Brooks Macdonald Group plc · LSE:BRK
Brooks Macdonald — FY2016 Earnings Presentation
29 slides from Brooks Macdonald's earnings presentation, 2016
Slide 1: Final results for the 12 months ended 30 June 2016
Final results for the 12 months ended 30 June 2016 Chris Macdonald, Group Chief Executive; Simon Jackson, Group Finance Director; and Andrew Shepherd, Group Deputy Chief Executive
Slide 2: Highlights: Financial
Highlights Financial Total discretionary FUM up to £8.3bn Revenue up 5% Underlying pre-tax profit up 3% to £15.5m Underlying EPS down 4% to 87.92p Pre-tax profit up 39% to £15.9m EPS up 38% to 94.41p Total dividends up 15% to 35p Cash & liquid investments £20.5m “A good year for the business in spit
Slide 3: Highlights: Business
Highlights Business 11.6% organic growth in FUM - BMAM, BMI and BMF all grew FUM Negative impacts of advisory to discretionary at BMI, Brexit uncertainty and postponing of two fund launches Continued investment in infrastructure Significant growth in distribution and capacity on and offshore Continu
Slide 4: Asset growth across the Group
Asset growth across the Group Discretionary funds under management June 2016 June 2015 AM £6.15bn £5.59bn BMI £1.35bn £1.16bn Funds £796m £663m Total £8.30bn £7.41bn Other assets and funds June 2016 June 2015 Property AUA £1.10bn £1.14bn Third party AUA >£270m >£255m Final results for the year ended
Slide 5: Discretionary funds under management for last 5 years
Discretionary funds under management (£m) for last 5 years 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Year to June Year to June Year to June Year to June Year to June ‘12 ‘13 ‘14 ‘15 ‘16 Total BM FUM (£m) 3,520 5,110 6,550 7,413 8,301 % Increment 18.6 45.0 28.2
Slide 6: Analysis of discretionary fund flows FY16
Analysis of discretionary fund flows FY16 £m June 2016 June 2015 Opening discretionary FUM 7,413 6,550 Net new discretionary business 863 645 Acquisitions - - Investment growth 25 218 Total FUM growth 888 863 Closing FUM 8,301 7,413 Organic growth (net of markets) 11.6% 9.8% Total growth 12.0% 13.2%
Slide 7: Analysis of discretionary funds under management FY16
Analysis of discretionary funds under management FY16 Funds under management Revenue 3% 10% 5% 5% AM 16% AM BMI 15% BMI FC Funds Funds 72% Estates 74% Service* Clients (BMAM)* 6% 12% 13% BPS 38% SIPPs MPS Private Funds Trusts/Charities 56% 75% *by value Final Results for the year ended 30 June 2016
Slide 8: Continued growth in distribution
Continued growth in distribution June June June June June 2012 2013 2014 2015 2016 Number of introducing firms 420 544 670 775 960 Number of strategic alliances 11 12 15 17 19 Investment managers and 67 90 107 102 101 trainees Total staff numbers 282 376 457 471 482 • 729 introducing adviser firms i
Slide 9: Financial highlights
Financial highlights FY16 FY15 % Change Revenue £81.4m £77.7m 5% Underlying profit before taxation £15.5m £15.1m 3% Profit before taxation £15.9m £11.4m 39% Underlying earnings per share 87.92p 91.33p (4)% Basic earnings per share 94.41p 68.30p 38% Interim dividend 12.0p 10.0p 20% Final dividend 23.
Slide 10: Underlying profit before tax
Underlying profit before tax £’000s FY16 FY15 % Change Investment Management fee income 66,563 63,470 5% Fees from other advisory services and 12,001 11,008 9% other income Commission income 125 235 (47%) Pre RDR payments to introducers 2,710 2,973 (9%) Underlying operating income 81,399 77,686 5% U
Slide 11: Reconciliation of underlying profits to statutory
Reconciliation of underlying profits to statutory £’000 FY16 FY15 % Change Underlying profit before tax 15,536 15,078 3% Amortisation of intangible assets (2,674) (2,708) (1%) Finance costs of deferred consideration (577) (760) (24%) Changes in fair value of deferred consideration 3,571 (70) (5,201%
Slide 12: Underlying segmental results
Underlying segmental results Funds* and Investment Financial property Group and FY16 £’000 management planning management International central costs Total Revenue 58,711 4,251 6,832 11,605 - 81,399 Underlying profit 19,074 (57) (592) 806 (3,695) 15,536 Margin 32% (1%) (9%) 7% - 19% Total yield 100b
Slide 13: Operating expenses
Operating expenses £’000 FY16 FY15 % Change Fixed staff costs 26,514 25,930 2% Variable staff costs 16,133 15,483 4% Average number of employees in year 472 467 1% Actual number of employees at year end 478 471 1% Other direct expenses 22,473 21,130 6% Underlying operating expenses 65,120 62,543 4%
Slide 14: Total administrative costs
Total administrative costs FY16 FY15 2% 5% 6% 2% 6% 6% 5% 5% Depreciation & amortisation 6% Staff costs - payroll (fixed) 5% Staff costs - other (variable) Sales & marketing 10% 10% £67.8m 39% ICT £65.4m 40% Property & office 3% 2% Professional, regulatory & financial Commission & fees Investment ad
Slide 15: IT investment – new Wealth Management System
IT investment – new Wealth Management System Total project budget £5.3m Total expenditure to date £3.8m Balance to spend through to June 17 £1.5m • The total investment in the system has remained at £5.3m, however, the project has now been extended by six months and will complete in June 2017 • We a
Slide 16: Cash bridge
Cash bridge 20,000 £19,274 £2,773 £17,597 £19,478 17,500 £4,016 15,000 £4,372 12,500 10,000 £3,901 7,500 5,000 £1,143 £1,586 2,500 £398 0 -2,500 Opening Tax paid Fixed, Dividends Deferred Purchase of Investment in Issue of new Cash Closing balance 1 July intangible and consideration shares for finan
Slide 17: Analysis of the balance sheet
Analysis of the balance sheet £m FY16 FY15 Assets Cash & liquid assets 20.5 19.3 Accrued income and other assets 26.6 24.2 Property plant and equipment 3.3 3.5 Intangible assets 65.8 65.3 Total assets 116.2 112.3 Liabilities Trade payables and accruals (18.8) (16.8) Current tax liabilities (2.1) (1.
Slide 18: Strategies for growth
Strategies for growth • To be the investment manager of choice for professional intermediaries and private clients on and offshore • Focusing on consistency and stability in an ever changing marketplace • Regional growth is strong – Moved to a larger Taunton base – Renewing leases – There may be opp
Slide 19: Industry background, our positioning and the key drivers for FY17 growth
Industry background, our positioning and the key drivers for FY17 growth Industry Background Our Positioning Key Growth Drivers Taking advantage of growth in professional adviser community: SIPPs remain substantial area of Continuing consolidation and - Wider and deeper relationships growth, but leg
Slide 20: Outlook & conclusions
Outlook & conclusions • Strong organic growth despite difficult & volatile market conditions • Distribution base continues to grow in an expanding sector • Integration of Asset Management & Funds and working closer with Brooks Macdonald International (BMI) leading to further distribution opportuniti
Slide 21: Appendices
Appendices BM BROOKS MACDONALD
Slide 22: Appendices
Appendices • Asset allocation • EPS and dividend growth • Employee breakdown • Industry recognition 22
Slide 23: Asset allocation
Asset allocation Current guidance portfolios – July 2016 The investment managers’ tolerance limits: +/-3 +/-5 +/-7 Low Low-to- Medium- Low (Income & Medium High Medium to-High Growth) UK fixed income 25 23 16 11 3 0 International fixed income 18 15 9 3 2 0 UK equities 8 8 15 22 27 30 North American
Slide 24: Revenue and profits growth
Revenue and profits growth Underlying profit Revenue 85.00 81.4 80.00 77.7 75.00 69.1 70.00 65.00 62.9 60.00 55.00 52.18 53.3 50.00 45.00 40.00 35.1 35.00 30.00 25.00 20.00 15.08 15.54 13.45 13.32 15.00 7.60 9.03 10.00 5.68 5.00 0.00 FY10 FY11 FY12 FY13 FY14 FY 15 FY16 24
Slide 25: Underlying earnings per share, dividend growth and cover
Underlying earnings per share, dividend growth and cover 100 4 Underlying earnings per share (p) 91.33 Total Dividend (p) 87.94 90 87.92 86.24 Interim Dividend (p) 3.54 3.52 80 Underlying Dividend cover (multiple) 3.2 3.28 3 70 2.99 62.84 60 2.52 55.07 50 2 41.18 40 35 30 24.76 30.5 26 1 20 22.5 12.
Slide 26: Employee Breakdown
Employee Breakdown Asset Management Group Investment Managers 65 Non-Executive Chairman 1 Trainee Investment Managers 11 Chief Executive Officer 1 Executive Support 60 Deputy Chief Executive Officer 1 Operations 47 Non-Executive Directors 3 New business development (NBD) 19 ICT 33 NBD Administration
Slide 27: Recent awards and ratings
Recent awards and ratings • 2016 – Citywire Wealth Manager Regional Stars – Scotland and Northern Ireland, North, Midlands, London and South East. • 2016 – 5 star rating for MPS, BPS and MPS platform (Defaqto). • 2015 – Gold Standard Awards: Awarded the Gold Standard for Portfolio Management (Incisi
Slide 28: Contacts
Contacts Chris Macdonald Simon Jackson Andrew Shepherd Group Chief Executive Group Finance Director Group Deputy Chief Executive 72 Welbeck Street 72 Welbeck Street 72 Welbeck Street London London London W1G 0AY W1G 0AY W1G 0AY T 020 7499 6424 T 020 7499 6424 T 020 7499 6424 D 020 7408 5577 D 020 74
Slide 29: Important information
Important information This presentation has been prepared for general information on matters of interest only and does not constitute an invitation to treat or a promotion, solicitation, or offer capable of acceptance and does not constitute professional advice of any kind. You should not act upon t
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