Last checked at 16 Jan 2020 07:00
16 January 2020
BROOKS MACDONALD GROUP PLC
Half Year Trading Update and Quarterly Announcement of Funds under Management
Notice of Half Year results
"Good progress on strategy delivery, on track to meet margin and profit expectations"
Brooks Macdonald Group plc ("Brooks Macdonald" or the "Group") today publishes its Trading Update for its half year ended 31 December 2019, together with an update on discretionary Funds under Management ("FUM") for the second quarter.
Revenue, underlying profit and underlying profit margin are all ahead of the same period last year and in line with expectations.
Total FUM remained stable over the half year ending the period at £13.1 billion (30 June 2019: £13.1 billion). During the quarter ended 31 December 2019, total FUM decreased by 1.5% (30 September 2019: £13.3 billion).
UKIM discretionary FUM, comprising our BPS and MPS services, grew by 1.3% during the first half driven by continued strong investment performance ahead of the MSCI WMA Private Investor Balanced Index. Net flows in this part of the business were broadly in line with expectations, given softer client sentiment in the light of the political and macroeconomic backdrop, and the Group's focus on efficiency and business quality.
Within Funds, our Defensive Capital Fund continued to perform well, with FUM reaching the milestone of £700 million, growing by 6.6% during the first half and 2.0% during the quarter.
During the second quarter, the Group's investment management agreement for the Grosvenor Wealth Management funds was terminated. This accounted for £244 million of FUM corresponding to annualised revenues of circa £0.6 million. This followed extensive discussions between Brooks Macdonald and Grosvenor over the purchase of the sponsorship company attached to the Grosvenor funds, where we were unable to reach a satisfactory commercial arrangement that met our stated acquisition criteria.
International FUM performed in line with expectations ending the first half up by 1.8%, demonstrating the continuing reinvigoration of the business.
Caroline Connellan, Chief Executive of Brooks Macdonald commented:
"It has been a positive six months for Brooks Macdonald. Over the first half of our financial year we maintained FUM levels, delivered strong investment performance, and made good progress in our International business. We continue to deliver on our commitment to improve profit margins over the medium term, and the recently announced acquisition of Cornelian represents a significant step forward in our strategy of delivering sustainable value-enhancing growth.
"While the recent UK election has removed some uncertainty, the broader macroeconomic and political backdrop makes it prudent to remain somewhat cautious about the short-term outlook for flows. We remain optimistic about the opportunities for Brooks Macdonald and, given our continued investment in talent, focus on delivering for clients and advisers, and ongoing cost discipline, our expectations for full year profit remain unchanged."
Analysis of discretionary fund flows over the period
| Six months to 31 December 2019 | |||||
£m | Opening FUM1,2 | Net new business |
Performance | Closing FUM | Net new business (%) | Total growth (%) |
BPS | 8,254 | (225) | 303 | 8,332 | (2.7) | 0.9 |
MPS | 1,705 | (10) | 60 | 1,755 | (0.6) | 2.9 |
UKIM discretionary total |
9,959 |
(235) |
363 |
10,087 |
(2.4) |
1.3 |
Funds - ongoing | 1,354 | (14) | 29 | 1,369 | (1.0) | 1.1 |
Funds - Grosvenor | 230 | (244) | 14 | - | (106) | (100) |
Funds total | 1,584 | (258) | 43 | 1,369 | (16.3) | (13.6) |
UKIM total | 11,543 | (493) | 406 | 11,456 | (4.3) | (0.8) |
International | 1,604 | (13) | 42 | 1,633 | (0.8) | 1.8 |
Total | 13,147 | (506) | 448 | 13,089 | (3.8) | (0.4) |
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Total investment performance | 3.4% | |||||
MSCI WMA Private Investor Balanced Index | 2.9% | |||||
| Quarter to 31 December 2019 | |||||
£m | Opening FUM1,2 | Net new business |
Performance | Closing FUM | Net new business (%) | Total growth (%) |
BPS | 8,275 | (172) | 229 | 8,332 | (2.1) | 0.7 |
MPS | 1,738 | (19) | 36 | 1,755 | (1.1) | 1.0 |
UKIM discretionary |
10,013 |
(191) |
265 |
10,087 |
(1.9) |
0.7 |
Funds - ongoing | 1,387 | (37) | 19 | 1,369 | (2.7) | (1.3) |
Funds - Grosvenor | 244 | (244) | - | - | (100) | - |
Funds total | 1,631 | (281) | 19 | 1,369 | 17.2 |
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UKIM total | 11,644 | (472) | 284 | 11,456 | (4.1) | (1.6) |
International | 1,641 | (6) | (2) | 1,633 | (0.4) | (0.5) |
Total | 13,285 | (478) | 282 | 13,089 | (3.6) | (1.5) |
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Total investment performance | 2.1% | |||||
MSCI WMA Private Investor Balanced Index | 0.9% | |||||
1As announced on 24 October 2019, Braemar Group PCC Limited-UK Agricultural Land fund (the "PCC"), to which the Group acts as promoter and distributor, is being wound up following the EGM held on 14 August 2019. Accordingly, the PCC's assets, which were valued at £4 million as at 30 June 2019, have been excluded from all figures shown in this announcement.
2As announced on 24 July 2019, the Group exited from its investment management agreement with the Ground Rents Income Fund plc ("GRIF"), a specialised property fund, on 13 May 2019. Accordingly, comparative FUM figures shown in this announcement have been restated to exclude GRIF's assets.
Notice of Half Year results
The Group intends to issue its preliminary statement of half year results for the period ended 31 December 2019 on Thursday 5 March 2020.
An analyst meeting will be held at 9.15 for 9.30am on Thursday, 5 March at the offices of Peel Hunt, 120 London Wall, London, EC2Y 5ET. Please contact Ailsa Prestige at MHP Communications on 020 3128 8147 or e-mail brooks@mhpc.com for further details.
Enquiries to:
Brooks Macdonald Group plc Caroline Connellan, Chief Executive Ben Thorpe, Group Finance Director
| www.brooksmacdonald.com 020 7499 6424
|
Peel Hunt LLP (Nominated Adviser and Broker) Guy Wiehahn / John Welch
| 020 7418 8900 |
MHP Communications Reg Hoare / Simon Hockridge / Charlie Barker
| 020 3128 8734 |
Notes to editors
Brooks Macdonald Group plc, through its various subsidiaries, provides leading investment management services in the UK and internationally. The Group, which was founded in 1991 and began trading on AIM in 2005, had Discretionary Funds under Management of £13.1 billion as at 31 December 2019.
Brooks Macdonald offers a range of investment management services to private high net worth individuals, pension funds, institutions, charities and trusts. The Group also provides financial planning as well as offshore investment management and acts as fund manager to a regulated OEIC providing a range of risk-managed multi-asset funds and a specialised absolute return fund.
The Group has thirteen offices across the UK and the Channel Islands including London, East Anglia, Hampshire, Leamington Spa, Leeds, Manchester, Taunton, Tunbridge Wells, Wales, Scotland, Jersey, and Guernsey.
LEI: 213800WRDF8LB8MIEX37