Last checked at 16 Apr 2020 07:00
16 April 2020
BROOKS MACDONALD GROUP PLC
Trading Update and Quarterly Announcement of Funds under Management
"Q3 financial performance resilient in context of market decline and economic uncertainty"
Brooks Macdonald Group plc ("Brooks Macdonald" or the "Group") today publishes an update on Funds under Management ("FUM") for the third quarter of its financial year (ending 31 March 2020), together with a Trading Update for the period.
Funds under Management
FUM at the quarter end totalled £12.2 billion (31 December 2019: £13.1 billion). The Group experienced organic net outflows for the period of £0.2 billion. Within that, gross inflows strengthened over the quarter, reflecting our continued focus on client and adviser relationships. The organic net outflows were more than offset by the FUM increase of £1.2 billion arising from the successful completion of the Cornelian acquisition on 28 February.
In the context of the steep market decline caused by the outbreak of COVID-19, the Group's investment performance was robust, with portfolios declining by 14.1% (£1.8 billion), compared to the MSCI WMA Private Investor Balanced Index decline of 15.2%.
Key points in FUM movements during the quarter included:
· Within UKIM discretionary, BPS saw organic net new business of £(0.1) billion for the quarter which, including the acquisition of Cornelian's direct client book (£0.4 billion FUM at the end of the quarter), resulted in overall net flows of £0.3 billion or 3.8%. This was outweighed by investment performance of £(1.3) billion. There was a decrease of 12.4% in MPS, wholly attributable to investment performance with flat organic net new business over the quarter.
· Within Funds, we saw net outflows of £31 million or 2.3%. However, during the period we added the Cornelian funds business increasing our overall Funds FUM by more than 50% to £1.9 billion.
· Stripping out the impact of investment performance, which drove most of the 13% decrease in the quarter, our International business performed broadly in line with expectations, continuing its reinvigoration. Net outflows in the period of £48 million primarily related to a withdrawal by a corporate client (to fund an acquisition) and comprised a low income-yielding mandate.
Trading Update
The Group's fee revenues are primarily driven by the FUM values at quarter ends and as a result fees for the quarter ended 31 March 2020 were affected by the sharp decline in global markets caused by the outbreak of COVID-19 as well as the resulting economic uncertainty. Total revenues held up well with higher transaction revenue partly offsetting the lower fees.
Our business continuity planning allowed us to react effectively to the crisis, moving to home-working and continuing to operate as normal. We have no current intention to take advantage of any of the government backed lending schemes, or to furlough any permanent staff. The progress we have made in executing our strategy, including strong ongoing cost discipline, and the actions we have taken in response to the outbreak allowed us to maintain a solid underlying profit margin for the quarter.
The ongoing COVID-19 crisis will inevitably have some impact on the current year out-turn. However, should markets at our financial year end (30 June 2020) be broadly in line with current levels, we would anticipate delivering a satisfactory result, marginally ahead of last year's in terms of underlying profit and underlying profit margin. Given the nature of the crisis all guidance is inevitably subject to uncertainty.
The Group is well capitalised with a strong balance sheet and therefore reconfirms its decision to pay the interim dividend of 21.0p on 24 April as previously announced.
Caroline Connellan, CEO of Brooks Macdonald commented:
"Our immediate priority in these unprecedented times has been protecting the health and safety of our staff while ensuring we continue to provide excellent service to our clients and advisers. I am proud of how our people are responding to the crisis, moving quickly to home-working in support of the government's social distancing measures, while staying focused on communicating with and providing reassurance to our clients in these exceptionally volatile markets.
"While the scale and duration of the current disruption are unknown, we remain optimistic about the medium term outlook for Brooks Macdonald. Given our focus on clients and advisers, our actions in response to the crisis, and our continuing strategic execution, we are well positioned to take advantage of opportunities once the worst of the COVID-19 crisis is past."
Analysis of fund flows by service over the period
Quarter to 31 March 2020 | |||||||
£m | Opening FUM | Organic net new business | FUM acquired in the period1 | Investment performance | Closing FUM | Organic net new business | Total mvmt |
BPS | 8,332 | (125) | 445 | (1,250) | 7,402 | (1.5)% | (11.2)% |
MPS | 1,755 | - | - | (217) | 1,538 | - | (12.4)% |
UKIM Discretionary |
10,087 |
(125) |
445 |
(1,467) |
8,940 |
(1.2)% |
(11.4)% |
Funds | 1,369 | (31) | 736 | (211) | 1,863 | (2.3)% | 36.1% |
UKIM total | 11,456 | (156) | 1,181 | (1,678) | 10,803 | (1.4)% | (5.7)% |
International | 1,633 | (48) | - | (165) | 1,420 | (2.9)% | (13.0)% |
Total | 13,089 | (204) | 1,181 | (1,843) | 12,223 | (1.6)% | (6.6)% |
| |||||||
Total investment performance | (14.1)% | ||||||
MSCI WMA Private Investor Balanced Index2 | (15.2)% | ||||||
Nine months to 31 March 2020 | |||||||
£m | Opening FUM3,4 | Organic net new business | FUM acquired in the period1 | Investment performance | Closing FUM | Organic net new business | Total mvmt |
BPS | 8,254 | (350) | 445 | (947) | 7,402 | (4.2)% | (10.3)% |
MPS | 1,705 | (10) | - | (157) | 1,538 | (0.6)% | (9.8)% |
UKIM discretionary |
9,959 |
(360) |
445 |
(1,104) |
8,940 |
(3.6)% |
(10.2)% |
Funds - ongoing | 1,354 | (45) | 736 | (182) | 1,863 | (3.3)% | 37.6% |
Funds - Grosvenor | 230 | (244) | - | 14 | - | (106)% | (100)% |
Funds total | 1,584 | (289) | 736 | (168) | 1,863 | (18.3)% | 17.6% |
UKIM total | 11,543 | (649) | 1,181 | (1,272) | 10,803 | (5.6)% | (6.4)% |
International | 1,604 | (61) | - | (123) | 1,420 | (3.8)% | (11.5)% |
Total | 13,147 | (710) | 1,181 | (1,395) | 12,223 | (5.4)% | (7.0)% |
| |||||||
Total investment performance | (10.6)% | ||||||
MSCI WMA Private Investor Balanced Index2 | (12.8)% | ||||||
1Closing value of Cornelian Asset Managers Limited's FUM as at 31 March 2020 acquired during the period.
2Capital-only index.
3As 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.
4As 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.
Enquiries to:
Brooks Macdonald Group plc Caroline Connellan, CEO Ben Thorpe, Group Finance Director
| www.brooksmacdonald.com 020 7659 3492 |
Peel Hunt LLP (Nominated Adviser and Broker) Guy Wiehahn / John Welch
| 020 7418 8900 |
MHP Communications Reg Hoare / Simon Hockridge / Charlie Barker
| 020 3128 8540 |
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 £12.2 billion as at 31 March 2020.
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 twelve offices across the UK and the Channel Islands including London, East Anglia, Hampshire, Leamington Spa, Leeds, Manchester, Taunton, Tunbridge Wells, Scotland, Wales, Jersey and Guernsey.
LEI: 213800WRDF8LB8MIEX37