Last checked at 24 Jan 2019 07:00
24 January 2019
BROOKS MACDONALD GROUP PLC
Half Year Trading Update and Quarterly Announcement of Funds under Management
Notice of Half Year Results
Brooks Macdonald Group plc (the "Group"), the AIM listed investment management group, today publishes its Trading Update for its half year ended 31 December 2018, together with a quarterly update on its Discretionary Funds under Management ("FUM").
Discretionary Funds under Management
FUM was down by 7.2% over the quarter and 4.5% over the half year, compared with the MSCI WMA Balanced Index which fell by 7.9% and 7.0% respectively.
· As at 31 December 2018, discretionary FUM totalled £11.9 billion (30 June 2018: £12.4 billion; 30 September 2018: £12.8 billion).
· FUM in both periods were driven by market performance (down £1,010m for the quarter, down £799m
· for the half year), partly offset by net new business (up £83m and £241m respectively).
· Net new business was 0.6% over the quarter and 1.9% over the half year:
o Within these total figures UK Investment Management maintained a good rate of organic growth, up by 1.6% in the quarter and 3.6% over the half year, in spite of a weak December driven by difficult market conditions.
o The International business was affected by the previously disclosed loss of a client-facing team.
· Investment performance continues to be robust.
Analysis of discretionary fund flows over the quarter and half year
Quarter to 31 December 2018 | Half Year to 31 December 2018 | |||||
£m |
UK IM
|
BMI |
TOTAL |
UK IM
|
BMI |
TOTAL |
Opening FUM | 11,110 | 1,674 | 12,784 | 10,722 | 1,693 | 12,414 |
Net new business | 177 | (94) | 83 | 388 | (146) | 241 |
Performance | (940) | (70) | (1,010) | (762) | (37) | (799) |
Closing FUM | 10,347 | 1,510 | 11,857 | 10,347 | 1,510 | 11,857 |
Net new business (%) | 1.6% | (5.6%) | 0.6% | 3.6% | (8.6%) | 1.9% |
Total growth (%) | (6.9%) | (9.8%) | (7.2%) | (3.5%) | (10.8%) | (4.5%) |
Half Year Trading Update
The Group's anticipated underlying profit for the financial year is in line with management's expectations, assuming no further deterioration in markets or client sentiment.
Some short-term pressure on revenue is being seen, driven by macroeconomic and political uncertainty. Lower market levels resulted in lower management fees at the quarter end and transactional revenue was impacted by reduced new business flows, a relatively stable asset allocation and the ongoing trend towards all-in fees.
We have responded to this more challenging environment with cost discipline and have started implementing our plans for medium-term margin improvement. As announced earlier this month, the Group has taken action to streamline the business by driving efficiency and effectiveness, improving processes and building a scalable operating model. These changes position the business to deliver an improved, more consistent client experience and will make it easier for advisers to do business with the firm. These measures will have a current financial year benefit of approximately one third of the expected annualised savings of c. £4m.
In line with the Group's stated strategy to focus on its core offerings, we completed the sale of our sub-scale Employee Benefits business to Brunsdon Employee Benefits Ltd.
The opportunity for the business remains strong driven by demographics, the need to save for retirement and adviser demand for outsourced investment management. The Group continues to invest for growth, recently expanding its Court of Protection offering, launching a new Responsible Investment Service and a Decumulation service will launch in the coming weeks. The pipeline for new business remains encouraging although inevitably sensitive to the current environment.
Caroline Connellan, Chief Executive of Brooks Macdonald commented:
"We had a good first half notwithstanding December when both markets and client sentiment became weaker as a result of the macroeconomic and political uncertainty. We have continued to implement our strategy, driving for medium-term margin improvement and building a scalable operating platform.
The fundamental opportunity for our business remains strong. I am confident that the strength of our client and adviser relationships, coupled with the investment we are making in our offering, position us well to capture future growth. The efficiency measures that we recently announced combined with ongoing cost discipline will help deliver greater value from this opportunity."
Notice of Half Year Results
The Group intends to issue its Half Year Results on Thursday 14 March 2019.
Enquiries to:
Brooks Macdonald Group plc Caroline Connellan, Chief ExecutiveBen Thorpe, Finance Director | www.brooksmacdonald.com 020 7499 6424
|
Peel Hunt LLP (Nominated Adviser and Broker) Guy Wiehahn / Adrian Haxby
| 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 £11.9bn as at 31 December 2018.
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 regulated OEICs providing specialist funds in the property and structured return sectors.
The Group has thirteen offices across the UK and the Channel Islands including London, East Anglia, Hampshire, Leamington Spa, Manchester, Taunton, Tunbridge Wells, York, Scotland, Wales, Jersey, and Guernsey.
LEI: 213800WRDF8LB8MIEX37