Last checked at 24 Jul 2019 07:00
24 July 2019
BROOKS MACDONALD GROUP PLC
Year End Trading Update
Quarterly Announcement of Funds under Management
"Organic growth and strong investment performance over the year leading to record discretionary FUM, exceeding £13bn"
Brooks Macdonald Group plc (the "Group"), the AIM listed investment management group, today publishes a trading update for its financial year ended 30 June 2019, together with a quarterly update on its Discretionary Funds under Management ("FUM") for the fourth quarter. All figures are unaudited.
Trading Update
·; Positive net flows and investment performance over the full year led to a new record discretionary FUM of £13.2 billion, an increase of 6.8% over the year, of which 3.3% was net new business and 3.5% investment performance, compared to 2.2% for the MSCI WMA Private Investor Balanced Index. This was despite historically low levels of industry net flows and exceptionally weak client sentiment. Highlights included:
o Core UK Investment Management ("UKIM") net flows of 5.4% for the year
o Within UKIM, strong net flows into both Managed Portfolio Service ("MPS") on platforms (16.9%) and the Defensive Capital Fund (17.7%)
o Negative flows in International, driven principally by the prior loss of a client-facing team, but within that positive net flows of 10.0% in MPS.
·; Overall yields broadly stable, with exit from some lower-yield mandates. As a result, revenue growth is expected to be broadly in line with FUM growth
·; The efficiency and effectiveness initiatives announced in January are delivering as planned, resulting in a material improvement in underlying profit margin, underpinning the Group's confidence in the medium-term outlook.
Quarterly Funds Under Management
As at 30 June 2019, FUM totalled £13.2 billion, an increase of 3.5% over the quarter (31 March 2019: £12.7 billion) and 11.9% over the second half of the year. As a comparison, the MSCI WMA Private Investor Balanced Index increased by 2.8% and 9.9% over the quarter and H2 respectively.
·; Net new business was broadly flat at £2 million over the quarter and £167 million (1.4%) over the half year:
o UKIM saw net flows of £32 million (+0.3%) in the quarter, despite the loss of a low-yielding investment management mandate of c.£50 million in Funds, and £184 million (1.8%) over the half year
o International had net outflows of £31 million (-2.0%) in the quarter and £17 million (-1.1%) for the half year.
·; Investment performance was strong at 3.5% in the quarter and 10.5% over the half year.
In line with the Group's stated strategy to focus on its core offerings, on 13 May the Ground Rents Income Fund plc ("GRIF"), a specialised property fund, announced that the Group was exiting from its investment management agreement with the fund. GRIF represented £93 million of non-core funds at 31 March 2019 and has been excluded from all figures shown in this announcement.
In the period, the Group reached a settlement agreement with the Dublin-based fund company that formed part of the previously disclosed Channel Islands legacy matters. The fund company's shareholders voted unanimously in favour of accepting the settlement, under the terms of which a goodwill payment of £3.4 million has been set aside. The payment is covered by the provision disclosed at the time of the announcement of the legacy matters. Shareholders have until 4 September 2019 to claim their share, and 77% of the amount has been paid to date. A fuller update on the legacy matters will be provided with the full year results.
Caroline Connellan, Chief Executive of Brooks Macdonald commented:
"I am pleased to report record discretionary FUM at the year end of £13.2 billion. We have generated positive net new business over the year and delivered strong investment performance, despite extremely low net flows across the industry and continuing macroeconomic and political uncertainty.
"We have taken decisive steps to streamline our business, drive increased efficiency and effectiveness, and reinforce the foundations of the organisation. This has helped us deal with the current challenging environment and positions us well to continue to deliver benefits for both clients and shareholders."
Analysis of discretionary fund flows over the quarter
Quarter to 30 June 2019 | ||||||
£m | Opening FUM | Net new business | Performance | Closing FUM | Net new business (%) | Total growth (%) |
BPS | 7,935 | 53 | 265 | 8,254 | 0.7 | 4.0 |
MPS | 1,621 | 24 | 60 | 1,705 | 1.5 | 5.2 |
UKIM discretionary | 9,557 | 78 | 325 | 9,959 | 0.8 | 4.2 |
Funds | 1,574 | (45) | 55 | 1,584 | (2.9) | 0.6 |
UKIM total | 11,130 | 32 | 380 | 11,543 | 0.3 | 3.7 |
International | 1,568 | (31) | 66 | 1,604 | (2.0) | 2.3 |
Non-core funds | 4 | 0 | 0 | 4 | 0.0 | (2.3) |
Total | 12,702 | 2 | 446 | 13,151 | 0.0 | 3.5 |
Analysis of discretionary fund flows over half year
Half Year to 30 June 2019 | ||||||
£m | Opening FUM | Net new business | Performance | Closing FUM | Net new business (%) | Total growth (%) |
BPS | 7,281 | 123 | 850 | 8,254 | 1.7 | 13.4 |
MPS | 1,491 | 62 | 152 | 1,705 | 4.2 | 14.4 |
UKIM discretionary | 8,772 | 185 | 1,002 | 9,959 | 2.1 | 13.5 |
Funds | 1,464 | (1) | 120 | 1,584 | 0.0 | 8.2 |
UKIM total | 10,236 | 184 | 1,122 | 11,543 | 1.8 | 12.8 |
International | 1,510 | (17) | 111 | 1,604 | (1.1) | 6.2 |
Non-core funds | 4 | 0 | 0 | 4 | 0.0 | (10.1) |
Total | 11,750 | 167 | 1,233 | 13,151 | 1.4 | 11.9 |
Analysis of discretionary fund flows over the full year
Full Year to 30 June 2019 | ||||||
£m | Opening FUM | Net new business | Performance | Closing FUM | Net new business (%) | Total growth (%) |
BPS | 7,699 | 303 | 251 | 8,254 | 3.9 | 7.2 |
MPS | 1,488 | 161 | 56 | 1,705 | 10.8 | 14.6 |
UKIM discretionary | 9,187 | 465 | 307 | 9,959 | 5.1 | 8.4 |
Funds | 1,428 | 107 | 49 | 1,584 | 7.5 | 10.9 |
UKIM total | 10,615 | 572 | 356 | 11,543 | 5.4 | 8.7 |
International | 1,693 | (163) | 74 | 1,604 | (9.6) | (5.2) |
Non-core funds | 4 | 0 | 0 | 4 | 0.0 | (9.6) |
Total | 12,312 | 409 | 430 | 13,151 | 3.3 | 6.8 |
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 £13.2 billion as at 30 June 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, Manchester, Taunton, Tunbridge Wells, York, Scotland, Wales, Jersey, and Guernsey.
LEI: 213800WRDF8LB8MIEX37