Brooks Macdonald announces half-year results

by | Mar 10, 2022

“Strategy delivering strong results: annualised net flows of 4%, record underlying profit margin of over 28% and 13% increase in the interim dividend” 

Brooks Macdonald Group plc (“Brooks Macdonald” or the “Group”) today announces its half-year results for the six months ended 31 December 2021.

Strong financial performance with momentum building in organic growth

  • Total Funds under Management (“FUM”) reached £17.3bn, up 5.3% over the half year (30 June 2021: £16.5 billion)
    • Positive and increasing net flows over the six months, totalling £326 million (H1 FY21: £(367) million), with annualised net flows of 4.7% for Q2 up from 3.1% for Q1 and (2.0)% for FY21
    • Positive investment performance of 3.3% for the half year.
  • The Group’s core UK discretionary business had annualised net flows of 6.3% for the period driven by:
    • Strong growth in Brooks Macdonald Investment Solutions (“BMIS”), the firm’s B2B offering for advisers, with FUM up 60% over the half year, and in Platform Managed Portfolio Service (“MPS”) which saw a rise of 20%
    • Sustained positive net flows in the Group’s Bespoke Portfolio Service (“BPS”), particularly in our Private Clients business and in the specialist products – Responsible Investment, Decumulation, Court of Protection and AIM.
  • International returned to positive net flows, reflecting improved client retention and increasing inflows during the period.
  • Revenue increased by 10.7% to £61.9 million (H1 FY21: £55.9 million) driven by improving positive net flows and a complete half year contribution from our acquisition of Lloyds Banking Group’s Channel Islands funds and wealth management business, partly offset by lower transaction-related revenues.
  • Underlying profit before tax rose 25.7% to £17.6 million (H1 FY21: £14.0 million), with underlying profit margin up 3.3 percentage points to a new high of 28.4%, driven by higher revenue and continued cost discipline, delivering on our commitment to top quartile underlying profit margin.
  • Statutory profit before tax fell by 6.4% to £13.2 million (H1 FY21: £14.1 million), with the decrease driven by an exceptional gain in H1 FY21 related to the Lloyds Channel Islands acquisition.
  • Underlying basic earnings per share increased by 20.7% to 88.6p (H1 FY21: 73.4p).
  • In line with Brooks Macdonald’s progressive dividend policy, the Group has raised the interim dividend by 13.0% to 26.0p (H1 FY21: 23.0p), reflecting the strong results for the period, the Group’s strong capital position, and the Board’s continuing confidence in the firm’s prospects.

 

Continued strategic progress

Acquisitions delivering, further M&A planned

  • The Group continued to see strong delivery from its acquisitions of Cornelian Asset Management and Lloyds’ Channel Islands wealth management and funds business, achieving higher than planned EPS accretion.
  • As part of its ambitious growth strategy, the Group continues to seek inorganic opportunities that meet its stated acquisition criteria of high quality businesses with a good strategic and cultural fit that will deliver strong economics.

 

Continued investment to deliver best-in-class adviser experience and client service

  • The Group continued its focus on making Brooks Macdonald easy to do business with through digital transformation:
    • Commenced the phased roll-out of a market-leading digital onboarding solution
    • Worked with the firm’s technology partner SS&C to identify how its prospective acquisition of Hubwise, the innovative financial services technology provider, could enhance the new platform currently being implemented for Brooks Macdonald.
  • Progress continued on the Group’s migration of its adviser- and client-facing processes to the SS&C/Hubwise platform.

 

Delivering our Corporate Social Responsibility (“CSR”) agenda

  • As part of its developing CSR agenda, the Group launched its “Inclusive Futures” programme, working to widen access to sector by providing career opportunities to young people through its partnerships with Investment 2020 and #10000blackinterns.
  • The firm is marking its 30th anniversary by partnering with the Dame Kelly Holmes Trust to support the Trust’s work in tackling youth inequality and disadvantage.

 

Russia exposure

  • The Group has no direct exposure to Russia in its discretionary client portfolios or its funds.  Its indirect exposure, through holdings in third party funds in the client portfolios, is c.0.1% of total FUM.  The holdings are being monitored closely and we are engaging with third party fund managers where appropriate. 

 

Andrew Shepherd (pictured), CEO, commented:

I am pleased to report that we delivered sustained strong financial performance for the first half year with positive net flows and record underlying profit margin of over 28%, enabling us to increase our interim dividend once again by 13%. These results clearly show growing client demand for our products and services alongside continued cost discipline.

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