Final Results

RNS Number : 1780O

Brooks Macdonald Group PLC

14 September 2011

 



14 September 2011

Brooks Macdonald Group plc

Final Results for the year ended 30 June 2011

Brooks Macdonald Group plc ("Brooks Macdonald" or the "group"), the AIM listed integrated wealth management group, today announces its final results for the year ended 30 June 2011.

Financial Highlights

	Year to 30.06.11	Year to 30.06.10	Change
Revenue	£52.2m	£35.1m	49%
Statutory pre-tax profits	£7.3m	£5.7m	28%
Underlying pre-tax profits (stated before FSCS levy of £0.5m in 2011)	£7.8m	£5.7m	37%
Basic earnings per share	51.92p	38.1p	36%
Total funds under management ("FUM")	£2.969bn	£2.186bn	36%
Total proposed dividend for the year	15p	9p	67%

 Business Highlights

-       36% growth in discretionary FUM driven by growth in distribution, capacity, strategic alliances and investment capability

-       'Free cash' of £13m supports continuing organic investment and acquisitions

-       Acquisition of Braemar and launch of new funds business

-       67% increase in dividend reflecting the Group's strong dividend cover

Post-year end

-       Acquisition of Clarke Willmott LLP's investment management team to increase regional presence (adding around £120m of funds under management)

-       Earnings have remained in line with the Board's expectations 

-       Diane Seymour Williams appointed as a non-executive director (announced separately today)

Commenting on the results, Chris Macdonald, CEO, said:

"This has been another year of significant growth for the Group.

We remain well-positioned to take advantage of industry change, notably the implementation of the Retail Distribution Review ('RDR'), and continue to see a number of opportunities to increase our presence in the marketplace.

"Our aim is to continue to grow our discretionary funds under management, through organic investment, acquiring investment management teams, expanding our regional presence, and developing our product and service offering."  

An analyst meeting will be held at 9.15 for 9.30am at the offices of MHP Communications, 60 Great Portland Street, London, W1W 7RT. Please contact Giles Robinson on 020 3128 8100 or e-mail [e-mail] for further details.

Enquiries to:

Brooks Macdonald Group plc                                                                                         

Chris Macdonald, Chief Executive                                                                                   020 7499 6424

Simon Jackson, Finance Director

Collins Stewart Europe Limited                                                                                      020 7523 8350

Bruce Garrow / Sebastian Jones

MHP Communications                                                                                                      020 3128 8100

Reg Hoare / Barnaby Fry / Simon Hockridge / Giles Robinson

Notes to editors

Brooks Macdonald Group plc is an AIM listed integrated wealth management group. The group consists of three principal companies: Brooks Macdonald Asset Management Limited, a discretionary asset management business; Brooks Macdonald Financial Consulting Limited, a financial advisory and employee benefits consultancy and the Braemar Group which acts as a fund manager, under the name of Brooks Macdonald Funds and manages property assets on behalf of the funds and other clients.

Brooks Macdonald Asset Management provides a bespoke, fee based, investment management service to private high net worth individuals, charities and trusts. It also provides in-house custody, nominee and dealing services and has existing offices in London, Manchester, Hampshire, Tunbridge Wells, and Edinburgh. Taunton will be its sixth office following completion of the Clarke Willmott investment team acquisition.

Brooks Macdonald Group plc

Chairman's statement

I am pleased to report on another year of significant growth for the Group.

Profit before tax has increased by 28% from £5.68 million to £7.29 million, on turnover which has increased by 49% to £52.18million. Earnings per share were 51.92p, compared with 38.10p for the previous year, an increase of 36%.

As I reported in my interim statement, these results are after a charge of £545,000, being the levy imposed on Brooks Macdonald (in common with all other wealth managers) under the Financial Services Compensation Scheme.

The board has recommended a final dividend of 10p per share. If approved by shareholders this will result in total dividends for the year of 15p, an increase of 67% over the dividends of 9p per share paid for the previous financial year.

Funds under management (FUM) at 30 June 2011 were £2,969 million, an increase of £783 million or 36% over the figure a year earlier. When our shares were listed on AIM in 2005, our FUM were £315 million. This nine-fold increase in six years is a remarkable achievement and one, we believe, which reflects both the excellent service we provide to our clients and the strength of our relationship with our partners and professional introducers.

Since the year-end we have launched our funds business, initially consisting of the three funds we acquired as part of Braemar Group and four existing Brooks Macdonald funds. We are now marketing our funds to a wider group of potential investors.

In November we plan to open our sixth private client regional office in Taunton, where we have recently announced the acquisition of the investment management department of Clarke Willmott LLP. The acquisition will add over c. £120 million to our FUM. Our regional offices are closely associated with our Strategic Alliance partners and hence are an important part of our growth strategy.

We are pleased to welcome Diane Seymour Williams as a non-executive director. Diane has had a distinguished career in investment management having spent over twenty years at Morgan Grenfell/Deutsche Asset Management. She is now an executive director of Lloyd George Management and a non-executive director of both Calculus Capital and of Witan Pacific Investment Trust and will undoubtedly be a valuable addition to the Brooks Macdonald Board.

The UK economy faces significant economic challenges, the eurozone is in turmoil and the US has a balance of payments problem that it is struggling to address. In challenging markets our approach remains unchanged: as we continue to look to invest our clients' funds with caution while providing them with an efficient and transparent service. We believe that this approach will continue to stand them and Brooks Macdonald in good stead as we continue to build our business.

Christopher Knight

Chairman

Brooks Macdonald Group plc

Chief Executive's review

Introduction

In spite of a volatile macroeconomic backdrop this has been another highly successful year for the Group. We have delivered value to our clients, shareholders and staff whilst critically maintaining our strong corporate ethos and culture.

Funds under management

Discretionary funds under management over the period rose from £2,186 million to £2,969 million representing an increase of 36%. As a comparison the APCIMS balanced index rose by 14% over the same period. This rise comes as a result of a combination of continuing strong new business and very solid investment performance across all risk mandates. Our principal areas of investment management are the management of private portfolios, self invested personal pensions and charities and trusts and I am pleased to report that we have seen growth in all three areas.

Strategies for growth

We have, and will continue to pursue, a number of strategies for growth, principally as follows: expanding by organic investment in our core businesses, acquiring investment management teams, expanding our regional presence and developing our product and service offering.

Organic investment continues apace. We have expanded all parts of the business over the reporting period with growth in professional staff, senior hires in Compliance and Risk, Marketing, Trainees, Operations and New Business Development. Total staff numbers increased from 164 to 247, including an increase in investment managers from 35 to 43. Two trainees qualified as Investment Managers over the year. We remain firmly committed to our trainee programme and currently have 13 trainees who give us considerable capacity for the future as well as allowing us to recruit high quality graduates into the sector.

We continue to develop our product and service offering. We currently undertake around 85% of the back office functionality within Asset Management and over the next nine months we will be looking to undertake 100% in house. Whilst this will involve additional capital investment, it will improve further our service offering to clients and appropriately position the business to handle further growth. Service development and robust transparent investment performance are key beliefs of the business.

We have six offices throughout the UK with our office in Hale being the focus for our Estates and Funds business. All other offices are focussed on private clients and our growth has been strong across each location. Outside London our Hampshire and Manchester offices are the oldest (opening in 2005 and 2007 respectively) and these two offices have both had an exceptionally strong year.

New Taunton Office

In addition, as announced on 5 August 2011, we will be opening a new office in November in the South West of England, based in Taunton. This is as a result of our acquisition of the investment management department of Clarke Willmott LLP, the national law firm. As well as being a strong fit in terms of culture, the investment management team is a talented one.

Forming a relationship with Clarke Willmott also gives the Group the opportunity of working closer with the legal practice in all their regional offices. We are excited not only about the acquisition but by the opportunity of this new potential avenue for growth.

Strategic Alliances

Our new business is supported by both Strategic Alliances and introductions from other professional services sectors. We now have nine strategic partners and have commercial arrangements with over 240 quality professional services firms (Independent Financial Advisors, private client legal or accountancy practices). This number has risen by over 33% over the reporting period which represents our strongest period of growth since inception. I would like to go on record thanking all our professional connections for their continued support.

Braemar and launch of Funds business

The acquisition of Braemar Group plc completed in the last financial year and comprised of two businesses: Estates and Securities. The Estates business has continued its growth, now managing over £750m of property assets, and gives the Group another avenue for recurrent income growth.

The Securities business has been used as the 'launch pad' for our Funds Business which we announced in July 2011. As a Group we have a highly successful Managed Portfolio Service ('MPS') that offers clients with £200,000 or less to have access to our fund management service by investing into a portfolio managed by risk mandates. A natural extension of this was to launch a unitised version and this together with the existing three

Braemar funds and our Structured Growth fund forms the basis of the new Funds business. Whilst clearly early days, initial progress is encouraging.

Financial Consulting

Our Financial Consulting arm continues to grow organically. It has been another year of progress developing and maintaining alliances with solicitors, accountants and investment managers allowing us to work as part of a team in the management of client affairs.

Regulation

The Retail Distribution Review (RDR) comes into force in January 2013. Transparency of charges, high professional standards, clarity of services and an industry that engages with consumers are some of the key outcomes of RDR. These are outcomes that we fully support and we are excited by the opportunities both before and beyond the implementation of RDR.

Brooks Macdonald Foundation

During the year we established the Brooks Macdonald Foundation that supports a range of charities that our staff have connections with. I would like to thank the trustees for their hard work in establishing the Foundation and all the staff involved in making this happen.

Summary and Outlook

In September of this year we will have been trading for 20 years. We are proud of what has been achieved in that period and look ahead with confidence. Since the period end and despite challenging markets, we have witnessed continued inflows of funds through our private client offices and professional contacts and our funds business continues to progress well.

This is in the main due to the quality of our staff. I would like to end this report by thanking them all for their continued hard work, drive and professionalism over the last year.

Chris Macdonald

Chief Executive

Brooks Macdonald Group plc

Consolidated Statement of Comprehensive Income

for the year ended 30 June 2011

Consolidated income statement

		2011		2010
			£		£
Revenue			52,178,344		35,108,634
Administrative expenses			(44,949,945)		(29,500,860)
Operating profit			7,228,399		5,607,774
Finance income			148,048		105,676
Finance cost			(87,332)		(30,987)
Profit before taxation			7,289,115		5,682,463
Taxation			(1,846,270)		(1,825,642)
Profit for the year attributable to equity holders of the parent company			5,442,845		3,856,821
Earnings per share
Basic			51.92p		38.10p
Diluted			50.51p		36.31p
Statement of  comprehensive income
Profit for the year attributable to equity holders of the company			5,442,845		3,856,821
Revaluation of available for sale investments			45,295		-
Transfer of share based payments  exercised during the year			448,399		220,375
Total comprehensive income for the year, net of tax attributable to equity holders of the parent company			5,936,539		4,077,196

Brooks Macdonald Group plc

Consolidated Statement of Financial Position as at 30 June 2011

		2011			2010 (re-stated)
			£		£
Assets
Non-current assets
Intangible assets			6,023,293		1,892,145
Property, plant and equipment			1,891,693		2,042,002
Investment properties			-		-
Available for sale financial assets			1,561,210		194,177
Held to maturity investments			-		-
Deferred tax assets			1,494,947		1,180,595
Total non-current assets			10,971,143		5,308,919
Current assets
Trade and other receivables			9,860,226		3,793,191
Cash and cash equivalents			16,808,194		14,374,719
Total current assets			26,668,420		18,167,910
Total assets			37,639,563		23,476,829
Current liabilities
Trade and other payables			(16,899,502)		(7,247,730)
Current tax liabilities			(24,680)		(1,232,408)
Provisions			(1,036,641)		(377,110)
Total current liabilities			(17,960,823)		(8,857,248)
Non-current liabilities
Other non-current liabilities			(627,613)		(2,209,513)
Total non-current liabilities			(627,613)		(2,209,513)
Net assets			19,051,127		12,410,068
Financed by:
Equity
Share capital			107,882		102,451
Share premium account			4,125,634		2,012,427
Other reserves			2,562,965		1,790,739
Retained earnings			12,254,646		8,504,451
Total equity			19,051,127		12,410,068

Brooks Macdonald Group plc

Consolidated Statement of cash flow

for the year ended 30 June  2011

		2011		2010
			£		£
Cash inflow from operating activities
Cash generated from operations			10,763,715		10,432,064
Interest paid			(51,576)		(30,987)
Taxation paid			(2,491,600)		(1,709,681)
Net cash generated from operating activities			8,220,539		8,691,396
Cash flow from investing activities
Purchase of property, plant and equipment			(484,444)		(1,053,043)
Purchase of intangible assets			(402,324)		(210,629)
Sale of held to maturity investment			9,000		-
Acquisition of subsidiary company, net of cash acquired			(2,871,323)		(848,184)
Purchase of available for sale asset			(1,500,000)		(194,177)
Disposal of available for sale asset			194,177		-
Proceeds of sale of land and buildings			60,000		-
Proceeds of sale of investment property			612,000		-
Interest received			148,048		105,676
Proceeds of sale of acquired relationships			401,169		-
Net cash used in investing activities			(3,833,697)		(2,200,357)
Cash flows from financing activities
Proceeds of issue of shares			720,682		393,413
Purchase of own shares by employee benefit trust			(980,364)		-
Repayment of borrowings			(533,000)		-
Dividend paid to shareholders			(1,160,685)		(857,020)
Net cash used in financial activities			(1,953,367)		(463,607)
Net  increase in cash and cash equivalents			2,433,475		6,027,432
Cash and cash equivalents at start of year			14,374,719		8,347,287
Cash and cash equivalents at end of year			16,808,194		14,374,719

Note 1 Basis of accounting and preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union, IFRIC interpretations, and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical convention, as modified by the revaluation of available-for-sale financial assets and financial liabilities at fair value through profit and loss.

In respect of the phantom scheme liabilities at 30 June 2010, an amount of £1,444,996 was classified as amounts falling due within one year and has now been re-classified as amounts falling due after more than one year.

Note 2 Earnings per share

Basic earnings per share are calculated by dividing the Group profits after tax of £5.443m by 10.48m, the weighted average number of ordinary shares in issue over the year ended 30 June 2011. The resultant earnings per share for the year are 51.92p.

Note 3 Dividend

The final dividend is payable on 24 October 2011 to shareholders on the register at the close of business on 23 September 2011 subject to approval by the shareholders at the Annual General Meeting.

Note 4 Statutory accounts

The financial information set out above does not constitute a full financial statement of the Group's affairs for the years ended 30 June 2011 or 2010 but it is derived from those accounts. The Group's auditors have reported on the full accounts of each year and have accompanied them with an unqualified report.

The statutory accounts will be delivered to the Registrar of Companies following the Brooks Macdonald annual general meeting to be held at the Group's head office on 19 October 2011

 

END

 

 

FR SFEFMDFFSEFU