Final Results

RNS Number : 6805S

Brooks Macdonald Group PLC

15 September 2010

 



15 September 2010

Brooks Macdonald Group plc

Final Results for the year ended 30 June 2010

Brooks Macdonald Group plc (the "group"), the AIM listed integrated wealth management group, today announces its final results for the year ended 30 June 2010.

Highlights:

	Year to 30.06.10	Year to  30.06.09
Revenue	£35.1m	£21.8m	Up 61%
Pre-tax profits	£5.68m	£3.18m	Up 78%
Basic earnings per share	38.10p	22.56p	Up 69%
Funds under management ("FUM")	£2.186bn	£1.386bn	Up 57%
Total proposed dividend for the year	9p*	5.5p	Up 64%

* Includes interim dividend of 3p per share

·      Funds under management growth of 57% - APCIMS balanced index rise 12.7 per cent over the same period

·      Growth in FUM driven by increased support from professional introducers

·      Growth across all parts of the business, SIPPs, Private Portfolios, Financial Consulting and Managed Portfolio Service

·      Acquisition of Lawrence House Fund Managers during the period and of Braemar Group post-period end

·      Board recommends final dividend of 6p per share, payable on 25 October 2010 to shareholders on the register on 24 September 2010.

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

"The year under review has seen significant progress across the group: substantial milestones such as £2bn FUM have been passed, with all growth strategies demonstrating progress. Organic growth fuelled by office openings and new strategic alliances with professional introducers has been a key driver, but has been complemented by the acquisition of Lawrence House during the year and of Braemar Group post year end."

"Alongside strong financial performance the group has continued to invest in infrastructure and employees to ensure that we continue to deliver high levels of service and performance to our clients.  We are well placed for the rest of the current calendar year and beyond."

Enquiries to:

Brooks Macdonald Group plc      [phone]

Chris Macdonald, Chief Executive

Simon Jackson, Finance Director

Collins Stewart Europe Limited    [phone]

Bruce Garrow

Sebastian Jones

Bankside Consultants                [phone]

Simon Rothschild

Louise Mason

Brooks Macdonald Group plc

Chairman's statement

This has been another strong year for Brooks Macdonald, with pre-tax profit increasing by 78% to £5.7m. Earnings per share were 38.10p, an increase of 69%.

On the back of these excellent results the Board has decided to recommend a final dividend of 6p per share.  This, following our maiden interim dividend in March 2010 of 3p, represents a 64% increase in total dividends over last year, when a single dividend of 5.5p was paid.

Funds under management at 30 June 2010 were £2.186bn, compared with £1.386bn a year earlier, an increase of 57%. We are delighted that FUM now exceed £2bn, a milestone which reflects the group's robust business model, consistent investment performance across all risk mandates and the continued ability to generate new business from both on-going and new relationships.

The momentum seen in the first half of the year carried through into the second half and beyond. Since the end of the financial year we have completed the acquisition of Braemar Group, a specialist manager of property funds. This acquisition was undertaken only after careful consideration of its "fit" with Brooks Macdonald in terms of company values as well as its ability to enhance shareholder value.

In April I was pleased to welcome Nicholas Holmes and Andrew Shepherd to the Board. As Joint Managing Directors of our asset management company they have played a major role in the growth of our business. Colin Harris, the former Chief Executive Officer of Newton Investment Group, was appointed a non executive director in July. I am confident that Colin's experience and expertise will be of significant value to Brooks Macdonald as we continue to expand.

Market conditions remain volatile but they have provided some 'tailwind' over the period in terms of assisting growth. However none of the progress of the group would have been possible without the hard work, dedication and professionalism of our staff.

The year under review was one of significant progress for Brooks Macdonald. Our strong balance sheet, growing brand and the strength and depth of talent throughout the group give the Board confidence that our progress will continue in the current year.

Christopher Knight

Chairman

Brooks Macdonald Group plc

Chief Executive's review

The group continues to have a number of growth strategies and I am pleased to report that these have enabled us to continue to grow the business at a very successful rate over the last year. Organic growth has been the major driving force, but has been combined with new office openings, strategic alliances and the acquisition of Lawrence House.

Funds under management rose from £1.386bn to £2.186bn over the period representing an increase of 57%. Whilst markets remained volatile they were supportive, with the APCIMS Balanced index rising 12.66% and the less relevant FTSE100 rising 6.7% over the same period.

We continue to work closely with high quality IFAs and professional introducers alike. This continues to account for a major part of the group's growth and in the period under review over 80% of our new business came from these sources. I would like to take this opportunity to thank all our professional connections for their continued support.

Our principal offering to clients is based around providing high quality fee based private client discretionary fund management. This service is divided into the management of Private Portfolios, Self Invested Personal Pensions ('SIPP'), Charities and Trusts, and our Managed Portfolio Service ('MPS'). In addition we have a bespoke financial consulting practice. I am pleased to report that in all areas we have seen growth.

The group has continued to make significant strides in the SIPP market, which now accounts for 42% of funds under management. Our MPS service, aimed at clients with portfolios of between £20,000 and £150,000, has seen considerable growth in the number of SIPP accounts but also noticeably from ISA amalgamations. This represents around 7% of FUM and continues to be a driver of profit and turnover growth. Our pipeline for new business remains robust for all our discretionary investment management services.

In London we have seen continued growth in the fund management teams, our operations department, central functions and financial consulting. This remains our largest office and further space has been secured to allow continued growth. Outside of London, we have relocated our Hampshire office to larger premises reflecting its considerable success, and Manchester, Tunbridge Wells and our newest office in Edinburgh have all grown ahead of forecasts over the last year. We will continue to look at regional opportunities over the coming year.

The Retail Distribution Review ('RDR') is scheduled for January 2013 and it will change the distribution models of most firms in financial services. We are highly supportive of the proposed changes and see RDR as a considerable opportunity for the group over the next two years and beyond.

In July 2010 we completed the acquisition of the Braemar Group. Part of our growth strategy has been to look at niche funds and to make acquisitions where we can see strong medium term value. Braemar very much fitted these objectives. It manages over £500m of property and has c £45m in specialist funds. Whilst still early days in terms of integration, I am pleased to report initial progress has been strong. I do not believe that in the first year the acquisition will be earnings enhancing due to the system development and new recruitment that will take place, but over the medium term (2011 onwards) I am confident that this will be a valuable addition to the group.

I remain firmly of the view that private clients require a blend of service and investment performance in a risk controlled environment. We continue to invest in the investment management process to expand our research and performance capabilities as well as investing in the development of our systems to enhance the offering to our clients.

Over the year a number of landmarks were achieved. We passed through £2bn of funds under management, we announced further significant 'hires', added further strategic partners and were awarded the accolade of being one of the Best Companies in the UK to work for according to the Sunday Times. The latter was especially pleasing as it is a strong reflection of the ethos and culture of the group. During the year the company decided to establish the Brooks Macdonald Employee Benefit Trust to motivate and retain our employees, all of whom are potential beneficiaries of the Trust.

I wish to end this report by thanking all members of staff. Total staff numbers have increased from 140 to 168 over the financial year, and now amount to over 200, and it remains a privilege to work alongside such a talented group of individuals. With growth being generated from a number of sources, an exceptional team and a robust balance sheet we continue to look forward with confidence.

Chris Macdonald

Chief Executive

Brooks Macdonald Group plc

Consolidated Income Statement

for the year ended 30 June 2010

		2010		2009
			£		£
Revenue			35,108,634		21,752,209
Administrative costs			(29,500,860)		(18,765,646)
Operating profit			5,607,774		2,986,563
Finance income			105,676		198,860
Finance cost			(30,987)		-
Profit before taxation			5,682,463		3,185,423
Taxation			(1,825,642)		(930,858)
Profit for the year			3,856,821		2,254,565
Earnings per share
Basic			38.10p		22.56p
Diluted			36.31p		22.26p

The group had no other comprehensive income in either period.

Brooks Macdonald Group plc

Consolidated Statement of Financial Position as at 30 June 2010

		2010		2009 (re-stated)	2008 (re-stated)
			£	£	£
Assets
Non-current assets
Property, plant and equipment			2,042,002	1,471,160	876,941
Available for sale			194,177	-	-
Intangible assets			1,892,145	406,849	605,271
Deferred tax assets			1,261,307	144,784	20,980
Total non-current assets			5,389,631	2,022,793	1,503,192
Current assets
Trade and other receivables			3,793,191	3,507,191	2,840,270
Cash and cash equivalents			14,374,719	8,347,287	5,923,712
Total current assets			18,167,910	11,854,478	8,763,982
Total assets			23,557,541	13,877,271	10,267,174
Current liabilities
Trade and other payables			(8,692,726)	(4,828,172)	(4,037,849)
Current tax liabilities			(1,313,120)	(767,326)	(310,482)
Provisions			(377,110)	(188,710)	(53,607)
Total current liabilities			(10,382,956)	(5,784,208)	(4,401,938)
Non-current liabilities
Other non-current liabilities			(764,517)	(14,063)	(20,313)
Total non-current liabilities			(764,517)	(14,063)	(20,313)
Net assets			12,410,068	8,079,000	5,844,923
Financed by:
Equity
Share capital			102,451	100,162	99,850
Share premium account			2,012,427	1,621,303	1,571,031
Other reserves			1,790,739	1,073,260	813,903
Retained earnings			8,504,451	5,284,275	3,360,139
Total equity			12,410,068	8,079,000	5,844,923

Brooks Macdonald Group plc

Consolidated Statement of Cash flows

for the year ended 30 June 2010

		2010		2009
			£		£
Cash inflow from operating activities
Cash generated from operations			10,432,064		3,918,440
Taxation paid			(1,709,681)		(509,035)
Net cash generated from operating activities			8,722,383		3,409,405
Cash flow from investing activities
Purchase of property, plant and equipment			(1,053,043)		(923,814)
Purchase of intangible assets			(210,629)		(20,907)
Acquisition of subsidiary company, net of cash acquired			(848,184)		-
Interest received			105,676		198,860
Purchase of Gilt			-		(738,393)
Other interest			(30,987)		-
Purchase of available for sale asset			(194,177)		-
Sale of Gilt			-		797,317
Net cash used in investing activities			(2,231,344)		(686,937)
Cash flows from financing activities
Proceeds of issue of shares			393,413		50,584
Dividend paid to shareholders			(857,020)		(349,477)
Net cash used in financial activities			(463,607)		(298,893)
Net increase in cash and cash equivalents			6,027,432		2,423,575
Cash and cash equivalents at start of year			8,347,287		5,923,712
Cash and cash equivalents at end of year			14,374,719		8,347,287

Note 1 Basis of accounting and preparation

In respect of provision for client compensation payments, at 30 June 2009 and 30 June 2008, these were classified as non-current provisions and have now been classified as current provisions and the balance sheets have therefore been restated.

The financial statements have been prepared on the historical cost basis and in accordance with IFRS as adopted by the European Union. The group has adopted all new and revised standards and interpretations issued by the International Accounting Standards Board and the International Financial Reporting Interpretations Committee that are relevant to the group's operations and effective for annual reporting periods beginning 1 July 2009.

Note 2 Earnings per share

Basic earnings per share are calculated by dividing the group profits after tax of GBP3.857m by 10.12m, the weighted average number of ordinary shares in issues over the year ended 30 June 2010. The resultant earnings per share for the year are 38.10p.

Note 3 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 2010 or 2009 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 company's annual general meeting to be held at the group's head office on 19 October 2010

 

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