Q2 FUM Announcement and Half Year Trading Update

Brooks Macdonald Group PLC

17 January 2024

 

17 January 2024

BROOKS MACDONALD GROUP PLC

Second Quarter FUM Announcement and Half Year Trading Update

"FUM up 4.3% in the quarter to £17.6 billion"

Brooks Macdonald Group plc ("Brooks Macdonald" or "the Group") today publishes an update on its Funds under Management and Advice ("FUM/A") for the second quarter of its financial year, the three months ended 31 December 2023.

Quarterly FUM/A update

During the quarter ended 31 December 2023, the Group delivered robust gross inflows at £0.6 billion, up 1.5% on the prior quarter to an annualised rate of 14.0%.  Gross outflows were elevated, particularly in BPS and Funds, reaching £0.7 billion for the quarter, driven by the prevailing backdrop of market volatility and higher interest rates continuing to affect client behaviour.

This resulted in overall net outflows for the quarter of £0.1 billion or 0.6%.

The net outflows were more than offset by positive investment performance in the quarter of 4.9% resulting in the Group's closing Funds Under Management ("FUM") increasing 4.3% to £17.6 billion (30 September 2023: £16.9 billion).

As at 31 December 2023, the Group had £5.2 billion Funds under Management or Advice ("FUM/A") with private clients who deal with the Group directly.  £4.4 billion related to portfolios in the Group's investment management and £0.8 billion to portfolios with third party investment managers.

Highlights for the quarter included:

·    Investment performance for the quarter was positive at 4.9%, in line with the benchmark MSCI PIMFA Private Investor Balanced Index which increased by 5.0% in the period;

·    Platform MPS, including the Group's B2B offering for financial advisers, BM Investment Solutions ("BMIS"), grew to £3.9 billion - an increase in the quarter of 7.3%, of which organic net flows contributed 3.3%;

·    BPS experienced net outflows in the quarter of £0.1 billion or 1.1%, as clients withdrew funds to repay debt or to hold higher cash balances;

·    Within UK BPS, the recently launched gilts offering generated net new business of 44.7% in the quarter, taking it to c.£0.2 billion FUM in its first year, meeting client demand for their portfolios to take advantage of higher interest rates while avoiding equity risk;

·    Total UKIM discretionary FUM increased by 5.0% over the quarter, primarily driven by the rally in markets seen in December 2023.

Half Year trading update

Trading performance in the first half was solid, with total FUM up 4.3%.  In parallel, the Group completed the organisational changes announced in October, delivering a full year cost saving of
c.£4 million.  The cost of the changes was within the previously notified £3 million, a non-recurring expense which the Group intends to exclude from its reported underlying profit.

Outlook

The Group expects momentum on gross inflows to continue across the product range in the second half, with the level of both gross outflows and the resulting full year net flows dependent in part on macroeconomic factors.

Following the organisational changes announced in October, the Group expects its full year underlying profit and underlying profit margin to be in line with market expectations.

Andrew Shepherd, CEO of Brooks Macdonald commented:

"I am pleased to report growth of 4.3% in the Group's FUM for the first half of the financial year.  This result is a testament to the expertise and hard work of our people who are committed to delivering on our purpose to 'realise ambitions and secure futures' for all our stakeholders.

"During a challenging period for both the economy and financial markets, we continued to see healthy demand across our range of products and services, with £0.6 billion of gross inflows during the second quarter. Pleasingly, this included 44.7% organic growth from our recently launched and fast-growing gilt portfolio service.

"These results reflect our capabilities as a Group to deliver what people value - the guidance and reassurance of trusted advice and robust long-term investment management.  Given those capabilities and the opportunities we can see ahead, I remain confident in our ability to deliver on the Group's ambitious growth strategy."

Notice of Half Year results

The Group intends to issue its preliminary statement of half year results for the period ended 31 December 2023 on Thursday 7 March 2024.

An analyst meeting will be held at 9.30am on Thursday, 7 March 2024.  Please contact Iona Biggart at FTI Consulting on 07971 989065 or e-mail [e-mail] for further details.

Analysis of FUM net flows by service over the quarter

Quarter to 31 December 2023 (£m)
	Opening FUM 1 Oct 23	Organic net new business	Investment performance in the period	Closing FUM 31 Dec 23	Organic net new business	Total mvmt
BPS	8,444	(94)	462	8,812	(1.1)%	4.4%
MPS Custody	957	(21)	34	970	(2.2)%	1.4%
MPS Platform	3,662	121	147	3,930	3.3%	7.3%
MPS total	4,619	100	181	4,900	2.2%	6.1%
UKIM discretionary	13,063	6	643	13,712	0.0%	5.0%
Funds - DCF	317	(23)	13	307	(7.3)%	(3.2)%
Funds - Other	1,324	(48)	69	1,345	(3.6)%	1.6%
Funds total	1,641	(71)	82	1,652	(4.3)%	0.7%
UKIM total	14,704	(65)	725	15,364	(0.4)%	4.5%
International	2,152	(33)	96	2,215	(1.5)%	2.9%
Total	16,856	(98)	821	17,579	(0.6)%	4.3%
Total investment performance					4.9%
MSCI PIMFA Private Investor Balanced Index1					5.0%

¹Capital-only index.

Analysis of FUM net flows by service over the half year

Six months to 31 December 2023 (£m)
	Opening FUM	Organic net new business			Total Inv. Perf.	Closing FUM	Organic net new business	Total mvmt
	1 Jul 23	Q1	Q2	Total YTD	YTD	31 Dec 23	YTD	YTD
BPS	8,527	(98)	(94)	(192)	477	8,812	(2.3)%	3.3%
MPS Custody	966	(14)	(21)	(35)	39	970	(3.6)%	0.4%
MPS Platform	3,489	147	121	268	173	3,930	7.7%	12.6%
MPS total	4,455	133	100	233	212	4,900	5.2%	10.0%
UKIM discretionary	12,982	35	6	41	689	13,712	0.3%	5.6%
Funds - DCF	338	(26)	(23)	(49)	18	307	(14.5)%	(9.2)%
Funds - Other	1,370	(52)	(48)	(100)	75	1,345	(7.3)%	(1.8)%
Funds total	1,708	(78)	(71)	(149)	93	1,652	(8.7)%	(3.3)%
UKIM total	14,690	(43)	(65)	(108)	782	15,364	(0.7)%	4.6%
International	2,157	(27)	(33)	(60)	118	2,215	(2.8)%	2.7%
Total	16,847	(70)	(98)	(168)	900	17,579	(1.0)%	4.3%
Total investment performance								5.3%
MSCI PIMFA Private Investor Balanced Index1								5.6%

¹Capital-only index.

Analysis of FUM gross flows by service over the half year

	Organic gross inflows				Q2 vs Q1	Organic gross outflows			Q2 vs Q1
	Q1	Q2	Total YTD	Inc/(dec) %		Q1	Q2	Total YTD	Inc/(dec) %
BPS	192	173	365	(9.9)%		(290)	(267)	(557)	(7.9)%
MPS Custody	15	15	30	-		(29)	(36)	(65)	24.1%
MPS Platform	276	317	593	14.9%		(129)	(196)	(325)	51.9%
MPS total	291	332	623	14.1%		(158)	(232)	(390)	46.8%
UKIM discretionary	483	505	988	4.6%		(448)	(499)	(947)	11.4%
Funds - DCF	12	7	19	(41.7)%		(38)	(30)	(68)	(21.1)%
Funds - Other	43	45	88	4.7%		(95)	(93)	(188)	(2.1)%
Funds total	55	52	107	(5.5)%		(133)	(123)	(256)	(7.5)%
UKIM total	538	557	1,095	3.5%		(581)	(622)	(1,203)	7.1%
International	44	34	78	(22.7)%		(71)	(67)	(138)	(5.6)%
Total	582	591	1,173	1.5%		(652)	(689)	(1,341)	5.7%

Enquiries to:

Brooks Macdonald Group plc Andrew Shepherd, CEO Andrea Montague, Chief Financial Officer		www.brooksmacdonald.com 020 7927 4816
Singer Capital Markets (Nominated Adviser and Joint Broker) Charles Leigh-Pemberton / James Moat		020 7496 3000
Investec Bank plc (Joint Broker) Bruce Garrow / David Anderson		020 7597 4000
FTI Consulting Edward Berry	[e-mail] 07703 330199

Notes to editors

Brooks Macdonald Group plc, through its various subsidiaries, provides leading wealth 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 £17.6 billion as at 31 December 2023.

Brooks Macdonald offers outsourced discretionary investment management for intermediaries and advice-led integrated wealth management for private clients. The Group also acts as fund manager to a range of onshore and international funds.

The Group has fourteen offices across the UK and Crown Dependencies including London, Birmingham, East Anglia, Exeter, Leeds, Manchester, Nuneaton, Southampton, Tunbridge Wells, Scotland, Wales, Jersey, Guernsey and Isle of Man.

LEI: 213800WRDF8LB8MIEX37

www.brooksmacdonald.com / @BrooksMacdonald

 

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