results for the year ended · 2020-01-29 · direct private client flows by rate card (£bn)...
TRANSCRIPT
Results for the year ended
30 September 2018
28 November 2018
2
AgendaAgenda
1
2
3
4
Key themes
Financial results
Progress on growth
Q&A
3
Continued strong
funds inflows
Investment in services, people
and technology
Earnings and dividend
growth
Growth initiatives being
delivered
Key themes
4
3.85 4.25 4.40
9.15
10.75
12.00
FY 2016 FY 2017 FY 2018
13.0
15.0
16.4
Results highlights
61.0
70.0
77.5
FY 2016 FY 2017 FY 2018
+11%
28.8
33.8
37.6
FY 2016 FY 2017 FY 2018
+17%
16.8
19.6
21.7
FY 2016 FY 2017 FY 2018
Total funds (£bn) Discretionary funds (£bn) Discretionary organic net flows* (£bn)
Adjusted** PBT (£m) Adjusted** diluted EPS (p) Full year dividend (p)
1.1
2.3 2.3
FY 2016 FY 2017 FY 2018
Growth rate
8%
Growth rate
4%
Growth rate
7%
35.4
40.1
42.8
FY 2016 FY 2017 FY 2018
+13%
* Including transfers
** Adjusted to exclude redundancy costs, onerous contracts, amortisation of client relationships, acquisition costs, incentivisation award, FSCS levy refund and impairment/disposal of available-for-sale investments
+7%
+11%
+17%
Adjusted** margin 23.0% 23.6%
+15%
21.6%
+11%
5
Tracking ahead of 2020 growth target
8.2
1.1
3.4
5.7
FY 2015 FY 2016 FY 2017 FY 2018 FY 2020
Target
Growth
* excludes acquired funds and market growth
5 year discretionary growth target – increase of 1/3 by 2020* (£bn)
6
Financial results
7
Financial headlines
£m
FY
2017
FY
2018
Change
(%)
Core income
Other income
291.0
13.5
319.7
9.3
+10
Total income 304.5 329.0 +8
Total operating costs (234.5) (252.3) +8
Adjusted operating profit* 70.0 76.7 +10
Net finance income - 0.8
Adjusted* profit before tax 70.0 77.5 +11
Statutory profit before tax 57.6 68.5 +19
Adjusted* PBT margin (%)
Adjusted* diluted EPS (p)
Total dividend (p)
23.0
19.6
15.0
23.6
21.7
16.4
+11
+9
Cash and cash equivalents
Capital adequacy** (%)
170.0
232
186.2
234
* Adjusted to exclude redundancy costs, onerous contracts, amortisation of client relationships, acquisition costs, incentivisation award, FSCS levy refund and impairment/disposal of available-for-sale investments
** Includes current year profit
8
Total funds up 7% / Discretionary funds up 11%
£bn
FY
2017
Total
net flows
Investment
performance
FY
2018
Growth
%
Private clients
Charities and corporates
Direct discretionary
18.9
4.5
23.4
0.6
0.1
0.7
0.9
0.1
1.0
20.4
4.7
25.1
+8
+7
Bespoke
MPS
Indirect discretionary
8.1
2.3
10.4
1.0
0.6
1.6
0.4
0.1
0.5
9.5
3.0
12.5
+17
+30
+20
Discretionary funds 33.8 2.3 1.5 37.6 +11
Execution only & BPS 3.6 0.6 (0.2) 4.0
Core funds 37.4 2.9 1.3 41.6 +11
Advisory 2.7 (1.4) (0.1) 1.2
Total funds 40.1 1.5 1.2 42.8 +7
9
1.5 1.5
0.90.6
(0.3) (0.4) -3.8%-3.9%
+26.1%
+18.5%+23.1%
+75.0%MPS
Continued strong discretionary fund flows
1.0 1.1
(0.9) (0.9)
+4.7%
-4.3% -3.8%
Direct
Indirect
Inflows
Outflows
25.123.4
0.2 0.51.0
12.5
( 0.1 )
10.4
1.7 0.5
+4.7%
+7%
+20%
FY 2017 FY 2018
£bn (excl. transfers) £bn
3.4 3.2
(1.2) (1.3)
+9.5%
-3.8%
+11.8%
-4.2%
37.6
33.8
1.9 0.41.5
+11%
Total discretionary
FY 2017Net
flows
Net
transfers
Investment
performanceFY 2018
Bespoke
10
(0.6)
0.3
(0.1)
0.3
(0.1) 0.3
Outflows Inflows
0.9
67%
75%
Direct private client flows by rate card (£bn)
(excluding charities and corporates)
(0.8)
Changing direct private client mix
Financial planning
Fee only
Fees & commissions
11
56% -
established
prior to
FY 2015
15% -
established
FY 2018
7% -
established
FY 2017
11% -
established
FY 2016
11% -
established
FY 2015
Broadening and deepening intermediary relationships
Growing funds from existing
and new relationships
36%23%
20%
20%
20%
23%
24%34%
FY 2017 FY 2018
>£50m
£25m - £50m
£10m - £25m
<£10m
Intermediary size
Intermediaries funds by relationship size
103 103
201 160
155
247
165
165
106
232
FY 2015 FY 2016 FY 2017 FY 2018
FY 2016
FY 2015
FY 2017
Inflows from intermediary relationships formed after 2014 (£m)
FY 2018
Year relationship
formed
FY 2018
£1.5bn
inflows
12
17.921.7
FY 2017 FY 2018
Income
£m
FY
2017
FY
2018
Change
(%)
Fees
Commissions
144.1
54.1
153.0
58.6
+6
+8
Direct discretionary 198.2 211.6 +7
Bespoke
MPS
55.3
5.3
64.2
7.6
+16
+43
Indirect discretionary 60.6 71.8 +18
Total discretionary 258.8 283.4 +10
Financial planning
BPS
Execution only
20.8
1.0
10.4
24.5
1.1
10.7
+18
+3
Core income 291.0 319.7 +10
Advisory
Interest
12.9
0.6
6.5
2.8
-50
Total other income 13.5 9.3 -31
Total income 304.5 329.0 +8
87.6 87.0
FY 2017 FY 2018
Direct discretionary income margin (bps)
Recurring advice income (£m)
+21%
13
16%
84%
Client facing &
client support
Central
support
Operating costs
£m
FY
2017
FY
2018
Change
(%)
Staff costs 110.2 117.1 +6
Non-staff costs 71.8 77.5 +8
Fixed operating costs 182.0 194.6 +7
Profit share 52.5 57.7 +10
Total costs 234.5 252.3 +8
Total staff cost / income (%) 53.4 53.1
Non-staff costs / income (%) 23.6 23.6
Total costs / income (%) 77.0 76.7
Profit share / pre profit
share profit (%)42.9 42.9
Investment in headcount, growth initiatives and technology
Headcount increased from 1,614 to 1,699 (+85)
29%24%
11%8% 7%
5% 4% 4%8%
Components of non-staff costs (£77.5m)
53%
14
Cash flow and capex
FY 2017 AdjustedEBITDA
Pensionfunding
Capex Workingcapital
Interest& tax
Net sharepurchases
Dividends Purchase oftrading
investments
Exceptionalitems
FY 2018
170.0
5.0
£m
92.0 (3.0)(8.3)
(11.6)
(13.3)
(41.6)
(2.7)(0.3)
7.6 6.4
2.0
8.3
FY 2015 FY 2016 FY 2017 FY 2018
Capex (£m)
186.2
15
Balance sheet
£m
FY
2017
FY
2018
Goodwill & client relationships
Software
90.5
5.3
83.2
2.5
Total intangible assets 95.8 85.7
Fixed assets
Defined benefit pension
Other non-current assets
3.8
4.5
6.9
8.1
11.4
4.2
Total other non-current assets 15.2 23.7
Net cash
Working capital
Provisions
170.0
(6.3)
(3.8)
186.2
(9.3)
(3.4)
Total net current assets 159.9 173.5
Total non-current liabilities (8.3) (9.2)
Net assets 262.6 273.7
Regulatory capital resources
Capital adequacy (%)
165.2
232
180.8
234
16
Progress on growth
17
Proven strategy for organic growth
Understand our target clients and
their changing needs
Refine proposition to meet those needs
Improve brand awareness
and promise
Enhance services to deliver
that promise
Refocus on distribution and leverage our scale in delivery
18
Complexity of client advice needs
Widening advice spectrum to support client needs
➢Wealth advice service
- Face-to-face delivery
- Advice across all areas of
clients’ financial needs
- Broad range of investment
solutions➢Simplified financial advice
service
- Face-to-face in office & digital
delivery
- Pensions, investment & protection
- Active & passive investment
solutions
➢Non advised self select
investment service
- Fully automated delivery
- £2,000 entry point
- GIA, ISA, JISA & Bare Trusts
- Risk rated passive portfolios
➢Complex financial advice
service
- Face-to-face delivery
- Advice across all areas of
complex clients’ financial needs
- Broad range of investment
solutions
BPS
WealthPilot
Wealth Core
1762
“More choice for more
people”
“Spectrum of yes”
19
Investing in the future of the business
➢ MPS enhancement – new unitised structure saving clients £3m p.a., increased take up in MPS Passive Plus
➢ Digital proposition – enhanced with new corporate website, iOS and Google apps in Q1 2019
Propositions
➢ Intermediaries growth – over 1,700 intermediary partners
➢ Business development structure – dedicated team of 19, local sales support
➢ Professional services proposition – Law Society of Scotland partnership
Distribution
➢ People – 85 new hires and investment in talent development
➢ Regulation – MiFID II/GDPR implemented, ready for SMCR
➢ MyBrewin – 14,000 clients registered to use the platform, 40% using via mobile or tablet
➢ New desktop environment – greater cohesion and collaboration across branch network, flexible/agile working,
greater employee engagement
➢ Client management system – development of replacement system underway
➢ Core custody and settlement system – discussions ongoing with potential vendor
People and operations
20
KPIs
Dividend
growth
Adjusted2 EPS 14.4 16.0 17.1 16.8 19.6 21.7 n.a
Dividends (p)
(dividend payout ratio %)
8.6
(60%)
9.9
(62%)
12.0
(70%)
13.0
(77%)
15.0
(77%)
16.4
(76%)n.a
Revenue
growth
Discretionary fund inflows (%) 6 7 5 4 8 7 5
Net promoter score (-100% / +100%) n/a n/a n/a +45 +48 +44 +291
Overall client satisfaction (n/10) n/a n/a n/a 8.4 8.5 8.5 8.11
Improved
efficiency
Adjusted2 PBT margin (%) 19 21 22 22 23 24 25+
Discretionary funds per CF30
(£m)41 48 53 64 75 80
Employee engagement (%) n/a n/a 76 78 82 83 761
Capital
sufficiencyCapital adequacy ratio (%) 226 241 248 232 232 234
Min
150
1 Benchmark
2 Adjusted to exclude redundancy costs, onerous contracts, amortisation of client relationships, acquisition costs, incentivisation award, FSCS levy refund and impairment/disposal of available-for-
sale investments
3 New target increased from £75m to £100m
100375
21
Conclusion
➢ Strong set of results
➢ Targeted investment in people and infrastructure
➢ Innovation driving new propositions
➢ Growth ahead of target
22
Q & A
23
Appendices
24
Funds summary
£bn
FY
2016
FY
2017
FY
2018
12
month
change
%
Private clients
Charities and corporates
Direct discretionary
Bespoke
MPS
Indirect discretionary
16.9
4.2
21.1
6.4
1.3
7.7
18.9
4.5
23.4
8.1
2.3
10.4
20.4
4.7
25.1
9.5
3.0
12.5
+8
+4
+7
+17
+30
+20
Discretionary 28.8 33.8 37.6 +11
BPS
Execution only
0.1
3.5
0.1
3.5
0.1
3.9
-
+11
Core funds 32.4 37.4 41.6 +11
Advisory 3.0 2.7 1.2
Total funds 35.4 40.1 42.8 +7
MSCI WMA Private Investor
Balanced Index1,457 1,545 1,612 +4
FTSE 100 Index 6,899 7,373 7,510 +2
25
FY 2018 core funds flows and transfers
£bn
Private clients
Charities and corporates
Direct discretionary
Bespoke
MPS
Indirect discretionary
Discretionary funds
BPS
Execution only
Core funds
Inflows Outflows Net flows
0.9
0.2
(0.8)
(0.1)
0.1
0.1
1.1
1.5
0.6
2.1
(0.9)
(0.4)
-
(0.4)
0.2
1.1
0.6
1.7
3.2 (1.3) 1.9
-
0.3
-
(0.6)
-
(0.3)
3.5 (1.9) 1.6
Total net
flows
0.6
0.1
0.7
1.0
0.6
1.6
2.3
-
0.6
2.9
Growth rate %
Inflows Outflows
Total net
flows
+5
+4
-4
-2
+3
+2
+5
+19
+26
+20
-4
-5
-
-4
+3
+12
+26
+15
+9 -4 +7
-
+8
-
-17
-
+17
+9 -5 +8
Transfers
0.5
-
0.5
(0.1)
-
(0.1)
0.4
-
0.9
1.3
26
Discretionary flows
0.1 0.2 0.30.5
0.90.60.5
0.60.7
0.8
0.9
1.5
1.5
0.9
1.41.4 1.0
1.0
1.0
1.1
(0.1) (0.2) (0.3) (0.3) (0.3) (0.4)(0.4)
(0.9)(1.0)
(1.0)(1.2)
(0.9)(0.9)
Direct
Bespoke
MPSInflows
Outflows
FY 2012 2013 2014 2015 2016 2017 2018
Total gross
inflows1.4 2.1 2.3 2.1 2.4 3.4 3.2
Total gross
outflows(0.4) (1.0) (1.2) (1.3) (1.5) (1.2) (1.3)
£bn
27
Net discretionary funds growth
0.1 0.2 0.30.5
1.0
0.60.50.5
0.50.5
0.6
1.1
1.0
0.50.5
0.70.3
0.2
0.7
0
0.5
1
1.5
2
2.5
Direct
Bespoke
MPS
1.0 1.1 1.4 1.1 1.1 2.3 2.3
6.4 6.0 6.6 4.6 4.4 8.0 6.8
Net flows
including
transfers
Growth rate p.a. %
FY 2012 2013 2014 2015 2016 2017 2018
Total
£bn
28
Fees and commissions
£m
FY
2017
FY
2018
Change
(%)
Fees
Commissions
203.1
55.7
223.7
59.7
+10
+7
Discretionary 258.8 283.4 +10
BPS (Fees only) 1.0 1.1
Fees
Commissions
3.8
6.6
4.4
6.3
+16
-5
Execution only 10.4 10.7 +3
Core fees
Core commissions
207.9
62.3
229.2
66.0
+10
+6
Core fees and commissions 270.2 295.2 +9
Fees
Commissions
9.1
3.8
4.7
1.8
Advisory 12.9 6.5 -50
Total fees
Total commissions
217.0
66.1
233.9
67.8
+8
+3
Total fees and commissions 283.1 301.7 +7
Financial planning
Other
20.8
0.6
24.5
2.8
+18
Total income 304.5 329.0 +8
29
Continued improvement in quality
38
71 714
7 7
41
22 2117
1
2010 FY 2017 FY 2018
Discretionary 51
8488
16
99
33
73
Execution
only
Advisory
Asset mix % Income profile %
FY
2010
FY
2017
FY
2018
FY
2017
FY
2018
Fees
FP income
Commissions
Other Income
FY
2010
30
Total funds and income margin
FY 2017
Average
funds
£bn
FY 2018
Average
funds
£bn
FY 2017
Income
£m
FY 2018
Income
£m
FY 2017
Average
margin
bps
FY 2018
Average
margin
bps
Discretionary 32.0 36.0 258.8 283.4 80.9 78.7
YoY change 13% 10% (3%)
0.
BPS 0.1 0.2 1.0 1.1 70.2 70.3
Execution only 3.4 3.8 10.4 10.7 30.2 27.9
YoY change 12% 3% (8%)
Advisory 2.8 1.6 12.9 6.5 46.2 40.2
YoY change (43%) (50%) (13%)
Total 38.3 41.6 283.1 301.7 73.8 72.5
YoY change 9% 7% (2%)
31
Discretionary funds and income margin
FY 2017
Average
funds
£bn
FY 2018
Average
funds
£bn
FY 2017
Income
£m
FY 2018
Income
£m
Change
%
FY 2017
Average
margin
bps
FY 2018
Average
margin
bps
Direct 22.6 24.3 Fees 144.1 153.0 6% 63.7 62.9
YoY change 8% Commissions 54.1 58.6 23.9 24.1
198.2 211.6 7% 87.6 87.0
Bespoke 7.5 9.0 Fees 53.7 63.1 18% 71.9 70.5
YoY change 20% Commissions 1.6 1.1 2.2 1.3
55.3 64.2 16% 74.1 71.8
MPS 1.9 2.7 Fees 5.3 7.6 43% 27.7 27.9
YoY change 42%
Total discretionary 32.0 36.0 Fees 203.1 223.7 10% 63.5 62.1
YoY change 13% Commissions 55.7 59.7 17.4 16.6
258.8 283.4 10% 80.9 78.7
32
Statutory PBT reconciliation
£m
FY
2017
FY
2018
Change
(%)
Adjusted* profit before tax 70.0 77.5 +11
Exceptional items
Amortisation of client relationships
(5.7)
(6.7)
(1.4)
(7.6)
-75
+13
Statutory profit before tax 57.6 68.5 +19
Tax (12.5) (15.0) +20
Profit after tax 45.1 53.5 +19
Diluted earnings per share (p) 16.0 18.9 +18
* Adjusted to exclude redundancy costs, onerous contracts, amortisation of client relationships, acquisition costs, incentivisation award, FSCS levy refund and impairment/disposal of available-for-sale investments
33
Regional network
£bn
FY
2017
FY
2018
Change
(%)
London / South East 10.9 11.7 +7
Scotland / Northern England 7.5 8.5 +13
Midlands and Islands 6.7 7.4 +10
South / West & Wales 6.4 7.0 +9
Models 2.3 3.0 +30
Total discretionary funds 33.8 37.6 +11
34
Asset allocation – balanced
Asset class
WMA
Balanced
%
BD
Balanced
%
Cash 5.0 5.0
Gilts
Corporate bonds
UK index linked bonds (O/B)
5.0
10.0
2.5
5.0
9.0
2.0
Bonds 17.5 16.0
UK
North America
Dev’d Europe ex UK
Japan
Asia
Emerging
Overseas
30.0
20.0
4.9
2.6
4.0
1.0
32.5
29.5
21.5
4.5
4.0
5.0
1.0
36.0
Equities 62.5 65.5
Hedge funds / Absolute return (O/B)
UK commercial property
10.0
5.0
10.0
3.5
Alternatives 15.0 13.5
Total 100.0 100.0
35
Dividends
3.55 3.65 3.75 3.85 4.25 4.40
5.056.25
8.259.15
10.7512.00
2013 2014 2015 2016 2017 2018
Interim dividend (p)
Final dividend (p)
Total dividend (p)8.6 9.9 12.0 13.0 15.0 16.4
36
Major shareholders as at 1st November 2018
% holding
Kabouter Management 6.11
Aberforth Partners 5.65
Royal London Asset Management 5.62
BlackRock 3.97
Legal and General Investment Management 3.25
Norges Bank Investment Management 3.18
Vanguard group 3.12
Kames Capital 3.04
Other* 66.06
* of which Brewin Dolphin staff and former staff
including Employee Benefit Trust 15.21
37
Disclaimer
The information contained in this document has been prepared by Brewin Dolphin Holdings PLC (the "Company"). No representation or warranty, express or
implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by the Company or by any of its affiliates or agents as
to or in relation to, the accuracy or completeness of this document or any other written or oral information made available to or publicly available to any
interested party or its advisers, and any liability therefore is expressly disclaimed. Notwithstanding the aforesaid, nothing in this paragraph shall exclude
liability for any undertaking, representation, warranty or other assurance made fraudulently.
This document does not constitute or form part of any offer for sale or solicitation of any offer to buy or subscribe for any securities in the Company nor shall it
or any part of it form the basis of or be relied on in connection with, or act as any inducement to enter into, any contract or commitment whatsoever. No
reliance may be placed for any purpose whatsoever on the information or opinions contained in this document, the presentation or on the completeness,
accuracy or fairness.
Certain statements in this document are forward-looking statements which are based on the Company's expectations, intentions and projections regarding its
future performance, anticipated events or trends and other matters that are not historical facts. These forward-looking statements, which may use words such
as "aim", "anticipates", "believe", "intend", "estimate", "expect" and words of similar meaning, include all matters that are not historical facts. These forward-
looking statements involve risks and uncertainties that could cause the actual results of operations, financial condition, liquidity, dividend policy and the
development of the industry in which the Company's business operates to differ materially from the impression created by the forward-looking statements.
These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause
actual results to differ materially from those expressed or implied by such forward-looking statements. Given these risks and uncertainties, prospective
investors are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of such statements
and, except as required by the FCA, the London Stock Exchange or applicable law, the Company undertakes no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information, future events or otherwise.
Neither the content of the Company's website: www.brewin.co.uk (or any other website), nor the content of any website accessible from hyperlinks on such
websites, is incorporated into, or forms part of this document.
28 November 2018
38
12 Smithfield Street, London, EC1A 9BD
Tel: 020 3201 3900
Email: [email protected]
https://www.brewin.co.uk