TIDMBRK
RNS Number : 2701E
Brooks Macdonald Group PLC
10 March 2022
10 March 2022
BROOKS MACDONALD GROUP PLC
HALF-YEAR RESULTS FOR THE SIX MONTHSED 31 DECEMBER 2021
"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 GBP17.3bn, up
5.3% over the half year (30 June 2021: GBP16.5 billion)
- Positive and increasing net flows over the six months,
totalling GBP326 million (H1 FY21: GBP(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 GBP61.9 million (H1 FY21:
GBP55.9 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 GBP17.6 million
(H1 FY21: GBP14.0 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 GBP13.2 million
(H1 FY21: GBP14.1 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 30(th) 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, 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.
"We are announcing these results against the backdrop of the
human tragedy unfolding in Ukraine. During these troubled times,
our thoughts are with those who are directly and indirectly
affected, and we have made a donation towards humanitarian aid
efforts in the region on behalf of the Group and BM Foundation.
"This is a challenging time for investors and we are grateful
for the trust they continue to place in us, as they have done for
over 30 years. I'm pleased we've been able to grow the assets we
manage on behalf of clients to over GBP17 billion, which is up 12%
on last year. We could not have delivered these results, or served
our clients and advisers in the way we have, without the commitment
and dedication of our people.
"Although the short-term macroeconomic outlook is highly
uncertain, looking ahead we remain confident in our long-term
prospects building on our ambitious organic and inorganic growth
strategy, grounded in our purpose of realising ambitions and
securing futures."
Financial highlights: H1 FY22 H1 FY21 FY21
Underlying(1) profit before tax (GBPm) 17.6 14.0 30.6
Underlying(1) profit margin before tax
(%) 28.4 25.1 25.9
Statutory profit before tax (GBPm) 13.2 14.1 25.1
Statutory profit margin before tax (%) 21.3 25.2 21.2
Underlying(1) basic earnings per share
(p) 88.6 73.4 155.6
Statutory basic earnings per share (p) 65.5 77.3 125.3
Interim (FY21 - final) dividend per share
(p) 26.0 23.0 63.0
------------------------------------------ ------- ------- -----
Business highlights: H1 FY22 H1 FY21 FY21
FUM (GBPbn) 17.3 15.5 16.5
Revenue (GBPm) 61.9 55.9 118.2
Total net assets (GBPm) 140.3 129.0 134.0
Cash balances (GBPm) 45.7 38.6 54.9
------------------------ ------- ------- -----
Revenue by segment: H1 FY22 H1 FY21 FY21
UK Investment Management (GBPm) 50.9 48.8 100.0
International (GBPm) 11.0 7.1 18.2
-------------------------------- ------- ------- -----
Financial calendar:
Results announcement 10 March 2022
Ex-dividend date for interim dividend 17 March 2022
Record date for interim dividend 18 March 2022
Interim dividend payment date 14 April 2022
------------------------------------- -------------
(1) The underlying figures represent the results for the Group's
activities excluding underlying adjustments as listed in the
Interim management report. The Board considers the underlying
profit to be an appropriate reflection of the Group's performance
compared to statutory profit. A reconciliation between the Group's
statutory and underlying profit before tax is also included in the
Interim management report.
An analyst meeting will be held at 9.30am on Thursday 10 March.
Please contact Katherine Bell at FTI Consulting on 07976 870961 or
e-mail brooksmacdonald@fticonsulting.com for further details.
Enquiries to:
Brooks Macdonald Group plc www.brooksmacdonald.com
Andrew Shepherd, CEO 020 7659 3492
Ben Thorpe, Chief Financial Officer
Peel Hunt LLP (Nominated Adviser and Broker)
Rishi Shah / Andrew Buchanan / John Welch 020 7418 8900
FTI Consulting brooksmacdonald@fticonsulting.com
Ed Berry / Laura Ewart / Katherine Bell 07703 330199 / 07711
387085 / 07976 870961
Notes to editors
Brooks Macdonald Group plc, through its various subsidiaries,
provides leading investment 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
GBP17.3 billion as at 31 December 2021.
Brooks Macdonald offers a range of investment management
services to private high net worth individuals, pension funds,
institutions, charities and trusts. The Group also provides
financial planning as well as international investment management,
and acts as fund manager to a range of onshore and international
funds.
The Group has fourteen offices across the UK and Crown
Dependencies: London, Birmingham, Cheltenham, East Anglia, Exeter,
Leeds, Manchester, Southampton, Tunbridge Wells, Scotland, Wales,
Jersey, Guernsey and Isle of Man.
LEI: 213800WRDF8LB8MIEX37
www.brooksmacdonald.com / @BrooksMacdonald
Brooks Macdonald Group plc
Interim Report and Accounts for the six months ended 31 December
2021
Interim management report
Strong performance in H1
Brooks Macdonald has had an excellent six months, with FUM
growing to GBP17.3 billion, strong financial results, improving
organic growth and clear evidence of our strategy delivering for
advisers, clients and shareholders alike.
The Group increased revenues by 10.7% to GBP61.9 million (H1
FY21: GBP55.9 million) driven by improving positive net flows and a
complete half year contribution from our Lloyds Channel Islands
acquisition, partly offset by lower transaction-related revenues.
Underlying costs increased by 5.7% to GBP44.3 million (H1 FY21:
GBP41.9 million), driven by the Lloyds Channel Islands acquisition
and investment for growth, moderated by continued strong cost
discipline. This resulted in an underlying profit before tax of
GBP17.6 million, a 25.7% increase on the prior period (H1 FY21:
GBP14.0 million).
Our underlying profit margin rose 3.3 percentage points to a
record 28.4% (H1 FY21: 25.1%), reflecting our commitment to top
quartile underlying profit margin over the medium term, and
underlying basic EPS increased by 20.7% to 88.6p (H1 FY21:
73.4p).
Statutory profits declined from GBP14.1 million to GBP13.2
million with the prior period figure inflated by an exceptional
gain arising on the Lloyds Channel Islands acquisition.
In keeping with our stated progressive dividend policy, the
excellent results for the period, and the Board's continuing
confidence in the firm's prospects, the Group is declaring an
interim dividend of 26.0 pence per share, a 13.0% uplift on the
interim dividend paid last year.
Our investment performance remains positive. Comparing against
the relevant PIMFA and ARC benchmarks over investment time horizons
shows that our Centralised Investment Process ("CIP") continues to
achieve robust risk adjusted returns for clients. For example, our
Bespoke Portfolio Service ("BPS") delivered performance ahead of
ARC benchmarks for all risk profiles over five and ten years.
We maintained our focus on advisers and clients, working in
partnership with SS&C to deliver best-in-class adviser
experience and client service.
The highlight of our people agenda in the period was the launch
of the Group's "Inclusive Futures" programme, offering three
training schemes with entry-level career opportunities. The focus
in the programme on diversity and inclusion, with a recruitment
process as free as possible from unconscious bias, meant that it
was fully aligned to the Group's Guiding Principles and its
developing Corporate Social Responsibility agenda.
Strategy delivering
As we have worked through our strategy, we have at all times
been conscious of building on the long-standing strengths of the
organisation - our client and adviser relationships, our culture
and our Centralised Investment Process. These critical strengths
continue to position us well for the future, and we see clear
evidence of the strategy delivering. Our strategy is based on three
key value drivers:
-- Market-leading organic growth
-- Service and operational excellence
-- Selective high-quality acquisitions.
Market-leading organic growth
The first half of our financial year saw continuing positive net
flows, running at an annualised rate of 4.0% for the period,
picking up from 3.1% in Q1 to 4.7% in Q2. This strengthening growth
was underpinned by our continued focus on clients and
intermediaries, supported by our teams' welcome return to more
face-to-face meetings as pandemic-related restrictions fell
away.
Our UK Investment Management ("UKIM") business, under the
leadership of Robin Eggar, had a strong half. We saw particularly
good growth in BM Investment Solutions, our B2B offering for
advisers, with FUM up 60% over the half year, and in Platform
Managed Portfolio Service ("PMPS") which saw a rise of 20%. We also
continued to see progress in the specialised variants of our
Bespoke Portfolio Service, including the Responsible Investment
Service ("RIS") and the Decumulation Service, with both seeing FUM
up close to 20% over the period. Overall, our core UK Investment
Management discretionary business had annualised net flows of 6.3%
for the half year.
The UKIM Funds business saw solid investment performance largely
offset by net outflows, although the Defensive Capital Fund
returned to positive net flows in Q2.
A highlight of the period was the return to positive net flows
of our International business in Q2, with outflows down sharply
compared to the previous half and inflows increasing each month in
the period. The underlying profit margin for International was also
up on the prior period by 2.1 percentage points to 21.8%, and we
see potential to close the gap further to UKIM levels of
profitability.
With markets continuing to be volatile, our Centralised
Investment Process emphasised the need for portfolios at all risk
levels to maintain balance across multiple dimensions. This has
proved a sound approach as we continued to deliver robust
risk-adjusted returns for clients, with performance ahead of ARC
benchmarks across all risk profiles over five and ten years.
Our vision for Brooks Macdonald is as the leading investment
manager for intermediaries - we are an investment manager focused
on working with intermediaries to support their clients and to help
them build successful businesses. In parallel, we have a material
Private Clients business with c.GBP2.5 billion funds under
management in the UK, covering both Wealth Management and
Specialist Financial Advice propositions. Over the period, we have
continued integrating Private Clients with UK Investment
Management. Our intention is to ensure that we deliver the same
high level of service and experience for those private clients as
we do for our intermediated clients.
Service and operational excellence
SS&C Technologies ("SS&C"), a global provider of
software and technology services to the financial services
industry, is our technology partner. In H1, we completed the
transition of full support of our Funds business to SS&C and
commenced the phased rollout of our new digital onboarding tool to
advisers. In the period, SS&C acquired Hubwise, the innovative
financial services technology provider, (subject to regulatory
approval) allowing SS&C to redesign some elements of the new
platform being implemented for Brooks Macdonald to incorporate some
features of the Hubwise functionality. We continue to work with
SS&C to complete the transition of all client- and
adviser-facing processes on to their platform, which is the next
milestone in our journey to deliver best-in-class adviser
experience and client service through technology and innovation. As
we continue the journey, our digital transformation will provide a
market-leading digital experience for the Group's intermediaries
and clients.
In parallel, we maintain a strong focus on delivering continuous
improvement in our internal practices to ensure that we make Brooks
Macdonald as easy as possible to do business with.
Selective high-quality acquisitions
We have been transparent that acquisitions form part of our
medium-term strategy and we reviewed a number of potential targets
in H1. As previously disclosed, we have four strict criteria for
acquisitions: (i) the target must be a good business in its own
right; (ii) there must be clear strategic logic to the combination;
(iii) it must be a good cultural fit with Brooks Macdonald; and
(iv) the economics of the transaction must be compelling. In the
period at hand, we did not find a target that fully met those
criteria. We will continue to seek inorganic opportunities that
meet our criteria.
Corporate Social Responsibility
The Group strengthened its focus on our Corporate Social
Responsibility ("CSR") agenda in H1. We published our CSR brochure
in September 2021, showcasing the range of initiatives we have
under way and explaining how well they complement the Group's
Guiding Principles. Initiatives included covered a wide range - for
example, our Responsible Investment Service, our approach to new
offices, our commitment to diversity and inclusion, and how we are
using our continuing 30th anniversary celebrations to support our
CSR agenda.
The Group's Responsible Investment Service, continued to show
rapid growth. In November 2021, we launched our Responsible
Investment Hub with a range of materials dedicated to facilitating
conversations about responsible investment and streamlining the way
advisers access the resources they need.
We opened three new offices in the period and continue to
relocate existing premises as leases end. In all cases, we focus on
ensuring the workspace supports the wellbeing of everyone who
enters, with contemplation rooms, biophilic design and
collaboration and relaxation spaces. We moved our Manchester office
to the city's most cycle-friendly building (according to
CycleScore), certified outstanding by BREEAM, the leading
sustainability assessment method for buildings.
The Group's "Inclusive Futures" recruitment programme has three
strands - our graduate intake and our partnerships with Investment
2020 and #10000blackinterns. We have redesigned our recruitment
process with talent experts Zircon BeTalent to eliminate
unconscious bias, giving us a robust approach to talent assessment.
The strands all offer great opportunities to young people who might
not have otherwise considered a career in investment
management.
In H1, the Group reached the 30th anniversary of its founding.
To mark the anniversary, we have partnered with the Dame Kelly
Holmes Trust to put together a series of events and fundraising
activities to support the Trust's work in tackling youth inequality
and disadvantage. The Trust runs programmes designed to improve
young people's wellbeing, help them build healthy relationships and
unlock the confidence, self-esteem and resilience needed to achieve
in education, work and life. Their mission resonates strongly with
the Group's commitment to diversity and inclusion, and we are
delighted to be working with them.
We are also working with a respected independent organisation
with the intention of achieving certified status on their standards
programme, measuring a company's entire social and environmental
impact, and we expect to make an announcement in the first half of
our next financial year.
Positive medium-term outlook, short-term uncertainty
We are announcing these results against the backdrop of the
human tragedy unfolding in Ukraine. During these troubled times,
our thoughts are with those who are directly and indirectly
affected, and we have made a donation towards humanitarian aid
efforts in the region on behalf of the Group and BM Foundation.
Although the short-term geopolitical and macroeconomic outlook
is highly uncertain, looking ahead the fundamental opportunity for
the Group remains as strong as it has ever been. We are confident
in our long-term prospects building on our ambitious organic and
inorganic growth strategy, grounded in our purpose of realising
ambitions and securing futures.
Review of the results for the period
Six months Six months 12 months
to to to
31 Dec 2021 31 Dec 2020 30 Jun 2021
GBPm GBPm GBPm
------------------------------------ ------------ ------------ ------------
Revenue 61.9 55.9 118.2
Fixed staff costs (20.0) (20.0) (40.0)
Variable staff costs (8.3) (7.4) (12.2)
------------------------------------ ------------ ------------ ------------
Total staff costs (28.3) (27.4) (53.2)
FSCS levy - - (2.2)
Non-staff costs (16.0) (14.5) (32.2)
------------------------------------ ------------ ------------ ------------
Total non-staff costs (16.0) (14.5) (34.4)
------------------------------------ ------------ ------------ ------------
Total underlying costs (44.3) (41.9) (87.6)
------------------------------------ ------------ ------------ ------------
Underlying profit before tax 17.6 14.0 30.6
Underlying adjustments (4.4) 0.1 (5.5)
------------------------------------ ------------ ------------ ------------
Statutory profit before tax 13.2 14.1 25.1
Taxation (3.0) (2.0) (5.5)
------------------------------------ ------------ ------------ ------------
Statutory profit after tax 10.2 12.1 19.6
------------------------------------ ------------ ------------ ------------
Underlying profit margin before tax 28.4% 25.1% 25.9%
Underlying basic earnings per share 88.6p 73.4p 155.6p
Statutory profit margin before tax 21.3% 25.2% 21.2%
Statutory basic earnings per share 65.5p 77.3p 125.3p
Dividends per share 26.0p 23.0p 63.0p
------------------------------------ ------------ ------------ ------------
Revenue
Total revenue for the Group grew by 10.7% to GBP61.9 million in
the first half of the financial year. This increase was due to
higher average FUM levels driven by strong positive net flows and
investment performance, along with the full period impact of the
Lloyds Channel Islands business which contributed GBP4.6 million to
the Group's H1 FY22 headline figure. The rise in fee income was
offset by a reduction in transactional income of GBP1.9 million as
a result of the Group's relatively stable asset allocation during
the period and a reduction in interest turn of GBP0.6 million off
the back of lower base rates.
As noted in the following table, the yield on BPS fees for UKIM
decreased by 1.0 bp to 66.3 bps during the first half. This was
principally driven by the impact of timing of inflows and outflows
during the period. The BPS non-fee income declined by 7.3 bps to
10.9 bps largely due to a reduction in transactional income and
interest turn as noted above.
MPS saw a decline in fee yield by 4.4 bps compared to FY21 with
the reduction driven by strong levels of net new business within
Platform MPS and the BM Investment Solutions offering.
Funds fee yields have increased marginally by 0.4 bps during the
six-month period due to a change in mix and a slowdown in outflows
seen in the Defensive Capital Fund.
International fee income yields are up by 1.6 bps on FY21 due to
higher performance and custody fees in the period. The Lloyds
Channel Islands fee yields are up slightly by 0.7 bps on FY21 as a
result of the full six-month impact on the average FUM. Non-fee
income yields declined by 2.2 bps driven by a decrease in interest
and FX income during the period.
Revenue, yields and average FUM
Revenue Average FUM Yields
------------------------ ------------------------ ----------------------------------
H1 FY22 H1 FY21 Change H1 FY22 H1 FY21 Change H1 FY22 FY21 H1 FY21 Change(1)
GBPm GBPm % GBPm GBPm % bps bps bps bps
-------------------------- ------- ------- ------ ------- ------- ------ ------- ----- ------- ---------
BPS fees 31.6 28.8 9.7 9,475 8,398 12.8 66.3 67.3 68.0 (1.0)
BPS non-fees
(transactional) 4.9 6.9 (29.0) - - - 10.3 16.6 16.3 (6.3)
BPS non-fees (interest
turn) 0.3 0.6 (50.0) - - - 0.6 1.6 1.4 (1.0)
-------------------------- ------- ------- ------ ------- ------- ------ ------- ----- ------- ---------
Total BPS 36.8 36.3 1.4 9,475 8,398 12.8 77.2 85.5 84.3 (8.3)
MPS 4.9 4.0 22.5 2,726 1,867 46.0 35.7 40.1 42.5 (4.4)
-------------------------- ------- ------- ------ ------- ------- ------ ------- ----- ------- ---------
UKIM discretionary 41.7 40.3 3.5 12,201 10,265 18.9 67.9 76.8 77.9 (8.9)
Funds 6.4 6.1 4.9 2,281 2,188 4.3 55.7 55.3 55.3 0.4
-------------------------- ------- ------- ------ ------- ------- ------ ------- ----- ------- ---------
Total UKIM 48.1 46.4 3.7 14,482 12,453 16.3 65.9 73.2 73.9 (7.3)
International fees 4.7 4.5 4.4 1,665 1,659 0.4 56.0 54.4 53.8 1.6
International non-fees 1.3 1.3 - - - - 15.5 17.7 15.5 (2.2)
Lloyds CI(2) 4.6 0.8 475.0 889 153 481.0 102.6 101.9 103.7 0.7
-------------------------- ------- ------- ------ ------- ------- ------ ------- ----- ------- ---------
Total International 10.6 6.6 60.6 2,554 1,812 40.9 82.3 79.3 72.3 3.0
-------------------------- ------- ------- ------ ------- ------- ------ ------- ----- ------- ---------
Total FUM related
revenue 58.7 53.0 10.8 17,036 14,265 19.4 68.4 73.9 73.7 (5.5)
Financial Planning
- UK 2.2 1.9 15.8
Financial Planning
- International 0.5 0.5 -
Other income 0.5 0.5 -
-------------------------- ------- ------- ------ ------- ------- ------ ------- ----- ------- ---------
Total non-FUM related
revenue 3.2 2.9 10.3
-------------------------- ------- ------- ------ ------- ------- ------ ------- ----- ------- ---------
Total Group revenue 61.9 55.9 10.7
-------------------------- ------- ------- ------ ------- ------- ------ ------- ----- ------- ---------
(1) Yield variance change is between H1 FY22 and FY21 yields as
this represents a more appropriate comparison of the composition
and mix of the portfolios.
(2) The Lloyds CI yields for H1 FY21 and FY21 were calculated on
a pro rata basis reflecting the relative period the business was
owned by the Group.
Underlying costs
Total underlying costs for the Group increased by 5.7% from
GBP41.9 million to GBP44.3 million. Excluding the full period
impact of the Lloyds Channel Islands acquisition amounting to
GBP2.4 million, total underlying costs were flat with the prior
period.
Staff costs
Total staff costs increased by 3.3% from GBP27.4 million to
GBP28.3 million. Fixed staff costs were in line with H1 FY21 at
GBP20.0 million. The incremental costs of the Lloyds Channel
Islands acquisition of GBP1.1 million and the net impact of pay
rises and new hires were offset by savings of GBP1.3 million
arising from the transfer of a number of roles from the Investment
Services and Technology Services departments to SS&C during
December 2020 and reductions in temporary staff costs and
recruitment fees of GBP0.2 million.
Variable staff costs increased by 12.2% to GBP8.3 million in H1
FY22, including the incremental cost in respect of the acquired
Lloyds Channel Islands business of GBP0.3 million. The share-based
payments charge for the year is up GBP0.9 million on the prior
period due to lapses recognised in H1 FY21 and a rise in the
Group's share price during the period impacting the associated
employer national insurance contributions. The bonus pool accrual
is relatively in line with H1 FY21.
Non-staff costs
Non-staff costs amounted to GBP16.0 million representing an
increase of GBP1.5 million (10.3%) on H1 FY21. The increase was
primarily driven by the full period impact of the Lloyds Channel
Islands acquisition contributing additional costs of GBP1.3
million, and other net incremental costs of GBP0.2 million as the
Group maintained its cost discipline.
Combined, the above gave rise to an underlying profit before tax
for the half year of GBP17.6 million, an increase of 25.7% on the
prior period (H1 FY21: GBP14.0 million) resulting in a profit
margin of 28.4%, up by 3.3 points on last year (H1 FY21:
25.1%).
The Group's statutory profit before tax fell by GBP0.9 million
to GBP13.2 million (H1 FY21: GBP14.1 million). The prior period
statutory profit included a GBP5.0 million gain recognised on the
Lloyds Channel Islands acquisition.
Funds under management
Six months Six months 12 months
to to to
31 Dec 2021 31 Dec 2020 30 Jun 2021
GBPm GBPm GBPm
---------------------------------------------- ------------ ------------ ------------
Opening FUM 16,459 13,685 13,685
Organic net new business 326 (367) (275)
FUM acquired in the period(1) - 882 882
Investment performance 544 1,303 2,167
---------------------------------------------- ------------ ------------ ------------
Total FUM growth 870 1,818 2,774
---------------------------------------------- ------------ ------------ ------------
Closing FUM 17,329 15,503 16,459
---------------------------------------------- ------------ ------------ ------------
Organic net new business 2.0% (2.7%) (2.0%)
Total FUM movement 5.3% 13.3% 20.3%
---------------------------------------------- ------------ ------------ ------------
Investment performance in the period 3.3% 9.5% 15.8%
MSCI PIMFA Private Investor Balanced Index(2) 4.0% 6.5% 12.9%
---------------------------------------------- ------------ ------------ ------------
(1) Closing value of the acquired Lloyds Channel Islands FUM at
the completion date, 30 November 2020.
(2) Capital-only index.
FUM increased to GBP17.3 billion at 31 December 2021 (H1 FY21:
GBP15.5 billion; FY21: GBP16.5 billion), representing an increase
of 11.8% and 5.3% on the FUM levels at H1 FY21 and FY21
respectively. The increase in FUM reflected the Group's return to
positive net flows of GBP0.3 billion and positive investment
performance of GBP0.5 billion.
Investment performance remained positive at 3.3%, although
marginally behind the benchmark index of 4.0% for the six months
ended 31 December 2021, investment performance is ahead of ARC
benchmarks across all risk profiles over five and ten years.
Closing FUM by service and segment
The table below shows the closing FUM broken down by segment and
by our key services within UKIM at 31 December 2021 and comparative
periods.
31 Dec 31 Dec H1 FY22 30 Jun
vs. H1
2021 2020 FY21 2021
GBPm GBPm % GBPm
-------------- ------ ------ -------- ------
BPS 9,814 8,910 10.1% 9,460
MPS 2,834 1,962 44.4% 2,411
Funds 2,099 2,045 2.6% 2,076
-------------- ------ ------ -------- ------
UKIM total 14,747 12,917 14.2% 13,947
International 2,582 2,586 (0.2%) 2,512
-------------- ------ ------ -------- ------
Total FUM 17,329 15,503 11.8% 16,459
-------------- ------ ------ -------- ------
Segmental analysis
The Group reports its results across two key operating segments,
UK Investment Management and International. The tables below
provide a breakdown of the half year performance broken down by
these segments, with comparatives.
UK Investment Group and
H1 FY22 (GBPm) Management International consolidation Total
------------------------------------ ------------- ------------- -------------- ------
Revenue 50.9 11.0 - 61.9
Direct costs (20.1) (6.8) (17.4) (44.3)
------------------------------------ ------------- ------------- -------------- ------
Operating contribution 30.8 4.2 (17.4) 17.6
Internal cost recharges (14.0) (1.8) 15.8 -
------------------------------------ ------------- ------------- -------------- ------
Underlying profit/(loss) before tax 16.8 2.4 (1.6) 17.6
------------------------------------ ------------- ------------- -------------- ------
Underlying adjustments (2.2) (0.7) (1.5) (4.4)
------------------------------------ ------------- ------------- -------------- ------
Statutory profit/(loss) before tax 14.6 1.7 (3.1) 13.2
------------------------------------ ------------- ------------- -------------- ------
Underlying profit margin before tax 33.0% 21.8% n/a 28.4%
Statutory profit margin before tax 28.7% 15.5% n/a 21.3%
------------------------------------ ------------- ------------- -------------- ------
UK Investment Group and
H1 FY21(1) (GBPm) Management International consolidation Total
-------------------------------------- ------------- ------------- -------------- ------
Revenue 48.8 7.1 - 55.9
Direct costs (21.7) (4.3) (15.9) (41.9)
-------------------------------------- ------------- ------------- -------------- ------
Operating contribution 27.1 2.8 (15.9) 14.0
Internal cost recharges (12.8) (1.4) 14.2 -
-------------------------------------- ------------- ------------- -------------- ------
Underlying profit/(loss) before tax 14.3 1.4 (1.7) 14.0
-------------------------------------- ------------- ------------- -------------- ------
Underlying adjustments (0.7) (2.3) 3.1 0.1
-------------------------------------- ------------- ------------- -------------- ------
Statutory profit/(loss) before tax 13.6 (0.9) 1.4 14.1
-------------------------------------- ------------- ------------- -------------- ------
Underlying profit margin before tax 29.3% 19.7% n/a 25.1%
Statutory profit/(loss) margin before
tax 27.9% (12.7%) n/a 25.2%
-------------------------------------- ------------- ------------- -------------- ------
(1) Comparative figures have been restated to reflect the
integration of the Financial Planning division into UK Investment
Management on 1 January 2021.
Both operating segments reported improved performance across all
metrics. UKIM saw revenue grow by 4.3% contributed by strong
positive net flows and an increase of the Private Clients revenue
(formerly Financial Planning). Underlying profit grew by 17.5% to
GBP16.8 million and the underlying profit margin rose by 3.7 points
to 33.0%.
Revenue grew by GBP3.9 million in the International segment
largely as a result of the full period impact of the Lloyds Channel
Islands acquisition. Total underlying costs increased by GBP2.9
million, also primarily as a result of the acquired business. This
resulted in underlying profit growing from GBP1.4 million to GBP2.4
million, and underlying profit margin rising by 2.1 points to
21.8%.
Reconciliation between underlying and statutory profits
Underlying profit before tax is considered by the Board to be an
appropriate reflection of the Group's performance when compared to
the statutory results as this excludes income and expense
categories, which are deemed of a non-recurring nature or a
non-cash operating item. Reporting at an underlying basis is also
considered appropriate for external analyst coverage and peer group
benchmarking, allowing a like-for-like comparison. Underlying
profit is deemed to be an alternative performance measure ("APM"),
refer to the Non-IFRS financial information section in the
Condensed consolidated financial statements for a glossary of the
Group's APMs, their definition, and the criteria for how underlying
adjustments are considered.
A reconciliation between underlying and statutory profit before
tax for the six months ended 31 December 2021, with comparatives is
shown in the following table:
Six months Six months 12 months
to to to
31 Dec 2021 31 Dec 2020 30 Jun 2021
GBPm GBPm GBPm
--------------------------------------------------- ------------ ------------ ------------
Underlying profit before tax 17.6 14.0 30.6
Amortisation of client relationships (2.7) (2.3) (4.9)
Dual running operating platform costs (1.6) - (1.0)
Changes in fair value and finance cost of deferred
consideration (0.1) (0.2) (0.4)
Acquisition-related costs:
- Gain arising on acquisition - 5.0 5.0
- Integration and staff retention costs - (2.4) (2.7)
Client relationship contracts impairment - - (1.5)
--------------------------------------------------- ------------ ------------ ------------
Total underlying adjustments (4.4) 0.1 (5.5)
Statutory profit before tax 13.2 14.1 25.1
--------------------------------------------------- ------------ ------------ ------------
Amortisation of client relationships (GBP2.7 million charge)
These intangible assets are created in the course of acquiring
funds under management and are amortised over their useful life,
which have been assessed to range between 6 and 20 years. The
increase from H1 FY21 to H1 FY22 is due to the Lloyds Channel
Islands acquisition, which completed on 30 November 2020. This
amortisation charge has been excluded from the underlying profit
since it is a significant non-cash item. Refer to Note 9 of the
Condensed consolidated financial statements for more details.
Dual running operating platform costs (GBP1.6 million
charge)
The Group is in a partnership agreement with SS&C to
transform our adviser and client service including the onboarding
process and digital experience, as well as enhancing our operating
platform. As part of the transition process, the Group has incurred
net incremental costs in running two operating platforms
concurrently. The dual running costs have been excluded from
underlying profit in view of their non-recurring nature.
Changes in fair value and finance cost of deferred consideration
(GBP0.1 million charge)
This comprises the fair value measurement arising on deferred
consideration payments from acquisitions carried out by the Group,
together with their associated net finance costs where applicable.
Refer to Note 14 of the Condensed consolidated financial statements
for more details.
FY21 Acquisition-related costs
i. Gain arising on acquisition
A gain on purchase was recognised in respect of the previous
Lloyds Channel Islands acquisition as the net identifiable assets
acquired were greater than the total purchase consideration
paid.
ii. Integration and staff retention costs
These comprised the costs incurred in integrating the Cornelian
acquisition, which completed on 28 February 2020, and the Lloyds
Channel Islands acquisition, which completed on 30 November 2020.
It also includes payments made to key employees who were retained
by the Group for a short period of time to assist with the
integration of the businesses.
FY21 Client relationship contracts impairment
In FY21, the Group experienced accelerated withdrawals from a
previously acquired business, DPZ Limited, resulting in the
estimated useful economic life of the intangible assets associated
with the business to reduce. Accordingly, an impairment charge of
GBP1.5 million was recognised in the prior year.
Taxation
The Group's Corporation Tax charge on underlying profits for the
period was GBP3.7 million (H1 FY21: GBP2.5 million) representing an
effective tax rate of 21.1% (H1 FY21: 17.7%). The statutory
Corporation Tax charge was GBP3.0 million (H1 FY21: GBP2.0
million). The increase in the effective tax rate on the previous
year is principally as a result of the impact of remeasuring
deferred tax assets and liabilities for the substantively enacted
Corporation Tax rate to 25.0% from 1 April 2023. Refer to Note 6 of
the Condensed consolidated financial statements for more
details.
Earnings per share
The Group's basic statutory earnings per share for the six
months ended 31 December 2021 was 65.5p, which reduced by 11.8p
from H1 FY21 as a result of the one-off gain recognised on the
Lloyds Channel Islands acquisition in the prior period. On an
underlying basis, basic earnings per share increased by 20.7% to
88.6p (H1 FY21: 73.4p). Details on the basic and diluted earnings
per share are provided in Note 7 of the Condensed consolidated
financial statements.
Dividend
The Group has a progressive dividend policy, growing dividends
year-on-year. The Board recognises the importance of dividends to
shareholders and the benefit of providing sustainable shareholder
returns. In determining the level of dividend in any year, the
Board considers a number of factors such as the level of retained
earnings, future cash commitments, statutory profit cover, capital
and liquidity requirements and the level of profit retention
required to sustain the growth of the Group. The Board has declared
an interim dividend of 26.0p (H1 FY21: 23.0p). This represents an
increase of 13.0% compared to the previous period. The interim
dividend will be paid on 14 April 2022 to shareholders on the
register as at 18 March 2022. Refer to Note 8 of the Condensed
consolidated financial statements for more details.
Financial position and regulatory capital
The Group's financial position remains strong with net assets of
GBP140.3 million at 31 December 2021 (H1 FY21: GBP129.0 million;
FY21: GBP134.0 million). As at 31 December 2021, the Group had a
total capital ratio of 22.9% (H1 FY21: 17.2%). Total capital ratio
is defined as the Group's own funds as a proportion of the total
fixed overhead exposure amount (being 12.5 times the Pillar I
requirement). The total net assets and the total capital ratio
calculation take into account the respective period's interim
profits (net of the declared interim dividends) as these are deemed
to be verified at the date of publication of the half year
results.
Brooks Macdonald Asset Management Limited, the Group's main
operating subsidiary, is an IFPRU 125k Limited Licence Firm
regulated by the Financial Conduct Authority ("FCA"). In view of
this, the Group is classified as a regulated group and subject to
the same regime. As required under FCA rules, and those of both the
Jersey and Guernsey Financial Services Commission, the Group
assesses its regulatory capital and liquidity on an ongoing basis
through the Internal Capital Adequacy Assessment Process ("ICAAP")
and Adjusted Net Liquid Asset ("ANLA") assessments, which include
performing a range of stress tests and scenario analysis to
determine the appropriate level of regulatory capital and liquidity
that the Group needs to hold. Surplus levels of capital and
liquidity are forecast, taking into account known outflows and
proposed dividends to ensure that the Group maintains sufficient
capital and liquidity at all times.
The FY21 ICAAP review was conducted for the period ended 30 June
2021 and signed off by the Board in December 2021. Regulatory
capital forecasts are performed monthly and take into account
expected dividends and intangible asset acquisitions and disposals
where applicable, as well as budgeted and forecast trading
results.
The Group's Pillar III disclosures are published annually on the
Group's website ( www.brooksmacdonald.com ) and provide further
details about the Group's regulatory capital resources and
requirements. The Group monitors a range of capital and liquidity
statistics on a daily and monthly basis.
Cash flow and capital expenditure
The Group continues to have strong levels of cash generation
from operations. Total cash resources at the end of December 2021
grew by GBP7.1 million to GBP45.7 million (H1 FY21: GBP38.6
million). The Group continued to have no borrowings at 31 December
2021.
During the six months ended 31 December 2021, the Group incurred
capital expenditure of GBP2.4 million. This comprised
technology-related development of GBP2.2 million, property-related
costs of GBP0.1 million and IT and office equipment of GBP0.1
million. The technology-related spend was primarily incurred in
connection with our partnership with SS&C where the
collaboration will provide a market-leading digital experience for
the Group's intermediaries and clients. These will be amortised
over a ten-year period from the point at which the new platform
goes live.
Condensed consolidated statement of comprehensive income
for the six months ended 31 December 2021
Six months
ended Year ended
Six months
31 Dec 2021 ended 30 Jun 2021(1)
31 Dec 2020(1)
(unaudited) (unaudited) (audited)
----
Note GBP'000 GBP'000 GBP'000
--------------------------------------------- ---- ------------- --------------- ---------------
Revenue 4 61,941 55,855 118,206
Administrative costs (48,517) (46,371) (96,012)
--------------------------------------------- ---- ------------- --------------- ---------------
Gross profit 13,424 9,484 22,194
Other gains/(losses) - net 5 28 (18) (1,438)
--------------------------------------------- ---- ------------- --------------- ---------------
Operating profit 13,452 9,466 20,756
--------------------------------------------- ---- ------------- --------------- ---------------
Gain on bargain purchase - 4,966 4,966
Finance income 16 31 47
Finance costs (229) (317) (678)
--------------------------------------------- ---- ------------- --------------- ---------------
Profit before tax 13,239 14,146 25,091
Taxation 6 (2,955) (2,003) (5,449)
--------------------------------------------- ---- ------------- --------------- ---------------
Profit for the period attributable to equity
holders of the Company 10,284 12,143 19,642
Other comprehensive income - - -
--------------------------------------------- ---- ------------- --------------- ---------------
Total comprehensive income for the period 10,284 12,143 19,642
--------------------------------------------- ---- ------------- --------------- ---------------
Earnings per share
Basic 7 65.5p 77.3p 125.3p
Diluted 7 63.1p 75.5p 121.3p
--------------------------------------------- ---- ------------- --------------- ---------------
(1) See Note 7 for details regarding the restatement of diluted
earnings per share.
Condensed consolidated statement of financial position
as at 31 December 2021
30 Jun
31 Dec 2021 31 Dec 2020 2021
(unaudited) (unaudited) (audited)
----
Note GBP'000 GBP'000 GBP'000
---------------------------------------------- ---- ------------ ----------------------- ----------
Assets
Non-current assets
Intangible assets 9 88,241 94,371 89,897
Property, plant and equipment 10 2,527 3,295 2,756
Right of use assets 11 5,229 6,646 5,979
Financial assets at fair value through other
comprehensive income 12 500 500 500
Deferred tax assets 3,240 1,784 2,736
---------------------------------------------- ---- ------------ ----------------------- ----------
Total non-current assets 99,737 106,596 101,868
Current assets
Trade and other receivables 12 29,769 27,525 28,449
Financial assets at fair value through profit
or loss 12 867 608 624
Current tax receivables - - 32
Cash and cash equivalents 12 45,715 38,600 54,899
---------------------------------------------- ---- ------------ ----------------------- ----------
Total current assets 76,351 66,733 84,004
---------------------------------------------- ---- ------------ ----------------------- ----------
Total assets 176,088 173,329 185,872
---------------------------------------------- ---- ------------ ----------------------- ----------
Liabilities
Non-current liabilities
Other non-current liabilities 12 (785) (560) (548)
Lease liabilities 13 (4,545) (6,162) (5,422)
Deferred consideration 14 - (298) (303)
Provisions 15 (265) (237) (279)
Deferred tax liabilities (8,398) (7,987) (8,902)
---------------------------------------------- ---- ------------ ----------------------- ----------
Total non-current liabilities (13,993) (15,244) (15,454)
Current liabilities
Trade and other payables 12 (18,031) (19,041) (27,055)
Current tax liabilities 12 (118) (118) -
Lease liabilities 13 (1,437) (1,355) (1,447)
Deferred consideration 14 (321) (7,799) (5,934)
Provisions 15 (1,933) (739) (1,979)
---------------------------------------------- ---- ------------ ----------------------- ----------
Total current liabilities (21,840) (29,052) (36,415)
---------------------------------------------- ---- ------------ ----------------------- ----------
Net assets 140,255 129,033 134,003
---------------------------------------------- ---- ------------ ----------------------- ----------
Equity
Share capital 17 162 161 161
Share premium 17 78,931 78,071 78,703
Other reserves 9,801 7,042 8,467
Retained earnings 51,361 43,759 46,672
---------------------------------------------- ---- ------------ ----------------------- ----------
Total equity 140,255 129,033 134,003
---------------------------------------------- ---- ------------ ----------------------- ----------
The Condensed consolidated financial statements were approved by
the Board of Directors and authorised for issue on 9 March 2022,
signed on their behalf by:
Andrew Shepherd
CEO
Ben Thorpe
Chief Financial Officer
Company registration number: 4402058
Condensed consolidated statement of changes in equity
for the six months ended 31 December 2021
Retained
Share capital Share premium Other reserves earnings Total
----
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ---- ------------- ------------- -------------- --------- -------
Balance at 1 July 2020 161 77,982 6,398 39,000 123,541
----------------------------------- ---- ------------- ------------- -------------- --------- -------
Comprehensive income
Profit for the period - - - 12,143 12,143
Other comprehensive income - - - - -
----------------------------------- ---- ------------- ------------- -------------- --------- -------
Total comprehensive income - - - 12,143 12,143
Transactions with owners
Issue of ordinary shares 17 - 89 - - 89
Share-based payments - - 1,560 - 1,560
Share-based payments exercised - - (1,065) 1,065 -
Purchase of own shares by employee
benefit trust - - - (3,450) (3,450)
Tax on share options - - 149 - 149
Dividends paid 8 - - - (4,999) (4,999)
----------------------------------- ---- ------------- ------------- -------------- --------- -------
Total transactions with owners - 89 644 (7,384) (6,651)
----------------------------------- ---- ------------- ------------- -------------- --------- -------
Balance at 31 December 2020 161 78,071 7,042 43,759 129,033
----------------------------------- ---- ------------- ------------- -------------- --------- -------
Comprehensive income
Profit for the period - - - 7,499 7,499
Other comprehensive income - - - - -
----------------------------------- ---- ------------- ------------- -------------- --------- -------
Total comprehensive income - - - 7,499 7,499
Transactions with owners
Issue of ordinary shares 17 - 632 - - 632
Share-based payments - - 1,431 - 1,431
Share-based payments exercised - - (747) 747 -
Purchase of own shares by employee
benefit trust - - - (1,760) (1,760)
Tax on share options - - 741 - 741
Dividends paid 8 - - - (3,573) (3,573)
----------------------------------- ---- ------------- ------------- -------------- --------- -------
Total transactions with owners - 632 1,425 (4,586) (2,529)
----------------------------------- ---- ------------- ------------- -------------- --------- -------
Balance at 30 June 2021 161 78,703 8,467 46,672 134,003
----------------------------------- ---- ------------- ------------- -------------- --------- -------
Comprehensive income
Profit for the period - - - 10,284 10,284
Other comprehensive income - - - - -
----------------------------------- ---- ------------- ------------- -------------- --------- -------
Total comprehensive income - - - 10,284 10,284
Transactions with owners
Issue of ordinary shares 17 1 228 - - 229
Share-based payments - - 2,161 - 2,161
Share-based payments exercised - - (1,957) 1,957 -
Purchase of own shares by employee
benefit trust - - - (1,300) (1,300)
Tax on share options - - 1,130 - 1,130
Dividends paid 8 - - - (6,252) (6,252)
----------------------------------- ---- ------------- ------------- -------------- --------- -------
Total transactions with owners 1 228 1,334 (5,595) (4,032)
----------------------------------- ---- ------------- ------------- -------------- --------- -------
Balance at 31 December 2021 162 78,931 9,801 51,361 140,255
----------------------------------- ---- ------------- ------------- -------------- --------- -------
Condensed consolidated statement of cash flows
for the six months ended 31 December 2021
Six months Six months
ended ended Year ended
31 Dec 2021 31 Dec 2020 30 Jun 2021
(unaudited) (unaudited) (audited)
----
Note GBP'000 GBP'000 GBP'000
--------------------------------------------- ---- ------------ ------------ ------------
Cash flow from operating activities
Cash generated from operations 16 10,485 8,994 36,907
Taxation paid (2,843) (2,963) (5,804)
--------------------------------------------- ---- ------------ ------------ ------------
Net cash generated from operating activities 7,642 6,031 31,103
Cash flows from investing activities
Purchase of computer software 9 (2,240) (1,999) (3,061)
Purchase of property, plant and equipment 10 (200) (577) (620)
Deferred consideration paid 14 (6,000) (421) (2,421)
Interest received 16 31 47
Consideration paid - (5,287) (5,287)
--------------------------------------------- ---- ------------ ------------ ------------
Net cash used in investing activities (8,424) (8,253) (11,342)
Cash flows from financing activities
Dividends paid to shareholders 8 (6,252) (4,999) (8,572)
Payment of lease liabilities 13 (1,079) (986) (1,969)
Proceeds of issue of shares 17 229 89 721
Purchase of own shares by employee benefit
trust (1,300) (3,450) (5,210)
--------------------------------------------- ---- ------------ ------------ ------------
Net cash used in financing activities (8,402) (9,346) (15,030)
Net (decrease)/increase in cash and cash
equivalents (9,184) (11,568) 4,731
--------------------------------------------- ---- ------------ ------------ ------------
Cash and cash equivalents at beginning of
period 54,899 50,168 50,168
--------------------------------------------- ---- ------------ ------------ ------------
Cash and cash equivalents at end of period 45,715 38,600 54,899
--------------------------------------------- ---- ------------ ------------ ------------
Notes to the condensed consolidated financial statements
for the six months ended 31 December 2021
1. General information
Brooks Macdonald Group plc ("the Company") is the Parent Company
of a group of companies ("the Group"), which offers a range of
investment management services to private high net worth
individuals, pension funds, institutions, charities and trusts. The
Group also provides financial planning as well as international
investment management, and acts as fund manager to a range of
onshore and international funds.
The Company is a public limited company, incorporated and
domiciled in the United Kingdom under the Companies Act 2006 and
listed on AIM. The address of its registered office is 21 Lombard
Street, London, EC3V 9AH.
The Interim Report and Accounts were approved for issue on 9
March 2022. The Condensed consolidated financial statements have
been independently reviewed but are not audited.
2. Accounting policies
a) Basis of preparation
The Group's Condensed consolidated financial statements have
been prepared in accordance with International Financial Reporting
Standards ("IFRS"), as adopted by the Companies Act 2006 applicable
to companies reporting under IFRS. The Financial statements have
been prepared on the historical cost basis, except for the
revaluation of financial assets at fair value through other
comprehensive income, financial assets at fair value through profit
or loss and deferred consideration such that they are measured at
their fair value.
At the time of approving the Financial statements, the Directors
have a reasonable expectation that the Company and the Group have
adequate resources to continue in operational existence for the
foreseeable future. Accordingly, they continue to adopt the going
concern basis in preparing the Financial statements.
Developments in reporting standards and interpretations
Standards and interpretations adopted during the current
reporting period
In the six months ended 31 December 2021, the Group did not
adopt any new standards or amendments issued by the IASB or
interpretations by the IFRS Interpretations Committee ("IFRS IC")
that have had a material impact on the Condensed consolidated
financial statements.
Future new standards and interpretations
A number of new standards are effective for annual periods
beginning after 1 July 2021 and earlier application is permitted;
however, the Group has not early adopted the new or amended
standards in preparing these Condensed consolidated financial
statements. None of the standards not yet effective are expected to
have a material impact on the Group's financial statements.
b) Changes in accounting policies
The accounting policies applied in these Condensed consolidated
financial statements are the same as those applied in the Group's
Consolidated financial statements as at and for the year ended 30
June 2021.
In the six months ended 31 December 2021, the Group did not
adopt any new standards or amendments issued by the IASB or
interpretations issued by the IFRS IC that have had a material
impact on the Condensed consolidated financial statements.
New standards, amendments and interpretations listed below were
newly adopted by the Group but have not had a material impact on
the amounts reported in these Financial statements. They may,
however, impact the accounting for future transactions and
arrangements.
-- Definition of a Business (Amendments to IFRS 3)
-- Definition of Material (Amendments to IAS 1 and IAS 8)
-- Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)
-- COVID-19-related Rent Concessions (Amendment to IFRS 16).
3. Segmental information
For management purposes the Group's activities are organised
into two operating divisions: UK Investment Management and
International. The Group's other activity, offering nominee and
custody services to clients, is included within UK Investment
Management. These divisions are the basis on which the Group
reports its primary segmental information to the Executive
Committee, which is the Group's chief operating decision-maker. In
accordance with IFRS 8 'Operating Segments', disclosures are
required to reflect the information that the Board of Directors
uses internally for evaluating the performance of its operating
segments and allocating resources to those segments. The
information presented in this Note is consistent with the
presentation for internal reporting.
The UK Investment Management segment offers a range of
investment management services to private high net worth
individuals, pension funds, institutions, charities and trusts, and
also provides management services to high net worth individuals and
families, giving independent "whole of market" financial advice
enabling clients to build, manage and protect their wealth. The
International segment is based in the Channel Islands and Isle of
Man, offering a similar range of investment management and
financial planning services as the UK Investment Management
segment.
The Group segment principally comprises the Group Board's
management and associated costs, along with the consolidation
adjustments. Revenues and expenses are allocated to the business
segment that originated the transaction. Transactions between
segments are carried out at arm's length. Centrally incurred
expenses are allocated to business segments on an appropriate pro
rata basis.
Group and
UK Investment consolidation
Management International adjustments Total
Six months ended 31 Dec 2021 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- ------------- ------------- -------------- --------
Total revenue 53,700 11,057 - 64,757
Inter segment revenue (2,816) - - (2,816)
----------------------------------------- ------------- ------------- -------------- --------
External revenue 50,884 11,057 - 61,941
Underlying other gains/(losses) - net,
finance income and finance costs (20,055) (6,852) (17,301) (44,208)
----------------------------------------- ------------- ------------- -------------- --------
Operating contribution 30,829 4,205 (17,301) 17,733
Allocated costs (13,862) (1,790) 15,652 -
Net finance (cost)/income (96) (18) 14 (100)
----------------------------------------- ------------- ------------- -------------- --------
Underlying profit/(loss) before tax 16,871 2,397 (1,635) 17,633
Amortisation of client relationship
contracts (792) (513) (1,416) (2,721)
Dual running costs of operating platform (1,589) - - (1,589)
Finance cost of deferred consideration - (6) (78) (84)
Profit/(loss) mark-up on Group allocated
costs 134 (134) - -
----------------------------------------- ------------- ------------- -------------- --------
Profit/(loss) before tax 14,624 1,744 (3,129) 13,239
Taxation (2,955)
----------------------------------------- ------------- ------------- -------------- --------
Profit for the period attributable to
equity holders of the Company 10,284
----------------------------------------- ------------- ------------- -------------- --------
From 1 January 2021, the Group integrated its previous Financial
Planning segment into its UK Investment Management segment. As a
result, the information for the six months ended 31 December 2020
has been restated to reflect the new segments of UK Investment
Management, International and Group and other consolidation
adjustments, consistent with the current year.
Group and
UK Investment consolidation
Management International adjustments Total
Six months ended 31 Dec 2020 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------ ------------- ------------- -------------- --------
Total segment revenue 51,679 7,058 - 58,737
Inter segment revenue (2,882) - - (2,882)
------------------------------------------------ ------------- ------------- -------------- --------
External revenues 48,797 7,058 - 55,855
Underlying administrative costs (21,114) (4,289) (16,360) (41,763)
------------------------------------------------ ------------- ------------- -------------- --------
Operating contribution 27,683 2,769 (16,360) 14,092
Allocated costs (13,160) (1,468) 14,628 -
Underlying other gains/(losses) - net,
finance income and finance costs (108) 2 20 (86)
------------------------------------------------ ------------- ------------- -------------- --------
Underlying profit/(loss) before tax 14,415 1,303 (1,712) 14,006
Gain on bargain purchase - - 4,966 4,966
Acquisition-related costs (435) (1,961) 40 (2,356)
Amortisation of client relationship
contracts (343) (260) (1,648) (2,251)
Finance cost of deferred consideration - (1) (158) (159)
Changes in fair value of deferred consideration - - (60) (60)
Profit/(loss) mark-up on Group allocated
costs 40 (43) 3 -
------------------------------------------------ ------------- ------------- -------------- --------
Profit/(loss) before tax 13,677 (962) 1,431 14,146
Taxation (2,003)
------------------------------------------------ ------------- ------------- -------------- --------
Profit for the period attributable to
equity holders of the Company 12,143
------------------------------------------------ ------------- ------------- -------------- --------
Group and
UK Investment consolidation
Management International adjustments Total
Year ended 30 June 2021 (audited) GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------- ------------- ------------- -------------- -----------------------
Total revenue 102,998 18,211 - 121,209
Inter segment revenue (3,003) - - (3,003)
----------------------------------------------- ------------- ------------- -------------- -----------------------
External revenue 99,995 18,211 - 118,206
Underlying administrative costs (45,738) (10,804) (30,870) (87,412)
----------------------------------------------- ------------- ------------- -------------- -----------------------
Operating contribution 54,257 7,407 (30,870) 30,794
Allocated costs (25,067) (2,864) 27,931 -
Underlying other gains/(losses) - net,
finance income and finance costs (285) (21) 109 (197)
----------------------------------------------- ------------- ------------- -------------- -----------------------
Underlying profit/(loss) before tax 28,905 4,522 (2,830) 30,597
Gain on bargain purchase - - 4,966 4,966
Amortisation of client relationship
contracts (1,770) (992) (2,166) (4,928)
Acquisition-related costs (467) (2,244) 39 (2,672)
Impairment of client relationship contracts - (1,210) (303) (1,513)
Dual running costs of operating platform (1,000) - - (1,000)
Finance cost of deferred consideration - (7) (292) (299)
Changes in fair value of deferred consideration - - (60) (60)
Profit/(loss) mark-up on Group allocated
costs 143 (147) 4 -
----------------------------------------------- ------------- ------------- -------------- -----------------------
Profit/(loss) before tax 25,811 (78) (642) 25,091
Taxation (5,449)
----------------------------------------------- ------------- ------------- -------------- -----------------------
Profit for the period attributable to
equity holders of the Company 19,642
----------------------------------------------- ------------- ------------- -------------- -----------------------
4. Revenue
Six months
ended Year ended
Six months
31 Dec 2021 ended 30 Jun 2021
31 Dec 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------ ------------ ------------- ------------
Portfolio management fees 50,554 46,893 98,006
Fund management fees 8,738 6,629 15,353
Advisory fees 2,469 2,167 4,526
Financial services commission 180 166 321
------------------------------ ------------ ------------- ------------
Total revenue 61,941 55,855 118,206
------------------------------ ------------ ------------- ------------
Portfolio management fees and financial services commission
Portfolio management and other advisory and custody services are
billed in arrears but are recognised over the period the service is
provided. Fees are calculated on the basis of a percentage of the
value of the portfolio over the period. Dealing charges are levied
at the time a deal is placed for a client. Fees are only recognised
when the fee amount can be estimated reliably and it is probable
that the fee will be received. Amounts are shown net of rebates
paid to significant investors. Performance fees are earned from
some clients when contractually agreed performance levels are
exceeded within specified performance measurement periods. They are
only recognised, at the end of these performance periods, when a
reliable estimate of the fee can be made and is virtually certain
that it will be received.
Fund management fees
Amounts due on an annual basis for the management of third-party
investment vehicles are recognised on a time apportioned basis.
Fees are calculated on the basis of a percentage of the value of
the portfolio over the period. Where amounts due are conditional on
the successful completion of fundraising for investment vehicles,
revenue is recognised where, in the opinion of the Directors, there
is reasonable certainty that sufficient funds have been raised to
enable the successful operation of that investment vehicle.
Advisory fees
Advisory fees are charged to clients using an hourly rate or by
a fixed fee arrangement and are recognised over the period the
service is provided. Commissions receivable and payable are
accounted for in the period in which they are earned.
a) Geographic analysis
The Group's operations are located in the United Kingdom,
Channel Islands and Isle of Man. The Group has recently established
operations in the Isle of Man, which has yet to generate revenue
for the six months ended 31 December 2021. The following table
presents external revenue analysed by the geographical location of
the Group entity providing the service.
Six months
ended Year ended
Six months
31 Dec 2021 ended 30 Jun 2021
31 Dec 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
---------------- ------------ ------------- ------------
United Kingdom 50,884 48,797 99,995
Channel Islands 11,057 7,058 18,211
---------------- ------------ ------------- ------------
Total revenue 61,941 55,855 118,206
---------------- ------------ ------------- ------------
b) Major clients
The Group is not reliant on any one client or group of connected
clients for the generation of revenues.
5. Other gains/(losses) - net
Other gains and losses represent the net changes in the fair
value of the Group's financial instruments and intangible assets
recognised in the Condensed consolidated statement of comprehensive
income.
Six months Six months
ended ended
31 Dec 2021 31 Dec 2020 Year ended
30 Jun 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
---------------------------------------------------------- ------------ ------------ ------------
Gain from changes in fair value of financial assets
at fair value through profit or loss (Note 12) 28 42 75
Client relationship contracts impairment (Note
9) - - (1,513)
Loss from changes in fair value of deferred consideration
payable (Note 14) - (60) -
---------------------------------------------------------- ------------ ------------ ------------
Total other gains/(losses) - net 28 (18) (1,438)
---------------------------------------------------------- ------------ ------------ ------------
6. Taxation
The current tax expense for the six months ended 31 December
2021 was calculated based on the Corporation Tax rate of 19%,
applied to the taxable profit for the six months ended 31 December
2021 (six months ended 31 December 2020: 19%; year ended 30 June
2021: 19%).
Six months Six months
ended ended Year ended
31 Dec 2021 31 Dec 2020 30 Jun 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------------------ ------------ ------------ ------------
UK Corporation Tax 2,816 2,582 5,466
Over provision in prior years - - (127)
------------------------------------------------ ------------ ------------ ------------
Total current taxation 2,816 2,582 5,339
Deferred tax credits (73) (510) (6)
Under/(over) provision of deferred tax in prior
years 212 (69) 116
------------------------------------------------ ------------ ------------ ------------
Total income tax expense 2,955 2,003 5,449
------------------------------------------------ ------------ ------------ ------------
Taxation for other jurisdictions is calculated at the rates
prevailing in the respective jurisdictions.
The tax on the Group's profit before tax differs from the
theoretical amount that would arise using the time apportioned tax
rate applicable to profits of the consolidated entities in the UK
as follows, split out between underlying and statutory profits:
Underlying Underlying Statutory
profit profit adjustments profit
Six months ended 31 Dec 2021 (unaudited) GBP'000 GBP'000 GBP'000
-------------------------------------------------------- ---------- ------------------- ---------
Profit before taxation 17,633 (4,394) 13,239
Profit multiplied by the standard rate of tax in
the UK of 19% 3,350 (835) 2,515
Tax effect of amounts that are not deductible/(taxable)
in calculating taxable income:
- Depreciation and amortisation 107 77 184
- Disallowable expenses 171 (15) 156
- Share-based payments 97 - 97
- Overseas tax losses not available for UK tax purposes (206) - (206)
- Under provision of deferred tax in prior years 212 - 212
- Non-taxable income (3) - (3)
-------------------------------------------------------- ---------- ------------------- ---------
Income tax expense 3,728 (773) 2,955
-------------------------------------------------------- ---------- ------------------- ---------
Effective tax rate 21.1% n/a 22.3%
-------------------------------------------------------- ---------- ------------------- ---------
Underlying Underlying Statutory
profit profit adjustments profit
Six months ended 31 Dec 2020 (unaudited) GBP'000 GBP'000 GBP'000
-------------------------------------------------------- ---------- ------------------- ---------
Profit before taxation 14,006 140 14,146
Profit multiplied by the standard rate of tax in
the UK of 19% 2,661 27 2,688
Tax effect of amounts that are not deductible/(taxable)
in calculating taxable income:
- Non-taxable income (5) (943) (948)
- Disallowable expenses (144) 402 258
- Over provision of deferred tax in prior years (69) - (69)
- Depreciation and amortisation 2 35 37
- Share-based payments 33 - 33
- Overseas tax losses not available for UK tax purposes 4 - 4
-------------------------------------------------------- ---------- ------------------- ---------
Income tax expense 2,482 (479) 2,003
-------------------------------------------------------- ---------- ------------------- ---------
Effective tax rate 17.7% n/a 14.2%
-------------------------------------------------------- ---------- ------------------- ---------
Underlying Underlying Statutory
profit profit adjustments profit
Year ended 30 Jun 2021 (audited) GBP'000 GBP'000 GBP'000
-------------------------------------------------------- ---------- ------------------- ---------
Profit before taxation 30,597 (5,506) 25,091
Profit multiplied by the standard rate of tax in
the UK of 19% 5,813 (1,046) 4,767
Tax effect of amounts that are not deductible/(taxable)
in calculating taxable income:
- Depreciation and amortisation 749 670 1,419
- Non-taxable income (7) (944) (951)
- Overseas tax losses not available for UK tax purposes (541) - (541)
- Disallowable expenses 174 273 447
- Impairment charges - 287 287
- Share-based payments 30 - 30
- Over provision of deferred tax in prior years (9) - (9)
-------------------------------------------------------- ---------- ------------------- ---------
Income tax expense 6,209 (760) 5,449
-------------------------------------------------------- ---------- ------------------- ---------
Effective tax rate 20.3% n/a 21.7%
-------------------------------------------------------- ---------- ------------------- ---------
On 1 April 2017, the standard rate of Corporation Tax in the UK
was reduced to 19%. As a result, the effective rate of Corporation
Tax applied to the taxable profit for the six months ended 31
December 2021 is 19% (six months ended 31 December 2020: 19%; year
ended 30 June 2021: 19%).
On 11 March 2021 it was outlined in the Finance Bill 2021, and
substantively enacted having received royal ascent on 24 May 2021
that the UK Corporation Tax rate would increase to 25% from 1 April
2023 and remain at 19% until that date. Deferred tax assets and
liabilities are calculated at the rate that is expected to be in
force when the temporary differences unwind.
7. Earnings per share
The Board of Directors considers that underlying earnings per
share provides an appropriate reflection of the Group's performance
in the period. Underlying earnings per share are calculated based
on 'underlying earnings', which is defined as earnings before
underlying adjustments listed below. The tax effect of these
adjustments has also been considered. Underlying earnings is an
alternative performance measure ("APM") used by the Group. Refer to
the Non-IFRS financial information section for a glossary of the
Group's APMs, their definition and criteria for how underlying
adjustments are considered.
Earnings for the period used to calculate earnings per share as
reported in these Condensed consolidated financial statements were
as follows:
Six months
ended
Six months
31 Dec 2021 ended Year ended
31 Dec 2020 30 Jun 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
---------------------------------------------------------- ------------ ------------- ------------
Earnings attributable to ordinary shareholders 10,284 12,143 19,642
Underlying adjustments
Amortisation of acquired client relationship contracts
(Note 9) 2,721 2,251 4,928
Dual running costs of operating platform 1,589 - 1,000
Finance cost of deferred consideration (Note 14) 84 159 299
Gain on bargain purchase - (4,966) (4,966)
Acquisition-related costs - 2,356 2,672
Changes in fair value of deferred consideration
(Note 14) - 60 60
Impairment of acquired client relationship contracts
(Note 9) - - 1,513
Tax impact of adjustments (Note 6) (773) (479) (760)
---------------------------------------------------------- ------------ ------------- ------------
Underlying earnings attributable to ordinary shareholders 13,905 11,524 24,388
---------------------------------------------------------- ------------ ------------- ------------
Basic earnings per share is calculated by dividing earnings
attributable to ordinary shareholders by the weighted average
number of shares in issue throughout the period. Diluted earnings
per share represents the basic earnings per share adjusted for the
effect of dilutive potential shares issuable on exercise of
employee share options under the Group's share-based payment
schemes, weighted for the relevant period. The weighted average
number of shares in issue during the six months ended 31 December
2021 were as follows:
Six months Six months
ended ended
31 Dec 2021 31 Dec 2020(1) Year ended
30 Jun 2021(1)
(unaudited) (unaudited) (audited)
Number of Number of Number of
shares shares shares
--------------------------------------------------- ------------ --------------- ---------------
Weighted average number of shares in issue 15,691,468 15,710,199 15,671,672
Effect of dilutive potential shares issuable on
exercise of employee share options 595,775 374,687 521,547
--------------------------------------------------- ------------ --------------- ---------------
Diluted weighted average number of shares in issue 16,287,243 16,084,886 16,193,219
--------------------------------------------------- ------------ --------------- ---------------
Six months
ended Year ended
Six months
31 Dec 2021 ended 30 Jun 2021(1)
31 Dec 2020(1)
(unaudited) (unaudited) (audited)
p p p
------------------------------ ------------ --------------- ---------------
Based on reported earnings:
Basic earnings per share 65.5 77.3 125.3
Diluted earnings per share 63.1 75.5 121.3
Based on underlying earnings:
Basic earnings per share 88.6 73.4 155.6
Diluted earnings per share 85.4 71.6 150.6
------------------------------ ------------ --------------- ---------------
(1) The Group previously reported the dilutive effect of
potential shares issuable on exercise of employee share options for
employee share options that are satisfied from newly created
shares. This did not take into account share options that are
satisfied from shares bought in the market and held in the Group's
Employee Benefit Trust ("EBT"). The Group now considers it is
appropriate to also take into account the share options that are
satisfied from shares held in the EBT where the average market
price of the ordinary shares during the period exceeds the exercise
price of the options, in calculating the dilutive weighted average
number of shares in issue. Accordingly, the diluted weighted
average number of shares in issue and diluted earnings per share
for the comparative periods have been restated to be consistent
with the current period calculation.
For the six months ended 31 December 2020, the reported effect
of dilutive potential shares was 26,391 and the reported diluted
weighted average number of shares in issue was 15,736,590. For the
six months ended 31 December 2020, the reported diluted earnings
per share on statutory and underlying earnings was 77.2p and 73.2p
respectively. For the year ended 30 June 2021, the reported effect
of dilutive potential shares was 50,891 and the reported diluted
weighted average number of shares in issue was 15,722,563. For the
year ended 30 June 2021, the reported diluted earnings per share on
statutory and underlying earnings was 124.9p and 155.1p
respectively.
8. Dividends
Six months
ended
Six months
31 Dec 2021 ended Year ended
31 Dec 2020 30 Jun 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
----------------------------------------- ------------ ------------- ------------
Final dividend paid on ordinary shares 6,252 4,999 4,999
Interim dividend paid on ordinary shares - - 3,573
----------------------------------------- ------------ ------------- ------------
Total dividends 6,252 4,999 8,572
----------------------------------------- ------------ ------------- ------------
An interim dividend of 26.0p (six months ended 31 December 2020:
23.0p) per share was declared by the Board of Directors on 9 March
2022. It will be paid on 14 April 2022 to shareholders who are on
the register at the close of business on 18 March 2022. In
accordance with IAS 10, this dividend has not been included as a
liability in the Condensed consolidated financial statements at 31
December 2021.
A final dividend for the year ended 30 June 2021 of 40.0p (year
ended 30 June 2020: 32.0p) per share was paid to shareholders on 5
November 2021.
9. Intangible assets
Acquired Contracts
client acquired
Computer relationship with fund
Goodwill software contracts managers Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- -------- --------- ------------- ---------- -------
Cost
At 1 July 2020 51,887 10,503 57,784 3,521 123,695
Additions - 1,999 12,227 - 14,226
---------------------------------------- -------- --------- ------------- ---------- -------
At 31 December 2020 51,887 12,502 70,011 3,521 137,921
Additions - 1,062 - - 1,062
Disposals - (2,166) - - (2,166)
---------------------------------------- -------- --------- ------------- ---------- -------
At 30 June 2021 51,887 11,398 70,011 3,521 136,817
Additions - 2,240 - - 2,240
---------------------------------------- -------- --------- ------------- ---------- -------
At 31 December 2021 51,887 13,638 70,011 3,521 139,057
---------------------------------------- -------- --------- ------------- ---------- -------
Accumulated amortisation and impairment
At 1 July 2020 11,213 5,564 19,593 3,521 39,891
Amortisation charge - 1,408 2,251 - 3,659
---------------------------------------- -------- --------- ------------- ---------- -------
At 31 December 2020 11,213 6,972 21,844 3,521 43,550
Amortisation charge - 1,346 2,677 - 4,023
Accumulated amortisation on disposals - (2,166) - - (2,166)
Impairment - - 1,513 - 1,513
---------------------------------------- -------- --------- ------------- ---------- -------
At 30 June 2021 11,213 6,152 26,034 3,521 46,920
Amortisation charge - 1,175 2,721 - 3,896
---------------------------------------- -------- --------- ------------- ---------- -------
At 31 December 2021 11,213 7,327 28,755 3,521 50,816
---------------------------------------- -------- --------- ------------- ---------- -------
Net book value
At 1 July 2020 40,674 4,939 38,191 - 83,804
At 31 December 2020 40,674 5,530 48,167 - 94,371
At 30 June 2021 40,674 5,246 43,977 - 89,897
---------------------------------------- -------- --------- ------------- ---------- -------
At 31 December 2021 40,674 6,311 41,256 - 88,241
---------------------------------------- -------- --------- ------------- ---------- -------
a) Goodwill
Goodwill acquired in a business combination is allocated at
acquisition to the cash generating units ("CGUs") that are expected
to benefit from that business combination. The carrying amount of
goodwill in respect of these CGUs within the operating segments of
the Group comprises:
31 Dec 2021
31 Dec 2020 30 Jun
(unaudited) (unaudited) 2021 (audited)
GBP'000 GBP'000 GBP'000
-------------------------------------------------------- ------------ ------------ ---------------
Funds
Braemar Group Limited ("Braemar") 3,320 3,320 3,320
International
Brooks Macdonald Asset Management (International)
Limited and Brooks Macdonald Retirement Services
(International) Limited (collectively "International") 21,243 21,243 21,243
Cornelian
Cornelian Asset Managers Group Limited ("Cornelian") 16,111 16,111 16,111
Total goodwill 40,674 40,674 40,674
-------------------------------------------------------- ------------ ------------ ---------------
At the reporting date there were no indicators that the carrying
amount of goodwill in relation to any of the CGUs should be
impaired therefore the recoverable amount calculations have not
been performed.
b) Computer software
Computer software costs are amortised on a straight-line basis
over an estimated useful life of four years. Costs incurred on
internally developed computer software are initially recognised at
cost and when the software is available for use the costs are
amortised on a straight-line basis over an estimated useful life of
four years.
c) Acquired client relationship contracts
This asset represents the fair value of future benefits accruing
to the Group from acquired client relationship contracts. The
amortisation of client relationships is charged to the Condensed
consolidated statement of comprehensive income on a straight-line
basis over their estimated useful lives (6 to 20 years).
d) Contracts acquired with fund managers
This asset represented the fair value of the future benefits
accruing to the Group from contracts acquired with fund managers.
Payments made to acquire such contracts are initially recognised at
cost and amortised on a straight-line basis over an estimated
useful life of five years.
10. Property, plant and equipment
Fixtures,
fittings
Leasehold and office
improvements equipment IT equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------------- ----------- ------------ -------
Cost
At 1 July 2020 3,944 1,017 2,482 7,443
Additions 414 21 142 577
-------------------------- ------------- ----------- ------------ -------
At 31 December 2020 4,358 1,038 2,624 8,020
Additions 20 8 15 43
Disposals (1,748) (322) (697) (2,767)
-------------------------- ------------- ----------- ------------ -------
At 30 June 2021 2,630 724 1,942 5,296
Additions 95 16 89 200
-------------------------- ------------- ----------- ------------ -------
At 31 December 2021 2,725 740 2,031 5,496
-------------------------- ------------- ----------- ------------ -------
Accumulated depreciation
At 1 July 2020 2,045 641 1,576 4,262
Depreciation charge 180 46 237 463
-------------------------- ------------- ----------- ------------ -------
At 31 December 2020 2,225 687 1,813 4,725
Depreciation charge 296 58 228 582
Depreciation on disposals (1,748) (322) (697) (2,767)
-------------------------- ------------- ----------- ------------ -------
At 30 June 2021 773 423 1,344 2,540
Depreciation charge 206 50 173 429
-------------------------- ------------- ----------- ------------ -------
At 31 December 2021 979 473 1,517 2,969
-------------------------- ------------- ----------- ------------ -------
Net book value
At 1 July 2020 1,899 376 906 3,181
At 31 December 2020 2,133 351 811 3,295
At 30 June 2021 1,857 301 598 2,756
-------------------------- ------------- ----------- ------------ -------
At 31 December 2021 1,746 267 514 2,527
-------------------------- ------------- ----------- ------------ -------
11. Right of use assets
Cars Property Total
GBP'000 GBP'000 GBP'000
------------------------- ------- -------- -------
Cost
At 1 July 2020 - 8,491 8,491
Additions - 414 414
------------------------- ------- -------- -------
At 31 December 2020 - 8,905 8,905
Additions - 187 187
------------------------- ------- -------- -------
At 30 June 2021 - 9,092 9,092
Additions 47 - 47
------------------------- ------- -------- -------
At 31 December 2021 47 9,092 9,139
------------------------- ------- -------- -------
Accumulated depreciation
At 1 July 2020 - 1,500 1,500
Depreciation charge - 759 759
------------------------- ------- -------- -------
At 31 December 2020 - 2,259 2,259
Depreciation charge - 854 854
------------------------- ------- -------- -------
At 30 June 2021 - 3,113 3,113
Depreciation charge 2 795 797
------------------------- ------- -------- -------
At 31 December 2021 2 3,908 3,910
------------------------- ------- -------- -------
Net book value
At 1 July 2020 - 6,991 6,991
At 30 December 2020 - 6,646 6,646
At 30 June 2021 - 5,979 5,979
------------------------- ------- -------- -------
At 31 December 2021 45 5,184 5,229
------------------------- ------- -------- -------
In the six months ended 31 December 2021, the Group entered into
a new car leasing arrangement to provide a salary sacrifice car
leasing scheme for employees. Each vehicle leased to individual
employees creates a separate right of use asset and lease liability
measured at present value of the remaining lease payments,
discounted using the lessee's estimated incremental borrowing rate
(see Note 13). No new property leases were added.
12. Financial instruments
The analysis of financial assets and liabilities into their
categories as defined in IFRS 9 Financial Instruments is set out in
the following table.
30 Jun
31 Dec 2021 31 Dec 2020 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
----------------------------------------------------------- ------------ ------------- ----------
Financial assets
Financial assets at fair value through profit or
loss:
Investment in regulated OEIC 867 591 624
Investment in recognised funds - 17 -
Financial assets at fair value through other comprehensive
income:
Unlisted redeemable preference shares 500 500 500
Financial assets at amortised cost:
Trade and other receivables 29,769 27,525 28,449
Current tax receivables - - 32
Cash and cash equivalents 45,715 38,600 54,899
----------------------------------------------------------- ------------ ------------- ----------
Total financial assets 76,851 67,233 84,504
----------------------------------------------------------- ------------ ------------- ----------
Financial liabilities
Financial liabilities at fair value through profit
or loss:
Deferred consideration (Note 14) 321 8,097 6,237
Financial liabilities at amortised cost:
Trade and other payables 18,031 19,041 27,055
Current tax liabilities 118 118 -
Provisions (Note 15) 2,198 976 2,258
Lease liabilities (Note 13) 5,982 7,517 6,869
Other non-current liabilities 785 560 548
----------------------------------------------------------- ------------ ------------- ----------
Total financial liabilities 27,435 36,309 42,967
----------------------------------------------------------- ------------ ------------- ----------
The table below provides an analysis of the financial assets and
liabilities that, subsequent to initial recognition, are measured
at fair value. These are grouped into the following levels within
the fair value hierarchy, based on the degree to which the inputs
used to determine the fair value are observable:
-- Level 1 - derived from quoted prices in active markets for
identical assets or liabilities at the measurement date;
-- Level 2 - derived from inputs other than quoted prices
included within level 1 that are observable, either directly or
indirectly; and
-- Level 3 - derived from inputs that are not based on observable market data.
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------------- -------- -------- -------- --------
Financial assets
At 1 July 2020 549 - 500 1,049
Additions 4 - - 4
Net changes in fair value charged to the
Condensed consolidated statement of comprehensive
income 42 - - 42
Net changes in fair value charged to the
Condensed consolidated statement of financial
position 13 - - 13
--------------------------------------------------- -------- -------- -------- --------
At 31 December 2020 608 - 500 1,108
Net gain from changes in fair value 33 - - 33
Disposal (17) - - (17)
--------------------------------------------------- -------- -------- -------- --------
At 30 June 2021 624 - 500 1,124
Additions 215 - - 215
Net gain from changes in fair value 28 - - 28
--------------------------------------------------- -------- -------- -------- --------
At 31 December 2021 867 - 500 1,367
--------------------------------------------------- -------- -------- -------- --------
Comprising:
Financial assets at fair value through other
comprehensive income - - 500 500
Financial assets at fair value through profit
and loss 867 - - 867
--------------------------------------------------- -------- -------- -------- --------
Total financial assets 867 - 500 1,367
--------------------------------------------------- -------- -------- -------- --------
At 31 December 2021, the Group held an investment of 500,000
redeemable GBP1 preference shares in an unlisted company
incorporated in the UK. The preference shares carry an entitlement
to a fixed preferential dividend at a rate of 4% per annum.
Unlisted preference shares are classified as financial assets at
fair value through other comprehensive income. They have been
valued using a perpetuity income model which is based upon the
preference dividend cash flows.
The Group holds 500,000 shares in five of the SVS Cornelian Risk
Managed Passive Funds. During the six months ended 31 December
2021, the Group recognised a gain on these investments of
GBP24,000. The Group's holding in the SVS Cornelian Risk Managed
Passive Funds at 31 December 2021 was GBP648,000.
In September 2021, the Group invested GBP215,000 in the
Blueprint Multi Asset Fund range across the various models within
the fund range. During the six months ended 31 December 2021, the
Group recognised a gain on these investments of GBP4,000. The
Group's holding in the Blueprint Multi Asset Fund range at 31
December 2021 was GBP219,000.
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- -------- -------- -------- --------
Financial liabilities
At 1 July 2020 - - 7,991 7,991
Additions - - 308 308
Change in fair value - - 60 60
Finance cost of deferred consideration - - 159 159
Payments made during the period - - (421) (421)
--------------------------------------- -------- -------- -------- --------
At 31 December 2020 - - 8,097 8,097
Payments made - - (2,000) (2,000)
Finance cost of deferred consideration - - 140 140
--------------------------------------- -------- -------- -------- --------
At 30 June 2021 - - 6,237 6,237
Finance cost of deferred consideration - - 84 84
Payments made - - (6,000) (6,000)
--------------------------------------- -------- -------- -------- --------
At 31 December 2021 - - 321 321
--------------------------------------- -------- -------- -------- --------
Comprising:
Deferred consideration (Note 14) - - 321 321
--------------------------------------- -------- -------- -------- --------
Total financial liabilities - - 321 321
--------------------------------------- -------- -------- -------- --------
Deferred consideration is recognised at fair value through
profit or loss and is valued using the net present value of the
expected amounts payable based on management's forecasts and
expectations. For more details see Note 14.
13. Lease liabilities
Cars Property Total
GBP'000 GBP'000 GBP'000
--------------------------------------------- ------- -------- -------
At 1 July 2020 - 7,934 7,934
Additions - 396 396
Payments made against lease liabilities - (986) (986)
Finance cost of lease liabilities - 173 173
--------------------------------------------- ------- -------- -------
At 31 December 2020 - 7,517 7,517
Additions - 189 189
Payments made against lease liabilities - (999) (999)
Finance cost of lease liabilities - 162 162
--------------------------------------------- ------- -------- -------
At 30 June 2021 - 6,869 6,869
Additions 47 - 47
Payments made against lease liabilities (2) (1,077) (1,079)
Finance cost of lease liabilities - 145 145
--------------------------------------------- ------- -------- -------
At 31 December 2021 45 5,937 5,982
--------------------------------------------- ------- -------- -------
Analysed as:
Amounts falling due within one year 18 1,419 1,437
Amounts falling due after more than one year 27 4,518 4,545
--------------------------------------------- ------- -------- -------
Total lease liabilities 45 5,937 5,982
--------------------------------------------- ------- -------- -------
In the six months ended 31 December 2021, the Group entered into
a new car leasing arrangement to provide a salary sacrifice car
leasing scheme for employees. Each vehicle leased to individual
employees creates a separate right of use asset (Note 11) and lease
liability measured at present value of the remaining lease
payments, discounted using the lessee's estimated incremental
borrowing rate.
14. Deferred consideration
Deferred consideration is split between non-current liabilities
and current liabilities to the extent that it is due to be paid
within one year of the reporting date. It reflects the Directors'
best estimate of amounts payable in the future in respect of
certain client relationships and subsidiary undertakings that were
acquired by the Group. Deferred consideration is measured at its
fair value based on discounted expected future cash flows. The
movements in the total deferred consideration balance during the
six-month period were as follows:
Six months
ended
Six months
31 Dec 2021 ended Year ended
31 Dec 2020 30 Jun
(unaudited) (unaudited) 2021 (audited)
GBP'000 GBP'000 GBP'000
--------------------------------------------- ------------ ------------- ----------------
At beginning of period 6,237 7,991 7,991
Addition - 308 308
Finance cost of deferred consideration 84 159 299
Change in fair value - 60 60
Payments made during the period (6,000) (421) (2,421)
--------------------------------------------- ------------ ------------- ----------------
At end of period 321 8,097 6,237
--------------------------------------------- ------------ ------------- ----------------
Analysed as:
Amounts falling due within one year 321 7,799 5,934
Amounts falling due after more than one year - 298 303
--------------------------------------------- ------------ ------------- ----------------
At end of period 321 8,097 6,237
--------------------------------------------- ------------ ------------- ----------------
During the year ended 30 June 2020, the Group acquired Cornelian
Asset Managers Group Limited and part of the consideration was
deferred over a period of up to two years. Full details of the
Cornelian acquisition are disclosed in Note 10 of the 2020 Annual
Report and Accounts. The total cash deferred consideration of
GBP8,000,000 was recognised at its fair value of GBP7,466,000 on
acquisition. During the six months ended 31 December 2021, the
Group paid the final deferred consideration amount of GBP6,000,000.
Prior to the payment, the Group recognised a finance cost of
GBP78,000.
During the year ended 30 June 2021, the Group acquired Lloyds
Channel Islands and part of the consideration was deferred over a
period of two years. The total cash deferred consideration of
GBP334,000 was recognised at its fair value of GBP308,000 on
acquisition. The deferred consideration is payable in December 2022
based on the future revenue generated by the discretionary business
acquired. During the six months ended 31 December 2021, the Group
recognised a finance cost of GBP6,000 on the Lloyds Channel Islands
deferred consideration. The fair value of the Lloyds Channel
Islands deferred consideration at 31 December 2021 was GBP321,000,
recognised in current liabilities.
Deferred consideration is classified as Level 3 within the fair
value hierarchy, as defined in Note 12.
15. Provisions
Exceptional
costs of
resolving
legacy Regulatory Leasehold
Client compensation matters levies dilapidations Tax-related Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ------------------- ----------- ---------- -------------- ----------- --------
At 1 July 2020 38 608 1,501 380 - 2,527
Charged to the Condensed
consolidated statement of
comprehensive income 208 - 16 23 - 247
Utilised during the period (169) (8) (1,517) (104) - (1,798)
--------------------------- ------------------- ----------- ---------- -------------- ----------- --------
At 31 December 2020 77 600 - 299 - 976
Charged to the Condensed
consolidated statement of
comprehensive income 139 - 2,202 113 - 2,454
Utilised during the period (216) - (957) 1 - (1,172)
--------------------------- ------------------- ----------- ---------- -------------- ----------- --------
At 30 June 2021 - 600 1,245 413 - 2,258
Charged to the Condensed
consolidated statement of
comprehensive income 160 - - 65 162 387
Reclassified from trade
and other payables - - - - 1,217 1,217
Utilised during the period (126) - (1,145) (113) (280) (1,664)
--------------------------- ------------------- ----------- ---------- -------------- ----------- --------
At 31 December 2021 34 600 100 365 1,099 2,198
--------------------------- ------------------- ----------- ---------- -------------- ----------- --------
Analysed as:
Amounts falling due within
one year 34 600 100 100 1,099 1,933
Amounts falling due after
more than one year - - - 265 - 265
--------------------------- ------------------- ----------- ---------- -------------- ----------- --------
Total provisions 34 600 100 365 1,099 2,198
--------------------------- ------------------- ----------- ---------- -------------- ----------- --------
a) Client compensation
Client compensation provisions relate to the potential liability
arising from client complaints against the Group. Complaints are
assessed on a case by case basis and provisions for compensation
are made where judged necessary. The amount recognised within
provisions for client compensation represents management's best
estimate of the potential liability. The timing of the
corresponding outflows is uncertain as these are made as and when
claims arise.
b) Exceptional costs of resolving legacy matters
Following a review into legacy matters arising from the former
Spearpoint business, which was acquired by the Group in 2012, a
provision was recognised for costs of resolving these including
associated expenses in the years ended 30 June 2017 and 30 June
2018. These matters relate to a number of discretionary portfolios
formerly managed by Spearpoint, now managed by Brooks Macdonald
Asset Management (International) Limited, and a Dublin-based fund,
for which Spearpoint acted as investment manager. During the six
months ended 31 December 2021 no further provisions were made (six
months ended 31 December 2020: GBPnil; year ended 30 June 2021:
GBPnil). During the year ended 30 June 2020, a contingent liability
was recognised in relation to potential claims related to the
legacy matters (Note 20).
c) Regulatory levies
At 31 December 2021 provisions include an amount of GBP100,000
(at 31 December 2020: GBPnil; at 30 June 2021: GBP1,245,000) in
respect of expected levies by the Financial Services Compensation
Scheme ("FSCS").
d) Leasehold dilapidations
Leasehold dilapidations relate to dilapidation provisions
expected to arise on leasehold premises held by the Group, and
monies due under the contract with the assignee of leases on the
Group's leased properties. During the six months ended 31 December
2021, the Group settled dilapidations on the cessation of two
leases for GBP113,000. The non-current leasehold dilapidations
provision relate to expected economic outflow at the end of lease
terms, with the longest lease term ending in four years from the
Condensed consolidated statement of financial position date.
e) Tax-related
During the six months ended 31 December 2021, the Group
recognised a new provision in relation to an input VAT review,
making a voluntary disclosure to HM Revenue and Customs ("HMRC"),
totalling GBP162,000.
The Group also reclassified other tax-related provisions from
trade and other payables, totalling GBP1,217,000. These amounts
were previously voluntarily disclosed to HMRC, however HMRC have
yet to respond on the disclosures and it was therefore deemed more
appropriate to reclassify the balance as a provision. Additionally,
as a result of the HMRC four-year time limitation rules, the Group
has reduced the provision by GBP280,000.
16. Reconciliation of operating profit to net cash inflow from
operating activities
Six months Six months
ended ended Year ended
31 Dec 2021 31 Dec 2020 30 Jun 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
---------------------------------------------- ------------ ------------ ------------
Operating profit before tax 13,452 9,466 20,756
Depreciation of property, plant and equipment 429 463 1,045
Depreciation of right of use assets 797 759 1,614
Amortisation of intangible assets 3,896 3,659 7,682
Other gains/(losses) - net (28) 18 1,438
Decrease in receivables (1,320) (1,408) (2,333)
(Decrease)/increase in payables (9,079) (4,203) 3,765
Decrease in provisions (60) (1,550) (269)
Increase in other non-current liabilities 237 230 218
Share-based payments charge 2,161 1,560 2,991
---------------------------------------------- ------------ ------------ ------------
Net cash inflow from operating activities 10,485 8,994 36,907
---------------------------------------------- ------------ ------------ ------------
17. Share capital and share premium
The movements in share capital and share premium during the six
months ended 31 December 2021 were as follows:
Share
Number Exercise price capital Share premium Total
of shares p GBP'000 GBP'000 GBP'000
------------------------- ---------- ----------------- -------- ------------- --------
At 1 July 2020 16,127,102 161 77,982 78,143
Shares issued:
- on exercise of options 4,134 1,452.0 - 60 60
- to Sharesave scheme 1,700 1,400.0 - 1,738.0 - 29 29
------------------------- ---------- ----------------- -------- ------------- --------
At 31 December 2020 16,132,936 161 78,071 78,232
Shares issued:
- on exercise of options 3,842 1,629.8 - 2,260.0 - 5 5
- to Sharesave Scheme 44,360 1,400.0 - 2,300.0 - 627 627
------------------------- ---------- ----------------- -------- ------------- --------
At 30 June 2021 16,181,138 161 78,703 78,864
Shares issued:
- on exercise of options 6,886 2,360.0 - 2,640.0 1 194 195
- to Sharesave scheme 2,517 2,310.0 - 2,740.0 - 34 34
------------------------- ---------- ----------------- -------- ------------- --------
At 31 December 2021 16,190,541 162 78,931 79,093
------------------------- ---------- ----------------- -------- ------------- --------
The total number of ordinary shares issued and fully paid at 31
December 2021 was 16,190,541 (at 31 December 2020: 16,132,936: at
30 June 2021: 16,181,138).
There was GBP1,000 of share capital issued on exercise of
options for Sharesave and CSOP Scheme members in the six months
ended 31 December 2021 (six months ended 31 December 2020: GBPnil;
year ended 30 June 2021: GBPnil).
Employee Benefit Trust
The Group established an Employee Benefit Trust ("EBT") on 3
December 2010 to acquire ordinary shares in the Company to satisfy
awards under the Group's Long-Term Incentive Scheme and Long-Term
Incentive Plan. At 31 December 2021, the EBT held 534,461 (at 31
December 2020: 548,548; at 30 June 2021: 608,516) 1p ordinary
shares in the Company, acquired for a total consideration of
GBP12,300,000 (at 31 December 2020: GBP9,809,000; at 30 June 2021:
GBP11,000,000) with a market value of GBP14,270,108 (at 31 December
2020: GBP9,013,000; at 30 June 2021: GBP13,908,000). They are
classified as treasury shares in the Condensed consolidated
statement of financial position, their cost being deducted from
retained earnings within shareholders' equity.
18. Equity-settled share-based payments
Share options granted during the six months ended 31 December
2021 under the Group's equity-settled share-based payment schemes
were as follows:
Exercise
price Fair value
-----------
Number
p p of options
------------------------- --------- ------------- -----------
Long Term Incentive Plan nil 1,795 - 1,922 153,726
------------------------- --------- ------------- -----------
No options were granted in respect of the Company's other
equity-settled share-based payment schemes during the six months
ended 31 December 2021. The charge to the Condensed consolidated
statement of comprehensive income for the six months ended 31
December 2021 in respect of all equity settled share-based payment
schemes was GBP2,161,000 (six months ended 31 December 2020:
GBP1,560,000; year ended 30 June 2021: GBP2,991,000).
19. Related party transactions
There were no related party transactions during the six months
ended 31 December 2021 and no balances outstanding at 31 December
2021 owed to or from related parties.
20. Guarantees and contingent liabilities
In the normal course of business, the Group is exposed to
certain legal issues which, in the event of a dispute, could
develop into litigious proceedings and, in some cases, may result
in contingent liabilities. Similarly, a contingent liability may
arise in the event of a finding in respect of the Group's tax
affairs, including the accounting for VAT, which could result in a
financial outflow and/or inflow from the relevant tax
authorities.
A claim for unspecified losses has been made by a client against
Brooks Macdonald Financial Consulting Limited, a subsidiary of the
Group, in relation to alleged negligent financial advice. The
claimant has not yet advised the quantum of their claim so it is
not possible to reliably estimate the potential impact of a ruling
in their favour. There remains significant uncertainty surrounding
the claim and the Group's legal advice indicates that it is not
probable that the claim will be upheld, therefore no provision for
any liability has been recognised at this stage.
Brooks Macdonald Asset Management Limited, a subsidiary company
of the Group, has an agreement with the Royal Bank of Scotland plc
to guarantee settlement for trading with CREST stock on behalf of
clients. The Group holds client assets to fund such trading
activity. Additional levies by the Financial Services Compensation
Scheme may give rise to further obligations based on the Group's
income in the current or previous years. Nevertheless, the ultimate
cost to the Group of these levies remains uncertain and is
dependent upon future claims resulting from institutional
failures.
During the year ended 30 June 2020, a small number of clients
rejected goodwill offers made by Brooks Macdonald Asset Management
(International) Limited in connection with the exceptional costs of
resolving legacy matters, which were released from the provision.
It is possible that one or more of these clients might issue claims
against Brooks Macdonald Asset Management (International) Limited,
and at 31 December 2021, one claim has been issued to Brooks
Macdonald Asset Management (International) Limited, however it is
not possible to estimate with any certainty whether or not any
outflow might result, nor what might be the quantum or timing of
any outflow. As a result, it is not possible to estimate the
potential outcome of claims or to assess the quantum of any
liability with any certainty at this stage.
21. Principal risks and uncertainties
The principal risks and uncertainties facing the Group are in
line with those disclosed and included within the Group's Annual
Report and Accounts for the year ended 30 June 2021.
22. Events since the end of the period
No material events have occurred between the reporting date and
the date of signing the Condensed consolidated financial
statements.
Non-IFRS financial information
Non-IFRS financial information or alternative performance
measures ("APMs") are used as supplemental measures in monitoring
the performance of the Group. The adjustments applied to IFRS
measures to compute the Group's APMs excludes income and expense
categories which are deemed of a non-recurring nature or a non-cash
operating item. The Board considers the disclosed APMs to be an
appropriate reflection of the Group's performance and considered
appropriate for external analyst coverage and peer group
benchmarking.
The Group follows a rigorous process in determining whether an
adjustment should be made to present an alternative performance
measure compared to IFRS measures. For an adjustment to be excluded
from underlying profit as an alternative performance measure
compared to statutory profit, it must initially meet at least one
of the following criteria:
-- It is unusual in nature, e.g. outside the normal course of business and operations.
-- It is a significant item, which may be recognised in more than one accounting period.
-- It has been incurred as a result of either an acquisition,
disposal or a company restructure process.
The Group uses the below APMs:
APM Equivalent IFRS Definition and purpose
measure
-------------------- -------------------- -------------------------------------------------------------
Underlying profit Statutory profit Calculated as profit before tax excluding income and
before tax before tax expense categories which are deemed of a non-recurring
nature or a non-cash operating item. It is considered
by the Board to be an appropriate reflection of the
Group's performance and considered appropriate for
external analyst coverage and peer group benchmarking
-------------------- -------------------- -------------------------------------------------------------
Underlying tax Statutory tax charge Calculated as the statutory tax charge, excluding
charge the tax impact of the adjustments excluded from underlying
profit.
See Note 6 Taxation
-------------------- -------------------- -------------------------------------------------------------
Underlying earnings Total comprehensive Calculated as underlying profit before tax less the
/ Underlying profit income underlying tax charge.
after tax See Note 7 for a reconciliation of underlying profit
after tax and statutory profit after tax.
-------------------- -------------------- -------------------------------------------------------------
Underlying profit Statutory profit Calculated as underlying profit before tax over revenue
margin before tax margin before tax for the period. This is another key metric assessed
by the Board and appropriate for external analyst
coverage and peer group benchmarking.
-------------------- -------------------- -------------------------------------------------------------
Underlying basic Statutory basic Calculated as underlying profit after tax divided
earnings per share earnings per share by the weighted average number of shares in issue
during the period. This is a key management incentive
metric and is a measure used within the Group's remuneration
schemes.
See Note 7 Earnings per share.
-------------------- -------------------- -------------------------------------------------------------
Underlying diluted Statutory diluted Calculated as underlying profit after tax divided
earnings per share earnings per share by the weighted average number of shares in issue
during the period, including the dilutive impact of
future share awards. This is a key management incentive
metric and is a measure used within the Group's remuneration
schemes.
See Note 7 Earnings per share.
-------------------- -------------------- -------------------------------------------------------------
Underlying costs Statutory costs Calculated as total administrative expenses, other
net gains/(losses), finance income and finance costs
and excluding income and expense categories which
are deemed of a non-recurring nature or a non-cash
operating item. This is a key measure used in calculating
underlying profit before tax.
-------------------- -------------------- -------------------------------------------------------------
Segmental underlying Segmental statutory Calculated as profit before tax excluding income and
profit before tax profit before tax expense categories which are deemed of a non-recurring
nature or a non-cash operating item for each segment.
See Note 3 Segmental information.
-------------------- -------------------- -------------------------------------------------------------
Segmental underlying Segmental statutory Calculated as segmental underlying profit before tax
profit before tax profit before tax over segmental revenue.
margin margin
-------------------- -------------------- -------------------------------------------------------------
Statement of Directors' responsibilities
The Directors confirm that the Interim Report and Accounts have
been prepared in accordance with International Accounting Standard
34, 'Interim Financial Reporting', as adopted by the European Union
and that the interim management report includes a fair review of
the information required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the Condensed consolidated
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- material related party transactions in the first six months
and any material changes in the related party transactions
described in the last Annual Report and Accounts.
The Directors of Brooks Macdonald Group plc are listed further
below.
By order of the Board of Directors
Ben Thorpe
Chief Financial Officer
9 March 2022
Independent review report to Brooks Macdonald Group plc
for the six months ended 31 December 2021
Report on the Condensed consolidated financial statements
Our conclusion
We have reviewed Brooks Macdonald Group plc's condensed
consolidated interim financial statements (the "interim financial
statements") in the Interim report and Accounts of Brooks Macdonald
Group plc for the 6 month period ended 31 December 2021 (the
"period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the AIM Rules for Companies.
What we have reviewed
The interim financial statements comprise:
-- the condensed consolidated statement of financial position as at 31 December 2021;
-- the condensed consolidated statement of comprehensive income for the period then ended;
-- the condensed consolidated statement of cash flows for the period then ended;
-- the condensed consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim report
and Accounts of Brooks Macdonald Group plc have been prepared in
accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the AIM Rules for Companies.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Interim report and Accounts, including the interim financial
statements, is the responsibility of, and has been approved by the
directors. The directors are responsible for preparing the Interim
report and Accounts in accordance with the AIM Rules for Companies
which require that the financial information must be presented and
prepared in a form consistent with that which will be adopted in
the company's annual financial statements.
Our responsibility is to express a conclusion on the interim
financial statements in the Interim report and Accounts based on
our review. This report, including the conclusion, has been
prepared for and only for the company for the purpose of complying
with the AIM Rules for Companies and for no other purpose. We do
not, in giving this conclusion, accept or assume responsibility for
any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Interim
report and Accounts and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
9 March 2022
Further information
Directors
Alan Carruthers Chairman
Andrew Shepherd CEO
Ben Thorpe Chief Financial Officer
Lynsey Cross Chief Operations Officer
Robert Burgess Non-Executive Director
Dagmar Kershaw Non-Executive Director
John Linwood Non-Executive Director
Richard Price Non-Executive Director
Financial calendar
Interim results announced 10 March 2022
Ex-dividend date for interim
dividend 17 March 2022
Record date for interim dividend 18 March 2022
Payment date of interim dividend 14 April 2022
Company information
Secretary Phil Naylor
Company registration number 4402058
Registered office 21 Lombard Street, London, EC3V 9AH
Website www.brooksmacdonald.com
Cautionary statement
The Interim Report and Accounts for the six months ended 31
December 2021 has been prepared to provide information to
shareholders to assess the current position and future potential of
the Group. The Interim Report and Accounts contains certain
forward-looking statements concerning the Group's financial
condition, operations and business opportunities. These
forward-looking statements involve risks and uncertainties that
could impact the actual results of operations, financial condition,
liquidity, dividend policy and the development of the industry in
which the Group operates and differ materially from the impression
created by the forward-looking statements. Any forward-looking
statement is made using the best information available to the
Directors at the time of their approval of this report. Past
performance cannot be relied on as a guide to future
performance.
This information is provided by RNS, the news service of the
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END
IR MZGGFGLNGZZZ
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