results for the year ended · 2020-01-29 · direct private client flows by rate card (£bn)...

Results for the year ended

30 September 2018

28 November 2018

2

AgendaAgenda

1

2

3

4

Key themes

Financial results

Progress on growth

Q&A

3

Continued strong

funds inflows

Investment in services, people

and technology

Earnings and dividend

growth

Growth initiatives being

delivered

Key themes

4

3.85 4.25 4.40

9.15

10.75

12.00

FY 2016 FY 2017 FY 2018

13.0

15.0

16.4

Results highlights

61.0

70.0

77.5

FY 2016 FY 2017 FY 2018

+11%

28.8

33.8

37.6

FY 2016 FY 2017 FY 2018

+17%

16.8

19.6

21.7

FY 2016 FY 2017 FY 2018

Total funds (£bn) Discretionary funds (£bn) Discretionary organic net flows* (£bn)

Adjusted** PBT (£m) Adjusted** diluted EPS (p) Full year dividend (p)

1.1

2.3 2.3

FY 2016 FY 2017 FY 2018

Growth rate

8%

Growth rate

4%

Growth rate

7%

35.4

40.1

42.8

FY 2016 FY 2017 FY 2018

+13%

* Including transfers

** Adjusted to exclude redundancy costs, onerous contracts, amortisation of client relationships, acquisition costs, incentivisation award, FSCS levy refund and impairment/disposal of available-for-sale investments

+7%

+11%

+17%

Adjusted** margin 23.0% 23.6%

+15%

21.6%

+11%

5

Tracking ahead of 2020 growth target

8.2

1.1

3.4

5.7

FY 2015 FY 2016 FY 2017 FY 2018 FY 2020

Target

Growth

* excludes acquired funds and market growth

5 year discretionary growth target – increase of 1/3 by 2020* (£bn)

6

Financial results

7

Financial headlines

£m

FY

2017

FY

2018

Change

(%)

Core income

Other income

291.0

13.5

319.7

9.3

+10

Total income 304.5 329.0 +8

Total operating costs (234.5) (252.3) +8

Adjusted operating profit* 70.0 76.7 +10

Net finance income - 0.8

Adjusted* profit before tax 70.0 77.5 +11

Statutory profit before tax 57.6 68.5 +19

Adjusted* PBT margin (%)

Adjusted* diluted EPS (p)

Total dividend (p)

23.0

19.6

15.0

23.6

21.7

16.4

+11

+9

Cash and cash equivalents

Capital adequacy** (%)

170.0

232

186.2

234

* Adjusted to exclude redundancy costs, onerous contracts, amortisation of client relationships, acquisition costs, incentivisation award, FSCS levy refund and impairment/disposal of available-for-sale investments

** Includes current year profit

8

Total funds up 7% / Discretionary funds up 11%

£bn

FY

2017

Total

net flows

Investment

performance

FY

2018

Growth

%

Private clients

Charities and corporates

Direct discretionary

18.9

4.5

23.4

0.6

0.1

0.7

0.9

0.1

1.0

20.4

4.7

25.1

+8

+7

Bespoke

MPS

Indirect discretionary

8.1

2.3

10.4

1.0

0.6

1.6

0.4

0.1

0.5

9.5

3.0

12.5

+17

+30

+20

Discretionary funds 33.8 2.3 1.5 37.6 +11

Execution only & BPS 3.6 0.6 (0.2) 4.0

Core funds 37.4 2.9 1.3 41.6 +11

Advisory 2.7 (1.4) (0.1) 1.2

Total funds 40.1 1.5 1.2 42.8 +7

9

1.5 1.5

0.90.6

(0.3) (0.4) -3.8%-3.9%

+26.1%

+18.5%+23.1%

+75.0%MPS

Continued strong discretionary fund flows

1.0 1.1

(0.9) (0.9)

+4.7%

-4.3% -3.8%

Direct

Indirect

Inflows

Outflows

25.123.4

0.2 0.51.0

12.5

( 0.1 )

10.4

1.7 0.5

+4.7%

+7%

+20%

FY 2017 FY 2018

£bn (excl. transfers) £bn

3.4 3.2

(1.2) (1.3)

+9.5%

-3.8%

+11.8%

-4.2%

37.6

33.8

1.9 0.41.5

+11%

Total discretionary

FY 2017Net

flows

Net

transfers

Investment

performanceFY 2018

Bespoke

10

(0.6)

0.3

(0.1)

0.3

(0.1) 0.3

Outflows Inflows

0.9

67%

75%

Direct private client flows by rate card (£bn)

(excluding charities and corporates)

(0.8)

Changing direct private client mix

Financial planning

Fee only

Fees & commissions

11

56% -

established

prior to

FY 2015

15% -

established

FY 2018

7% -

established

FY 2017

11% -

established

FY 2016

11% -

established

FY 2015

Broadening and deepening intermediary relationships

Growing funds from existing

and new relationships

36%23%

20%

20%

20%

23%

24%34%

FY 2017 FY 2018

>£50m

£25m - £50m

£10m - £25m

<£10m

Intermediary size

Intermediaries funds by relationship size

103 103

201 160

155

247

165

165

106

232

FY 2015 FY 2016 FY 2017 FY 2018

FY 2016

FY 2015

FY 2017

Inflows from intermediary relationships formed after 2014 (£m)

FY 2018

Year relationship

formed

FY 2018

£1.5bn

inflows

12

17.921.7

FY 2017 FY 2018

Income

£m

FY

2017

FY

2018

Change

(%)

Fees

Commissions

144.1

54.1

153.0

58.6

+6

+8

Direct discretionary 198.2 211.6 +7

Bespoke

MPS

55.3

5.3

64.2

7.6

+16

+43

Indirect discretionary 60.6 71.8 +18

Total discretionary 258.8 283.4 +10

Financial planning

BPS

Execution only

20.8

1.0

10.4

24.5

1.1

10.7

+18

+3

Core income 291.0 319.7 +10

Advisory

Interest

12.9

0.6

6.5

2.8

-50

Total other income 13.5 9.3 -31


87.6 87.0

FY 2017 FY 2018

Direct discretionary income margin (bps)

Recurring advice income (£m)

+21%

13

16%

84%

Client facing &

client support

Central

support

Operating costs

£m

FY

2017

FY

2018

Change

(%)

Staff costs 110.2 117.1 +6

Non-staff costs 71.8 77.5 +8

Fixed operating costs 182.0 194.6 +7

Profit share 52.5 57.7 +10

Total costs 234.5 252.3 +8

Total staff cost / income (%) 53.4 53.1

Non-staff costs / income (%) 23.6 23.6

Total costs / income (%) 77.0 76.7

Profit share / pre profit

share profit (%)42.9 42.9

Investment in headcount, growth initiatives and technology

Headcount increased from 1,614 to 1,699 (+85)

29%24%

11%8% 7%

5% 4% 4%8%

Components of non-staff costs (£77.5m)

53%

14

Cash flow and capex

FY 2017 AdjustedEBITDA

Pensionfunding

Capex Workingcapital

Interest& tax

Net sharepurchases

Dividends Purchase oftrading

investments

Exceptionalitems

FY 2018

170.0

5.0

£m

92.0 (3.0)(8.3)

(11.6)

(13.3)

(41.6)

(2.7)(0.3)

7.6 6.4

2.0

8.3

FY 2015 FY 2016 FY 2017 FY 2018

Capex (£m)

186.2

15

Balance sheet

£m

FY

2017

FY

2018

Goodwill & client relationships

Software

90.5

5.3

83.2

2.5

Total intangible assets 95.8 85.7

Fixed assets

Defined benefit pension

Other non-current assets

3.8

4.5

6.9

8.1

11.4

4.2

Total other non-current assets 15.2 23.7

Net cash

Working capital

Provisions

170.0

(6.3)

(3.8)

186.2

(9.3)

(3.4)

Total net current assets 159.9 173.5

Total non-current liabilities (8.3) (9.2)

Net assets 262.6 273.7

Regulatory capital resources

Capital adequacy (%)

165.2

232

180.8

234

16

Progress on growth

17

Proven strategy for organic growth

Understand our target clients and

their changing needs

Refine proposition to meet those needs

Improve brand awareness

and promise

Enhance services to deliver

that promise

Refocus on distribution and leverage our scale in delivery

18

Complexity of client advice needs

Widening advice spectrum to support client needs

➢Wealth advice service

- Face-to-face delivery

- Advice across all areas of

clients’ financial needs

- Broad range of investment

solutions➢Simplified financial advice

service

- Face-to-face in office & digital

delivery

- Pensions, investment & protection

- Active & passive investment

solutions

➢Non advised self select

investment service

- Fully automated delivery

- £2,000 entry point

- GIA, ISA, JISA & Bare Trusts

- Risk rated passive portfolios

➢Complex financial advice

service

- Face-to-face delivery

- Advice across all areas of

complex clients’ financial needs

- Broad range of investment

solutions

BPS

WealthPilot

Wealth Core

1762

“More choice for more

people”

“Spectrum of yes”

19

Investing in the future of the business

➢ MPS enhancement – new unitised structure saving clients £3m p.a., increased take up in MPS Passive Plus

➢ Digital proposition – enhanced with new corporate website, iOS and Google apps in Q1 2019

Propositions

➢ Intermediaries growth – over 1,700 intermediary partners

➢ Business development structure – dedicated team of 19, local sales support

➢ Professional services proposition – Law Society of Scotland partnership

Distribution

➢ People – 85 new hires and investment in talent development

➢ Regulation – MiFID II/GDPR implemented, ready for SMCR

➢ MyBrewin – 14,000 clients registered to use the platform, 40% using via mobile or tablet

➢ New desktop environment – greater cohesion and collaboration across branch network, flexible/agile working,

greater employee engagement

➢ Client management system – development of replacement system underway

➢ Core custody and settlement system – discussions ongoing with potential vendor

People and operations

20

KPIs

Dividend

growth

Adjusted2 EPS 14.4 16.0 17.1 16.8 19.6 21.7 n.a

Dividends (p)

(dividend payout ratio %)

8.6

(60%)

9.9

(62%)

12.0

(70%)

13.0

(77%)

15.0

(77%)

16.4

(76%)n.a

Revenue

growth

Discretionary fund inflows (%) 6 7 5 4 8 7 5

Net promoter score (-100% / +100%) n/a n/a n/a +45 +48 +44 +291

Overall client satisfaction (n/10) n/a n/a n/a 8.4 8.5 8.5 8.11

Improved

efficiency

Adjusted2 PBT margin (%) 19 21 22 22 23 24 25+

Discretionary funds per CF30

(£m)41 48 53 64 75 80

Employee engagement (%) n/a n/a 76 78 82 83 761

Capital

sufficiencyCapital adequacy ratio (%) 226 241 248 232 232 234

Min

150

1 Benchmark

2 Adjusted to exclude redundancy costs, onerous contracts, amortisation of client relationships, acquisition costs, incentivisation award, FSCS levy refund and impairment/disposal of available-for-

sale investments

3 New target increased from £75m to £100m

100375

21

Conclusion

➢ Strong set of results

➢ Targeted investment in people and infrastructure

➢ Innovation driving new propositions

➢ Growth ahead of target

22

Q & A

23

Appendices

24

Funds summary

£bn

FY

2016

FY

2017

FY

2018

12

month

change

%

Private clients



Bespoke

MPS


16.9

4.2

21.1

6.4

1.3

7.7

18.9

4.5

23.4

8.1

2.3

10.4

20.4

4.7

25.1

9.5

3.0

12.5

+8

+4

+7

+17

+30

+20

Discretionary 28.8 33.8 37.6 +11

BPS

Execution only

0.1

3.5

0.1

3.5

0.1

3.9

-

+11

Core funds 32.4 37.4 41.6 +11

Advisory 3.0 2.7 1.2

Total funds 35.4 40.1 42.8 +7

MSCI WMA Private Investor

Balanced Index1,457 1,545 1,612 +4

FTSE 100 Index 6,899 7,373 7,510 +2

25

FY 2018 core funds flows and transfers

£bn

Private clients



Bespoke

MPS


Discretionary funds

BPS

Execution only

Core funds

Inflows Outflows Net flows

0.9

0.2

(0.8)

(0.1)

0.1

0.1

1.1

1.5

0.6

2.1

(0.9)

(0.4)

-

(0.4)

0.2

1.1

0.6

1.7

3.2 (1.3) 1.9

-

0.3

-

(0.6)

-

(0.3)

3.5 (1.9) 1.6

Total net

flows

0.6

0.1

0.7

1.0

0.6

1.6

2.3

-

0.6

2.9

Growth rate %

Inflows Outflows

Total net

flows

+5

+4

-4

-2

+3

+2

+5

+19

+26

+20

-4

-5

-

-4

+3

+12

+26

+15

+9 -4 +7

-

+8

-

-17

-

+17

+9 -5 +8

Transfers

0.5

-

0.5

(0.1)

-

(0.1)

0.4

-

0.9

1.3

26

Discretionary flows

0.1 0.2 0.30.5

0.90.60.5

0.60.7

0.8

0.9

1.5

1.5

0.9

1.41.4 1.0

1.0

1.0

1.1

(0.1) (0.2) (0.3) (0.3) (0.3) (0.4)(0.4)

(0.9)(1.0)

(1.0)(1.2)

(0.9)(0.9)

Direct

Bespoke

MPSInflows

Outflows

FY 2012 2013 2014 2015 2016 2017 2018

Total gross

inflows1.4 2.1 2.3 2.1 2.4 3.4 3.2

Total gross

outflows(0.4) (1.0) (1.2) (1.3) (1.5) (1.2) (1.3)

£bn

27

Net discretionary funds growth

0.1 0.2 0.30.5

1.0

0.60.50.5

0.50.5

0.6

1.1

1.0

0.50.5

0.70.3

0.2

0.7

0

0.5

1

1.5

2

2.5

Direct

Bespoke

MPS

1.0 1.1 1.4 1.1 1.1 2.3 2.3

6.4 6.0 6.6 4.6 4.4 8.0 6.8

Net flows

including

transfers

Growth rate p.a. %

FY 2012 2013 2014 2015 2016 2017 2018

Total

£bn

28

Fees and commissions

£m

FY

2017

FY

2018

Change

(%)

Fees

Commissions

203.1

55.7

223.7

59.7

+10

+7

Discretionary 258.8 283.4 +10

BPS (Fees only) 1.0 1.1

Fees

Commissions

3.8

6.6

4.4

6.3

+16

-5

Execution only 10.4 10.7 +3

Core fees

Core commissions

207.9

62.3

229.2

66.0

+10

+6

Core fees and commissions 270.2 295.2 +9

Fees

Commissions

9.1

3.8

4.7

1.8

Advisory 12.9 6.5 -50

Total fees

Total commissions

217.0

66.1

233.9

67.8

+8

+3

Total fees and commissions 283.1 301.7 +7

Financial planning

Other

20.8

0.6

24.5

2.8

+18


29

Continued improvement in quality

38

71 714

7 7

41

22 2117

1

2010 FY 2017 FY 2018

Discretionary 51

8488

16

99

33

73

Execution

only

Advisory

Asset mix % Income profile %

FY

2010

FY

2017

FY

2018

FY

2017

FY

2018

Fees

FP income

Commissions

Other Income

FY

2010

30

Total funds and income margin

FY 2017

Average

funds

£bn

FY 2018

Average

funds

£bn

FY 2017

Income

£m

FY 2018

Income

£m

FY 2017

Average

margin

bps

FY 2018

Average

margin

bps

Discretionary 32.0 36.0 258.8 283.4 80.9 78.7

YoY change 13% 10% (3%)

0.

BPS 0.1 0.2 1.0 1.1 70.2 70.3

Execution only 3.4 3.8 10.4 10.7 30.2 27.9

YoY change 12% 3% (8%)

Advisory 2.8 1.6 12.9 6.5 46.2 40.2

YoY change (43%) (50%) (13%)

Total 38.3 41.6 283.1 301.7 73.8 72.5

YoY change 9% 7% (2%)

31

Discretionary funds and income margin

FY 2017

Average

funds

£bn

FY 2018

Average

funds

£bn

FY 2017

Income

£m

FY 2018

Income

£m

Change

%

FY 2017

Average

margin

bps

FY 2018

Average

margin

bps

Direct 22.6 24.3 Fees 144.1 153.0 6% 63.7 62.9

YoY change 8% Commissions 54.1 58.6 23.9 24.1

198.2 211.6 7% 87.6 87.0

Bespoke 7.5 9.0 Fees 53.7 63.1 18% 71.9 70.5


55.3 64.2 16% 74.1 71.8

MPS 1.9 2.7 Fees 5.3 7.6 43% 27.7 27.9

YoY change 42%

Total discretionary 32.0 36.0 Fees 203.1 223.7 10% 63.5 62.1


258.8 283.4 10% 80.9 78.7

32

Statutory PBT reconciliation

£m

FY

2017

FY

2018

Change

(%)

Adjusted* profit before tax 70.0 77.5 +11

Exceptional items

Amortisation of client relationships

(5.7)

(6.7)

(1.4)

(7.6)

-75

+13

Statutory profit before tax 57.6 68.5 +19

Tax (12.5) (15.0) +20

Profit after tax 45.1 53.5 +19

Diluted earnings per share (p) 16.0 18.9 +18

* Adjusted to exclude redundancy costs, onerous contracts, amortisation of client relationships, acquisition costs, incentivisation award, FSCS levy refund and impairment/disposal of available-for-sale investments

33

Regional network

£bn

FY

2017

FY

2018

Change

(%)

London / South East 10.9 11.7 +7

Scotland / Northern England 7.5 8.5 +13

Midlands and Islands 6.7 7.4 +10

South / West & Wales 6.4 7.0 +9

Models 2.3 3.0 +30

Total discretionary funds 33.8 37.6 +11

34

Asset allocation – balanced

Asset class

WMA

Balanced

%

BD

Balanced

%

Cash 5.0 5.0

Gilts

Corporate bonds

UK index linked bonds (O/B)

5.0

10.0

2.5

5.0

9.0

2.0

Bonds 17.5 16.0

UK

North America

Dev’d Europe ex UK

Japan

Asia

Emerging

Overseas

30.0

20.0

4.9

2.6

4.0

1.0

32.5

29.5

21.5

4.5

4.0

5.0

1.0

36.0

Equities 62.5 65.5

Hedge funds / Absolute return (O/B)

UK commercial property

10.0

5.0

10.0

3.5

Alternatives 15.0 13.5

Total 100.0 100.0

35

Dividends

3.55 3.65 3.75 3.85 4.25 4.40

5.056.25

8.259.15

10.7512.00

2013 2014 2015 2016 2017 2018

Interim dividend (p)

Final dividend (p)

Total dividend (p)8.6 9.9 12.0 13.0 15.0 16.4

36

Major shareholders as at 1st November 2018

% holding

Kabouter Management 6.11

Aberforth Partners 5.65

Royal London Asset Management 5.62

BlackRock 3.97

Legal and General Investment Management 3.25

Norges Bank Investment Management 3.18

Vanguard group 3.12

Kames Capital 3.04

Other* 66.06

* of which Brewin Dolphin staff and former staff

including Employee Benefit Trust 15.21

37

Disclaimer

The information contained in this document has been prepared by Brewin Dolphin Holdings PLC (the "Company"). No representation or warranty, express or

implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by the Company or by any of its affiliates or agents as

to or in relation to, the accuracy or completeness of this document or any other written or oral information made available to or publicly available to any

interested party or its advisers, and any liability therefore is expressly disclaimed. Notwithstanding the aforesaid, nothing in this paragraph shall exclude

liability for any undertaking, representation, warranty or other assurance made fraudulently.

This document does not constitute or form part of any offer for sale or solicitation of any offer to buy or subscribe for any securities in the Company nor shall it

or any part of it form the basis of or be relied on in connection with, or act as any inducement to enter into, any contract or commitment whatsoever. No

reliance may be placed for any purpose whatsoever on the information or opinions contained in this document, the presentation or on the completeness,

accuracy or fairness.

Certain statements in this document are forward-looking statements which are based on the Company's expectations, intentions and projections regarding its

future performance, anticipated events or trends and other matters that are not historical facts. These forward-looking statements, which may use words such

as "aim", "anticipates", "believe", "intend", "estimate", "expect" and words of similar meaning, include all matters that are not historical facts. These forward-

looking statements involve risks and uncertainties that could cause the actual results of operations, financial condition, liquidity, dividend policy and the

development of the industry in which the Company's business operates to differ materially from the impression created by the forward-looking statements.

These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause

actual results to differ materially from those expressed or implied by such forward-looking statements. Given these risks and uncertainties, prospective

investors are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of such statements

and, except as required by the FCA, the London Stock Exchange or applicable law, the Company undertakes no obligation to update or revise publicly any

forward-looking statements, whether as a result of new information, future events or otherwise.

Neither the content of the Company's website: www.brewin.co.uk (or any other website), nor the content of any website accessible from hyperlinks on such

websites, is incorporated into, or forms part of this document.

28 November 2018

38

12 Smithfield Street, London, EC1A 9BD

Tel: 020 3201 3900

Email: [email protected]

https://www.brewin.co.uk

results for the year ended · 2020-01-29 · direct private client flows by rate card (£bn)...

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