Results for the half year ended 31 March 2020 1
Leadership team David Nicol Siobhan Boylan Robin Beer Chief Executive Chief Financial Officer Managing Director of Investment Solutions & Distribution 2
Agenda Agenda 4 – 6 1 Highlights and COVID-19 update 8 – 18 2 Financial results 20 – 24 3 Strategic progress Q&A 25 4 27 – 41 Appendix 5 3
H1 2020 highlights Discretionary inflows £1.5bn ➢ Resilient financial performance Total funds ➢ Strong total flows, 2.7% annualised £41.4bn growth rate Total income ➢ Income growth supported by acquisitions, £175.8m MPS and advice-led services ➢ Swift integration of BDCIIL 1 Adjusted PBT 2 £36.5m ➢ Strong balance sheet and cash of £144.1m Adjusted diluted EPS 3 9.5p ➢ Capital adequacy ratio of 204% ➢ Dividend held at 4.4p Interim dividend 4.4p 1 Rebranded from Investec Capital & Investments (Ireland) Limited (“ICIIL") 2 See adjusted PBT to statutory PBT reconciliation on page 35 3 See note 8 of the interim results to 31 March 2020 4
Our response to COVID-19 Moved rapidly to a remote business model • Values-led decision making Investment in our • 99% of our people working from home people • Multiple wellbeing initiatives provided to employees • Daily calls with leadership team; governance and oversight for real-time decision making Agile processes • Increased frequency of engagement with clients, shift to digital comms • All employees set up for remote-working Resilient systems • Robust systems and controls to mitigate risks prior to COVID-19 Business continuity maintained 5
Our brand is recognised and known for trusted advice Feedback from clients… Recent client survey 1 “Thank you very much for all the letters I have received. The information is comforting and I really appreciate it. I’m sure that you are doing your best 95% would for me” recommend Brewin Dolphin “It's times like this, that we are glad that we are with to a friend Brewin - hopefully your forward planning and investment in technology will make a real difference going forward.” IFA: “Great catch up with Brewin - our regular market updates are a great way for us to stay informed on the current approach being taken... allows our clients to be in the best possible position in this evolving market” 1 Survey of Brewin Dolphin clients, April 2020. Q. “Would you recommend Brewin Dolphin to a close friend?” (Y / N). 2,000 responses 6
Financial results Siobhan Boylan 7
Strong fund flows despite volatile markets… Discretionary organic net flows 3 (£bn) Total funds (£bn) Discretionary funds (£bn) Annualised 7.7 % 4.3 % 2.5% -2% growth rate +7% 42.4 -5% 41.4 +9% 39.7 35.7 37.5 1.3 34.3 0.8 0.5 H1 2018 H1 2019 H1 2020¹ H1 2018 H1 2019 H1 2020² H1 2018 H1 2019 H1 2020 • MSCI PIMFA Private Investor Balanced Index fell by 14.5% and the FTSE 100 Index fell by 23.4% in H1 2020 1 Total funds includes £2.7bn from acquisitions 2 Discretionary funds includes £1.0bn from acquisitions 3 Including transfers 8
…supporting resilient financial results Total costs 1 (£m) Adjusted 1 PBT (£m) Total income (£m) +9% +8% +3% 0% -8% +3% (138.6) 175.8 (127.6) 161.8 162.3 (123.3) 38.8 36.5 35.6 Adjusted margin 1 24.0% 21.9% 20.8% H1 2018 H1 2019 H1 2020 H1 2018 H1 2019 H1 2020 H1 2018 H1 2019 H1 2020 Adjusted 1 diluted EPS (p) Statutory PBT (£m) Interim dividend (p) -8% -4% 9.9 -13% 10.8 9.5 -5% 4.4 4.4 4.4 34.1 29.7 28.2 H1 2018 H1 2019 H1 2020 H1 2018 H1 2019 H1 2020 H1 2018 H1 2019 H1 2020 1. See adjusted PBT to statutory PBT reconciliation on page 35 9
Positive net flows supported by MPS and 1762 H1 H1 Discretionary net flows excl. transfers (£bn) £bn 2019 2020 Direct H1 2020 H1 2019 Opening discretionary funds 37.6 40.1 Intermediaries Inflows 1.4 1.5 MPS 0.2 0.3 Outflows (0.4) (0.7) 0.4 0.4 Net new flows 1.0 0.8 0.2 0.3 Transfers (0.2) (0.3) Net flows including transfers 0.8 0.5 Direct Acquired - 1.0 ➢ Discretionary direct net new flows £0.2bn continue to Investment performance (0.9) (5.9) benefit from growth of integrated service and 1762 from Brewin Dolphin . Irish business adding to organic inflows Closing discretionary funds 37.5 35.7 ➢ H1 2020 includes a one-off outflow from a low margin Execution only & BPS 4.0 3.9 large institutional client Advisory 0.9 1.8 ➢ 60% of new private client business taking advice-led Total closing funds 42.4 41.4 wealth management services Indirect MSCI PIMFA Private Investor 1,587 1,423 Balanced Index ➢ Indirect channel annualised net new flows of 8.7% with net flows in-line with H1 2019 despite challenging investor sentiment ➢ Defaqto satisfaction survey: Brewin Dolphin, most used DFM 10
Growth driven by integrated services & acquisitions H1 H1 Change ➢ Acquisitions have contributed £9.3m to total income; 2019 2020 (%) representing 69% of the growth £m ➢ Increase in direct income driven by higher trading volumes Direct 103.5 111.1 +7 from market volatility in Q2 20 with commission income up £3.3m (excl. acquisitions) Intermediaries 32.9 33.2 +1 ➢ Indirect income driven by strong MPS growth MPS 4.2 5.2 +24 Indirect 37.1 38.4 +4 ➢ Financial planning income growth largely due to recent acquisitions (£1.9m) and continued growth from 1762 from Total discretionary 140.6 149.5 +6 Brewin Dolphin Financial planning 12.6 16.4 +30 ➢ Other income includes £0.5m contribution from our recent acquisition of Mathieson Consulting Other income 1 9.1 9.9 Total income 162.3 175.8 +8 £bn (quarter end) Direct fee margin (bps) 3 Average total funds 41.3 45.0 +9 Intermediaries margin (bps) 3 70.5 71.2 Average discretionary funds 36.5 38.8 +6 Advice 8.1 9.1 Average direct funds 24.2 25.4 +5 Average indirect funds 12.3 13.4 +9 71.1 69.9 IM 62.4 62.1 Quarterly average MSCI 1,536 1,551 +10 PIMFA index 2 H1 2019 H1 2020 H1 2019 H1 2020 1 Other income includes interest, report writing, XO, advisory and rental income 2 Average MSCI PIMFA Private Investor Series Balanced Index 3 Revenue margin calculated using funds value as at each quarter’s fee strike date 11
Increase in costs largely driven by acquisitions H1 H1 Change Staff costs (£m) £m 2019 2020 (%) Staff costs 63.2 70.2 +11 Non-staff costs 37.8 40.3 +7 Fixed operating costs 101.0 110.5 +9 3.9 70.2 Profit share 26.6 28.1 +6 +5% BAU 1.1 Total costs 1 127.6 138.6 +9 66.3 2.0 1.4 (1.4) Headcount 1,768 1,950 +10 63.2 Total staff cost / income (%) 55.3 55.9 H1 2019 Pay inflation Temp staff Hiring Other² BAU Acquisitions H1 2020 Non-staff costs / income (%) 23.3 22.9 Total costs / income (%) 78.6 78.8 Fixed operating costs ➢ Increase of £6.2m resulting from acquisitions: Profit share / pre profit 43.4 43.0 ➢ Staff cost increase of £3.9m share profit (%) ➢ Non-staff cost increase of £2.3m ➢ Non-staff costs (ex. acquisitions) flat compared to H1 2019 Profit share ➢ Profit share 6% higher largely due to acquisitions. H1 2020 discretionary profit share provided for on an accrual basis ➢ Down 4% per capita in H1 2020 compared to H1 2019 1 See adjusted PBT to statutory PBT reconciliation on page 35 2 Other increase in cost of sales and holiday pay accrual 12
Investing in our infrastructure and technology H1 2020 capex spend of £17.2m (H1 2019: £5.6m) IT hardware Property 1 4% Client Engage and custody and 8% settlement system Technology enhancement • Client Engage £2.5m (FY 2019: £4.6m) 16% (user-experience) • Custody and settlement systems £9.9m (FY 2019: £5.6m) 72% Amortisation of both projects expected to increase opex by £4m-£5m from FY 2021 Normal run rate capex c.£10m per year 1 Property includes office equipment and leasehold improvements 13
138.8 H1 2019 Strong cash position, cyclical low in H1 £m 43.9 Adjusted EBITDA 9.7 Capex 28.1 Working capital 13.0 Interim dividend 10.8 M&A Pension funding, 6.5 interest, tax & other 58.4 Placing 229.2 FY 2019 46.6 Adjusted EBITDA Acquisitions 32.0 (net cash) 14.1 Capex 23.1 Working capital 3.3 Rental payment 35.4 Final dividend 2.3 Acquisition costs Pension funding, 13.3 interest, tax & other Net share 8.2 purchases 144.1 H1 2020 14
Balance sheet FY H1 £m 2019 2020 Movement in intangibles: • Acquisition of BDCIIL £35.0m Goodwill & client relationships 104.5 134.1 • Technology/ system development £15.2m Software 12.7 27.9 • Amortisation (£5.4m) Total intangible assets 117.2 162.0 £44.8m Fixed assets 10.7 10.9 Pension scheme investment strategy Defined benefit pension 17.4 23.2 de-risked in December 2019 Other non-current assets - 3.0 Right of use assets - 40.9 Total other non-current assets 28.1 78.0 Net cash 229.2 144.1 Impact of IFRS 16 lease accounting- Working capital (10.2) 8.0 gross up the balance sheet Provisions (4.4) (4.3) Total net current assets 214.6 147.8 Lease liabilities - (48.8) Other non-current liabilities (22.2) (20.8) Total non-current liabilities (22.2) (69.6) Net assets 337.7 318.2 Regulatory capital resources 216.0 151.6 Capital adequacy (%) 291 204 15
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