full year results and strategy update · 2020. 11. 25. · benefiting from our diversified business...

Full year results and strategy update

25 November 2020

Agenda

FY20 strategic and financial highlights

Robin Beer, CEO

1

Financial review

Siobhan Boylan, CFO

2

Strategy update

Robin Beer, CEO

3

Conclusion and Q&A4

09:00 am

09:10 am

09:30 am

10:00 am

Sarah Houlston, COO

2 Brewin Dolphin | Full year results and strategy update

Delivering strong results and achieving on our strategic objectives

Good progress across our four strategic objectives

1

Provide more choice

for more clients

• Broadened 1762

proposition to include

Lombard Lending, LMS and

investment propositions

• Launched virtual advice for

WealthPilot

• Over 6,100 BPS accounts at

year end

4

Maintain a proud

culture

• Virtually overnight,

99% of our people

working from home

• Supporting our

communities

2

Further develop our

client experience

• Enhanced MyBrewin portal

and new MyBrewin app

release

• Launched new client

valuation data service to

intermediaries

• Most used DFM, more than

30% of IFAs using the service2

• 95% of Brewin clients would

recommend us to a friend

Inflows1

£2.8bnconsistent with FY19

Total dividend

14.3p

Income

£361.4m (+6.6%)

Adj. PBT

£78.2m (+4.3%)

FY 2020

3

Build a platform for

growth

• Irish acquisition and

integration completed

• Implemented Client

Engage

• Avaloq project

progressing


1. Total discretionary fund inflows

2. Defaqto 2019

Financial reviewSiobhan Boylan | Chief Financial Officer

2.3

1.4

0.9

FY 2018 FY 2019 FY 2020

Growth rate

Positive fund flow performance


Net flows (£bn)

Growth rate (%)

Discretionary funds (£bn) Discretionary organic net inflows1

(£bn)

Total funds (£bn)

Ex-transfers

7% 4% 2%

1.9

5.61.6

4.3

1.4

3.5

37.6

40.1

41.2

FY 2018 FY 2019 FY 2020

+7%

+3%

42.8

45.0

47.6

FY 2018 FY 2019 FY 2020

+6%

+5%

1. Including transfers

77.5 75.0 78.2

FY 2018 FY 2019 FY 2020

-3%+4%

Strong set of results


21.7 20.5 20.4

FY 2018 FY 2019 FY 2020

0%-6%

(252.3)(265.7)

(281.5)

FY 2018 FY 2019 FY 2020

+5%+6%

329.0339.1

361.4

FY 2018 FY 2019 FY 2020

+7%+3%

68.5 62.6 62.1

FY 2018 FY 2019 FY 2020

-9%-1%

4.4 4.4 4.4

12.0 12.0

9.9

FY 2018 FY 2019 FY 2020

16.4

14.3

16.4

1. See adjusted PBT to statutory PBT reconciliation on page 55

Total costs1

(£m)

Adjusted PBT1

(£m)

Total income

(£m)

Statutory

PBT

(£m)

Full year

dividend

(p)

Adjusted

diluted

EPS1

(p)

22.1%Adjusted margin1 23.6% 21.6%

£bn

FY

2019

FY

2020

Opening discretionary funds 37.6 40.1

Inflows 2.8 2.8

Outflows (1.2) (1.4)

Net new flows 1.6 1.4

Transfers (0.2) (0.5)

Net flows including transfers 1.4 0.9

Acquired 0.3 1.0

Investment performance 0.8 (0.8)

Closing discretionary funds 40.1 41.2

Execution only & BPS 4.1 4.3

Advisory 0.8 2.1

Total closing funds 45.0 47.6

MSCI WMA Private Investor

Series Balanced Index1,665 1,568

3.2 2.8 2.8

(1.3) (1.2) (1.3)

(0.1)

• Consistently strong inflows, greater contribution from higher yielding direct inflows. Direct funds growth benefiting from strong integrated inflows (aided by 1762 from Brewin Dolphin) and contribution from BDCIIL1

• Strong client FUM retention - over 96%

• Increased advisory book following BDCIIL acquisition provides opportunity to increase transfers into discretionary business in coming years –successful track record

Discretionary net flow growth offset

by investment performance

Inflows

Outflows

Outflows – low-margin institutional exits

FY18 FY19 FY20£bn

1. Investec Capital & Investments (Ireland) Limited: rebranded to Brewin Dolphin Capital & Investments

(Ireland) Limited (‘BDCIIL’)

Continued positive discretionary net flows despite challenging markets


Benefiting from our diversified business model


0.4

0.1

0.4

0.7Intermediaries

0.4

0.1

0.4

0.5

Direct - Integrated

MPS

FY19 FY20Discretionary net

new flows

(£bn) Direct – IM only

Discretionary inflows

(£bn)

FY19 v FY20

0

0.6

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY15 FY16 FY17 FY18 FY19 FY20

Positive discretionary net new flows every quarter

(£bn)

• Consistent delivery of organic

discretionary fund flows

• Advice-focused strategy paying off

– greater contribution from integrated

fund flows

• Continued demand for advice-

focused wealth management services

– c.60% of direct new business taking

integrated wealth advice services

• Balanced multi-channel approach

aiding resilient delivery of growth

0.9

0.7 0.7

0.5

0.9

0.5

0.8

0.6

Intermediaries MPS Direct - IM only Direct - Integrated

FY19 FY20 FY19 FY20 FY19 FY20FY19 FY20

61% 58%

19% 18%

20% 24%

FY19 FY20

• Recent acquisitions have contributed £19.8m to total income

• Increase in direct income driven by higher trading volumes from market volatility in Q2 20 and Q3 20 with commission income up £3.8m (excl. acquisitions) on prior year

• Indirect income driven by continued strong MPS net flows

• Financial planning income growth largely due to recent acquisitionsand continued growth from the 1762 from Brewin Dolphin proposition

• Other income includes £4.7m contribution from recent acquisitions

62.1 61.8

8.1 9.0

FY19 FY20

70.2 70.8

Income growth driven by advice and acquisitions


Effective direct fee margin

(bps)3

IM

Advice

IFA relationships4

• IFA relationships growing in scale

• Development of more competitive price points

• Stable due to changing income mix

• Growth in integrated service

>£50m

£m

FY

2019

FY

2020

Change

(%)

Direct 217.5 228.8 +5

Intermediaries

MPS

Indirect

67.7

9.1

76.8

67.6

11.2

78.8

-

+23

+3

Total discretionary 294.3 307.6 +5

Financial planning

Other income1

27.5

17.3

33.1

20.7

+20

+20

Total income 339.1 361.4 +7

£bn (quarter end)

Average direct funds 25.0 25.9 +4

Average intermediaries funds 9.6 9.8 +2

Average MPS funds 3.4 4.1 +21

Average discretionary funds 37.9 39.8 +5

Average total funds 42.8 46.1 +8

Quarterly average MSCI PIMFA index2 1,592 1,561 -2

1. Other income includes interest, report writing, execution only, 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

4. Intermediaries funds by relationship size

<£50m

>£100m

70.5 69.0 Intermediaries margin (bps)3

129.9 130.8 125.8

8.4

0.9 2.8

0.4 1.8

7.5

FY19 Inflationary pay rises Hiring BAU Holiday accrual Acquisitions FY20

+3% BAU

139.2

126.7

80.5

74.9

76.6

7.1

5.5

0.3

1.2

2.0

5.2

FY19 Savings Other BAU FSCS levy Acquisitions FY20

-7% BAU

82.1

80.8

Non-staff costs

(£m)Controllable


2. Includes headcount from acquisitions completed in FY19

3. Total costs excludes temporary staff costs, divided by average permanent headcount

4. Accounting adjustment – employees allowed to carry additional annual leave resulting in a cost accrual

5. Savings and costs avoided - includes T&E, staff-related, recruitment, office supplies and marketing

Staff costs

(£m)£m

FY

2019

FY

2020

Change

(%)

Staff costs 126.7 139.2 +10

Non-staff costs 80.8 82.1 +2

Fixed operating costs 207.5 221.3 +7

Profit share 58.2 60.2 +3

Total costs1 265.7 281.5 +6

Headcount ex-acquisitions 1,810 1,894 +5

Acquisitions 54 1102

Headcount 1,864 2,004 +8

Total staff costs / income (%) 54.5 55.2

Non-staff costs / income (%) 23.8 22.7

Total costs / income (%) 78.4 77.9

Profit share / pre profit share profit (%) 44.2 43.0

Profit share per capita (£000)

Total cost per perm. head (£000)3

31.2

138.9

30.0

136.2

-4

-2

4

Disciplined cost control - operating costs ex-acquisitions broadly flat


5

Acquisitions

73%

20%

5%2%

Investing in our technology and infrastructure


Custody and settlement system:

• Expected delivery in the Autumn of

2021

• Complexities of integration in

remote working environment

• Expanded scope; incremental

solutions added to further improve

client experience and introduction

of automation to some processes

• Total capex spend to date £26.5m

Technology

enhancement

(user-experience)

Property1

IT hardware

Systems investment

• Client management system

£5.3m (FY19: £4.6m)

• Custody and settlement system

£20.9m (FY19: £5.6m)

Capital expenditure was £35.6m2

(FY19: £16.7m), slightly higher than

£30m-£33m guided due to delay in

custody and settlement system

1. Property includes office equipment and leasehold improvements

2. Excluding IFRS 16 related right of use additions of £1.9m

Capex spend

Highly cash generative


£m

229.2

180.5

32.0

28.9 8.2

48.4 3.6

19.1 8.3

99.5

0.3

FY19 Acquisitions

(net cash)

Adjusted

EBITDA

Capex Working

capital

Rental

payment

(IFRS 16)

Dividends Acquisition/

integration

costs

Tax, interest

& other

Net share

purchases

FY20

Robust balance sheet


£m

FY

2019

FY

2020

Goodwill, client relationships & brand

Software

104.5

12.7

129.3

45.4

Total intangible assets 117.2 174.7

Fixed assets

Defined benefit pension

Other non-current assets

Right of use assets

10.7

17.4

-

-

9.7

20.3

3.0

38.0

Total other non-current assets 28.1 71.0

Net cash

Working capital

Provisions

229.2

(10.2)

(4.4)

180.5

(17.9)

(4.8)

Total net current assets 214.6 157.8

Lease liabilities

Other non-current liabilities

Total non-current liabilities

-

(22.2)

(22.2)

(45.3)

(23.2)

(68.5)

Net assets 337.7 335.0

Regulatory capital resources

Capital adequacy (%)

216.0

291

161.1

220

*Impact of IFRS 16 lease accounting – gross up the

balance sheet

*Pension scheme investment strategy de-risked in

December 2019

*

Movement in intangible assets (£m)

Acquisition of BDCIIL

Technology/system development

Amortisation

36.0

33.1

(11.6)

Total 57.5

Strong regulatory capital supporting outlook


Capital

resources are

220% of FCA

requirements

Net assets

£335.0m

Capital

deductions

£173.9m

Regulatory

capital

resources

£161.1m

Regulatory

capital

resources

£161.1m

Capital

adequacy

220%

Capital

requirement

including group

risk appetite

150%

£110.0m

Surplus capital

£22.0m

Final dividends

est. £29.1m1

1. Estimated based on issued number of shares as at 30 September 2020

Dividends


3.55 3.65 3.75 3.85 4.25 4.40 4.40 4.40

5.056.25

8.259.15

10.7512.00 12.00

9.90

2013 2014 2015 2016 2017 2018 2019 2020

Interim dividend (p)

Final dividend (p)

Total dividend (p)

Dividend payout ratio8.6

60%

9.9

62%

12.0

70%

13.0

77%

15.0

77%

16.4

76%

16.4

80%

14.3

70%

1.0 0.2 1.5 1.1 1.1 1.2 1.0 1.1 Dividend cover

Dividend policy is to pay 60-80% of annual adjusted diluted earnings per share

Capital management philosophy


ROE metric

Policy unchanged

Capital allocation framework

>150% risk capital

• Entering a period of reinvestment

• Capital allocation framework established

• Introduction of ROE as a guide to be

used for investing organically and

inorganically

− Creates discipline and efficiency

− Historical ROE around 20%

• Capital risk appetite retained at >150%

− Maintaining a strong balance sheet

• Dividend policy of 60%-80% of adj. EPS

Balancing reinvestment and consistent shareholder returns

Updated FY 2021 guidance


Opex Capex

Continue to monitor the impact of Covid-19

on operations and any change in client

behaviours so we can adapt appropriately

Operating costs to grow

mid-single digitFY 2021 capex of around £30m

Custody and settlement system on track for

completion during Autumn 2021

• FY 2021 capex for custody and settlement system

expected to be c.£19m (cost to date: c.£26.5m)

• FY 2021 capex of c.£3m for property1 (FY20: £2.0m)

• Normal run rate capex c.£8m-£10m per year

• Amortisation of systems investment expected to

increase opex by £5m-£6m per year

1. Largely relating to new London

head office at Cannon Street

2. See slide 47 in the appendix

No change to our long-term KPI targets2

Looking ahead, further fasterRobin Beer | Chief Executive Officer

Introduction

My initial thoughts as CEO1

My 2025 ambition2

Our strategic priorities 3


A strong track record in a sector with attractive growth prospects

A highly experienced leadership

team with a strong track record

Operating in a sector with

attractive growth dynamics

• Changing client requirements, demand for advice increasing

− Pension freedoms

− Complexity of legislation

− Increased life expectancy

• Opportunity for consolidation

Executing our

client-focused strategy

• Creation of a fully integrated wealth manager

• Market leading Intermediaries proposition

• Innovation of new propositions and digital user experience for clients

• Successful M&A strategy

• Strong growth of assets, income and profit


1 2 3

Provide more

choice for more

clients

Further develop

our client centric

experience

Build a platform

for growth

Maintain a culture we

are proud of

Our advice-focused strategy supported strong growth across the business

8.0

FY17 FY20

17.5

33.1

+17% CAGR

7.7

14.5

+17% CAGRFinancial planning income

(£m)

FuM

(£bn)

Intermediaries FuM

(£bn)

Growth through acquisitions

FY16 FY20FY16 FY20

FY16 FY20

Achieved our FuM target:

grow organic discretionary

funds by a third over 5 years

FY19FY18

Duncan Lawrie AM Aylwin Ltd

Epoch

ICIIL

Dundee IFA

Total FuMA

acquired

£4.0bn1

1. Includes £0.3bn of AuA


My 2025 vision

Driving

shareholder

returns

Leading advice-focused digitally enabled Wealth Manager

Relevant GrowthEfficient

• Grow client base

• Increase client digital penetration

• Wealth-advice penetration

• Increase profits

• Increase advisors capacity

• Improve margins

Creating shareholder value through organic / inorganic growth and operational improvement


Assessing relevance through external trends and client insight

• Move to self reliance for pension planning

• Financial planning needs are becoming more

complicated with changes in legislations

• Instant/digital valuations, reports and analysis

• Speed, convenience as important as price

• 24/7 access and support

External Clients

Increasing demand

for alternatives &

ESG solutions

• Greater demand for alternatives

• Growth in ESG products

• Greater demand for diverse asset exposure

• Growing need for responsible investment

Changing client

requirements

• Ability to reach customers

• Distribution model post Covid-19

• MPS gaining traction

• Increased life expectancy

• Increase in intergenerational transfers

• Back office integration for Intermediaries

• Preference for digital engagement

Desire for

advice

• Continued shift from DB to DC

• Brexit

• Covid-19 catalyst

Technological

innovation

• Importance of digital interface

• Personalised client interaction

• Data insight capabilities

Trends

Relevant


Our strategic destination

Advice

Self-serve

Analogue Digitally enabled


Our Goal

Wealth managers

High street banks

Private banks & Global wealth managers

D2C & Robo

Finance advisors & networks

Relevant


Investment in

technology

Innovating

our

propositions

Accelerate

our digital

agenda

Expand our

distribution

channels

Maintain a

culture we

are proud of

Build a

platform for

growth

Further develop

our client centric

experience

Provide more

choice for more

clients

Strategic priorities to increase relevance, become more efficient

& drive growth

Our strategic

objectives remain

Inorganic

opportunities

Relevant Efficient Growth


Investment in

technology

Innovating

our

propositions

Accelerate

our digital

agenda

Expand our

distribution

channels

Maintain a

culture we

are proud of

Build a

platform for

growth

Further develop

our client centric

experience

Provide more

choice for more

clients

Our strategic

objectives remain

Inorganic

opportunities




& drive growth

Spectrum of yes, more choice for clients

Complexity of Client Advice Needs

Wealth advice service

Simplified financial

advice service

Non-advised self select

investment service

Complex financial

advice service

BPS

WealthPilot

Wealth Core

1762

Relevant

Propositions


BPSDigital self service

1762Financial planning-led (more complex needs)

WealthPilotManaged portfolio (less complex needs)

Wealth CoreAdvice-led

Our broad range of propositions support client’s life cycle needs

Life transitions that drive the need for advice-focused financial planning

10s 20s 80s70s60s50s40s30s 90s

Propositions

Relevant

Propositions


0

500

1000

1500

2000

0

40

80

120

Attracting a wider range of clients through relevant digital solutions

Age

• Supporting intergenerational wealth

transfers

• Mitigating FuM loss from ageing client base

• Attracting clients at an earlier age

• Efficient and scalable digital delivery

Nu

mb

er

of a

cco

un

ts

Wealth Core & 1762

Nu

mb

er o

f acco

un

ts

BPS

Double new client numbers

Propositions

Relevant

Propositions


0 100

Continually innovating and deepening our client propositions

Investment SolutionsVoyager Fund SeriesESG

• Optimise target market

• Drive growth

• Specific client group

• Success criteria

• Client insight

• Robust governance


Creation Distribution Expansion

Maturity Lifecycle

Investment in

technology

Innovating

our

propositions

Accelerate

our digital

agenda

Expand our

distribution

channels

Maintain a

culture we

are proud of

Build a

platform for

growth

Further develop

our client centric

experience

Provide more

choice for more

clients

Our strategic

objectives remain

Inorganic

opportunities




& drive growth

Sarah Houlston | Chief Operating Officer

Digital and Technology update

Building a digital and data enabled wealth management capability

Digital

Our aims:

• To provide more, higher

quality client interactions,

with a lower cost to serve

• To make the firm accessible

and relevant to a broader

range of clients earlier in their

wealth journey

ClientsData Digital

PeopleLocal wealth managers

Out of hours support teams

Data scientists

Commercial strategists

Technologists

Brewin client systems

Platform integration

Open Banking, savings & investments

Pension dashboard

Client activity triggers

Product applications

Paperless processes

Interactive tools

Self serve capabilities

Document storage

Relevant

Digital


Digital roadmap: step change in digital capabilities

New BPS System Launch

Intermediary Client Onboarding

MyBrewin client reporting suite launch

2020 2021 2022 and beyond

Paper statement migration

Increase MyBrewin penetration

‘Brewin Wealth’ Launch

WealthPilot full launch

Digital Document Sharing / Signing

Digital Tool Consolidation

MyBrewin Enhancements

Direct Client Onboarding

Digital product sales and fulfilment

Intermediary Platform Integration

‘Powered by Brewin’ Capabilities

Digital

Relevant

Digital

Ambition: c.80% digital penetration of our client base


Beginning of 2020

WDX

eXimius

• New cloud-based CRM

and custody and

settlement systems

• Fully integrated systems

with straight through

processing

• Client Engage live in H2

2020

• Enhanced portfolio

rebalancing

Fiscal

Ma

nu

al In

terf

ace

Client Management

Portfolio & Order

Management

Custody & Settlement

Au

tom

ate

d in

terf

ace

End of 2021

MyBrewin BPS

Brewin Wealth WealthPilot

Upgraded New

New technology architecture provides resilience and platform for growth

Client Engage

eXimius

Avaloq

• Aged CRM and custody

and settlement systems

• Systems built stand-

alone, limited integration

and straight through

processing

• Large support overhead

supporting manual

interface

Client Management

Portfolio & Order

Management

Custody & Settlement

TechnologyEfficient

Technology


Custody & settlement system built, advanced stage of integration testing

Technology

Solution Design Core Avaloq Software Build

Extensive software and user acceptance testing

Data migration, rehearsals and training

Readiness and implementation

Avaloq solution validated

Software build underway

2019 2020 2021

Integration build

Avaloq solution

testing commenced

Integration between

Avaloq and Brewin

Systems underway

Testing of integration

Avaloq and Brewin

systems underway

Implementation

over consecutive

weekends to

minimise risk

Migration and

implementation

rehearsals begin

All Software build

complete

✓ ✓ ✓ ✓

✓✓

Avaloq contract

signed

User Acceptance

Testing begins

✓

✓

Efficient

Technology


Improved technology and digital capabilities supports efficiencies

Faster, simpler client journeys

Data led client recommendations

Improved business intelligence

Streamlined client reporting

Straight through processing

Adviser / admin capacity

Tighter business controls

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

• Reduced operational risk

• Scale faster, through increased

capacity and capability

• Better client data – increased

service take up

• Cost efficiencies – improving

margin

• Greater synergies from M&A

Client management

system

Custody & settlement

system

TechnologyEfficient

Technology

Increase by 25% advisor capacity and improve margins


Efficiencies

Investment in

technology

Innovating

our

propositions

Accelerate

our digital

agenda

Expand our

distribution

channels

Maintain a

culture we

are proud of

Build a

platform for

growth

Further develop

our client centric

experience

Provide more

choice for more

clients

Our strategic

objectives remain

Inorganic

opportunities




& drive growth

2020 2024F

c.8%

c.6%

c.4%

c.10%

UK wealth market expected to grow whilst we expand our target market

c.£1.6trn

c.£2.1trn

1. Source: Oliver Wyman

2. Excludes intermediated AUM to remove double counting between financial advisers & networks and wealth managers

Size and growth of the UK wealth

management market1

2020, AUA in £bn

Wealth managers2

High street bank

Private banks & Global

wealth managers

D2C & Robo

Finance advisors &

networks

30%

Expand our target

market captured

through a broad

range of

propositions

2020-2024F

CAGR

c.£560bn

c.£360bn

c.£390bn

c.£240bn

c.£770bn

c.£460bn

c.£460bn

c.£360bn

Growth


Brewin’s market opportunity broadens, through the “spectrum of yes”

Bespoke

managed

Model

portfolios

Self

directed

Non-advised Advised Complex needs

Mass market

<£100k

VHNW

>£5m

Mass affluent

£100-250k

HNW

£1-5m

Affluent

£250k-£1m

Market

definition

Size of market

c.£bn 20201

2020-2024

CAGR growth1

540

340

250

50

3%

4%

10%

9%

Wealth core and intermediaries

WealthPilot 1762

Advice-led

Managed portfolio Less complex needs

Financial planning-

ledMore complex needs

Our opportunity

Intermediaries

BPS

Digital self

service

Growth

Distribution

160 11%

1. Source: Oliver Wyman and Brewin Dolphin

Brewin Dolphin

definition


Broadening our distribution channels, with more choice for clients

2018 2020+

UK

& IR

EL

AN

D B

RA

NC

H

NE

TW

OR

K

PR

OF

ES

SIO

NA

L S

ER

VIC

ES

INT

ER

ME

DIA

RIE

S

CH

AR

ITIE

S

CH

AR

ITIE

S

UK

BR

AN

CH

NE

TW

OR

K

PR

OF

ES

SIO

NA

L S

ER

VIC

ES

INT

ER

ME

DIA

RIE

S

INC

RE

AS

ED

IR

EL

AN

D

OP

PO

RT

UN

ITY

B2

B

ST

RA

TE

GIC

PA

RT

NE

RS

HIP

S

Distribution

Channels

Propositions

& Solutions

BPSWealth

PilotCore 1762

MPS

Core BPSWealth

Pilot

Voyager

FundsMPS ESG

More channels, propositions & solutions

More choice for

more clients

Client prospect

Growth

Distribution

Double new client numbers


Delivered growth through acquisitions, expanding capacity and channels

2. Strategic

• Enhanced financial planning capability/capacity

• Additional distribution channels

• Expanded our services through Mathieson

• Expanded footprint

3. Culture

• Strong cultural fit

• High retention rates

• Smooth integration

Growth

Inorganic

Maintain disciplined approach aligned with our strategic objectives

Successful track record


1. Financial

Disciplined approach£bn

£m

My 2025 ambition

Driving

shareholder

returns


Relevant GrowthEfficient

• Double new client numbers

• c.80% digital penetration of our client base

• 75% of new clients taking wealth-advice services

• Organic doubledigit EPS growth

• Increase advisors capacity by 25%

• Improve operatingmargin

Creating shareholder value through organic / inorganic growth and operational improvement


Appendix

FY21 priorities

Technology

• Delivery of the custody and settlement system

• Prioritise and further develop our digital agenda

Innovation

• Innovate at pace, ensuring we remain relevant to clients and prospects

• Explore ways to improve the client and adviser experience

• Optimise learnings from our data warehouse

Expanding our distribution channels

• Ireland: capture the growing market opportunity

• Intermediaries

• Strategic partners

ESG

• Evolve our corporate ESG initiatives and deliver a relevant client solution

Provide more

choice for more

clients

Further develop

our client centric

experience

Build a platform

for growth

Maintain a culture

we are proud of


Adjusted EPS5 16.8 19.6 21.7 20.5 20.4 n.a

Dividends (p)

Dividend payout ratio

13.0

(77%)

15.0

(77%)

16.4

(76%)

16.4

(80%)

14.3

(70%)

60% -

80%

KPIs

Build a platform for

growth

Adjusted PBT margin3 (%) 22 23 24 22 22 25

Capital adequacy ratio (%) 232 232 234 2914 220Min

150

Provide more choice

for more clients

Discretionary fund inflows (%) 4 8 7 4 2 5

Net promoter score (-100% /

+100%)+45 +48 +44 +51 +51 +381

Further develop our

client centric

experience/

proposition

Overall client satisfaction

(n/10)8.4 8.5 8.5 8.6 8.7 8.41

Discretionary funds per

CFCP (£m)64 75 80 81 772 100

Strategic Objective KPI

FY

2016

FY

2017

FY

2018

FY

2019

FY

2020

Current

target Progress

Maintain a culture we

are proud ofEmployee engagement (%) 78 82 83 87 90 771

RG

RG

IE

RG

IE

IE

CS

CS

RG

IE

CS

Revenue growth

Improved efficiency

Capital efficiency

and shareholder

return

CS

1. Benchmark

2. Excluding the acquisition in Ireland, the measure is £80m


4. 235% post BDCIIL acquisition & IFRS 16

5. See EPS note to the Financial Statements


Financial planning presence and support across branch network


Continued improvement in quality

38

66 68

4

69

41

2522

173 1

Discretionary 51

7887

16

11

9

33

114

Execution

only

Advisory

Asset mix % Income profile %

FY

2010

FY

2015

FY

2020

Fees

FP income

Commissions

Other Income

FY

2015

FY

2020

FY

2010


Funds summary

£bn

FY

2018

FY

2019

FY

2020

12

month

change

%

Private clients

Charities and corporates

Direct discretionary

Intermediaries

MPS

Indirect discretionary

20.4

4.7

25.1

9.5

3.0

12.5

21.4

4.9

26.3

10.0

3.8

13.8

21.6

5.1

26.7

10.1

4.4

14.5

+1

+4

+2

+1

+16

+5

Discretionary 37.6 40.1 41.2 +3

BPS

Execution only

0.1

3.9

0.2

3.9

0.2

4.1

Advisory 1.2 0.8 2.1

Total funds 42.8 45.0 47.6 +6

MSCI PIMFA Private Investor

Balanced Index1,612 1,665 1,568 -6

FTSE 100 Index 7,510 7,408 5,866 -21


Fund flows and transfers

£bn

Private clients

Charities and corporates

Direct discretionary

Intermediaries

MPS

Indirect discretionary

Discretionary funds

BPS

Execution only

Advisory

Total funds

Inflows Outflows

Net new

flows

1.1

0.3

(0.6)

(0.3)

0.5

-

1.4

0.9

0.5

1.4

(0.9)

(0.5)

-

(0.5)

0.5

0.4

0.5

0.9

2.8 (1.4) 1.4

-

0.2

-

(0.5)

-

(0.3)

0.1 (0.1) -

3.1 (2.0) 1.1

Annualised growth rate %

Inflows Outflows

Net new

flows

+5

+6

-3

-6

+2

-

+5

+9

+13

+10

-3

-5

-

-4

+2

+4

+13

+7

+7 -3 +3

+5 -13 -8

+7 -4 +2

Transfers1 Net flows

(0.7)

0.3

(0.2)

0.3

(0.4)

(0.1)

-

(0.1)

0.1

0.3

0.5

0.8

(0.5) 0.9

-

0.5

-

0.2

- -

- 1.1


1. Charities and corporates internal transfers includes a £0.3bn reclassification from private clients related to Brewin Dolphin Wealth Management Limited

Fees and commissions

£m

FY

2019

FY

2020

Change

(%)

Fees

Commissions

231.7

62.6

237.6

70.0

+3

+12

Discretionary 294.3 307.6 +5

BPS (Fees only) 1.2 1.3 +8

Fees

Commissions

4.1

6.2

4.6

6.7

+12

+8

Execution only 10.3 11.3 +10

Fees

Commissions

2.1

0.4

3.6

1.1

+71

+175

Advisory 2.5 4.7 +88

Total fees

Total commissions

239.1

69.2

247.1

77.8

+3

+12

Total fees and commissions 308.3 324.9 +5

Financial planning

Other income

27.5

3.3

33.1

3.4

+20

+3

Total income 339.1 361.4 +7


Total funds and income margin

FY 2019

Average

funds1

£bn

FY 2020

Average

funds1

£bn

FY 2019

Income

£m

FY 2020

Income

£m

FY 2019

Average

margin1

bps

FY 2020

Average

margin1

bps

Discretionary 38.1 39.9 294.3 307.6 77.2 77.3

YoY change 5% 5% -

. .

BPS 0.2 0.2 1.2 1.3 68.6 68.4

Execution only 3.8 4.1 10.3 11.3 27.0 27.8

YoY change 8% 10% 3%

Advisory 0.9 2.0 2.5 4.7 28.1 25.5

YoY change 122% 88% -9%

Total 43.0 46.2 308.3 324.9 71.8 70.7

YoY change 7% 5% -2%

1. Calculated using funds value as at quarter end fee strike dates. Following the completion of the acquisition on 31st October 2019, BDCIIL contributed income to the group for eleven months in FY20. The revenue margins provided are

calculated on the basis that income from BDCIIL was generated for the full twelve months of the period


Discretionary funds and income margin

FY 2019

Average

funds1

£bn

FY 2020

Average

funds1

£bn

FY 2019

Income

£m

FY 2020

Income

£m

Change

%

FY 2019

Average

margin1

bps

FY 2020

Average

margin1

bps

Direct 25.1 26.0 Fees 156.0 159.9 3% 62.1 61.8

YoY change 4% Commissions 61.5 68.9 12% 24.5 26.6

217.5 228.8 5% 86.6 88.4

Intermediaries 9.6 9.8 Fees 66.6 66.5 - 69.4 67.9

YoY change 2% Commissions 1.1 1.1 - 1.1 1.1

67.7 67.6 - 70.5 69.0

MPS 3.4 4.1 Fees 9.1 11.2 23% 27.0 26.5

YoY change 21%

Total discretionary 38.1 39.9 Fees 231.7 237.6 3% 60.8 59.7

YoY change 5% Commissions 62.6 70.0 12% 16.4 17.6

294.3 307.6 5% 77.2 77.3

1. Calculated using funds value as at quarter end fee strike dates. Following the completion of the acquisition on 31st October 2019, BDCIIL contributed income to the group for eleven months in FY20. The revenue margins provided are

calculated on the basis that income from BDCIIL was generated for the full twelve months of the period


Statutory PBT reconciliation

£m

FY

2019

FY

2020

Change

(%)

Profit before tax and adjusted items 75.0 78.2 +4

Acquisition costs

Defined benefit pension scheme past service costs

Onerous contracts

Incentivisation awards

Amortisation of intangible assets - client relationships and brand

Adjusted items

(2.3)

(1.9)

(1.0)

(0.3)

(6.9)

(12.4)

(3.6)

-

(0.2)

(1.2)

(11.1)

(16.1)

Statutory profit before tax 62.6 62.1 -1

Tax (14.5) (14.1)

Statutory profit after tax 48.1 48.0 -

Statutory diluted earnings per share (p) 16.6 15.9 -4

Average number of diluted shares 289.3 301.1


Cash flow full year cycle

229.2

144.1

180.5

32.0

14.1

23.1 3.3

35.4 2.3

13.3 8.2

14.8

4.9

13.0 1.3

5.9

46.6

52.9 23.4

FY 2019 Acquisitions

(net cash)

Adjusted

EBITDA

Capex Working

capital

Rental

payment

(IFRS 16)

Final

dividend

Acquisition/

integration

costs

Tax,

interest &

other

Net share

purchases

H1 2020 Adjusted

EBITDA

Capex Working

capital

Rental

payment

(IFRS 16)

Interim

dividend

Acquisition/

integration

costs

Tax,

interest &

other

FY 2020


Regional network

£bn

FY

2019

FY

2020

Change

(%)

London / South East 12.5 12.5 +1

Scotland / Northern England 8.8 8.7 -1

Central and Islands 6.0 7.1 +18

Midlands and South West 9.0 8.4 -7

Models 3.8 4.4 +16

Total discretionary funds 40.1 41.2 +3


Asset allocation (balanced) as at 30 September 2020

Asset class

WMA

Balanced

%

BD

Balanced

%

Cash 5.0 6.0

Gilts

Corporate bonds

UK index linked bonds (O/B)

5.0

10.0

2.5

3.5

10.0

1.5

Bonds 17.5 15.0

UK

North America

Dev’d Europe ex UK

Japan

Asia

Emerging

Overseas

30.0

20.8

4.4

2.2

4.3

0.8

32.5

29.0

23.2

5.0

2.5

5.5

1.8

38.0

Equities 62.5 67.0

Hedge funds / Absolute return (O/B)

UK commercial property

10.0

5.0

10.0

2.0

Alternatives 15.0 12.0

Total 100.0 100.0


Major shareholders as at 1 November 2020

% holding

Janus Henderson Investors 5.0

BlackRock 4.9

Royal London Asset Management 4.8

Aberforth Partners 4.6

Vanguard Group 3.9

M&G Investment Management 3.9

JPMorgan Asset Management 3.7

Aegon Asset Management 3.5

Legal and General Investment Management 3.5

Other1 62.2

1. Of which Brewin Dolphin staff and

former staff including Employee Benefit Trust 13.7


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November 2020


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full year results and strategy update · 2020. 11. 25. · benefiting from our diversified business...

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