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33. Contingent liabilities and guarantees
35. Interest in unconsolidated structured entities
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. 34. Related-party transactions Transactions between the Company and its subsidiaries, which are related parties, are eliminated on consolidation. The Company’s individual financial statements include the amounts attributable to subsidiaries. These amounts are disclosed in aggregate in the relevant company financial statements and in detail in the following table:
Structured entities are those entities that have been designed so that voting or similar rights are not the dominant factor in deciding who has control, such as when any voting rights relate to administrative tasks only, or when the relevant activities are directed by means of contractual arrangements. The Group’s interests in consolidated and unconsolidated structured entities are described below. The only consolidated structured entity is the Brooks Macdonald Group Employee Benefit Trust, details of which are given in Note 30. The Group has interests in structured entities as a result of contractual arrangements arising from the management of assets on behalf of its clients. Assets under management within the UK Investment Management segment include those managed within structured entities. These structured entities consist of unitised vehicles such as OEICs, which entitle investors to a percentage of the vehicle’s net asset value. The structured entities are financed by the purchase of units or shares by investors. As fund manager, the Group does not guarantee returns on its funds or commit to financially support its funds. Where external finance is raised, the Group does not provide a guarantee for the repayment of any borrowings. The business activity of all structured entities, in which the Group has an interest, is the management of assets in order to maximise investment returns for investors from capital appreciation and/or investment income. The Group earns a management fee from its structured entities, based on a percentage of the entity’s net asset value. The funds under management of unconsolidated structured entities within both the UK Investment Management and International segments total £1.945 billion (FY23: £2.079 billion). Included in the revenue on the Consolidated statement of comprehensive income is management fee income of £12,148,000 (FY23: £13,722,000) from unconsolidated structured entities managed by the Group.
Amounts owed by related parties
Amounts owed to related parties
2024 £’000
2024 £’000 14,654
2023 £’000
2023 £’000
–
Brooks Macdonald Asset Management Limited
239
–
Brooks Macdonald Asset Management (International) Limited Brooks Macdonald Funds Limited Adroit Financial Planning Limited
162
–
83
–
– –
900 355
– –
900
–
All of the above amounts are interest-free and repayable on demand.
Brooks Macdonald Group plc Annual Report and Accounts 2024
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