Financial review
Table 10 – Own funds reconciliation
3. Driving scale and efficiencies. Remaining focused on managing costs across the business and optimising our technology to best serve clients, freeing up time for our client-facing employees.
surplus corporate cash into financial assets at amortised cost of £30.0 million, refer to Note 16 of the Consolidated financial statements for further information. Combining the financial assets at amortised cost and the cash balance totals £74.7 million at 30 June 2024, an increase of £21.3 million on the prior year. The Group incurred capital expenditure of £1.8 million (FY23: £3.7 million). This comprised technology-related development of £1.7 million (FY23: £3.0 million), property-related and IT and office equipment of £0.1 million (FY23: £0.7 million). Half of the technology- related spend was incurred in connection with continued developments on our partnership with SS&C and amortisation started at the end of July 2022 following the migration, with the capital expenditure amortised over the remaining eight years from migration. Reigniting growth We have a strong business model that consistently delivers for our clients. Our current strengths include a broad investment proposition, strong distribution and brand, a robust investment process yielding attractive returns, and a talented team. Moving forward, we aim to build on these strengths to drive further growth in the attractive markets we serve. Our priority is to return to positive flows, and we have identified three key enablers to achieve this: 1. Delivering excellent client service. This includes working to continually improve our technology delivery to clients, scaling our existing specialist products and creating new products to serve client demand. 2. Broadening and deepening client reach. Improving distribution both directly to clients and to advisers by using data more heavily and effectively. We will also adapt employee incentives to reward retention of client funds as well as winning new business.
FY24 £m
FY23 £m
0.2
Share capital Share premium Other reserves Retained earnings
0.2
83.1
81.8
FY25 guidance and outlook
6.3
9.1
62.7
66.2 157.3
The structural growth opportunity in our industry remains highly attractive, underpinned by demographics, government policy and increasing use of advice. This, coupled with an improving economic outlook gives us strong confidence in delivering our strategy. We anticipate a return to overall positive net flows later in the financial year. We expect to see the established blended revenue yield trend to follow as our Platform MPS business continues to grow at pace, which will drive operational leverage through the business. The International transaction is due to complete by March 2025 with an impact of c. £2 million on group underlying profit in FY25. As we guided at the half year, H2 FY24 interest income was in line with our guidance at £5 million. Following on from that, we expect interest income to be impacted by further BOE base rate reductions. For FY25, we expect client interest turn to be c. £7 million - £8 million. We remain focused on cost discipline and efficiency to ensure we are well-positioned for future growth. Capital expenditure for FY25 is expected to be c. £4 million - £5 million.
Total equity
152.3 (83.2)
Intangible assets (net book value)
(100.6)
6.6
Deferred tax adjustment
7.9
Own funds
75.7
64.6
the requisite levels of regulatory capital and liquidity. The Group forecasts surplus capital and liquidity, factoring in anticipated outflows and proposed dividends, to ensure the perpetual adequacy of capital and liquidity. The FY23 ICARA review was conducted for the year ended 30 June 2023 and signed off by the Board in December 2023. 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 IFPR Public 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 the year were £44.7 million (FY23: £53.4 million) and the Group had no borrowings at 30 June 2024. The reduction in cash balance compared to the previous year was contributed by the Group investing
The Group includes five regulated entities that provide personalised investment management and financial consultancy services to clients within the UK and abroad. These entities comply with regulations set by the Financial Conduct Authority (“FCA”), Jersey Financial Services Commission (“JFSC”), and Guernsey Financial Services Commission (“GFSC”). The Group operates under its parent company, Brooks Macdonald Group plc (“BMG”), which is incorporated and registered in England and Wales, with the UK as its primary business market. The Group’s main operating subsidiary, Brooks Macdonald Asset Management Limited (“BMAM”), is categorised as a MIFIDPRU Non-SNI Firm under the Investment Firms Prudential Regime (“IFPR”) and is authorised and regulated by the FCA. As such, the Group, being the parent entity, is obliged to adhere to MIFIDPRU rules within the IFPR framework and reports to the FCA on a prudential consolidation basis. In compliance with the regulations of the FCA, JFSC, and GFSC, the Group routinely conducts assessments of its regulatory capital and liquidity. This is achieved through the Internal Capital Adequacy and Risk Assessment (“ICARA”) and Adjusted Net Liquid Asset (“ANLA”) evaluations. These include a series of stress tests and scenario analyses to ascertain
Andrea Montague Chief Financial Officer
11 September 2024
38 Brooks Macdonald Group plc Annual Report and Accounts 2024
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