23rd Jul 2014 07:00
23 July 2014
Brewin Dolphin Holdings PLC
Interim Management Statement
Quarter ended 29 June 2014
Third quarter 2014 Interim Management Statement - Q3 Highlights
The Group has recorded a good performance in the quarter and continues to make progress against its strategic targets.
· Continued growth of net external organic funds into our core discretionary service in line with our 5% per annum long term target. An additional 2% annualised growth in net funds due to successful conversion from advisory services.
· Net outflows from advisory services of £0.4 billion in the quarter as a result of final phase repricing and service review of which £0.1 billion successfully converted to discretionary service.
· 81% of managed/advised funds receive discretionary investment management service - in excess of our target of 80% (29 September 2013: 76%).
· Net new managed/advised funds growth combined with positive investment performance in the quarter resulted in an overall increase of 2% in total managed/advised funds to £29.3 billion.
· Core income of £67.0 million in the quarter 5% higher than Q3 2013 (£63.8 million), albeit lower than anticipated as a result of lower commission income in common with industry trends.
Funds under management
£ billion | 3 months to 29 June 2014 | |||||||
30 March 2014 | Inflows | Outflows | Service switching | Net Flows | Growth Rate % * | Market Movement | 29 June 2014 | |
Discretionary Managed | 22.7 | 0.8 | (0.4) | 0.1 | 0.5 | 9% | 0.5 | 23.7 |
Advisory Managed | 4.5 | 0.0 | (0.1) | (0.2) | (0.3) | (24%) | 0.0 | 4.2 |
Advisory Dealing | 1.5 | 0.0 | (0.1) | 0.0 | (0.1) | (29%) | 0.0 | 1.4 |
Total Advisory | 6.0 | 0.0 | (0.2) | (0.2) | (0.4) | (25%) | 0.0 | 5.6 |
Total Managed/Advised | 28.7 | 0.8 | (0.6) | (0.1) | 0.1 | 2% | 0.5 | 29.3 |
Execution Only | 7.4 | 0.2 | (0.1) | 0.1 | 0.2 | 10% | (0.1) | 7.4 |
Total Funds | 36.1 | 1.0 | (0.7) | 0.0 | 0.3 | 4% | 0.3 | 36.7 |
*Annualised
Indices | 29 June 2014 | 30 March 2014 | Change
| |
FTSE WMA Private Investor Series Balanced Portfolio | 3,435 | 3,380 | 1.6% | |
FTSE 100 | 6,758 | 6,615 | 2.2% |
£ billion | 9 months to 29 June 2014 | |||||||
29 September 2013 | Inflows | Outflows | Service switching | Net Flows | Growth Rate % * | Market Movement | 29 June 2014 | |
Discretionary Managed | 21.3 | 1.8 | (1.0) | 0.3 | 1.1 | 7% | 1.3 | 23.7 |
Advisory Managed | 4.8 | 0.1 | (0.3) | (0.5) | (0.7) | (19%) | 0.1 | 4.2 |
Advisory Dealing | 2.1 | 0.0 | (0.3) | (0.4) | (0.7) | (46%) | 0.0 | 1.4 |
Total Advisory | 6.9 | 0.1 | (0.6) | (0.9) | (1.4) | (27%) | 0.1 | 5.6 |
Total Managed/Advised | 28.2 | 1.9 | (1.6) | (0.6) | (0.3) | (1%) | 1.4 | 29.3 |
Execution Only | 6.7 | 0.7 | (0.5) | 0.6 | 0.8 | 16% | 0.0 | 7.4 |
Total Funds | 34.9 | 2.6 | (2.1) | 0.0 | 0.5 | 2% | 1.4 | 36.7 |
*Annualised
Indices | 29 June 2014 | 29 September 2013 | Change
| |
FTSE WMA Private Investor Series Balanced Portfolio | 3,435 | 3,315 | 3.6% | |
FTSE 100 | 6,758 | 6,513 | 3.8% |
Fund inflows into our core discretionary investment management service of £1.1 billion represent a growth rate of 7% year to date on an annualised basis. The external organic growth rate of 5% is in line with our long term target with an additional 2% annualised growth from the successful conversion of funds from advisory services.
The final phase to move our advisory business onto new standard national pricing structures has continued in the quarter and is still planned to be fully completed by the end of 2014. Whilst the outflows from this review have increased as anticipated, the majority has been retained, either as execution only or successfully converted to our core discretionary service.
Discretionary funds under management now represent 81% (29 September 2013: 76%) of total managed/advised funds, in excess of the target of 80%.
Funds held in relation to the execution only business have grown by 10% to £7.4 billion (29 September 2013: £6.7 billion) benefitting from £0.6 billion of transfers from other services, in particular advisory dealing.
Income
Third quarter ended | Year to date | ||||||
£ million | 29 June 2014 | 30 June 2013 | Change | 39 weeks to 29 June 2014 | 39 weeks to 30 June 2013 | Change | |
Commissions | 20.9 | 23.8 | (12)% | 69.3 | 70.8 | (2)% | |
Fees | 46.1 | 40.0 | 15% | 132.1 | 111.5 | 18% | |
Core Income | 67.0 | 63.8 | 5% | 201.4 | 182.3 | 10% | |
Other | 6.1 | 9.5 | (36)% | 18.0 | 30.0 | (40)% | |
Total Income | 73.1 | 73.3 | n/a | 219.4 | 212.3 | 3% | |
For the third quarter to 29 June 2014 core fee and commission income of £67.0 million was 5% higher than the same period last year (30 June 2013: £63.8 million) whilst total income at £73.1 million was broadly flat (30 June 2013: £73.3 million). In line with first half performance, other income fell by 36%, primarily as a result of the on-going planned reduction in "trail income" post RDR and declining margins on cash deposits.
Core income growth, in common with industry trends, was slower than achieved in the first half due to a marked decline in commission income in the quarter to £20.9 million (12% down on 2013). Whilst lower transactional volumes partially reflect seasonal effects, they are also a result of lower market volatility in the quarter.
Year to date core income is up 10% from £182.3 million in 2013 as a result of increased funds under management and, the move onto new standard national pricing structures. Commission income has fallen by 2% year on year due, as discussed above, to lower trading volumes and market volatility.
Other income declined by 40% to £18.0 million year to date (30 June 2013: £30.0 million) due to the planned switch to non-trail paying fund units and the current low interest rate environment. Other income also includes financial planning revenue which has increased 22% to £9.5 million (30 June 2013: £7.8 million) as a result of the strategy to offer an integrated wealth management service.
The Group's financial position remains strong.
Outlook
The outlook remains positive as the transformation and growth strategy for the business is implemented. Solid performance in the quarter, underpinned by a robust balance sheet, gives us confidence that continued delivery against this strategy will create long term value for both clients and shareholders.
For further information please contact:
David Nicol, Chief Executive
Andrew Westenberger, Finance Director
Matthew Sims, Director of Investor Relations
Brewin Dolphin Holdings PLC
020 7248 4400
Andrew Hayes/Wendy Baker
Hudson Sandler
020 7796 4133
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