Making a difference
Realising ambitions, securing futures
Annual Report and Accounts
for the year ended 30 June 2022
Contents
Introduction
Making a difference
Our investment case
Strategic report
Chairman’s statement
CEO’s review
Business model
Marketplace
Our services
Supporting our clients and advisers
Our strategy
Key performance indicators
Financial review
Risks
Viability statement
How we engage with our stakeholders
Corporate responsibility report
Corporate governance
Introduction to Corporate governance
Board overview
Board and Committee structure
Board of Directors
Executive Committee
Audit Committee report
Nominations Committee report
Remuneration Committee report
Risk and Compliance Committee report
Report of the Directors
Statement of Directors’ responsibilities
Independent Auditors’ report
Financial statements
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Company financial statements
Company statement of financial position
Company statement of changes in equity
Company statement of cash flows
Notes to the Company financial statements
Other information
Non-IFRS financial information
Company information
Glossary
Our offices
02
03
06
08
12
14
16
20
24
26
28
40
46
48
52
70
71
74
77
82
86
90
92
108
112
114
116
124
125
126
127
128
170
171
172
173
181
182
183
184
Introduction
Strategic report
Corporate governance
Financial statements
Highlights
Highlights
of the year
of the year
Strategic progress
Financial highlights
Positive net flows throughout
the year, now five
successive quarters
BMIS more than doubled
FUM, MPS overall
up 25%
Underlying profit margin
up to 28.2%
in line with the Group's
commitment to top
quartile margin over the
medium term
Major milestone on
digital transformation,
with all of our client- and
adviser-facing processes
now live on the SS&C
platform (shortly after
year end)
Announced
acquisition of
Integrity Wealth
Solutions in May,
subject to regulatory
approval
Funds under management
Revenue (£m)
Underlying
Underlying profit
(“FUM”) (£bn)
£15.7bn
16.5
15.7
13.7
profit before tax (£m)
margin before tax (%)
£122.2m £34.5m 28.2%
118.2
122.2
108.6
34.5
30.6
28.2
25.9
21.2
23.0
FY20
FY21
FY22
FY20
FY21
FY22
FY20
FY21
FY22
FY20
FY21
FY22
Statutory profit
before tax (£m)
Underlying basic
Statutory basic earnings
Total dividend
earnings per share (p)
per share (p)
per share (p)
£29.5m 174.1p
149.0p
71.0p
29.5
25.1
174.1
155.6
124.1
149.0
125.3
71.0
63.0
53.0
10.0
43.2
FY20
FY21
FY22
FY20
FY21
FY22
FY20
FY21
FY22
FY20
FY21
FY22
The underlying figures represent the results for the Group’s activities excluding underlying adjustments as listed
on page 35. These represent alternative performance measures (“APMs”) for the Group. Refer to the Non-IFRS
financial information section on page 181 for a glossary of the Group’s APMs, their definition, and the criteria for how
underlying adjustments are considered. A reconciliation between the Group statutory and underlying profit before
tax is included on page 35.
Brooks Macdonald Group plc / Annual Report and Accounts 2022
01
Contents
Introduction
Making a difference
Our investment case
Strategic report
Chairman’s statement
CEO’s review
Business model
Marketplace
Our services
Supporting our clients and advisers
Our strategy
Key performance indicators
Financial review
Risks
Viability statement
How we engage with our stakeholders
Corporate responsibility report
Corporate governance
Introduction to Corporate governance
Board overview
Board and Committee structure
Board of Directors
Executive Committee
Audit Committee report
Nominations Committee report
Remuneration Committee report
Risk and Compliance Committee report
Report of the Directors
Statement of Directors’ responsibilities
Independent Auditors’ report
Financial statements
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Company financial statements
Company statement of financial position
Company statement of changes in equity
Company statement of cash flows
Notes to the Company financial statements
Other information
Non-IFRS financial information
Company information
Glossary
Our offices
02
03
06
08
12
14
16
20
24
26
28
40
46
48
52
70
71
74
77
82
86
90
92
108
112
114
116
124
125
126
127
128
170
171
172
173
181
182
183
184
Highlights
Highlights
of the year
of the year
Positive net flows throughout
the year, now five
successive quarters
BMIS more than doubled
FUM, MPS overall
up 25%
Underlying profit margin
up to 28.2%
in line with the Group's
commitment to top
quartile margin over the
medium term
Major milestone on
digital transformation,
with all of our client- and
adviser-facing processes
now live on the SS&C
platform (shortly after
year end)
Announced
acquisition of
Integrity Wealth
Solutions in May,
subject to regulatory
approval
Introduction
Strategic report
Corporate governance
Financial statements
Strategic progress
Financial highlights
Funds under management
(“FUM”) (£bn)
Revenue (£m)
Underlying
profit before tax (£m)
Underlying profit
margin before tax (%)
£15.7bn
£122.2m £34.5m 28.2%
16.5
15.7
13.7
118.2
122.2
108.6
34.5
30.6
28.2
25.9
21.2
23.0
FY20
FY21
FY22
FY20
FY21
FY22
FY20
FY21
FY22
FY20
FY21
FY22
Statutory profit
before tax (£m)
Underlying basic
earnings per share (p)
Statutory basic earnings
per share (p)
Total dividend
per share (p)
£29.5m 174.1p
149.0p
71.0p
29.5
25.1
174.1
155.6
124.1
149.0
125.3
71.0
63.0
53.0
10.0
43.2
FY20
FY21
FY22
FY20
FY21
FY22
FY20
FY21
FY22
FY20
FY21
FY22
The underlying figures represent the results for the Group’s activities excluding underlying adjustments as listed
on page 35. These represent alternative performance measures (“APMs”) for the Group. Refer to the Non-IFRS
financial information section on page 181 for a glossary of the Group’s APMs, their definition, and the criteria for how
underlying adjustments are considered. A reconciliation between the Group statutory and underlying profit before
tax is included on page 35.
Brooks Macdonald Group plc / Annual Report and Accounts 2022
01
Making a difference
The Group’s strategy is underpinned by our mission to
protect and enhance our clients' wealth, enabling them
to realise their ambitions and secure their futures.
Clients
Private clients
Trustees
Pension funds
Independent Financial Advisors
We make a difference for the advisers in our network by
understanding their clients’ needs, challenges and concerns,
delivering consistently robust investment performance, and
providing additional support to their businesses.
Support and innovation
We drive innovation in our products and services.
We have a range of specialist products – Responsible
Investment, Decumulation, Court of Protection, and AIM –
and our B2B BM Investment Solutions offering for advisers
has been enormously successful.
Services
We offer a comprehensive range
of investment products and services, sold
direct or through intermediaries, from
bespoke discretionary portfolios to model
portfolios and unitised solutions.
Centr a l i s e d Invest
P r o cess
Centralised Investment
Process
m
e
n
t
Our CIP identifies the best
investment ideas in our team
and makes sure they are shared
as widely as possible, making a
difference by protecting and
enhancing our clients’ wealth.
Read more about our Centralised
Investment Process on pages 16 to 17
Read more about our
services on pages 18 to 19
Read more about our
clients on pages 20 to 23
02
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Making a difference
Our investment case
Introduction
Strategic report
Corporate governance
Financial statements
The Group’s strategy is underpinned by our mission to
protect and enhance our clients' wealth, enabling them
to realise their ambitions and secure their futures.
Clients
Private clients
Trustees
Pension funds
Independent Financial Advisors
We make a difference for the advisers in our network by
understanding their clients’ needs, challenges and concerns,
delivering consistently robust investment performance, and
providing additional support to their businesses.
Support and innovation
We drive innovation in our products and services.
We have a range of specialist products – Responsible
Investment, Decumulation, Court of Protection, and AIM –
and our B2B BM Investment Solutions offering for advisers
has been enormously successful.
Services
We offer a comprehensive range
of investment products and services, sold
direct or through intermediaries, from
bespoke discretionary portfolios to model
portfolios and unitised solutions.
Centr a l i s e d Invest
P r o cess
Centralised Investment
m
e
n
t
Process
Our CIP identifies the best
investment ideas in our team
and makes sure they are shared
as widely as possible, making a
difference by protecting and
enhancing our clients’ wealth.
why
1
Market opportunity
Strong fundamental market opportunity,
driven by demographic, regulatory and
technological changes.
3
Strong culture
and brand
Strong brand, particularly among UK
financial advisers, with reputation
for consistent investment
process and commitment to
client service.
Strong Centralised
Investment Process,
driving consistently robust
investment returns for clients.
5
Centralised
Investment Process
Compelling investment proposition,
differentiated set of specialised BPS
products, funds and unitised solutions,
and business-to-business investment
solutions tailored to adviser.
7
Broad investment
proposition
Delivery capability
2
Clear vision for Brooks Macdonald as
the leading investment manager for
intermediaries, with complementary
advice-led Private Clients business.
Distribution
reach
4
Strong relationships in intermediary
channel, positioned to take
advantage of robust demand
for outsourced investment
management.
Building market-leading
intermediary experience and
client service levels, through
our digital transformation in
partnership with SS&C.
Service
excellence 6
Strong leadership team with depth
of investment management, adviser-
facing and client-facing experience,
complemented by functional expertise.
Quality of
leadership team 8
Read more about our Centralised
Investment Process on pages 16 to 17
Read more about our
services on pages 18 to 19
Read more about our
clients on pages 20 to 23
Read more about our investment case in the
Strategic report on pages 12 to 25
02
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
03
Strategic report
A comprehensive review
of our business and strategy
Chairman’s statement
CEO’s review
Business model
Marketplace
Our services
Supporting our clients and advisers
Our strategy
Key performance indicators
Financial review
Risks
Viability statement
How we engage with our stakeholders
Corporate responsibility report
06
08
12
14
16
20
24
26
28
40
46
48
52
04
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Corporate governance
Financial statements
Strategic report
A comprehensive review
of our business and strategy
Chairman’s statement
CEO’s review
Business model
Marketplace
Our services
Supporting our clients and advisers
Our strategy
Key performance indicators
Financial review
Risks
Viability statement
How we engage with our stakeholders
Corporate responsibility report
06
08
12
14
16
20
24
26
28
40
46
48
52
04
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Chairman’s statement
An excellent first year under
the leadership of Andrew
Shepherd as CEO.
Alan Carruthers
Chairman
Introduction
I am pleased to report that Brooks Macdonald has had an
excellent first year under the leadership of Andrew Shepherd
as CEO. Despite challenging market conditions, the Group set
records for revenue, underlying profit and underlying profit
margin. The closing FUM figure of £15.7 billion was delivered
through positive and improving net flows, offset by the impact
on asset values of declining and volatile markets. After the
Group’s net flows returned to being positive in Q4 of the
previous financial year, they remained positive throughout
the twelve months to 30 June 2022, delivering 4.8% organic net
new business for the year. The fourth quarter (three months
to 30 June 2022) was particularly pleasing with an annualised
positive net flows rate of 6.7%.
Our Centralised Investment Process continues to deliver
strong performance over the medium and longer term,
underpinning our mission to protect and enhance our clients’
wealth. Our investment performance remains robust versus
our peer group, as measured by the ARC indices, particularly
over 3, 5 and 10 years. Overall Group investment performance
for this financial year was (9.6)%, driven by three factors: the
overall market decline, which affected both equity markets
(MSCI All Countries World Index was down 12.3%) and bond
markets (Bloomberg Gilts Total Return Index fell 14.3%);
exposure to small- and medium-sized companies, which is
common across the wealth management industry; and the
impact of equity volatility on some of the portfolios the Group
runs for clients with higher risk appetite.
Performance overview
Brooks Macdonald continues to grow strongly, driven
by our strategy of focusing on intermediaries, alongside
our complementary Private Clients business. Underlying
profit before tax was £34.5 million, up 12.7% on the year
(FY21: £30.6 million), and underlying basic earnings per share
(“EPS”) was up 11.9% to 174.1p (FY21: 155.6p).
06
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Chairman’s statement
Introduction
Strategic report
Corporate governance
Financial statements
An excellent first year under
the leadership of Andrew
Shepherd as CEO.
Alan Carruthers
Chairman
174.1p
71.0p
Underlying basic EPS up 11.9% to 174.1p from the
FY21 figure of 155.6p.
Dividend up 8.0 p or 12.7% to 71.0p
(FY21: 63.0p).
Introduction
I am pleased to report that Brooks Macdonald has had an
excellent first year under the leadership of Andrew Shepherd
as CEO. Despite challenging market conditions, the Group set
records for revenue, underlying profit and underlying profit
margin. The closing FUM figure of £15.7 billion was delivered
through positive and improving net flows, offset by the impact
on asset values of declining and volatile markets. After the
Group’s net flows returned to being positive in Q4 of the
previous financial year, they remained positive throughout
the twelve months to 30 June 2022, delivering 4.8% organic net
new business for the year. The fourth quarter (three months
to 30 June 2022) was particularly pleasing with an annualised
positive net flows rate of 6.7%.
Our Centralised Investment Process continues to deliver
strong performance over the medium and longer term,
underpinning our mission to protect and enhance our clients’
wealth. Our investment performance remains robust versus
our peer group, as measured by the ARC indices, particularly
over 3, 5 and 10 years. Overall Group investment performance
for this financial year was (9.6)%, driven by three factors: the
overall market decline, which affected both equity markets
(MSCI All Countries World Index was down 12.3%) and bond
markets (Bloomberg Gilts Total Return Index fell 14.3%);
exposure to small- and medium-sized companies, which is
common across the wealth management industry; and the
impact of equity volatility on some of the portfolios the Group
runs for clients with higher risk appetite.
Performance overview
Brooks Macdonald continues to grow strongly, driven
by our strategy of focusing on intermediaries, alongside
our complementary Private Clients business. Underlying
profit before tax was £34.5 million, up 12.7% on the year
(FY21: £30.6 million), and underlying basic earnings per share
(“EPS”) was up 11.9% to 174.1p (FY21: 155.6p).
Statutory profit before tax rose 17.5% to £29.5 million
(FY21: £25.1 million). Statutory basic EPS rose 18.9% to 149.0p
(FY21: 125.3p).
Delivering our strategy
We have a clear strategy based on the three value drivers
of market-leading organic growth, service and operational
excellence, and selective high-quality M&A. We have
continued to deliver against all three drivers:
• On organic growth, our focus on BM Investment Solutions
and our Managed Portfolio Service (both in custody and on
third-party platforms) has been highly successful with FUM
growth of 25%.
• We have driven improvements in our adviser experience
and client service levels, with all client- and adviser-facing
processes moving to the SS&C platform shortly after year
end, continuing our digital transformation.
• We announced the acquisition of Integrity Wealth
Solutions, subject to regulatory approval.
In parallel, we have maintained our focus on the culture of the
business and taken forward Our Promise, which is the Group’s
commitment to its people, to deliver an inclusive culture,
fulfilling careers, and great recognition.
Dividend
The Board has recommended a final dividend of 45.0p (FY21:
40.0p), which, subject to approval by shareholders, will
result in total dividends for the year of 71.0p (FY21: 63.0p).
This represents an increase of 12.7% in total dividend on
the previous year and underlines the Board’s confidence
in the prospects for the Group, despite the challenging
macroeconomic environment, and our commitment to a
progressive dividend policy. The final dividend will be paid on
4 November 2022 to shareholders on the register at the close of
business on 23 September 2022.
Board changes
There were two changes to the Board during the financial year.
As mentioned in last year’s Annual Report and Accounts, our
CEO, Andrew Shepherd, and the Group Chief Operating Officer,
Lynsey Cross, were appointed to the Board with effect from
13 July 2021.
Looking ahead
The UK macroeconomic outlook in the short term remains
highly uncertain, with high inflation, a cost of living crisis,
increasing interest rates, and recessionary risks. Nonetheless,
the fundamental opportunity for Brooks Macdonald remains
strong, driven by demographic and policy trends as well
as increasing adviser demand for outsourced investment
management. The Group has a strong balance sheet,
consistently supportive shareholders and an ambitious growth
agenda. We look to the future with confidence.
Alan Carruthers
Chairman
14 September 2022
Read more about our Corporate
governance on pages 70 to 115
Read more about our
performance on pages 28 to 39
06
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
07
CEO’s review
Another year of strong
performance, making a
difference for our clients,
intermediaries and colleagues.
Andrew Shepherd
CEO
Introduction
I am delighted that my first full year as CEO of Brooks
Macdonald has been another year of record performance
across a number of dimensions, further demonstrating the
strength and resilience of our business model.
The ongoing macroeconomic and market conditions have
been challenging for all our stakeholders, and I thank them for
their support. I am pleased that our positive and improving net
flows show that our clients and their intermediaries recognise
and value our products and services. I am also extremely
grateful to our people who, over recent years, have dealt with
Brexit, the pandemic and a global economic crisis whilst,
despite all that, maintaining their service and commitment to
our clients and their intermediaries.
Delivering our strategy
Brooks Macdonald’s strategy is founded on the three value
drivers of organic growth, service and operational excellence,
and selective high-quality acquisitions. We are committed to
delivering consistently top quartile underlying profit margins,
through building on the sustainable and scalable business
model we have put in place. We continue to make progress,
ready to capitalise on the growth opportunities we see ahead,
achieving higher returns as we go.
A core element of our strategy, alongside our robust
Centralised Investment Process and our compelling
investment proposition, is delivering a high-quality
intermediary experience alongside exceptional client
service. We are committed to continuous improvement on
that dimension and I am delighted that, shortly after our
financial year end, we reached a major milestone in our digital
transformation when we went live with all our client- and
intermediary-facing processes on the SS&C platform.
08
Brooks Macdonald Group plc / Annual Report and Accounts 2022
CEO’s review
Introduction
Strategic report
Corporate governance
Financial statements
Another year of strong
performance, making a
difference for our clients,
intermediaries and colleagues.
Andrew Shepherd
CEO
£122.2m
Revenue reached a new record of £122.2m driven
by strong flows and robust investment performance.
28.2%
Achieved a further increase in underlying profit
margin of 2.3 points on prior year, delivering on
our commitment.
Introduction
I am delighted that my first full year as CEO of Brooks
Macdonald has been another year of record performance
across a number of dimensions, further demonstrating the
strength and resilience of our business model.
The ongoing macroeconomic and market conditions have
been challenging for all our stakeholders, and I thank them for
their support. I am pleased that our positive and improving net
flows show that our clients and their intermediaries recognise
and value our products and services. I am also extremely
grateful to our people who, over recent years, have dealt with
Brexit, the pandemic and a global economic crisis whilst,
despite all that, maintaining their service and commitment to
our clients and their intermediaries.
Delivering our strategy
Brooks Macdonald’s strategy is founded on the three value
drivers of organic growth, service and operational excellence,
and selective high-quality acquisitions. We are committed to
delivering consistently top quartile underlying profit margins,
through building on the sustainable and scalable business
model we have put in place. We continue to make progress,
ready to capitalise on the growth opportunities we see ahead,
achieving higher returns as we go.
A core element of our strategy, alongside our robust
Centralised Investment Process and our compelling
investment proposition, is delivering a high-quality
intermediary experience alongside exceptional client
service. We are committed to continuous improvement on
that dimension and I am delighted that, shortly after our
financial year end, we reached a major milestone in our digital
transformation when we went live with all our client- and
intermediary-facing processes on the SS&C platform.
This is a critical step in our digital transformation, giving
our clients and their intermediaries improved digital self-
service capabilities, complementing the high-quality of our
face-to-face relationships. The platform includes automated
onboarding, full intermediary and client portal functionality,
and bespoke reporting.
The migration has been a massive effort and I want to thank
all our staff for their commitment and indeed patience as we
continue the work to embed and refine the new processes and
systems.
However, although this is a major milestone, it is by no means
the end of our digital transformation, which will continue with
further improvements in, for example, our use of data and the
application of artificial intelligence.
We announced another building block in our M&A agenda
with the acquisition of Integrity Wealth Solutions ("Integrity"),
an IFA firm whom we have worked closely with for almost a
decade now. We expect the acquisition to complete, subject to
regulatory approval, later this calendar year. As well as being
an important addition to our Private Clients business, Integrity
will give us deeper insight into the products and services a
high-quality, growing IFA firm values from a discretionary fund
manager. This was one of a number of M&A discussions and
going forward we expect further acquisitions.
We continue to review how we can further help the
intermediaries we know well and with whom we have built a
long-term trust-based relationship. While we do not set out to
be a consolidator of IFAs, we are keen to give the opportunity
to successful financial advisers, like Integrity, to join a larger
wealth management company, and we expect this to become
an increasingly important part of our proposition. We firmly
believe that the biggest single factor in successful integration of
acquisitions is complementary cultures, so working with firms
we know well gives us a head start in integration.
Financial performance
We had another year of strong financial performance in FY22,
continuing to deliver on our medium-term commitment to
top quartile margins, with the underlying profit margin up
2.3 points to 28.2%. We also delivered record revenue and
underlying profit levels of £122.2 million and £34.5 million
respectively.
Statutory profit before tax rose 17.5% to £29.5 million
(FY21: £25.1 million).
Our year-end closing FUM was £15.7 billion. Net flows were
positive in all quarters, 4.8% at Group level for the full year, and
reaching an annualised level of 6.7% for the final quarter. Total
FUM was down 4.8% over the year, with the decline being the
result of strong flows offset by the impact of declining markets
on asset values. We have a strong pipeline going into FY23,
although market conditions are resulting in some clients taking
longer to commit funds.
Investment performance and
market conditions
Investment performance for the year came in at (9.6)%, with
declining markets bringing down FUM totals. Nonetheless, our
investment performance remains strong for client portfolios
over 3, 5 and 10 years against peers as represented by ARC
benchmarks.
The path of investment markets over the year was complex,
with the market environment favouring different asset classes
and different investment styles at different times. In the first
quarter, equities were strong and Brooks Macdonald's growth
and mid-cap positions performed well. Later in 2021, equity
sentiment worsened, with smaller companies most affected.
Active funds, which tend to have a smaller companies skew,
therefore underperformed, which was negative for the Group
given our active bias. During 2022, the market has focused on
08
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
09
CEO’s review continued
inflationary risks, resulting initially in good performance for
our short-duration bond positions but declines in our growth-
orientated equity positions. The last quarter of our financial
year saw investors shift focus to possible recessionary risks,
leading to falls across asset classes. Brooks Macdonald
performed broadly in line with peers.
Looking ahead, we expect inflation to begin to moderate in the
United States but remain sticky in Europe. Despite the higher
yields now available in bond markets, equities remain our
preferred asset class given the lower valuations after the sell-
off to date in 2022. The impact of inflation is creating a catalyst
for flows as clients look to 'put money to work' to help offset the
effect of rising prices on real returns.
Review of business performance
UK Investment Management
In UK Investment Management (“UKIM”), led by Robin Eggar
and his team, we have continued to provide high-quality
service to clients and intermediaries across the UK. We have
seen positive net flows throughout the year, reaching an
annualised rate of 8.6% at UKIM level in the final quarter. The
standout performance was from BM Investment Solutions
(“BMIS”), our business-to-business offering, where we
work with an adviser firm to provide a tailored investment
proposition, in either model portfolio or fund format, to meet
the needs of their clients. Over the course of FY22, the team
continued to build on their previous success, signing a series of
material deals.
Our Platform Managed Portfolio Service (“PMPS”) also had
a good year. PMPS is the platform version of our traditional
custody Managed Portfolio Service (“MPS”) and we have
continued to increase the number of platforms where it is
available, now up to over 20 of the most popular platforms, and
this has helped drive strong growth in the year. BMIS and PMPS
combined to deliver the material majority of our net flows over
the year.
In our flagship Bespoke Portfolio Service (“BPS”) product, we
have continued to see good growth in our specialist offerings,
the AIM Portfolio Service, the Responsible Investment Service,
our Decumulation Service, and our Court of Protection
service. The continued success of these more specialised
offerings highlights how we have been able to innovate to meet
developing client needs.
In common with much of the industry, our Funds business had
a challenging year, with persistent net outflows. Within that,
our Defensive Capital Fund (“DCF”) had a stronger year, with a
particular highlight being positive investment performance in
such a difficult year, although flows continued to be affected
by the ongoing downturn in sentiment in the Investment
Association’s Targeted Absolute Return sector.
We see multi-asset funds as a major potential source of
growth for Brooks Macdonald, and we have therefore started
repositioning our Funds business, with the first step being a
material repricing of our Cornelian Risk Managed Fund range
to drive medium-term growth.
During the year, we opened offices in Southampton and
Birmingham, replacing our former offices in Fareham and
Leamington Spa respectively, to improve facilities for clients
and colleagues, and to access a larger group of intermediaries
and greater pools of wealth.
Private Clients
Our new Private Clients arm, bringing together Financial
Planning and UKIM direct client investment management
services, has also had strong flows and has restructured
processes to ensure our direct clients receive the best
possible service. The acquisition of Integrity Wealth Solutions
(expected to complete, subject to regulatory approval,
later this calendar year) brings further scale, capability and
management expertise to our Private Clients business, and
we look forward to welcoming Martin Lindsey and his team to
the Group.
International
In International, Richard Hughes’ first full year since he took
over from me as CEO International has been a good one, with
improving flows and solid commercial performance in difficult
market conditions. We opened a new Isle of Man office, which
we expect to be an increasing source of business growth,
particularly through our referral agreement with Lloyds Bank.
People
I am personally committed to ensuring that we support the
talent we have in the business, as well as bringing in new, high-
quality hires. The aim of our people agenda is to enable our
strategy by attracting, engaging and retaining the best talent
in the industry. The people agenda is founded on our Guiding
Principles (see page 54) and promoting and advancing our
culture is a core priority for me. The current focus of our people
agenda, what we call 'Our Promise,' is to offer an inclusive
culture, fulfilling careers, and great recognition.
Among internal promotions this year, we brought two more
of our most talented internal leaders on to the Executive
Committee in March: Caroline Abbondanza, our Chief
Technology Officer, and Simon Broomfield, our General
Counsel. I am also delighted to welcome Sarah Ackland as
our new Global Head of Distribution. Sarah is an experienced
senior executive with deep expertise in the UK retail funds
market, most recently at Liontrust and Architas, and took up
her post after the financial year end.
10
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Corporate governance
Financial statements
Outlook
One year into my tenure as CEO, we are well positioned to
take advantage of the opportunities facing Brooks Macdonald,
despite the external macroeconomic and markets challenges.
We will build on our success to date:
• Driving organic growth, both through intermediaries and
among private clients;
• Ensuring service and operational excellence, building
on our migration of all client- and intermediary-facing
processes to the SS&C platform to further our digital
transformation; and
• Executing selective high-quality acquisitions.
We will also continue to deliver top quartile profit margins and
improving returns.
The fundamental opportunity for Brooks Macdonald remains
strong. An ageing population, a supportive policy environment
that both encourages individuals to save for their retirement
and gives them pension freedoms to invest as they please,
plus growing wealth in our target demographic, all combine
to give us a highly positive market opportunity so long as
we continue to deliver strong investment performance
alongside exceptional client service.
We have a strong team and we are well positioned for the
future, with deep experience in navigating a wide range of
economic conditions. I would like to finish by reiterating
my thanks to our clients, the intermediaries we work
with, and our people for their continuing support.
I look forward with excitement to what we can
achieve together.
Andrew Shepherd
CEO
14 September 2022
CEO’s review continued
inflationary risks, resulting initially in good performance for
We see multi-asset funds as a major potential source of
our short-duration bond positions but declines in our growth-
growth for Brooks Macdonald, and we have therefore started
orientated equity positions. The last quarter of our financial
repositioning our Funds business, with the first step being a
year saw investors shift focus to possible recessionary risks,
material repricing of our Cornelian Risk Managed Fund range
leading to falls across asset classes. Brooks Macdonald
to drive medium-term growth.
performed broadly in line with peers.
During the year, we opened offices in Southampton and
Looking ahead, we expect inflation to begin to moderate in the
Birmingham, replacing our former offices in Fareham and
United States but remain sticky in Europe. Despite the higher
Leamington Spa respectively, to improve facilities for clients
yields now available in bond markets, equities remain our
and colleagues, and to access a larger group of intermediaries
preferred asset class given the lower valuations after the sell-
and greater pools of wealth.
off to date in 2022. The impact of inflation is creating a catalyst
for flows as clients look to 'put money to work' to help offset the
Private Clients
effect of rising prices on real returns.
Review of business performance
UK Investment Management
In UK Investment Management (“UKIM”), led by Robin Eggar
and his team, we have continued to provide high-quality
service to clients and intermediaries across the UK. We have
seen positive net flows throughout the year, reaching an
annualised rate of 8.6% at UKIM level in the final quarter. The
standout performance was from BM Investment Solutions
(“BMIS”), our business-to-business offering, where we
work with an adviser firm to provide a tailored investment
proposition, in either model portfolio or fund format, to meet
the needs of their clients. Over the course of FY22, the team
continued to build on their previous success, signing a series of
material deals.
Our new Private Clients arm, bringing together Financial
Planning and UKIM direct client investment management
services, has also had strong flows and has restructured
processes to ensure our direct clients receive the best
possible service. The acquisition of Integrity Wealth Solutions
(expected to complete, subject to regulatory approval,
later this calendar year) brings further scale, capability and
management expertise to our Private Clients business, and
we look forward to welcoming Martin Lindsey and his team to
the Group.
International
In International, Richard Hughes’ first full year since he took
over from me as CEO International has been a good one, with
improving flows and solid commercial performance in difficult
market conditions. We opened a new Isle of Man office, which
we expect to be an increasing source of business growth,
Our Platform Managed Portfolio Service (“PMPS”) also had
particularly through our referral agreement with Lloyds Bank.
a good year. PMPS is the platform version of our traditional
custody Managed Portfolio Service (“MPS”) and we have
continued to increase the number of platforms where it is
available, now up to over 20 of the most popular platforms, and
this has helped drive strong growth in the year. BMIS and PMPS
combined to deliver the material majority of our net flows over
the year.
People
I am personally committed to ensuring that we support the
talent we have in the business, as well as bringing in new, high-
quality hires. The aim of our people agenda is to enable our
strategy by attracting, engaging and retaining the best talent
in the industry. The people agenda is founded on our Guiding
Principles (see page 54) and promoting and advancing our
In our flagship Bespoke Portfolio Service (“BPS”) product, we
have continued to see good growth in our specialist offerings,
culture is a core priority for me. The current focus of our people
agenda, what we call 'Our Promise,' is to offer an inclusive
the AIM Portfolio Service, the Responsible Investment Service,
culture, fulfilling careers, and great recognition.
our Decumulation Service, and our Court of Protection
service. The continued success of these more specialised
offerings highlights how we have been able to innovate to meet
developing client needs.
Among internal promotions this year, we brought two more
of our most talented internal leaders on to the Executive
Committee in March: Caroline Abbondanza, our Chief
Technology Officer, and Simon Broomfield, our General
In common with much of the industry, our Funds business had
Counsel. I am also delighted to welcome Sarah Ackland as
a challenging year, with persistent net outflows. Within that,
our Defensive Capital Fund (“DCF”) had a stronger year, with a
particular highlight being positive investment performance in
our new Global Head of Distribution. Sarah is an experienced
senior executive with deep expertise in the UK retail funds
market, most recently at Liontrust and Architas, and took up
such a difficult year, although flows continued to be affected
her post after the financial year end.
by the ongoing downturn in sentiment in the Investment
Association’s Targeted Absolute Return sector.
10
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Business model
Over the 31 years of Brooks Macdonald’s existence, our business model has successfully supported our mission to protect and enhance
our clients’ wealth through the provision of investment management and financial planning, alongside exceptional client service. We
are proud that we have made a difference through our consistent delivery of robust investment performance through our Centralised
Investment Process and exceptional client service through the client-centric, 'can-do' attitude of the people we recruit.
Our key resources
We work…
Expertise
… with financial advisers
Advisers select Brooks Macdonald because of the resources we
bring to bear on protecting and enhancing their clients’ wealth
The adviser determines which of the firm’s services is most
suitable for the client, based on their risk profile and their financial
objectives
We implement the service selected and work with the adviser to
ensure the client’s portfolio is managed appropriately
In some cases, we provide a white-labelled service for the adviser,
typically based on model portfolios or unitised solutions
We build strong relationships with our advisers and can, on
occasion, provide a potential exit route for those looking to sell
their business
… directly with private clients
Some clients approach us directly for financial planning, when
we can work with the client directly to understand whether they
need one-off advice or more regular financial planning
We can provide independent 'whole of market' advice, or on
a restricted basis, including the provision of our investment
management services if they are suitable for the client
In all cases where we provide an investment management service,
we manage the client’s portfolio with the same investment rigour.
We deliver consistent robust investment performance through
our Centralised Investment Process and exceptional client service
through the client-centric, 'can-do' attitude of the people we recruit.
We have deep expertise in investment management and
financial planning. We apply that expertise through our
investment process, whether working through intermediaries
or directly with private clients, to ensure that each portfolio is
managed to meet the client’s risk profile and requirements, and
ultimately to meet their long-term needs.
People
Our people are our greatest strength and we focus on attracting
and retaining the best talent in the industry. We work to increase
the capability of our people continuously across all levels of the
organisation through a combination of developing our internal
talent and making selective key hires, and we have a powerful
mix of long-term Brooks Macdonald experience and fresh ideas
from elsewhere.
Culture
Our client-centric culture is driven by our Guiding Principles, defined
by our people in 2018: we do the right thing, we are connected, we
care and, of course, our theme for this year’s Annual Report, we
make a difference. These principles underpin everything that we do.
Centralised Investment Process
Our Centralised Investment Process is core to delivering our
best ideas consistently to all our clients through collective asset
allocation and asset selection processes, supported by a set
of investment rules on, for example, liquidity, that guide our
decision making.
Financial resources
Brooks Macdonald has a strong balance sheet and supportive
shareholders. The business is highly cash-generative and has
zero debt.
12
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Corporate governance
Financial statements
Business model
Over the 31 years of Brooks Macdonald’s existence, our business model has successfully supported our mission to protect and enhance
our clients’ wealth through the provision of investment management and financial planning, alongside exceptional client service. We
are proud that we have made a difference through our consistent delivery of robust investment performance through our Centralised
Investment Process and exceptional client service through the client-centric, 'can-do' attitude of the people we recruit.
Our key resources
We work…
How we do it
We have a robust product development and governance process
to determine which solutions are appropriate to our clients and the
broader market, and to ensure they remain appropriate. We deliver
our services through a network of 14 offices across the UK and the
Crown Dependencies.
Our Centralised Investment Process helps ensure both consistency of
outcome for clients with similar requirements and economies of scale
for the business.
We use our knowledge of our clients and intermediaries to drive
innovation, delivering products and services that meet their
evolving needs
How we make a difference
for our stakeholders
Clients
We help our clients realise their ambitions and secure their
futures by protecting and enhancing their wealth through our
investment management and financial planning services.
Our investment management businesses work closely with
professional advisers both internally and externally
Advisers
Our network of offices puts us close to our clients, with the
geographic reach to build strong relationships with clients and
advisers alike
The professional advisers we work with receive a range of
services to support their client relationships, and peace of mind
that investment management is being conducted consistently,
with deep market insight and in a robustly compliant manner.
Our competitive advantages
1
2
3
Robust Centralised Investment Process
Consistent strong performance, ahead of ARC
benchmarks across core risk profiles for 3, 5 and 10 years.
Rigorous process giving consistency of outcomes to
clients with similar needs.
Compelling investment proposition
Comprehensive range of investment products
and services, addressing full scope of clients’ and
intermediaries’ needs. Core and specialist bespoke
services complemented by model-based and unitised
services, plus the more business-to-business BM
Investment Solutions offering.
Best-in-class client and adviser service
Quality and commitment of our people delivering
consistently outstanding service and now supported
by market-leading digital offering, delivered with our
technology partner SS&C.
Employees
We continuously improve the strong people proposition we
have developed, which is called 'Our Promise' and is aimed at
attracting and retaining the best people in the industry.
Shareholders
Shareholders benefit from the performance of the Group
through both capital growth and progressive dividends.
Expertise
… with financial advisers
Advisers select Brooks Macdonald because of the resources we
bring to bear on protecting and enhancing their clients’ wealth
The adviser determines which of the firm’s services is most
suitable for the client, based on their risk profile and their financial
objectives
We implement the service selected and work with the adviser to
ensure the client’s portfolio is managed appropriately
In some cases, we provide a white-labelled service for the adviser,
typically based on model portfolios or unitised solutions
We build strong relationships with our advisers and can, on
occasion, provide a potential exit route for those looking to sell
their business
… directly with private clients
Some clients approach us directly for financial planning, when
we can work with the client directly to understand whether they
need one-off advice or more regular financial planning
We can provide independent 'whole of market' advice, or on
a restricted basis, including the provision of our investment
management services if they are suitable for the client
In all cases where we provide an investment management service,
we manage the client’s portfolio with the same investment rigour.
We deliver consistent robust investment performance through
our Centralised Investment Process and exceptional client service
through the client-centric, 'can-do' attitude of the people we recruit.
We have deep expertise in investment management and
financial planning. We apply that expertise through our
investment process, whether working through intermediaries
or directly with private clients, to ensure that each portfolio is
managed to meet the client’s risk profile and requirements, and
ultimately to meet their long-term needs.
Our people are our greatest strength and we focus on attracting
and retaining the best talent in the industry. We work to increase
the capability of our people continuously across all levels of the
organisation through a combination of developing our internal
talent and making selective key hires, and we have a powerful
mix of long-term Brooks Macdonald experience and fresh ideas
People
from elsewhere.
Culture
Our client-centric culture is driven by our Guiding Principles, defined
by our people in 2018: we do the right thing, we are connected, we
care and, of course, our theme for this year’s Annual Report, we
make a difference. These principles underpin everything that we do.
Centralised Investment Process
Our Centralised Investment Process is core to delivering our
best ideas consistently to all our clients through collective asset
allocation and asset selection processes, supported by a set
of investment rules on, for example, liquidity, that guide our
decision making.
Financial resources
Brooks Macdonald has a strong balance sheet and supportive
shareholders. The business is highly cash-generative and has
zero debt.
12
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
13
Marketplace
Short-term trends
Long-term trends
UK and global economy
Changing product preferences
Demographic changes
Market conditions: The UK economy, in common
with those of other countries around the world, is
suffering from the effects of war in Ukraine, global
supply chain problems, and a cost of living crisis,
all exacerbated in the UK’s case by both the actual
impact of Brexit and the ongoing uncertainty
around its ultimate implementation. To date,
while this has inevitably undermined market
confidence, and we have seen some hesitation
in clients committing assets to market, it has had
limited effect on flows. We continue to monitor
activity closely.
Our response: Given current market uncertainty,
within our asset allocation we advocate balance
in portfolios, both between value and growth
stocks and across geographies, including the UK.
More broadly, we continue to work closely with
intermediaries and current and prospective private
clients to manage sentiment to support net flows.
Market conditions: Advisers are increasingly
moving away from their historic use of
discretionary fund managers as providers of
bespoke portfolio services in their custody, to
model portfolio services and funds delivered on
third-party platforms. This changing product mix
gives the industry a lower revenue yield per £ of
funds under management but has less impact, or
even positive impact, at the level of profit margin.
Our response: We have strong offerings in both
model portfolio services (our Managed Portfolio
Service (“MPS”)) and funds (our Blueprint and
Risk Managed ranges), and we have made them
available in different formats (e.g., our Responsible
Investment MPS) across all major platforms (21 in
total). This has enabled us to drive strong positive
net flows, particularly in our B2B BM Investment
Solutions offering.
Market conditions: The UK population continues to
age with the proportion of people over 65 growing
steadily. In parallel, the policy framework around
retirement is increasingly favourable for the wealth
management industry with people increasingly
encouraged to make their own provision for
retirement and pension freedoms adding to
the need for advice. The total wealth of the UK
population is projected to continue to grow, and
over 70% of that wealth is held by those aged 55
and over.
Our response: Brooks Macdonald continues to work
with clients to support them in their retirement
planning, reflecting the fact that retirement is the
biggest trigger for people to seek financial advice.
Our Decumulation service is aimed at people in
the early years of retirement balancing the need for
income with the need to stay invested to protect
their future wealth. We are also improving our
support to clients around intergenerational wealth
transfer, as well as encouraging people to think
about their retirement earlier.
Age distribution of the UK population
24.0%
18.3%
Proportion of the UK
population aged 65 and over,
2018 vs. 2043 (projected)
2018
2043F
Source: Office of National Statistics
What the market trends mean for Brooks Macdonald
The fundamental opportunity for Brooks Macdonald
remains strong and improving.
Our core investment management and financial planning
offering is well positioned to capture the opportunity.
We are adapting our offering both to meet short-term challenges
in the marketplace and to cater to advisers’ and clients’ changing
needs, with a strong set of specialised BPS products, further
development of funds and unitised solutions tailored to the
adviser, and consistent business-to-business investment
solutions delivery.
Technological change will continue to raise clients’ expectations
of how we interact with them and our technology and services
partnership with SS&C is designed to ensure that Brooks
Macdonald is easy to do business with, and that we provide
market-leading adviser experience and client service levels.
14
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Corporate governance
Financial statements
UK and global economy
Changing product preferences
Demographic changes
Growth of responsible investing
Advisers increasingly outsourcing
Regulatory
Market conditions: Advisers and clients alike are
increasingly looking for investment managers
to provide products and services meeting their
environmental, social and governance (“ESG”)
criteria. Providers are bringing products to market
but there is widespread confusion about what
standards these products observe and what
certification regimes clients and advisers can trust.
Advisers forecast rapid growth in the proportion of
client assets allocated to sustainable and ESG-based
products and services.
Our response: We launched our Responsible
Investment Service (“RIS”) in October 2018 within
our Bespoke Portfolio Service. We have Advance
and Avoid strategies available and investment
performance has been strong since launch. We have
now rolled out RIS in our International business and
included it in our Managed Portfolio Service and
Investment Solutions offering. As a Company, we
have signed up to the UN Principles for Responsible
Investing and consistently apply a sustainability
lens to our core investment process.
ESG funds as a proportion of total
European mutual funds
57%
41%
15%
11%
2015
2019
2025
base
case
2025
best
case
Actual
PwC forecast
Source: PwC Financial times
Source: PwC Financial times
Market conditions: IFAs continue to look to
outsource investment management to allow them
to focus on advising their clients and to reduce their
regulatory and administrative burden. GlobalData
and Platforum research shows advisers who have
not outsourced before are now looking to outsource
and those who do already outsource are looking to
outsource more.
Definition: The Financial Conduct Authority
supervises the investment management and
financial planning activities of Brooks Macdonald
in the UK. Over time, the regulator has increased
their focus on ensuring advice and investment
management is conducted appropriately and
professionally, and on giving transparency to
clients on fees and charges.
Our response: We continue to help advisers serve
their clients in ways that work for both parties,
applying our investment management expertise to
protect and enhance clients’ wealth. We are flexible
in our approach, offering bespoke portfolios, more
specialist variants (e.g., Responsible Investment
Service, Decumulation, Court of Protection), model-
based and unitised solutions, and Investment
Solutions options, more tailored to the needs and
requirements of the IFA.
Our response: We welcome the general direction
of regulation. We are committed to ensure we
are serving advisers and clients appropriately
and professionally, and actively contribute
to regulatory consultations both directly and
through our membership of the trade bodies,
the Investment Association and the Personal
Investment Management and Financial Advice
Association (“PIMFA”).
Adviser use of outsourced DFMs
Digital technology
37%
33%
40%
13%
9%
9%
Bespoke
DFM
Model
portfolios
Multi-asset
funds
Expected change in client assets allocated to
outsourced DFM services over the next two years
Increase
Decrease
Source: GlobalData
Definition: Digital technology is increasingly a
'must have' enabler of financial services, with
clients expecting digital to complement face-to-face
relationships. The wealth management sector has
been slow to adapt.
Our response: We have upgraded our technology
delivery with our partnership arrangement with
SS&C, the leading wealth management technology
and services provider, and we are excited that our
full SS&C technology suite went live shortly after
the financial year end. But this is only the beginning
and we will continue to push forward our digital
transformation, delivering better client and adviser
experience.
Marketplace
Short-term trends
Long-term trends
Long-term trends
Market conditions: The UK economy, in common
Market conditions: Advisers are increasingly
Market conditions: The UK population continues to
with those of other countries around the world, is
moving away from their historic use of
age with the proportion of people over 65 growing
suffering from the effects of war in Ukraine, global
discretionary fund managers as providers of
steadily. In parallel, the policy framework around
supply chain problems, and a cost of living crisis,
bespoke portfolio services in their custody, to
retirement is increasingly favourable for the wealth
all exacerbated in the UK’s case by both the actual
model portfolio services and funds delivered on
management industry with people increasingly
impact of Brexit and the ongoing uncertainty
third-party platforms. This changing product mix
encouraged to make their own provision for
around its ultimate implementation. To date,
gives the industry a lower revenue yield per £ of
retirement and pension freedoms adding to
while this has inevitably undermined market
funds under management but has less impact, or
the need for advice. The total wealth of the UK
confidence, and we have seen some hesitation
even positive impact, at the level of profit margin.
population is projected to continue to grow, and
in clients committing assets to market, it has had
limited effect on flows. We continue to monitor
activity closely.
Our response: We have strong offerings in both
model portfolio services (our Managed Portfolio
and over.
over 70% of that wealth is held by those aged 55
Our response: Given current market uncertainty,
Risk Managed ranges), and we have made them
with clients to support them in their retirement
within our asset allocation we advocate balance
available in different formats (e.g., our Responsible
planning, reflecting the fact that retirement is the
in portfolios, both between value and growth
Investment MPS) across all major platforms (21 in
biggest trigger for people to seek financial advice.
stocks and across geographies, including the UK.
total). This has enabled us to drive strong positive
Our Decumulation service is aimed at people in
More broadly, we continue to work closely with
net flows, particularly in our B2B BM Investment
the early years of retirement balancing the need for
Service (“MPS”)) and funds (our Blueprint and
Our response: Brooks Macdonald continues to work
intermediaries and current and prospective private
Solutions offering.
clients to manage sentiment to support net flows.
income with the need to stay invested to protect
their future wealth. We are also improving our
support to clients around intergenerational wealth
transfer, as well as encouraging people to think
about their retirement earlier.
Age distribution of the UK population
24.0%
18.3%
Proportion of the UK
population aged 65 and over,
2018 vs. 2043 (projected)
2018
2043F
Source: Office of National Statistics
What the market trends mean for Brooks Macdonald
Competitive landscape
The fundamental opportunity for Brooks Macdonald
Our core investment management and financial planning
remains strong and improving.
offering is well positioned to capture the opportunity.
We are adapting our offering both to meet short-term challenges
Technological change will continue to raise clients’ expectations
in the marketplace and to cater to advisers’ and clients’ changing
of how we interact with them and our technology and services
needs, with a strong set of specialised BPS products, further
partnership with SS&C is designed to ensure that Brooks
development of funds and unitised solutions tailored to the
Macdonald is easy to do business with, and that we provide
adviser, and consistent business-to-business investment
market-leading adviser experience and client service levels.
solutions delivery.
The investment management competitive landscape is complex with
numerous types of player with varying business models addressing
different, but overlapping, segments of the market. Types of player
include integrated wealth managers, Independent Financial Advisers
(“IFAs”) who may conduct some, or all, of their own investment
management, platform providers who serve advisers, players focused
on providing model portfolios and fund solutions, as well as the wealth
arms of the major high street banks and the high-end private banks.
The industry is highly fragmented and we have seen considerable
consolidation in recent years, among both IFAs and investment
managers, most notably this year RBC’s acquisition of Brewin Dolphin.
We expect to see consolidation continue and even potentially
accelerate, and selective, high-quality acquisitions remain part of our
strategy.
Within that competitive landscape, we believe that our approach, with
our vision of being the leading investment manager for intermediaries,
gives us a strong competitive position allowing us to create value for
advisers, clients, shareholders and staff.
14
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
15
Our services
Group Centralised Investment Process
We are an independent investment management firm, providing a wide range of investment and wealth management
services to private clients, pension funds, professional intermediaries and trustees; financial planning advice to high net
worth individuals and families; and multi-asset and specialist funds to the retail sector.
To make sure we deliver the best possible investment options for clients, our Centralised Investment Process aims to:
Deliver strong risk adjusted
returns for clients
Generate the best ideas and then
use them as widely as possible
Have an explainable process
and explainable results
We have an industry-leading investment process, which powers the services and products we provide to our clients. This process
creates a robust framework for our investment professionals to work together, sharing ideas and challenging each other’s views.
Inputs
• House view
• External research
• Investment data systems
People
• Head of Research
• Research team
• 85 Investment Managers/
Portfolio Managers
Governance
Asset Selection Committee
Buylist
Centralised
Investment
Process
In
vestm
rules
ent
w
e v i e
s
u
o
H
Governance
Investment
Committee
Governance
Asset Allocation
Committee
People
• Chief Investment
Office
• Risk department
Inputs
• Regulatory backdrop
• Industry best practice
• Brooks Macdonald
thought leadership
Inputs
Investment views from
•
our research providers
• External research
• In-house investment
strategist
People
• Nine senior investment
leaders
• External research analysts
Our Centralised Investment Process is built on a model where decision-making responsibility and authority
is shared equally by colleagues. This approach produces the best possible outcomes by encouraging the
best thinking from everyone involved. We recognise that no individual investment manager, research
analyst or member of our Chief Investment Office team has a monopoly on good ideas. Once we have
concluded that an idea is a great one, we will use it as widely as possible for all suitable strategies.
16
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Our services
Group Centralised Investment Process
We are an independent investment management firm, providing a wide range of investment and wealth management
services to private clients, pension funds, professional intermediaries and trustees; financial planning advice to high net
worth individuals and families; and multi-asset and specialist funds to the retail sector.
To make sure we deliver the best possible investment options for clients, our Centralised Investment Process aims to:
Deliver strong risk adjusted
Generate the best ideas and then
Have an explainable process
returns for clients
use them as widely as possible
and explainable results
We have an industry-leading investment process, which powers the services and products we provide to our clients. This process
creates a robust framework for our investment professionals to work together, sharing ideas and challenging each other’s views.
Inputs
• House view
• External research
• Investment data systems
People
• Head of Research
• Research team
• 85 Investment Managers/
Portfolio Managers
Governance
Asset Selection Committee
Buylist
Centralised
Investment
Process
In
vestm
rules
ent
w
e v i e
s
u
o
H
Governance
Governance
Investment
Committee
Asset Allocation
Committee
People
• Chief Investment
Office
• Risk department
Inputs
• Regulatory backdrop
• Industry best practice
• Brooks Macdonald
thought leadership
Inputs
•
Investment views from
our research providers
• External research
• In-house investment
strategist
People
leaders
• Nine senior investment
• External research analysts
Our Centralised Investment Process is built on a model where decision-making responsibility and authority
is shared equally by colleagues. This approach produces the best possible outcomes by encouraging the
best thinking from everyone involved. We recognise that no individual investment manager, research
analyst or member of our Chief Investment Office team has a monopoly on good ideas. Once we have
concluded that an idea is a great one, we will use it as widely as possible for all suitable strategies.
16
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Corporate governance
Financial statements
1 Asset allocation
To help diversify and manage risk, we use asset
allocation guidance to allocate portfolios between
various geographies and asset classes. Depending on
the study you read, asset allocation can determine up to
80% of client returns over a longer time horizon so it is
vital to get this right.
Our Asset Allocation Committee meets monthly to
determine our house view. We use external parties,
both independent macro research providers and the
research teams of investment banks, to challenge us and
help us construct our house view.
We encourage external scrutiny of our views and pay
the greatest attention to the group that disagrees with
our house view the most, inviting them to our monthly
investment forum to tell us what, in their view, we
are missing. External research is vital as it means our
Asset Allocation Committee is powered by the ideas of
hundreds of macro economists and strategists. We also
use the systems of most major data providers to test our
views against history, and flag opportunities in markets.
This is a major investment for us both in terms of time
and Brooks Macdonald’s financial investment.
3
Investment rules
2 Asset selection
Once the Asset Allocation Committee has set the house
view, it is passed to our sector research teams. All our
investment managers and research analysts have the
opportunity to involve themselves in sector research
and they form the core of the sector research teams.
With oversight and peer review from our Asset Selection
Committee, the ideas generated by the sector teams
drive the buylist. The end result is a substantial buylist of
researched assets for investment managers to use when
constructing portfolios.
Our investment rules have been designed to operate within the harshest of conditions and, whilst all market crises are
different, there is never a reason not to stick to our established investment rules.
We apply central investment rules to all our investment products. For our bespoke and managed portfolio services, these are
the key inputs into our risk management system, which assesses portfolios daily for deviations from expected volatility, asset
allocation, buylist and concentration limits. The executive-level Investment Committee is responsible for setting these rules,
as well as driving the overall investment philosophy of the firm. Rigorous application of these rules, such as maintaining high
levels of liquidity, has put us in a good position to weather any foreseeable investment storm that may occur.
We believe that in order to provide the best outcomes for our clients it is important to integrate consideration of
Environmental, Social and Governance (“ESG”) factors into our Centralised Investment Process.
We recognise that a broad range of financial and non-financial factors may be relevant in making investment decisions.
We have therefore systematically embedded ESG considerations into our investment analysis frameworks in order to
help identify financially material risks and opportunities. Common principles and research disciplines are applied, to the
greatest degree possible, across all research activities within a robust and transparent framework. However as global multi-
asset investors, our approach to assessing ESG factors is tailored to each asset class and the vehicle used to invest in each
asset class. We have published a Responsible Investment Policy, which outlines our approach and the key quantitative and
qualitative inputs. We will continue to review and develop our approach to ESG integration to ensure we consider the most
relevant and material information that can help improve client outcomes.
Brooks Macdonald is a signatory to the United Nations supported Principles for Responsible Investing (“PRI”) and we are
committed to implementing the six principles of the PRI across our investment management activities.
Our services continued
We provide our services through two core businesses:
1
UK Investment Management
Providing discretionary fund
management services to UK clients
introduced to us by intermediaries and
to direct private clients, to whom we also
provide wealth management advice.
International
2
Providing discretionary fund
management services to clients and
their introducers across the Crown
Dependencies, the UAE, South Africa and
Europe from offices in Jersey, Guernsey
and the Isle of Man.
• Decumulation Service, a bespoke approach, designed
to help meet clients’ income requirements by aiming to
shield the portfolio from downturns in the early years of
withdrawals. Its structure is specifically adapted to address
short-term sequencing risk, while retaining the ability for
longer-term assets to contend with inflation risk.
• Court of Protection Service, aimed at clients investing
following settlement of personal injury or clinical
negligence claims, many of whom are vulnerable due to
the effects of their injuries.
AIM Portfolio Service
The Group’s AIM Portfolio Service (“APS”) provides clients
with access to a carefully selected portfolio of AIM-listed
companies, with preference given to companies that are
judged to have attractive long-term investment potential.
The investment universe is restricted to companies that are
understood to qualify for Business Relief (“BR”), allowing
investors to benefit from Inheritance Tax (“IHT”) exemptions.
Managed Portfolio Service
The Managed Portfolio Service (“MPS”) provides a choice of
investment into a range of risk-managed model portfolios, each
investing across a different mix of asset classes. Each model
portfolio is designed to achieve specific investment objectives
within a specific risk profile. MPS portfolios are managed by a
dedicated team of investment managers in accordance with
the CIP. We also offer Responsible Investment Service model
portfolios using the Advance strategy as outlined in the BPS
section above.
1
UK Investment Management
(FUM at 30 June 2022: £13.5bn)
Within UK Investment Management (“UKIM”), there are seven
distinct service lines:
Bespoke Portfolio Service
The Bespoke Portfolio Service (“BPS”) is the Group’s flagship
offering, designed for clients who want an individual
investment portfolio constructed to meet their specific
requirements. The investment manager maintains a detailed
knowledge of the client’s investment requirements, allowing
the manager to construct focused portfolios supporting the
delivery of risk-adjusted investment returns appropriate to
the client’s investment objectives. The range of investments
includes unit trusts, open-ended investment companies,
exchange-traded funds, investment trusts and cash, as well as
individual equity and bond securities. Investment managers
for BPS follow the core asset allocation and asset selection
recommendations of the Group-wide Centralised Investment
Process (“CIP”).
Within BPS, in addition to our core BPS, we offer three
specialised services aimed at clients with distinct sets of needs:
• Responsible Investment Service, designed for clients
with the dual objectives of responsible investment and
return generation in line with defined risk profiles. We
offer two distinct Responsible Investment strategies: Avoid
and Advance. The values-based objective of the Avoid
strategy is to prevent exposure to companies involved in
the production of armaments, tobacco, alcohol, gambling
and pornography, while for the Advance strategy the
objective is to invest in, and advance, either businesses
that provide solutions to sustainability challenges through
their products and services, or businesses that have strong
corporate policies and outputs relating to environmental,
social and governance (“ESG”) criteria.
18
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Our services continued
We provide our services through two core businesses:
1
UK Investment Management
International
2
Providing discretionary fund
management services to UK clients
introduced to us by intermediaries and
to direct private clients, to whom we also
provide wealth management advice.
Providing discretionary fund
management services to clients and
their introducers across the Crown
Dependencies, the UAE, South Africa and
Europe from offices in Jersey, Guernsey
and the Isle of Man.
1
UK Investment Management
(FUM at 30 June 2022: £13.5bn)
Within UK Investment Management (“UKIM”), there are seven
distinct service lines:
Bespoke Portfolio Service
The Bespoke Portfolio Service (“BPS”) is the Group’s flagship
offering, designed for clients who want an individual
investment portfolio constructed to meet their specific
requirements. The investment manager maintains a detailed
knowledge of the client’s investment requirements, allowing
the manager to construct focused portfolios supporting the
delivery of risk-adjusted investment returns appropriate to
the client’s investment objectives. The range of investments
includes unit trusts, open-ended investment companies,
exchange-traded funds, investment trusts and cash, as well as
individual equity and bond securities. Investment managers
for BPS follow the core asset allocation and asset selection
recommendations of the Group-wide Centralised Investment
Process (“CIP”).
Within BPS, in addition to our core BPS, we offer three
specialised services aimed at clients with distinct sets of needs:
• Decumulation Service, a bespoke approach, designed
to help meet clients’ income requirements by aiming to
shield the portfolio from downturns in the early years of
withdrawals. Its structure is specifically adapted to address
short-term sequencing risk, while retaining the ability for
longer-term assets to contend with inflation risk.
• Court of Protection Service, aimed at clients investing
following settlement of personal injury or clinical
negligence claims, many of whom are vulnerable due to
the effects of their injuries.
AIM Portfolio Service
The Group’s AIM Portfolio Service (“APS”) provides clients
with access to a carefully selected portfolio of AIM-listed
companies, with preference given to companies that are
judged to have attractive long-term investment potential.
The investment universe is restricted to companies that are
understood to qualify for Business Relief (“BR”), allowing
investors to benefit from Inheritance Tax (“IHT”) exemptions.
Managed Portfolio Service
The Managed Portfolio Service (“MPS”) provides a choice of
investment into a range of risk-managed model portfolios, each
investing across a different mix of asset classes. Each model
portfolio is designed to achieve specific investment objectives
• Responsible Investment Service, designed for clients
within a specific risk profile. MPS portfolios are managed by a
with the dual objectives of responsible investment and
dedicated team of investment managers in accordance with
return generation in line with defined risk profiles. We
the CIP. We also offer Responsible Investment Service model
offer two distinct Responsible Investment strategies: Avoid
portfolios using the Advance strategy as outlined in the BPS
and Advance. The values-based objective of the Avoid
section above.
strategy is to prevent exposure to companies involved in
the production of armaments, tobacco, alcohol, gambling
and pornography, while for the Advance strategy the
objective is to invest in, and advance, either businesses
that provide solutions to sustainability challenges through
their products and services, or businesses that have strong
corporate policies and outputs relating to environmental,
social and governance (“ESG”) criteria.
Introduction
Strategic report
Corporate governance
Financial statements
2
International
(FUM at 30 June 2022: £2.2bn)
International is based in the Crown Dependencies of Jersey,
Guernsey and the Isle of Man and offers a range of investment
management and financial planning services. The services are
designed to meet the particular requirements of offshore and
international clients and the investment management process
follows the CIP. A comprehensive range of investment services
are provided to private clients, trusts and advisers, available in
Sterling, Euros or US Dollars:
•
•
International Bespoke Portfolio Service, including the
International Responsible Investment Service
International Managed Portfolio Service
International BPS, International RIS and International MPS
all offer the same services as the UK equivalents described
above, adjusted to meet the requirements of offshore and
international clients.
•
Single-strategy solutions, which invest directly in the
traditional asset classes of equities and bonds for ultra-
high-net-worth clients with higher entry thresholds.
The Direct Equity Strategy is structured to provide
capital appreciation and income growth through direct
investment in high-quality stocks, while the Corporate
Bond Strategy invests in a diversified portfolio of
investment-grade bonds to provide a balance of income,
security and liquidity.
• Funds, including a comprehensive range of international
investment funds and international multi-strategy funds.
For its private clients, the International business also offers
wider financial planning services around their wealth and
investments, with a focus on pensions and structuring.
Multi-Asset Funds
The Multi-Asset Funds (“MAF”) range allows investors to gain
access to the Group’s investment management expertise and
CIP through a pooled fund solution. The Group offers two
ranges:
• The SVS Brooks Macdonald Blueprint Fund – a range of
four risk-managed multi-asset funds: Defensive Income,
Cautious Growth, Balanced and Strategic Growth.
• The SVS Cornelian Risk Managed Funds – a range of six
multi-asset funds: Defensive, Cautious, Managed Income,
Managed Growth, Growth, and Progressive. All but the
Managed Income fund are also available in a version that
invests in predominantly passive funds for the more cost-
conscious investor who is prepared to compromise some
of the richness of the asset allocation.
By differing their levels of equity exposure, the ranges cater
for both investors seeking capital growth and more cautious
investors looking to generate income, while preserving their
capital.
BM Investment Solutions
The Group designs propositions for advisers and
intermediaries who are looking for investment solutions
meeting specific investment objectives for their clients.
These are delivered via an open-ended fund solution or an
investment platform, in fund or model portfolio form.
Defensive Capital Fund
The Group also provides investment management services
to the Defensive Capital Fund (“DCF”), a long-only multi-asset
fund sitting in the IA Targeted Absolute Return sector, which
had FUM of £438.8 million at 30 June 2022.
Financial Planning
Within UKIM, our Private Clients business provides financial
planning and wealth management advice services to
high-net-worth individuals and families, enabling clients to
build, manage and protect their wealth. For non-investment
products, the advice is independent 'whole of market'; for
investment products and services, the advice can be either
independent, where the client requests it or they have complex
requirements, or restricted, whereby the investment service
will, if suitable, be one provided by the Group. The service is
advice-driven rather than product-driven, providing clients
with a coherent, affordable strategy aimed at achieving their
long-term goals. In addition to the financial planning service,
the Group works in collaboration with other professional
advisers such as solicitors, accountants and wealth managers,
to help them provide a comprehensive service to their clients.
18
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
19
Supporting our clients
and advisers
Working with BM
Investment Solutions has
been a game-changer for my
team in how much time we
can spend with clients.
Bill
CEO, South-West IFA firm
20
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Supporting our clients
and advisers
Working with BM
Investment Solutions has
been a game-changer for my
team in how much time we
can spend with clients.
Bill
CEO, South-West IFA firm
Introduction
Strategic report
Corporate governance
Financial statements
How we are helping Nicola accelerate the
growth of her financial advice business
We have worked with Nicola for over five years now, while she has been
building and growing her East Midlands-based advice business. She and
her team have recommended both our Bespoke Portfolio Service and our
Managed Portfolio Service to their clients, depending on the need. We
have developed a strong relationship with Nicola and her team and now,
as she looks for investment to accelerate that growth, we are having
an exciting conversation with her about whether Brooks Macdonald
can help her meet her goals by investing in her business or, indeed,
whether her business should join the Group.
How our Platform Managed Portfolio Service
helped Geraldine meet her investment needs
Geraldine was a successful professional, building up material savings. She
spoke to a financial adviser and agreed with the adviser’s assessment that
she did not, at this stage, have material bespoke investment needs. The
adviser therefore recommended our Managed Portfolio Service (“MPS”),
which provides a range of ten portfolios, each with its own risk profile
and objective, one of which was suitable for Geraldine’s risk appetite and
investment objectives. Our Platform MPS targets low ongoing charges
while maintaining the rigour of the investment process and was an
ideal match for Geraldine.
How BM Investment Solutions made a
difference for Bill in driving forward his business
As a financial adviser, Bill was getting frustrated by the time he was devoting
to client investment reporting and the investment management process,
which he felt were increasingly getting in the way of his top priority activity
– talking to new and existing clients about their financial needs and
desires. He came to us and our specialist BM Investment Solutions team
worked with him to design a tailored managed portfolio solution that
met his clients’ risk profile. We provide active investment management,
co-branded factsheets and regular reporting for all the portfolios – and
Bill gets more time to talk to clients!
20
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
21
While these case studies are based on real people and events, names and some other details have been changed to protect confidentiality. The suitability of any recommendation is
dependent upon each individual’s personal and financial circumstances, in addition to other factors. These case studies do not constitute advice or a recommendation and investment
decisions should not be made on the basis of them.
The value of your investments and the income from them may go down as well as up. You may get back less than you invested. Past performance is not a reliable indicator of future results.
Please be aware that the decumulation service utilises structured products as part of the portfolio construction/strategy which comes with specific risks. Should the counterparty fail, you
may not have access to the Financial Services Compensation Scheme (“FSCS”). Investors should speak to their advisers for further information and to ensure they understand the risk and
return factors applicable in their case.
Supporting our clients
and advisers continued
Brooks Macdonald's
Responsible Investment
Service enables me to make
my investments work for a
sustainable future.
Mario
Private investor
22
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Supporting our clients
and advisers continued
Brooks Macdonald's
Responsible Investment
Service enables me to make
my investments work for a
sustainable future.
Mario
Private investor
Introduction
Strategic report
Corporate governance
Financial statements
How we made a difference to Mr and Mrs Misra’s
retirement through our Decumulation Service
Mr and Mrs Misra wanted to retire in two to three years’ time and decided
to consult a financial adviser. Their financial adviser assessed their
needs, identifying in particular a need for flexibility in the later years, and
recommended Brooks Macdonald’s Decumulation Service as suitable. We
constructed a portfolio with two elements – one short-term, principally
invested in structured products to safeguard their income in the early
years of retirement and one long-term, invested in growth assets. The
Misra's are delighted with the income they will get in the early years
and the flexibility they’ll get later, with better protection from the
effects of inflation.
How we helped Mario make a
difference through his investments
Mario was dissatisfied with the degree to which he was able to make his
investing work for a sustainable future. He approached an adviser who
recommended the Advance strategy of our Responsible Investment
Service, which proactively supports companies that seek solutions to
sustainability issues, or that have strong corporate policies and outputs
relating to environmental, social, and governance criteria. Mario is
pleased that his investments are now working for sustainability,
without compromising on investment returns.
How our Bespoke Portfolio Service
met John’s investment requirements
John was a successful professional with no near-term thoughts of
retirement. He had gathered a complex range of investments which
resulted in tax complications and he had some specific income
requirements from his investments. On a friend’s recommendation, he
approached us directly and met with an adviser from our Private Clients
team. Our Private Client manager worked closely with John to design
a suitable portfolio that would meet his objectives and allow him to
manage his tax liabilities efficiently. They meet regularly to ensure
John’s portfolio continues to deliver the desired outcomes.
22
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
23
While these case studies are based on real people and events, names and some other details have been changed to protect confidentiality. The suitability of any recommendation is
dependent upon each individual’s personal and financial circumstances, in addition to other factors. These case studies do not constitute advice or a recommendation and investment
decisions should not be made on the basis of them.
The value of your investments and the income from them may go down as well as up. You may get back less than you invested. Past performance is not a reliable indicator of future results.
Please be aware that the decumulation service utilises structured products as part of the portfolio construction/strategy which comes with specific risks. Should the counterparty fail, you
may not have access to the Financial Services Compensation Scheme (“FSCS”). Investors should speak to their advisers for further information and to ensure they understand the risk and
return factors applicable in their case.
Our strategy
Brooks Macdonald is delivering strong performance and has put in place foundations for our continued future success. Our strategy is
clear and we are making substantial progress, ready to capitalise on the growth opportunities we see ahead.
Looking forward
Our vision for Brooks Macdonald is to be the leading investment manager for intermediaries, both in the UK and internationally.
Our strategy also includes a strong and growing Private Clients business providing financial planning and investment
management – an advice-led integrated wealth management offering.
Our Purpose
Realising ambitions and
securing futures
Our Purpose
Our Mission
To protect and enhance
our clients’ wealth
through the provision of
investment management
and advice underpinned
by excellent client service
Our Vision
To be the leading
investment manager for
intermediaries
Our Mission
Our Vision
Our strategy
1
2
3
Market-leading
organic growth
Best-in-class adviser experience and
excellent client service, rigorous
Centralised Investment Process,
compelling investment proposition
Service and operational
excellence
Easy to do business with, digital
enhancement, margin growth
through efficiency and scalability
resilience
Agile, high-quality M&A
Strict criteria, delivery of benefits
Committed to top quartile underlying profit margin over the medium term
24
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Our strategy
Brooks Macdonald is delivering strong performance and has put in place foundations for our continued future success. Our strategy is
clear and we are making substantial progress, ready to capitalise on the growth opportunities we see ahead.
Value drivers
Introduction
Strategic report
Corporate governance
Financial statements
Our strategy is based on the three value drivers of strong organic growth, service and operational excellence, and selective high-
quality acquisitions. We will deliver further improvements in returns, committing to top quartile margins over the medium term,
by building on the sustainable and scalable business model we have put in place. Within the three value drivers of the existing
strategy, we announced five priority areas for 2022:
Organic growth
•
Investment Solutions: strong focus
on MPS, Funds and BMIS, the
fastest-growing sectors of the wealth
marketplace.
• Private Clients: standardisation
and streamlining of our financial
planning processes, building a
strong advice-led pillar of the Group.
Service and operational excellence
Being the best we can be: driving
•
continuous improvement in our
client and adviser service levels,
delivering digital transformation,
increasing data-driven decision
making throughout the firm.
• Delivering Our Promise: attracting,
engaging and retaining the best
talent in the industry.
Agile, high-quality M&A
•
Selective acquisitions: disciplined
acquisition criteria – high-quality
businesses that are a good
strategic and cultural fit and bring
compelling economics – and
ambitious inorganic growth plans,
with Integrity Wealth acquisition
announced in May (subject to
regulatory approval).
Our Purpose
Delivering our strategy
We announced our new strategy in our annual results presentation last year, and since then we have made material progress on
all three value drivers.
Value driver
Progress in FY22
Organic
growth
•
Increasingly strong positive net flows of client assets throughout the financial year
• Further strong business-to-business mandates through BM Investment Solutions
• Further growth in Platform MPS and our specialist BPS products – Responsible Investment
Service, Decumulation, Court of Protection, and the AIM Portfolio Service
• Positive net flows in Private Clients
Service and
operational
excellence
• Continued to work with our technology partner, SS&C, rolling out digital onboarding and (after
financial year end) migrating all our processes to the SS&C platform
Agile, high-
quality M&A
• Announced acquisition of Integrity Wealth Solutions in May, subject to regulatory approval
• Continued to review a range of potential targets
Looking forward
Our vision for Brooks Macdonald is to be the leading investment manager for intermediaries, both in the UK and internationally.
Our strategy also includes a strong and growing Private Clients business providing financial planning and investment
management – an advice-led integrated wealth management offering.
Our Purpose
Realising ambitions and
securing futures
Our Vision
To be the leading
investment manager for
intermediaries
Our Mission
To protect and enhance
our clients’ wealth
through the provision of
investment management
and advice underpinned
by excellent client service
Our Mission
Our Vision
Our strategy
1
2
3
Market-leading
organic growth
Service and operational
Agile, high-quality M&A
excellence
Strict criteria, delivery of benefits
Best-in-class adviser experience and
Easy to do business with, digital
excellent client service, rigorous
enhancement, margin growth
Centralised Investment Process,
through efficiency and scalability
compelling investment proposition
resilience
Committed to top quartile underlying profit margin over the medium term
24
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
25
Key performance indicators
The following financial and strategic measures have been identified as the key performance indicators (“KPIs”) of the Group's overall
performance for the financial year. The underlying figures represent the results for the Group’s activities excluding underlying adjustments
as listed on page 35. These represent alternative performance measures (“APMs”) for the Group. Refer to the Non-IFRS financial information
section on page 181 for a glossary of the Group’s APMs, their definition, and the criteria for how underlying adjustments are considered.
1
FUM and revenue
2
Underlying performance
Funds under management (£bn)
Underlying profit before tax (£m)
13.7
16.5
15.7
4.8%
Definition
Total funds under management
at the end of the year.
Relevance
The value of funds under
management has a direct impact
on the Group’s revenue.
34.5
30.6
23.0
FY20
FY21
FY22
FY20
FY21
FY22
12.7%
Definition
Revenue less underlying costs
before tax.
Relevance
This measures the Group’s
performance excluding the
impact of certain one-off costs
or credits so as to provide
an appropriate year-on-year
comparison.
Organic net fund flows (£bn)
Underlying profit margin before tax (%)
£1.1bn
28.2
25.9
2.3pts
0.8
Definition
Value of net organic discretionary
flows.
21.2
Definition
Underlying profit before tax as a
percentage of revenue.
FY20
FY21
FY22
0.3
0.8
Relevance
Net organic growth measures the
new business generated by the
Group excluding the impact of
acquired assets and after allowing
for lost business.
Relevance
This is a key measure of the
Group’s underlying performance
reflecting key drivers of long-term
profitability.
Revenue (£m)
Underlying basic earnings per share (p)
FY20
FY21
FY22
118.2
122.2
108.6
3.4%
Definition
Fee and non-fee income
generated during the year.
124.1
Relevance
The amount of fee and non-fee
income generated by the Group is
one of the key growth indicators.
174.1
155.6
11.9%
Definition
Total underlying profit after tax
divided by the weighted average
number of ordinary shares.
Relevance
This is another key metric
of measuring the Group’s
profitability and takes into
account new shares issued during
the year.
FY20
FY21
FY22
FY20
FY21
FY22
26
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Corporate governance
Financial statements
Key performance indicators
The following financial and strategic measures have been identified as the key performance indicators (“KPIs”) of the Group's overall
performance for the financial year. The underlying figures represent the results for the Group’s activities excluding underlying adjustments
as listed on page 35. These represent alternative performance measures (“APMs”) for the Group. Refer to the Non-IFRS financial information
section on page 181 for a glossary of the Group’s APMs, their definition, and the criteria for how underlying adjustments are considered.
1
FUM and revenue
2
Underlying performance
3
Shareholder return and Balance Sheet strength
Funds under management (£bn)
Underlying profit before tax (£m)
Statutory profit before tax (£m)
Total dividend per share (p)
16.5
15.7
13.7
4.8%
Definition
34.5
30.6
Total funds under management
at the end of the year.
23.0
Relevance
The value of funds under
management has a direct impact
on the Group’s revenue.
12.7%
Revenue less underlying costs
Definition
before tax.
Relevance
This measures the Group’s
performance excluding the
impact of certain one-off costs
or credits so as to provide
an appropriate year-on-year
comparison.
29.5
25.1
10.0
17.5%
Definition
Revenue less total costs before
tax.
Relevance
This measures the Group’s
profitability calculated in
accordance with International
Financial Reporting Standards.
53.0
71.0
63.0
12.7%
Definition
Total dividend per share paid out
to shareholders.
Relevance
Distributions by the Group in the
form of dividends represent an
important part of the returns to
shareholders.
FY20
FY21
FY22
FY20
FY21
FY22
FY20
FY21
FY22
FY20
FY21
FY22
Organic net fund flows (£bn)
Underlying profit margin before tax (%)
Statutory profit margin before tax (%)
Total capital ratio (%)
0.8
Value of net organic discretionary
21.2
FY20
FY21
FY22
0.3
0.8
£1.1bn
Definition
flows.
Relevance
Net organic growth measures the
new business generated by the
Group excluding the impact of
acquired assets and after allowing
for lost business.
28.2
25.9
2.3pts
Definition
Underlying profit before tax as a
percentage of revenue.
Relevance
This is a key measure of the
Group’s underlying performance
reflecting key drivers of long-term
profitability.
24.1
21.2
9.2
2.9pts
Definition
Statutory profit before tax as a
percentage of revenue.
Relevance
This measures the Group’s
profitability reflecting key drivers
of long-term profitability.
20.7
21.6
28.5
6.9pts
Revenue (£m)
Underlying basic earnings per share (p)
Statutory basic earnings per share (p)
Net assets (£m)
FY20
FY21
FY22
FY20
FY21
FY22
FY21
FY20
8% minimum requirement
FY22
118.2
122.2
108.6
3.4%
Definition
Fee and non-fee income
generated during the year.
174.1
155.6
11.9%
Definition
124.1
Relevance
The amount of fee and non-fee
income generated by the Group is
one of the key growth indicators.
43.2
FY20
FY21
FY22
FY20
FY21
FY22
FY20
FY21
FY22
Total underlying profit after tax
divided by the weighted average
number of ordinary shares.
Relevance
This is another key metric
of measuring the Group’s
profitability and takes into
account new shares issued during
the year.
Definition
Total statutory profit after tax
divided by the weighted average
number of ordinary shares.
Relevance
This measures the Group’s
profitability calculated in
accordance with International
Financial Reporting Standards
and takes into account new
shares issued during the year.
FY20
FY21
FY22
149.0
125.3
18.9%
148.4
134.0
123.5
Definition
The Group’s total regulatory
capital resources relative to its
Fixed Overhead Requirement.
Relevance
The Group must hold a minimum
amount of regulatory capital.
This ratio measures the amount
of capital in relation to the risk
exposure of the Group as an
indication of resilience.
10.7%
Definition
The Group’s total net assets per
the Consolidated statement of
financial position.
Relevance
This demonstrates the Group’s
balance sheet strength.
26
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
27
Financial review
The Group made further progress in the
delivery of its strategy, reporting positive net
flows and record underlying profit and margin,
although the market downturn meant earnings
in H2 were marginally lower than H1.
Ben Thorpe
Chief Financial Officer
Review of results for the year
The Group delivered another strong set of results for FY22,
despite the second half of the financial year being impacted
by the Russian invasion of Ukraine. The change in financial
markets and client sentiment has been significant, with the
situation being further impacted by the increase in energy
prices, the resulting rise of inflation and the need for central
banks to respond with higher interest rates. However, the
Group responded well and flows in H2 were up on H1 and
financial performance was resilient. Therefore, once again,
the Group reported improved revenue, underlying profit and
underlying profit margin.
The improved performance was due to increased revenue
driven by higher average FUM for the year and the full year
impact of the Lloyds Channel Islands acquisition, and the
Group’s continued discipline around costs and financial
resources.
This contributed to an underlying profit of £34.5 million, an
increase of 12.7% on the previous year and an underlying
profit margin of 28.2%, up 2.3 percentage points from last year’s
margin of 25.9%.
28
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Financial review
Introduction
Strategic report
Corporate governance
Financial statements
The Group made further progress in the
delivery of its strategy, reporting positive net
flows and record underlying profit and margin,
although the market downturn meant earnings
in H2 were marginally lower than H1.
Ben Thorpe
Chief Financial Officer
£122.2m
£34.5m
£29.5m
Total revenue for the Group
increased by 3.4% to £122.2 million
mainly driven by higher average FUM
and the full-year impact of the Lloyds
Channel Islands acquisition.
Underlying profit before tax increased
by 12.7% driven by growth in revenue
and continued cost discipline.
Statutory profit before tax increased
by 17.5% driven by the higher
underlying earnings with statutory
adjustments broadly flat.
Review of results for the year
The Group delivered another strong set of results for FY22,
despite the second half of the financial year being impacted
by the Russian invasion of Ukraine. The change in financial
markets and client sentiment has been significant, with the
situation being further impacted by the increase in energy
prices, the resulting rise of inflation and the need for central
banks to respond with higher interest rates. However, the
Group responded well and flows in H2 were up on H1 and
financial performance was resilient. Therefore, once again,
the Group reported improved revenue, underlying profit and
underlying profit margin.
The improved performance was due to increased revenue
driven by higher average FUM for the year and the full year
impact of the Lloyds Channel Islands acquisition, and the
Group’s continued discipline around costs and financial
resources.
This contributed to an underlying profit of £34.5 million, an
increase of 12.7% on the previous year and an underlying
profit margin of 28.2%, up 2.3 percentage points from last year’s
margin of 25.9%.
Group financial results summary
The table below shows the Group’s financial performance for the year ended 30 June 2022 with the comparative period and
provides a reconciliation between the underlying results, which the Board considers to be an appropriate reflection of the Group’s
underlying performance, and the statutory results. Underlying profit represents an alternative performance measure (“APM”) for
the Group. Refer to the Non-IFRS financial information section on page 181 for a glossary of the Group’s APMs, their definition, and
the criteria for how underlying adjustments are considered. A breakdown of the underlying adjustments is shown on page 35.
Revenue
Fixed staff costs
Variable staff costs
Total staff costs
Non-staff costs
FSCS levy
Total non-staff costs
Total underlying costs
Underlying profit before tax
Underlying adjustments
Statutory profit before tax
Taxation
Statutory profit after tax
Underlying profit margin before tax
Underlying basic earnings per share
Underlying diluted earnings per share
Statutory profit margin before tax
Statutory basic earnings per share
Statutory diluted earnings per share
Dividends per share
FY22
£m
122.2
(40.5)
(14.8)
(55.3)
(31.3)
(1.1)
(32.4)
(87.7)
34.5
(5.0)
29.5
(6.1)
23.4
28.2%
174.1p
168.7p
24.1%
149.0p
144.4p
71.0p
FY21
£m
118.2
(40.0)
(13.2)
(53.2)
(32.2)
(2.2)
(34.4)
(87.6)
30.6
(5.5)
25.1
(5.5)
19.6
25.9%
155.6p
150.6p
21.2%
125.3p
121.3p
63.0p
Change
3.4%
1.3%
12.1%
3.9%
(2.8)%
(50.0)%
(5.8)%
0.1%
12.7%
(9.1)%
17.5%
10.9%
19.4%
2.3ppt
11.9%
12.0%
2.9ppt
18.9%
19.0%
12.7%
28
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
29
Financial review continued
FUM movement in the year
The table below shows the opening and closing FUM position and the flows for the year broken down by segment and by our key
services within UK Investment Management (“UKIM”).
Opening
FUM
1 Jul
21
9,460
1,025
1,386
2,411
11,871
478
1,598
2,076
13,947
BPS
MPS Custody
MPS Platform
MPS total
UKIM discretionary
Funds – DCF
Funds – Other
Funds total
UKIM total
Year ended 30 June 2022 (£m)
Organic net new business
Q1
6
13
149
162
168
(11)
(15)
(26)
142
Q2
51
3
153
156
207
2
(23)
(21)
186
Q3
30
10
171
181
211
(15)
(20)
(35)
176
Q4
1
5
325
330
331
(22)
(3)
(25)
306
Total
88
31
798
829
917
(46)
(60)
(106)
810
Closing
FUM
30 Jun
22
8,581
960
2,053
3,013
11,594
439
1,418
1,857
13,451
Total
mvmt
Total
organic
net new
business
(9.3)%
0.9%
(6.3)%
3.0%
48.1%
57.6%
25.0%
34.4%
(2.3)%
7.7%
(8.2)%
(9.6)%
(11.3)%
(3.8)%
(5.1)% (10.5)%
3.6%
5.8%
Total
Inv.
Perf.
(967)
(96)
(131)
(227)
(1,194)
7
(120)
(113)
(1,307)
International
2,512
(14)
12
3
(26)
(25)
(271)
2,216
(1.0)%
(11.8)%
Total
16,459
128
198
179
280
785
(1,578)
15,667
4.8%
(4.8)%
Total investment performance
MSCI PIMFA Private Investor Balanced Index1
1. Capital-only index.
(9.6)%
(6.3)%
During the year, the Group recorded positive net flows of £0.8 billion or 4.8%, representing an upswing of £1.1 billion on last year.
This was offset by the market downturn experienced in the second half leading to an overall decrease in the Group’s closing FUM
of 4.8% to £15.7 billion (FY21: £16.5 billion).
Investment performance for the year came in at (9.6%), with declining markets bringing down FUM totals. Nonetheless,
investment performance remains strong for client portfolios over the three, five and ten-years against peers as represented by
ARC benchmarks.
Within UKIM, the BPS core offering made good progress with net inflows of £0.1 billion in the year. We continue to see good growth
in our specialist products – the AIM Portfolio Service, the Responsible Investment Service, the Decumulation Service, and the
Court of Protection Service – all focused on meeting different client needs.
Increasing flows in MPS has been an area of strategic focus for the Group in FY22 and our MPS services delivered flows of £0.8
billion in the year, primarily seen within Platform MPS and in Brooks Macdonald Investment Solutions, with several material
deals agreed during the year.
The Funds business recorded total net outflows of £0.1 billion during the year. Whilst still experiencing net outflows overall, we
have seen a notable decline in outflows in the Defensive Capital Fund compared to the prior year, assisted in part by its robust
investment performance over the last six months.
International made good progress in the year, returning to positive net flows for two-quarters of the year, with net outflows
reducing from £59.8 million to £25.4 million overall for the year.
Revenue
The Group’s total revenue for FY22 increased by 3.4% to £122.2 million (FY21: £118.2 million). FUM-related revenue overall
increased by 3.5% to £116.1 million, whilst non-FUM-related revenue increased marginally to £6.1 million. The rise in fee income
was driven by higher average FUM as a result of net inflows and favourable markets in H1, and the full-year impact of the Lloyds
Channel Islands business, which contributed an additional £3.4 million of revenue compared to FY21.
30
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Financial review continued
FUM movement in the year
services within UK Investment Management (“UKIM”).
The table below shows the opening and closing FUM position and the flows for the year broken down by segment and by our key
Opening
FUM
1 Jul
21
9,460
1,025
1,386
2,411
11,871
478
1,598
2,076
13,947
BPS
MPS Custody
MPS Platform
MPS total
Funds – DCF
Funds – Other
Funds total
UKIM total
UKIM discretionary
Year ended 30 June 2022 (£m)
Organic net new business
Q1
6
13
149
162
168
(11)
(15)
(26)
142
Q2
51
3
153
156
207
2
(23)
(21)
186
Q3
30
10
171
181
211
(15)
(20)
(35)
176
Q4
Total
1
5
325
330
331
(22)
(3)
(25)
306
88
31
798
829
917
(46)
(60)
(106)
810
Closing
FUM
Total
organic
30 Jun
net new
22
business
Total
Inv.
Perf.
(967)
(96)
(131)
(227)
(1,194)
7
(120)
(113)
8,581
960
2,053
3,013
11,594
439
1,418
1,857
Total
mvmt
(9.3)%
(6.3)%
48.1%
25.0%
(2.3)%
(8.2)%
(11.3)%
0.9%
3.0%
57.6%
34.4%
7.7%
(9.6)%
(3.8)%
(1,307)
13,451
5.8%
3.6%
(5.1)% (10.5)%
International
2,512
(14)
12
3
(26)
(25)
(271)
2,216
(1.0)%
(11.8)%
Total
16,459
128
198
179
280
785
(1,578)
15,667
4.8%
(4.8)%
Total investment performance
MSCI PIMFA Private Investor Balanced Index1
1. Capital-only index.
(9.6)%
(6.3)%
During the year, the Group recorded positive net flows of £0.8 billion or 4.8%, representing an upswing of £1.1 billion on last year.
This was offset by the market downturn experienced in the second half leading to an overall decrease in the Group’s closing FUM
of 4.8% to £15.7 billion (FY21: £16.5 billion).
Investment performance for the year came in at (9.6%), with declining markets bringing down FUM totals. Nonetheless,
investment performance remains strong for client portfolios over the three, five and ten-years against peers as represented by
ARC benchmarks.
Within UKIM, the BPS core offering made good progress with net inflows of £0.1 billion in the year. We continue to see good growth
in our specialist products – the AIM Portfolio Service, the Responsible Investment Service, the Decumulation Service, and the
Court of Protection Service – all focused on meeting different client needs.
Increasing flows in MPS has been an area of strategic focus for the Group in FY22 and our MPS services delivered flows of £0.8
billion in the year, primarily seen within Platform MPS and in Brooks Macdonald Investment Solutions, with several material
deals agreed during the year.
The Funds business recorded total net outflows of £0.1 billion during the year. Whilst still experiencing net outflows overall, we
have seen a notable decline in outflows in the Defensive Capital Fund compared to the prior year, assisted in part by its robust
investment performance over the last six months.
International made good progress in the year, returning to positive net flows for two-quarters of the year, with net outflows
reducing from £59.8 million to £25.4 million overall for the year.
Revenue
The Group’s total revenue for FY22 increased by 3.4% to £122.2 million (FY21: £118.2 million). FUM-related revenue overall
increased by 3.5% to £116.1 million, whilst non-FUM-related revenue increased marginally to £6.1 million. The rise in fee income
was driven by higher average FUM as a result of net inflows and favourable markets in H1, and the full-year impact of the Lloyds
Channel Islands business, which contributed an additional £3.4 million of revenue compared to FY21.
Introduction
Strategic report
Corporate governance
Financial statements
This was offset by a reduction in transactional income as a result of the Group’s relatively stable asset allocation during the year
and the continued trend of clients moving to a fee-only rate card.
Interest turn increased slightly on the prior year, driven by the rise in the Bank of England base rates in the latter part of the
financial year, although it continues to remain low by historic levels.
Total financial planning and wealth management advice income increased slightly by £0.2 million during the year. Within that,
UKIM financial planning fees were up by £0.4 million as we continue to grow our Private Clients business, whilst International
saw a slight reduction as more private clients moved to an all-in investment management fee.
Revenue, yields and average FUM
Revenue
Average FUM
Yield2
BPS fees
BPS non-fees (transactional)
BPS non-fees (interest turn)
Total BPS
MPS Custody
MPS Platform
Total MPS
UKIM discretionary
Funds
Total UKIM
International fees
International non-fees
Lloyds Channel Islands1
Total International
Total FUM-related revenue
Financial planning – UK
Financial planning – International
Other income
Total non-FUM-related revenue
Total Group revenue
FY22
£m
59.9
12.1
1.0
73.0
6.4
3.5
9.9
82.9
12.8
95.7
9.0
2.7
8.7
20.4
116.1
4.1
0.8
1.2
6.1
122.2
FY21
£m
58.7
14.5
1.4
74.6
6.0
2.3
8.3
82.9
12.2
95.1
8.9
2.9
5.3
17.1
112.2
3.7
1.0
1.3
6.0
118.2
Change
%
2.0
(16.6)
(28.6)
(2.1)
6.7
52.2
19.3
–
4.9
0.6
1.1
(6.9)
64.2
19.3
3.5
10.8
(20.0)
(7.7)
1.7
3.4
FY22
£m
FY21
£m
Change
%
9,108
1,029
1,808
2,837
11,945
2,220
14,165
1,602
–
841
2,443
16,608
8,722
950
1,119
2,069
10,791
2,207
12,998
1,636
–
540
2,176
15,174
4.4
8.3
61.6
37.1
10.7
0.6
9.0
(2.1)
–
55.7
12.3
9.5
FY22
bps
65.8
13.3
1.1
80.2
62.6
19.2
34.9
69.4
57.8
67.6
56.7
16.6
103.0
83.6
70.0
FY21
bps
67.3
16.6
1.6
85.5
63.2
20.6
40.1
76.8
55.3
73.2
54.4
17.7
101.9
79.3
73.9
Change
bps
(1.5)
(3.3)
(0.5)
(5.3)
(0.6)
(1.4)
(5.2)
(7.4)
2.5
(5.6)
2.3
(1.1)
1.1
4.3
(3.9)
1. The Lloyds Channel Islands yields for FY21 were calculated on a pro rata basis reflecting the relative period the business was owned by the Group.
2. The yield calculation is based on the average FUM at the respective billing dates.
The yield on BPS fees for UKIM decreased by 1.5bps to 65.8bps during the year (FY21: 67.3bps). This was driven by the movement
from net outflows to net inflows year on year and also a number of IFA partners passing through pricing thresholds, as we
captured higher levels of their new business. This highlights the alignment between us and IFAs and how our collective success
can ultimately lead to better outcomes for clients. The BPS non-fee income yield also declined, primarily due to the decrease in
transactional income (3.3bps) due to a higher proportion of fee-only accounts and a relatively stable asset allocation; and lower
interest turn (0.5bps) driven by lower Bank of England base rates at the start of the financial year.
MPS recorded a decline in yields of 5.2bps to 34.9bps. This reduction was principally driven by a change in mix with Platform
MPS growing more rapidly than custody MPS. The Platform MPS service includes our Brooks Macdonald Investment Solutions
offering that attracts relatively larger mandates, which benefit from discounted tiered rates.
The Funds fee yields rose by 2.5bps to 57.8bps in FY22, also as a result of a change in mix and the impact of timing inflows and
outflows.
International fee-income yields were up by 2.3bps to 56.7bps as a result of higher performance and custody fees, whilst non-fee
income yield declined by 1.1bps driven by a decrease in interest and FX income during the year. The Lloyds Channel Islands
assets reported a yield of 103.0bps, slightly up on the prior year.
30
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
31
Financial review continued
Underlying costs
Total underlying costs have remained relatively flat at £87.7 million (FY21: £87.6 million) with the increase in staff costs fully offset
by a reduction in non-staff costs.
Underlying expenditure bridge FY22
£2.5m net reduction from the digital transformation
1.9
0.8
1.6
(1.3)
(1.2)
1.0
2.0
87.6
(1.3)
(0.6)
(1.4)
87.7
(1.1)
(0.3)
£ millions
95.0
93.0
91.0
89.0
87.0
85.0
83.0
81.0
Full-year in pact of staff o utso urced to SS & C
D ecrease in a m ortisatio n of legacy platfor m
Release of historic tax-related provisio ns
Red uctio n in FSC S lev y
N e w SS & C tech n ology suite spen d
Higher T & E spen d with return to o ffi ce
Red uctio n in change costs
Incre m ental Lloyds CI costs
Pay rises an d net ne w hires
Rebate for partial utilisatio n of ne w platfor m
N et increase in variable staff costs
F Y 21 u n derlying expen diture
F Y 22 u n derlying expen diture
Other net m ove m ents
Breakdown of net movement in total underlying costs into staff and non-staff costs
Staff costs increase
Non-staff costs (decrease)/increase
Total FY22 underlying cost increase/(decrease)
Total
£m
2.1
(2.0)
0.1
Lloyds CI
£m
0.9
1.1
2.0
BM Core
£m
1.2
(3.1)
(1.9)
32
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Financial review continued
Total underlying costs have remained relatively flat at £87.7 million (FY21: £87.6 million) with the increase in staff costs fully offset
Underlying costs
by a reduction in non-staff costs.
Underlying expenditure bridge FY22
£2.5m net reduction from the digital transformation
1.9
0.8
1.6
(1.3)
(1.2)
1.0
2.0
87.6
(1.3)
(0.6)
(1.4)
87.7
(1.1)
(0.3)
£ millions
95.0
93.0
91.0
89.0
87.0
85.0
83.0
81.0
F Y 21 u n derlying expen diture
Incre m ental Lloyds CI costs
Pay rises an d net ne w hires
N et increase in variable staff costs
Higher T & E spen d with return to o ffi ce
N e w SS & C tech n ology suite spen d
Full-year in pact of staff o utso urced to SS & C
Rebate for partial utilisatio n of ne w platfor m
D ecrease in a m ortisatio n of legacy platfor m
Red uctio n in change costs
Release of historic tax-related provisio ns
Red uctio n in FSC S lev y
Other net m ove m ents
F Y 22 u n derlying expen diture
Breakdown of net movement in total underlying costs into staff and non-staff costs
Staff costs increase
Non-staff costs (decrease)/increase
Total FY22 underlying cost increase/(decrease)
Total
Lloyds CI
BM Core
£m
2.1
(2.0)
0.1
£m
0.9
1.1
2.0
£m
1.2
(3.1)
(1.9)
Introduction
Strategic report
Corporate governance
Financial statements
Staff costs
Total staff costs increased by £2.1 million to £55.3 million. Of this, £0.9 million was driven by the incremental costs arising from the
Lloyds Channel Islands acquisition, which completed at the end of November 2020.
Fixed staff costs for the Group's core operations decreased slightly by £0.3 million. This comprised an increase of £1.0 million
resulting from pay rises and net new joiners, with FTE headcount increasing slightly from 430 to 446 during the year, offset
by savings of £1.3 million arising from the transfer of a number of roles from the Investment Services and the Technology
departments to SS&C in December 2020 as part of the Group's digital transformation project.
Variable staff costs increased by 12.1% to £14.8 million in FY22. Apart from the impact of the Lloyds Channel Islands acquisition,
the increase comprised a higher bonus pool reflecting the improvement in the Group’s financial performance, offset by a
reduction in the share-based payment charge as the share option schemes held at the end of the year were marked to market.
Non-staff costs
Non-staff costs amounted to £32.4 million representing a decrease of 5.8% on the prior year. Excluding the impact of the
acquired costs of £1.1 million, non-staff costs for the core business fell by £3.1 million or 11.0%. Within that there were a number of
movements, which are set out in the bridge chart on the left and the key items explained below.
With the Group's return to office and increased travel and client facing activities, travel and entertainment spend increased by
£0.8 million on the prior year.
During the year, the Group turned on portions of the new SS&C technology landscape with a full go-live taking place shortly
after year end. This gave rise to additional external technology spend of £1.9 million in the year. This was in part driven by the
transition from our legacy systems but also by the delivery of brand-new capabilities to the Group to support our growth agenda.
In FY22, the main delivery being a whole new suite of tools to support our Funds business, which has grown rapidly through the
acquisition of the Cornelian and Lloyds offshore funds businesses.
This movement to an outsourced technology and operations provider has allowed us to make further structural non-staff costs
reductions. For example, during the year, the Group fully amortised the remaining legacy operating platform-related assets
in advance of moving onto the SS&C platform. This gave rise to a decrease in computer software amortisation of £1.3 million
compared to FY21. The Group also spent £0.6 million less on technology and operational change as it focused on the new system
go-live.
The Group also received a further benefit from the partnership agreement with SS&C as it received a transition funding credit of
£1.2 million due to the partial utilisation of the new operating platform during the transition period.
Following agreement with HMRC over the VAT treatment on the supply of certain Group services and other historic tax
provisions, the Group recognised a release of £1.4 million during the year. Moreover, the FSCS levy for the year represented a
reduction of £1.1 million on the fee charged for FY21.
Profit before tax
Combined, the above gave rise to an underlying profit before tax of £34.5 million, representing an increase of 12.7% on FY21 and
resulting in a profit margin of 28.2%, an increase of 2.3 percentage points (FY21: 25.9%).
On a statutory basis, the profit before tax increased by 17.5% to £29.5 million (FY21: £25.1 million). The statutory profit margin before
tax also saw an increase from last year, up to 24.1%. The quantum of one-off underlying adjustments for the year has reduced by
£0.5 million, with just three material adjustments. A breakdown of the underlying adjustments, together with an explanation of
each, is included on page 35.
32
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
33
Financial review continued
Segmental analysis
The Group reports its results across two key operating segments, UK Investment Management and International. The tables
below provide a breakdown of the half-year performance broken down by these segments, with comparatives.
FY22 (£m)
Revenue
Direct costs
Operating contribution
Indirect cost recharges and net finance costs
Underlying profit/(loss) before tax
Underlying adjustments
Statutory profit/(loss) before tax
UK
Investment
Management
101.0
(43.4)
57.6
(25.4)
32.2
(1.9)
30.3
International
21.2
(14.0)
7.2
(3.2)
4.0
(3.0)
1.0
Group and
consolidation
adjustments
–
(30.0)
(30.0)
28.3
(1.7)
(0.1)
(1.8)
Total
122.2
(87.4)
34.8
(0.3)
34.5
(5.0)
29.5
Underlying profit margin before tax
Statutory profit margin before tax
31.9%
30.0%
18.9%
4.7%
N/A
N/A
28.2%
24.1%
FY21 (£m)
Revenue
Direct costs
Operating contribution
Indirect cost recharges and net finance costs
Underlying profit/(loss) before tax
Underlying adjustments
Statutory profit/(loss) before tax
Underlying profit before tax margin
Statutory profit/(loss) margin before tax
UK
Investment
Management
100.0
(45.7)
54.3
(25.3)
29.0
(3.1)
25.9
International
18.2
(10.8)
7.4
(2.9)
4.5
(4.6)
(0.1)
29.0%
25.9%
24.7%
(0.5)%
Group and
consolidation
adjustments
–
(30.9)
(30.9)
28.0
(2.9)
2.2
(0.7)
N/A
N/A
Total
118.2
(87.4)
30.8
(0.2)
30.6
(5.5)
25.1
25.9%
21.2%
UKIM, which includes the Group’s Private Clients business, reported a 1.0% increase in revenue, arising from higher fee income
offset by a fall in transactional income. The increase in revenue, combined with disciplined cost management and efficiencies,
resulted in an underlying profit of £32.2 million, up by 11.0%, and an underlying profit margin of 31.9%, an improvement of 2.9
percentage points.
The International segment reported an increase in revenues of 16.5% driven by higher fee income during the year, primarily due
to a full-year contribution from the Lloyds Channel Islands business. Direct costs of £14.0 million were ahead of the prior year,
largely as a result of the incremental costs from the Lloyds Channel Islands business, investment in setting up the Isle of Man
office, which is now fully up and running and legal and professional costs incurred in re-domiciling and simplifying the legal
entity corporate structure. This resulted in a slight decline in underlying profit to £4.0 million and a lower underlying profit margin
of 18.9% for the year. Excluding the Isle of Man office direct costs of £0.5 million, the International underlying profit margin would
have been 21.2%, a reduction of 3.5 percentage points on FY21 due to the impact of markets on fee income in the second half of the
year and the additional costs noted above.
34
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Financial review continued
Segmental analysis
The Group reports its results across two key operating segments, UK Investment Management and International. The tables
below provide a breakdown of the half-year performance broken down by these segments, with comparatives.
Underlying profit margin before tax
Statutory profit margin before tax
31.9%
30.0%
18.9%
4.7%
N/A
N/A
28.2%
24.1%
FY22 (£m)
Revenue
Direct costs
Operating contribution
Indirect cost recharges and net finance costs
Underlying profit/(loss) before tax
Underlying adjustments
Statutory profit/(loss) before tax
FY21 (£m)
Revenue
Direct costs
Operating contribution
Indirect cost recharges and net finance costs
Underlying profit/(loss) before tax
Underlying adjustments
Statutory profit/(loss) before tax
Underlying profit before tax margin
Statutory profit/(loss) margin before tax
UK
Investment
Group and
consolidation
Management
International
adjustments
101.0
(43.4)
57.6
(25.4)
32.2
(1.9)
30.3
100.0
(45.7)
54.3
(25.3)
29.0
(3.1)
25.9
29.0%
25.9%
21.2
(14.0)
7.2
(3.2)
4.0
(3.0)
1.0
18.2
(10.8)
7.4
(2.9)
4.5
(4.6)
(0.1)
24.7%
(0.5)%
–
(30.0)
(30.0)
28.3
(1.7)
(0.1)
(1.8)
–
(30.9)
(30.9)
28.0
(2.9)
2.2
(0.7)
N/A
N/A
Total
122.2
(87.4)
34.8
(0.3)
34.5
(5.0)
29.5
Total
118.2
(87.4)
30.8
(0.2)
30.6
(5.5)
25.1
25.9%
21.2%
UK
Investment
Group and
consolidation
Management
International
adjustments
UKIM, which includes the Group’s Private Clients business, reported a 1.0% increase in revenue, arising from higher fee income
offset by a fall in transactional income. The increase in revenue, combined with disciplined cost management and efficiencies,
resulted in an underlying profit of £32.2 million, up by 11.0%, and an underlying profit margin of 31.9%, an improvement of 2.9
percentage points.
The International segment reported an increase in revenues of 16.5% driven by higher fee income during the year, primarily due
to a full-year contribution from the Lloyds Channel Islands business. Direct costs of £14.0 million were ahead of the prior year,
largely as a result of the incremental costs from the Lloyds Channel Islands business, investment in setting up the Isle of Man
office, which is now fully up and running and legal and professional costs incurred in re-domiciling and simplifying the legal
entity corporate structure. This resulted in a slight decline in underlying profit to £4.0 million and a lower underlying profit margin
of 18.9% for the year. Excluding the Isle of Man office direct costs of £0.5 million, the International underlying profit margin would
have been 21.2%, a reduction of 3.5 percentage points on FY21 due to the impact of markets on fee income in the second half of the
year and the additional costs noted above.
Introduction
Strategic report
Corporate governance
Financial statements
Reconciliation between underlying and statutory profits
Underlying profit before tax is considered by the Board to be an appropriate reflection of the Group’s performance compared to
the statutory results as it excludes income and expense categories, which are deemed to be of a non-recurring nature or a non-
cash operating item. Reporting at an underlying basis is also considered appropriate for external analyst coverage. Underlying
profit is deemed to be an alternative performance measure (“APM”); refer to the Non-IFRS financial information section on
page 181 for a glossary of the Group’s APMs, their definitions, and the criteria for how underlying adjustments are considered. A
reconciliation between underlying and statutory profit before tax for the year ended 30 June 2022 with comparatives is shown in
the table below:
Underlying profit before tax
Amortisation of client relationships
Dual running operating platform costs
Changes in fair value and finance cost of deferred consideration
Other non-operating income
Client relationship contracts impairment
Acquisitions related items:
— Gain arising on acquisition
— Integration and staff retention costs
Total underlying adjustments
Statutory profit before tax
FY22
£m
34.5
(5.5)
(2.4)
(0.1)
3.0
–
–
–
(5.0)
29.5
FY21
£m
30.6
(4.9)
(1.0)
(0.4)
–
(1.5)
5.0
(2.7)
(5.5)
25.1
Amortisation of client relationship contracts (£5.5 million charge)
These intangible assets are created in the course of acquiring funds under management and are amortised over their useful
life, which have been assessed to range between 6 and 20 years. The increase in the charge from last year is due to the full year
impact of the Lloyds Channel Islands acquisition. This amortisation charge has been excluded from the underlying profit since it
is a significant non-cash item. Refer to Note 14 to the Consolidated financial statements for more details.
Dual running operating platform costs (£2.4 million charge)
The Group is in a partnership agreement with SS&C to transform our client- and intermediary-facing processes, launch a digital
onboarding solution and enhance our operating platform. As part of the transition process, during FY22 the Group incurred
incremental costs in running two operating platforms concurrently. The increase is due to the full-year impact given the
partnership agreement commenced half way through FY21. The dual running costs have been excluded from underlying profit
in view of their non-recurring nature.
Changes in fair value and finance cost of deferred consideration (£0.1 million charge)
This comprises the associated net finance costs arising on deferred consideration payments from acquisitions carried out by the
Group, together with their fair value measurements where applicable. Refer to Note 24 of the Consolidated financial statements
for more details.
Other non-operating income (£3.0 million credit)
During the year, the Group received confirmation from HMRC that the supply of certain Group services was exempt from VAT. As
a result, the Group received a refund from HMRC in respect of VAT arising on those services during the period from 1 July 2017 to
30 June 2020 of £3.0 million. This has been treated as an adjusting item to the underlying profit in view of its non-recurring nature.
FY21 – Client relationship contracts impairment (£1.5 million charge)
Client relationship contracts are reviewed annually for impairment. In view of accelerated withdrawals from the previously
acquired business, DPZ Limited, seen during FY21, the estimated useful economic life of the intangible assets associated with this
business was reduced. Accordingly, an impairment charge of £1.5 million was recognised in FY21.
34
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
35
Financial review continued
FY21 – Acquisition related costs (£2.3 million credit)
i. Gain arising on acquisition (£5.0 million credit)
A gain on purchase was recognised in respect of the Lloyds Channel Islands acquisition as the net identifiable assets acquired
were greater than the total purchase consideration paid. Refer to Note 11 of the Consolidated financial statements for details on
the acquisition accounting.
ii. Integration and staff retention costs (£2.7 million charge)
These comprise the costs incurred in integrating the Cornelian business (acquisition completed on 28 February 2020) and the
Lloyds Channel Islands business (acquisition completed on 30 November 2020). They also include payments made to key
employees who were retained by the Group for a short period of time to assist with the integration of the businesses.
The above costs are being excluded from the Group’s underlying performance as they were one-off in nature.
Reconciliation between profits and earnings before interest, tax depreciation and
amortisation (“EBITDA”)
The table below provides a reconciliation between the Group's underlying profit before tax and the earnings before interest, tax
and depreciation (“EBITDA”), which constitutes an APM, and which the Board considers to be an appropriate alternative measure
to the Group's BAU performance.
Statutory profit before tax
Add back total underlying adjustments (as listed on page 35)
Underlying profit before tax
Add back:
Net finance costs
Depreciation and amortisation
Underlying EBITDA
Net finance costs on deferred consideration
Amortisation of client relationships
Earnings before interest, tax depreciation and amortisation (“EBITDA”)
FY22
£m
29.5
5.0
34.5
0.2
4.0
38.7
0.1
5.5
44.3
FY21
£m
25.1
5.5
30.6
0.2
5.4
36.2
0.4
4.9
41.5
Change
%
17.5
(9.1)
12.7
–
(25.9)
6.9
(75.0)
12.2
6.7
Taxation
The Group’s total tax charge for the year was £6.1 million, representing an increase of 10.9% from last year (FY21: £5.5 million).
The Group’s underlying effective tax rate has increased marginally from 20.3% to 20.8% and the statutory effective tax rate has
decreased from 21.7% to 20.8%. This is due to a higher proportion of allowable deductions for tax purposes, such as those arising
from the allowance on share-option exercises, compared to taxable add backs, which have not changed significantly from the
prior year. Details on taxation are provided in Note 9 of the Consolidated financial statements.
Earnings per share
Basic statutory earnings per share for the Group in FY22 was 149.0p (FY21: 125.3p). On an underlying basis, basic earnings per share
was 174.1p representing an increase of 11.9% on the prior year (FY21: 155.6p) driven by the increase in underlying earnings. Details
on the basic and diluted earnings per share are provided in Note 12 of the Consolidated financial statements.
Dividend
The Board recognises the importance of dividends to shareholders and the benefit of providing sustainable shareholder returns.
In determining the level of dividend in any year, the Board considers a number of factors, such as, the level of retained earnings,
future cash commitments, statutory profit cover, capital and liquidity requirements and the level of profit retention required to
sustain the growth of the Group. The Board has proposed a final dividend of 45.0p per share (FY21: 40.0p). Including the interim
dividend of 26.0p per share (FY21: 23.0p), this results in a total dividend for the year of 71.0p per share (FY21: 63.0p), an overall
increase of 8.0p or 12.7%. Refer to Note 13 to the Consolidated financial statements for more details. The recommended dividend
is subject to shareholders’ approval, which will be sought at the Company’s Annual General Meeting on 27 October 2022.
36
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Corporate governance
Financial statements
Financial position and regulatory capital
Net assets increased by 10.7% to £148.4 million at 30 June 2022 (FY21: £134.0 million), demonstrating the Group’s continued strong
financial position. The Group’s tangible net assets (net assets excluding intangibles) was up to £62.5 million at 30 June 2022 (FY21:
£44.1 million). As at 30 June 2022, the Group had regulatory capital resources of £70.0 million (FY21: £52.6 million). The own funds
calculation takes into account the respective years’ profit after tax as these are deemed to be verified at the date of publication of
the annual results. The Group continues to be well capitalised with a total capital ratio of 28.5% (FY21: 21.6%). The total capital ratio
is the Group’s total regulatory capital resources relative to its Fixed Overhead Requirement.
Share capital
Share premium
Other reserves
Retained earnings
Total equity
Intangible assets (net book value)
Deferred tax liabilities associated with intangible assets
Tier 1 capital
Own funds
FY22
£m
0.1
79.1
10.0
59.2
148.4
(85.9)
7.5
70.0
70.0
FY21
£m
0.1
78.7
8.5
46.7
134.0
(89.9)
8.5
52.6
52.6
Brooks Macdonald Asset Management Limited, the Group’s main operating subsidiary, is a MIFIDPRU Investment Firm regulated
by the Financial Conduct Authority (“FCA”). In view of this, the Group is classified as a regulated group and subject to the same
regime. As required under FCA rules, and those of both the Jersey and Guernsey Financial Services Commission, the Group
assesses its regulatory capital and liquidity on an ongoing basis through the Internal Capital Adequacy Assessment Process
(“ICAAP”) and Adjusted Net Liquid Asset (“ANLA”) assessments, which include performing a range of stress tests and scenario
analyses to determine the appropriate level of regulatory capital and liquidity that the Group needs to hold. Surplus levels
of capital and liquidity are forecast, taking into account known outflows and proposed dividends to ensure that the Group
maintains sufficient capital and liquidity at all times.
The FY21 ICAAP review was conducted for the year ended 30 June 2021 and signed off by the Board in December 2021.
Regulatory capital forecasts are performed monthly and take into account expected dividends and intangible asset acquisitions
and disposals, as well as, budgeted and forecast trading results. The Group’s IFPR Public Disclosures (previously referred to as the
Pillar III 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.
Financial review continued
FY21 – Acquisition related costs (£2.3 million credit)
i. Gain arising on acquisition (£5.0 million credit)
A gain on purchase was recognised in respect of the Lloyds Channel Islands acquisition as the net identifiable assets acquired
were greater than the total purchase consideration paid. Refer to Note 11 of the Consolidated financial statements for details on
the acquisition accounting.
ii. Integration and staff retention costs (£2.7 million charge)
These comprise the costs incurred in integrating the Cornelian business (acquisition completed on 28 February 2020) and the
Lloyds Channel Islands business (acquisition completed on 30 November 2020). They also include payments made to key
employees who were retained by the Group for a short period of time to assist with the integration of the businesses.
The above costs are being excluded from the Group’s underlying performance as they were one-off in nature.
Reconciliation between profits and earnings before interest, tax depreciation and
amortisation (“EBITDA”)
to the Group's BAU performance.
The table below provides a reconciliation between the Group's underlying profit before tax and the earnings before interest, tax
and depreciation (“EBITDA”), which constitutes an APM, and which the Board considers to be an appropriate alternative measure
Statutory profit before tax
Add back total underlying adjustments (as listed on page 35)
Underlying profit before tax
Add back:
Net finance costs
Depreciation and amortisation
Underlying EBITDA
Net finance costs on deferred consideration
Amortisation of client relationships
Earnings before interest, tax depreciation and amortisation (“EBITDA”)
Taxation
FY22
£m
29.5
5.0
34.5
0.2
4.0
38.7
0.1
5.5
44.3
FY21
£m
25.1
5.5
30.6
0.2
5.4
36.2
0.4
4.9
41.5
Change
%
17.5
(9.1)
12.7
–
(25.9)
6.9
(75.0)
12.2
6.7
The Group’s total tax charge for the year was £6.1 million, representing an increase of 10.9% from last year (FY21: £5.5 million).
The Group’s underlying effective tax rate has increased marginally from 20.3% to 20.8% and the statutory effective tax rate has
decreased from 21.7% to 20.8%. This is due to a higher proportion of allowable deductions for tax purposes, such as those arising
from the allowance on share-option exercises, compared to taxable add backs, which have not changed significantly from the
prior year. Details on taxation are provided in Note 9 of the Consolidated financial statements.
Basic statutory earnings per share for the Group in FY22 was 149.0p (FY21: 125.3p). On an underlying basis, basic earnings per share
was 174.1p representing an increase of 11.9% on the prior year (FY21: 155.6p) driven by the increase in underlying earnings. Details
on the basic and diluted earnings per share are provided in Note 12 of the Consolidated financial statements.
Earnings per share
Dividend
The Board recognises the importance of dividends to shareholders and the benefit of providing sustainable shareholder returns.
In determining the level of dividend in any year, the Board considers a number of factors, such as, the level of retained earnings,
future cash commitments, statutory profit cover, capital and liquidity requirements and the level of profit retention required to
sustain the growth of the Group. The Board has proposed a final dividend of 45.0p per share (FY21: 40.0p). Including the interim
dividend of 26.0p per share (FY21: 23.0p), this results in a total dividend for the year of 71.0p per share (FY21: 63.0p), an overall
increase of 8.0p or 12.7%. Refer to Note 13 to the Consolidated financial statements for more details. The recommended dividend
is subject to shareholders’ approval, which will be sought at the Company’s Annual General Meeting on 27 October 2022.
36
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
37
Financial review continued
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 £61.3 million (FY21: £54.9 million) and the Group had no
borrowings at 30 June 2022.
During the year ended 30 June 2022, the Group made the
final payment in relation to the acquisition of Cornelian Asset
Managers Group Limited of £6.0 million.
The Group incurred capital expenditure of £3.2 million (FY21:
£3.7 million). This comprised technology-related development
of £2.9 million, property-related costs of £0.2 million and IT
and office equipment of £0.1 million. The capital expenditure
comprised the programme implementation and software costs
incurred in respect of the migration of the Group’s client- and
intermediary-facing processes onto the SS&C platform.
The amortisation for these costs will commence in FY23
and will be amortised over the remaining eight years of
the ten-year agreement entered into with SS&C.
FY23 guidance and outlook
Looking ahead, we anticipate the impact of lower markets
year on year to have some impact on financial performance,
although this will be in part offset by lower variable
performance-based pay. The Group has a clear plan in place
to manage and offset inflationary cost pressures and we
are focused on containing cost growth to a mid-single digit
percentage increase. We remain mindful of the need to support
staff through these difficult times, whilst balancing our desire
to deliver top quartile underlying profit margins.
Despite these short-term headwinds, the Group is well
placed to deliver on our strategy in the medium term. The
fundamental opportunity is huge and building and we now
have all the required elements to deliver our ambitious organic
and inorganic growth agenda and we look forward to the
future with confidence.
The Strategic report in its entirety has been approved by
the Board of Directors and is signed on its behalf by:
Ben Thorpe
Chief Financial Officer
14 September 2022
38
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Corporate governance
Financial statements
Financial review continued
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 £61.3 million (FY21: £54.9 million) and the Group had no
borrowings at 30 June 2022.
During the year ended 30 June 2022, the Group made the
final payment in relation to the acquisition of Cornelian Asset
Managers Group Limited of £6.0 million.
The Group incurred capital expenditure of £3.2 million (FY21:
£3.7 million). This comprised technology-related development
of £2.9 million, property-related costs of £0.2 million and IT
and office equipment of £0.1 million. The capital expenditure
comprised the programme implementation and software costs
incurred in respect of the migration of the Group’s client- and
intermediary-facing processes onto the SS&C platform.
The amortisation for these costs will commence in FY23
and will be amortised over the remaining eight years of
the ten-year agreement entered into with SS&C.
FY23 guidance and outlook
Looking ahead, we anticipate the impact of lower markets
year on year to have some impact on financial performance,
although this will be in part offset by lower variable
performance-based pay. The Group has a clear plan in place
to manage and offset inflationary cost pressures and we
are focused on containing cost growth to a mid-single digit
percentage increase. We remain mindful of the need to support
staff through these difficult times, whilst balancing our desire
to deliver top quartile underlying profit margins.
Despite these short-term headwinds, the Group is well
placed to deliver on our strategy in the medium term. The
fundamental opportunity is huge and building and we now
have all the required elements to deliver our ambitious organic
and inorganic growth agenda and we look forward to the
future with confidence.
The Strategic report in its entirety has been approved by
the Board of Directors and is signed on its behalf by:
Ben Thorpe
Chief Financial Officer
14 September 2022
38
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Risks
Continued dynamic approach to risk identification and management in order to support
positive client outcomes
Despite the pandemic, geopolitical and macroeconomic challenges faced in the last year and the subsequent increase in
certain risk exposures, the Group has continued in its commitment to promote a positive compliance and risk culture across the
organisation.
Furthermore, it has maintained its focus on embedding and enhancing the risk management framework, through its focus on
resilience, third parties, and client outcomes.
The Group has also continued its drive towards efficient, data-driven and evidenced-based risk management, which has
facilitated the transition to a more agile and dynamic approach to identifying, assessing, managing and monitoring risks.
Overall, the Group remains well capitalised and liquid, with significant buffers above all regulatory requirements.
Risk identific
ati
o
n
R
i
s
k
a
p
p
e
t
i
t
e
Risk
Management
Methodology
Oversight
(Governance)
g
o rti n
R e p
Boards and
Committees
Rules and
delegated
authorities
Policies
s
n
o
i
t
c
a
l
a
n
o
i
t
i
d
d
A
C
o
n
tr
ols assessment
a l y sis
n
k a
s
R i
Insight
(Management
information)
Past
Errors, breaches,
near misses and
complaints
Present
Risk profiles and
qualification
Future
Predictor
events
Systems and controls
Communication, education, training and guidance
Culture
40
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Risks
Oversight
(Governance)
Boards and
Committees
Rules and
delegated
authorities
Policies
Continued dynamic approach to risk identification and management in order to support
positive client outcomes
organisation.
Despite the pandemic, geopolitical and macroeconomic challenges faced in the last year and the subsequent increase in
certain risk exposures, the Group has continued in its commitment to promote a positive compliance and risk culture across the
Furthermore, it has maintained its focus on embedding and enhancing the risk management framework, through its focus on
resilience, third parties, and client outcomes.
The Group has also continued its drive towards efficient, data-driven and evidenced-based risk management, which has
facilitated the transition to a more agile and dynamic approach to identifying, assessing, managing and monitoring risks.
Overall, the Group remains well capitalised and liquid, with significant buffers above all regulatory requirements.
g
o rti n
R e p
Risk identific
ati
o
n
s
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Risk
Management
Methodology
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R i
Communication, education, training and guidance
Systems and controls
Culture
Insight
(Management
information)
Past
Errors, breaches,
near misses and
complaints
Present
Risk profiles and
qualification
Future
Predictor
events
40
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Corporate governance
Financial statements
How we manage risk
The Group Risk Management Framework
(“RMF”)
Risk management starts with oversight through
appropriate governance; an efficient board and
committee structure, with individual and collective
roles and delegated authorities and a set of core policies
to provide guidance to staff.
Effective risk management relies on insight through
robust and timely management information. We
manage our risks by learning lessons from past events,
such as, errors, breaches, near misses and complaints,
by conducting point-in-time risk assessments and
attempting to predict what the future risk landscape
might look like through our suite of key indicators.
The risk management methodology within the Group’s
risk management framework consists of the following
six interlinked steps:
Risk identification. This takes place through regular
business monitoring and periodic reviews, including
risk mapping exercises and the risks arising from change
or new products and services.
Risk appetite. Once we have identified risks, we set an
appetite for each material risk. This defines the amount
of risk that the Board is prepared to accept in order to
deliver its business objectives. Risk appetite reflects
culture, strategic goals and the existing operating and
control environment.
Risk analysis. Having set the risk appetite, we can
assess the impact and probability of each material
risk against the agreed risk appetite. This can include
the quantification of capital risk as part of the Internal
Capital Adequacy and Risk Assessment (“ICARA”).
Controls assessment. We also assess the effectiveness of
controls in reducing the probability of a risk occurring or,
should it materialise, in mitigating its impact.
Additional actions. Where differences exist between
our risk appetite and the current residual risk profile,
we take action to either accept, avoid or transfer part or
all of those risks that are outside our risk appetite, or to
reconsider the risk appetite.
Reporting. Ongoing reporting of risks to senior
management provides insight to inform risk-based
decision-making and allocation of resources to achieve
business objectives.
Risks continued
Overarching risk appetite statement
• The Group’s overarching risk appetite statement (“ORAS”),
as defined by the Board, sets out the acceptable level of
current and emerging risk we are willing to take to achieve
our strategic business objectives. It provides a framework
to allow the Group to effectively balance the risk and
reward relationship in decision-making.
• Clients, both existing and prospective, are at the heart of
everything we do. As such, we aim to operate a sustainable
business that conducts itself in a reputable and prudent
manner, taking into account the interests of our clients
through providing products and services suited to their
needs and risk profile, which demonstrate value for money.
• As the business continues to grow through sustainable
organic growth and strategic value-adding acquisitions,
the ORAS helps ensure our key stakeholder obligations
are met, supported by internal policies and regulatory
requirements. We commit to using this framework to
ensure we make strategic and business decisions that do
not exceed our overarching risk appetite.
•
In all of the Group’s decisions and operations, we balance
risk versus reward and we consider the following three
dimensions.
Client
outcome
Control
environment
Financial
performance
and resources
Client outcome
• We put client interests at the
heart of everything we do
to ensure appropriate client
outcomes.
Control environment
• We, at all times, operate within
our risk appetite, operational
risk parameters and regulatory
framework, ensuring a
robust control and oversight
environment.
Financial performance
and resources
• We optimise profitability and
use resources efficiently to
drive financial performance.
• We, at all times, maintain
adequate capital and liquid
assets to meet financial and
funding obligations as they
fall due.
• We invest in the development
and wellbeing of our
employees.
42
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Risks continued
Overarching risk appetite statement
• The Group’s overarching risk appetite statement (“ORAS”),
as defined by the Board, sets out the acceptable level of
current and emerging risk we are willing to take to achieve
our strategic business objectives. It provides a framework
to allow the Group to effectively balance the risk and
reward relationship in decision-making.
• Clients, both existing and prospective, are at the heart of
everything we do. As such, we aim to operate a sustainable
business that conducts itself in a reputable and prudent
manner, taking into account the interests of our clients
through providing products and services suited to their
needs and risk profile, which demonstrate value for money.
• As the business continues to grow through sustainable
organic growth and strategic value-adding acquisitions,
the ORAS helps ensure our key stakeholder obligations
are met, supported by internal policies and regulatory
requirements. We commit to using this framework to
ensure we make strategic and business decisions that do
not exceed our overarching risk appetite.
•
In all of the Group’s decisions and operations, we balance
risk versus reward and we consider the following three
dimensions.
Client
outcome
Control
environment
Financial
performance
and resources
Client outcome
Control environment
• We put client interests at the
• We, at all times, operate within
heart of everything we do
to ensure appropriate client
outcomes.
our risk appetite, operational
risk parameters and regulatory
framework, ensuring a
robust control and oversight
environment.
Financial performance
and resources
• We optimise profitability and
use resources efficiently to
drive financial performance.
• We, at all times, maintain
adequate capital and liquid
assets to meet financial and
funding obligations as they
fall due.
• We invest in the development
and wellbeing of our
employees.
Introduction
Strategic report
Corporate governance
Financial statements
Key risks
We have identified our risks at Group and business line levels to help manage our key risks in a consistent and uniform way with
oversight from relevant Committees and Boards.
Group level risks
Definition
1. Credit risk
The risk of loss arising from a client
or counterparty failing to meet their
financial obligations to a Brooks
Macdonald entity as and when they
fall due.
2. Liquidity risk
The risk that assets are insufficiently
liquid and/or Brooks Macdonald does
not have sufficient financial resources
available to meet liabilities as they
fall due, or can secure such resources
only at excessive cost. Liquidity risk
also includes the risk that the Group is
unable to meet regulatory prudential
liquidity ratios.
Key risks identified
by risk management
framework
• Cash deposits with
external banks
• Client credit risk
• Counterparty credit risk
• Custodian-related credit
risk
•
Indirect counterparty risk
in respect of referrals
• Corporate cash deposited
with external banks
• Client cash deposited
with external banks (CASS
rules)
• Failed trades
•
•
•
•
Indirect liquidity risk
associated with client
portfolios
Indirect liquidity risks
associated with dealing
Indirect risk in respect of
the liquidity of individual
holdings in a fund
Indirect risk in respect of
the overall liquidity of our
funds
3. Market risk
• Failed trades
Increasing
The risk that arises from fluctuations
in the value of, or income arising
from, movements in equity, bonds, or
other traded markets, interest rates
or foreign exchange rates that has a
financial impact.
•
•
•
Indirect market risk
associated with advising
on client portfolios
Indirect market risks
associated with dealing
Indirect market risk
associated with managing
client portfolios
Change since
last year
Rationale
for change
Unchanged
Unchanged
The risk continues to
remain unchanged
given the strong
credit risk control
environment including
ongoing monitoring
and due diligence on all
counterparties.
The Group has adequate
liquidity resources
significantly above its
Minimum Liquidity
Requirement and
maintains appropriate
banking facilities. The
Group regularly monitors
forecast against actual
cash flows and matches
the maturity profiles
of financial assets and
liabilities. The Group
has robust contingency
funding arrangements
which are tested on a
periodic basis.
Although it is likely that
the worst of the pandemic
induced market
shocks have passed,
the continued conflict
in Ukraine and the
associated geopolitical
tensions, coupled
with significant global
inflationary pressure,
gives rise to increased
volatility and heightened
downside risk.
42
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
43
Risks continued
Business level risks
Definition
4. Business and
strategic risk
The risk of having an inadequate
business model or making strategic
decisions that may result in lower than
anticipated profit or losses, or exposes
the Group to unforeseen risks.
5. Conduct risk
The risk of causing detriment to
clients, stakeholders or the integrity
of the wider market because of
inappropriate execution of Brooks
Macdonald’s business activities.
Key risks identified by
risk management
framework
Change
since last
year
Rationale
for change
• Adviser concentration
Unchanged
• Acquisitions
• Business growth
• Extreme market events
•
Investment
performance
• Product governance
•
Suitability and
conduct risk
Unchanged
6. Operational risk
• Data quality
Unchanged
The risk of loss arising from
inadequate or failed internal
processes, people and systems, or
from external events. It includes
legal and fraud risk but not strategic,
reputational and business risks.
• Cyber/data security
• Change management
•
IT infrastructure and
capability
• Operational maturity
• Third-party suppliers
• People
• Resilience
7. Prudential risk
• Prudential requirements
Unchanged
The risk of adverse business and/
or client impact resulting from
breaching regulatory capital/liquidity
requirements, or market/credit risk
internal limits.
8. Legal and regulatory risk
• Reputational risk
Unchanged
Legal and regulatory risk is defined
as the risk of exposure to legal or
regulatory penalties, financial
forfeiture and material loss due to
failure to act in accordance with
industry laws and regulations.
• Financial crime
• Governance
• Legacy issues
• Regulatory, tax and legal
compliance
44
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Despite current macro-economic
and geological challenges, the
Group continues to post positive net
flows on a quarterly basis, therefore
highlighting the resiliency of its
business model.
The Group continues to work on
numerous initiatives to promote
good risk and compliance culture
and awareness to ensure positive
client outcomes.
This risk remains unchanged
despite the increase of external
threats brought about by the
current geopolitical environment
coupled with idiosyncratic risks
linked to the Group's transition to a
new operating model and business
as usual oversight. The Group is
monitoring this risk closely and will
continue to invest in enhancing its
control environment.
The Group continues to maintain
capital resources and liquid assets
above its minimum regulatory
requirement and internal
thresholds.
This risk continues to remain
unchanged given that the
regulatory landscape and focus on
the wealth management industry
has not changed.
Introduction
Strategic report
Corporate governance
Financial statements
Emerging risks
Definition
Context
9. Climate change (Emerging)
The potential financial, reputational and
client-related risks associated with ever
increasing climate change-related risks.
10. Geopolitical landscape
(Emerging)
In light of an ongoing energy crisis and
cost of living issues.
With the frequency of extreme natural events increasing as a result of climate
change, this could have a profound impact on the financial services industry.
Geopolitical events have a direct impact on market risk listed previously.
Prolonged economic downturn also has an impact on client sentiment and thus
business and strategic risk as listed previously.
Risks continued
Business level risks
Definition
Key risks identified by
risk management
framework
Change
since last
year
Rationale
for change
• Adviser concentration
Unchanged
Despite current macro-economic
and geological challenges, the
Group continues to post positive net
flows on a quarterly basis, therefore
highlighting the resiliency of its
business model.
•
Suitability and
conduct risk
Unchanged
The Group continues to work on
numerous initiatives to promote
good risk and compliance culture
and awareness to ensure positive
client outcomes.
• Data quality
Unchanged
This risk remains unchanged
4. Business and
strategic risk
The risk of having an inadequate
business model or making strategic
• Acquisitions
• Business growth
• Extreme market events
decisions that may result in lower than
anticipated profit or losses, or exposes
•
Investment
performance
the Group to unforeseen risks.
• Product governance
5. Conduct risk
The risk of causing detriment to
clients, stakeholders or the integrity
of the wider market because of
inappropriate execution of Brooks
Macdonald’s business activities.
6. Operational risk
The risk of loss arising from
inadequate or failed internal
processes, people and systems, or
•
IT infrastructure and
from external events. It includes
capability
legal and fraud risk but not strategic,
reputational and business risks.
• Cyber/data security
• Change management
• Operational maturity
• Third-party suppliers
• People
• Resilience
7. Prudential risk
• Prudential requirements
Unchanged
The Group continues to maintain
8. Legal and regulatory risk
• Reputational risk
Unchanged
This risk continues to remain
The risk of adverse business and/
or client impact resulting from
breaching regulatory capital/liquidity
requirements, or market/credit risk
internal limits.
Legal and regulatory risk is defined
as the risk of exposure to legal or
regulatory penalties, financial
forfeiture and material loss due to
failure to act in accordance with
industry laws and regulations.
• Financial crime
• Governance
• Legacy issues
• Regulatory, tax and legal
compliance
despite the increase of external
threats brought about by the
current geopolitical environment
coupled with idiosyncratic risks
linked to the Group's transition to a
new operating model and business
as usual oversight. The Group is
monitoring this risk closely and will
continue to invest in enhancing its
control environment.
capital resources and liquid assets
above its minimum regulatory
requirement and internal
thresholds.
unchanged given that the
regulatory landscape and focus on
the wealth management industry
has not changed.
44
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
45
Viability statement
In accordance with the UK Corporate Governance Code, the
Board has assessed the Group’s viability over a five-year period
from FY23 through to FY27. The decision to do so over this
period is to be aligned with the Group’s strategy, its budgeting
and forecasting process and the scenarios set out in the 2021
Internal Capital Adequacy Assessment Process (“ICAAP”).
The Board has carried out a robust assessment of the principal
risks facing the Group along with the stress tests and scenarios
that would threaten the sustainability of its business model,
future performance, solvency or liquidity. This assessment is
based on the Group’s Medium-Term Plan (“MTP”), the ICAAP
and an evaluation of the Group’s emerging and principal
risks, as set out in the Risks section of this Strategic report and
outlined in the Risk and Compliance Committee report.
In assessing the future viability of the overall business, the
Board has considered the current and future strategy, as well as
any significant business restructuring and legacy issues. The
Board has also considered the business environment of the
Group and the potential threats to its business model arising
from regulatory, demographic, political and technological
changes. Moreover, the Board’s assessment considered
the widespread economic impact arising from the Russian
invasion of Ukraine and subsequent impact on markets and
rising inflation, on the Group’s profitability, regulatory capital
and liquidity forecasts. The Board’s assessment of the Group’s
capital and liquidity position also considers the implications of
maintaining the Group’s proposed interim and final dividend
pay-outs.
The five-year MTP forms part of the Group’s annual business
planning process. The model translates the Group’s current
and future strategy into a detailed year-one budget, followed
by higher level forecasts for years two through to five.
The combination of this detailed budgeting, longer-term
forecasting and various stress tests provides a transparent and
holistic view of the forward-looking financial prospects of the
Group. The Board reviews and challenges the Group’s MTP
annually. The MTP covering the five-year period from FY23 to
FY27 was reviewed, challenged and approved by the Board in
June 2022.
In addition to the annual MTP preparation process, a re-
forecast is carried out by management and reviewed by the
Board on a quarterly basis. These reflect updates for prevailing
trading conditions and other changes required to the budget
assumptions set at the start of the year.
As part of the ICAAP, the Group models a range of downside
scenarios and a severe but plausible stress scenario designed
to assess the Group’s ability to withstand a market-wide shock
such as a sharp market decline triggered by a global recession;
Group-specific stresses, such as the loss of an investment
management team or key introducer; and a combination
of both.
The Group modelled a multi-layered scenario involving a
significant decline in financial markets over a five-year period
(a drop of 28% and 12% in years one and two respectively,
followed by a gradual recovery), combined with the loss of a
key investment management team. This scenario would have
a material impact on the Group’s profitability compared to the
MTP base case, with the CET1 capital ratio forecast to decrease
by 63% over the five-year period, without management
applying any mitigating actions.
Management identified a number of mitigating actions that
could be implemented in the event of such severe stresses.
These include a reduction in staff variable pay and Group
dividends as well as a reduction in discretionary expenditure
(T&E, marketing and similar), as well as freezing and deferring
purchases of non-current assets and a recruitment freeze
or headcount reduction. In the Group’s modelling on the
above-mentioned multi-layered scenario, the management
mitigating actions implemented forecast that the Group’s
forecast CET1 capital ratio would increase by 29% as opposed
to fall by 63% without any mitigating actions. Over the longer
term, mitigating actions could include a broader and more
significant reduction in the Group’s cost base (IT, property,
change initiatives and others). The implementation of the
above actions depends on the nature of the specific stress
events and the time frames over which they occur.
These scenarios are refreshed on a regular basis to ensure
they remain relevant and continue to be a suitable tool for
developing our controls and mitigating actions. Management
also considers a reverse stress case and carries out an
assessment of the cost to the Group of a wind-down in the
event of a non-recoverable shock to the operating model.
Moreover, Management has identified a number of actions
that could be implemented in the event of severe stresses. The
implementation of the above actions depends on the nature
of the specific stress events and the time frames over which
they occur.
Taking into consideration the assessment of the above
factors, including the results of the latest ICAAP, the Group’s
risk management framework and the mitigating actions
that can be put in place, together with the Group’s successful
navigation of the pandemic thus far, the Board has reasonable
expectations the Group will be able to continue in operation
and meet its liabilities as they fall due over the period under
assessment.
46
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Corporate governance
Financial statements
The Group regularly
carries out a robust
assessment of the
Group's current and
future viability,
supported by the
resilient operating
model.
Ben Thorpe
Chief Financial Officer
Viability statement
In accordance with the UK Corporate Governance Code, the
The Group modelled a multi-layered scenario involving a
Board has assessed the Group’s viability over a five-year period
significant decline in financial markets over a five-year period
from FY23 through to FY27. The decision to do so over this
(a drop of 28% and 12% in years one and two respectively,
period is to be aligned with the Group’s strategy, its budgeting
followed by a gradual recovery), combined with the loss of a
and forecasting process and the scenarios set out in the 2021
key investment management team. This scenario would have
Internal Capital Adequacy Assessment Process (“ICAAP”).
a material impact on the Group’s profitability compared to the
The Board has carried out a robust assessment of the principal
risks facing the Group along with the stress tests and scenarios
that would threaten the sustainability of its business model,
MTP base case, with the CET1 capital ratio forecast to decrease
by 63% over the five-year period, without management
applying any mitigating actions.
future performance, solvency or liquidity. This assessment is
Management identified a number of mitigating actions that
based on the Group’s Medium-Term Plan (“MTP”), the ICAAP
could be implemented in the event of such severe stresses.
and an evaluation of the Group’s emerging and principal
These include a reduction in staff variable pay and Group
risks, as set out in the Risks section of this Strategic report and
dividends as well as a reduction in discretionary expenditure
outlined in the Risk and Compliance Committee report.
(T&E, marketing and similar), as well as freezing and deferring
In assessing the future viability of the overall business, the
Board has considered the current and future strategy, as well as
any significant business restructuring and legacy issues. The
Board has also considered the business environment of the
Group and the potential threats to its business model arising
from regulatory, demographic, political and technological
changes. Moreover, the Board’s assessment considered
the widespread economic impact arising from the Russian
invasion of Ukraine and subsequent impact on markets and
rising inflation, on the Group’s profitability, regulatory capital
and liquidity forecasts. The Board’s assessment of the Group’s
purchases of non-current assets and a recruitment freeze
or headcount reduction. In the Group’s modelling on the
above-mentioned multi-layered scenario, the management
mitigating actions implemented forecast that the Group’s
forecast CET1 capital ratio would increase by 29% as opposed
to fall by 63% without any mitigating actions. Over the longer
term, mitigating actions could include a broader and more
significant reduction in the Group’s cost base (IT, property,
change initiatives and others). The implementation of the
above actions depends on the nature of the specific stress
events and the time frames over which they occur.
capital and liquidity position also considers the implications of
These scenarios are refreshed on a regular basis to ensure
maintaining the Group’s proposed interim and final dividend
they remain relevant and continue to be a suitable tool for
pay-outs.
The five-year MTP forms part of the Group’s annual business
planning process. The model translates the Group’s current
and future strategy into a detailed year-one budget, followed
by higher level forecasts for years two through to five.
The combination of this detailed budgeting, longer-term
forecasting and various stress tests provides a transparent and
holistic view of the forward-looking financial prospects of the
Group. The Board reviews and challenges the Group’s MTP
developing our controls and mitigating actions. Management
also considers a reverse stress case and carries out an
assessment of the cost to the Group of a wind-down in the
event of a non-recoverable shock to the operating model.
Moreover, Management has identified a number of actions
that could be implemented in the event of severe stresses. The
implementation of the above actions depends on the nature
of the specific stress events and the time frames over which
they occur.
annually. The MTP covering the five-year period from FY23 to
Taking into consideration the assessment of the above
FY27 was reviewed, challenged and approved by the Board in
factors, including the results of the latest ICAAP, the Group’s
risk management framework and the mitigating actions
that can be put in place, together with the Group’s successful
navigation of the pandemic thus far, the Board has reasonable
expectations the Group will be able to continue in operation
and meet its liabilities as they fall due over the period under
assessment.
June 2022.
In addition to the annual MTP preparation process, a re-
forecast is carried out by management and reviewed by the
Board on a quarterly basis. These reflect updates for prevailing
trading conditions and other changes required to the budget
assumptions set at the start of the year.
As part of the ICAAP, the Group models a range of downside
scenarios and a severe but plausible stress scenario designed
to assess the Group’s ability to withstand a market-wide shock
such as a sharp market decline triggered by a global recession;
Group-specific stresses, such as the loss of an investment
management team or key introducer; and a combination
of both.
46
Brooks Macdonald Group plc / Annual Report and Accounts 2022
How we engage with our stakeholders
Section 172, employee and other
stakeholder engagement
This part of the Annual Report serves as our statement
regarding Section 172 of the Companies Act 2006. This piece of
legislation states that a director of a company must act in the
way it considers, in good faith, would be most likely to promote
the success of the company for the benefit of its members as a
whole. In doing so, a director of a company must have regard
(amongst other matters) to:
a. The likely consequences of any decision in the long term;
b. The interests of the company’s employees;
c. The need to foster the company’s business relationships
with suppliers, customers and others;
d. The impact of the company’s operations on the
community and the environment;
e. The desirability of the company maintaining a reputation
for high standards of business conduct; and
f. The need to act fairly as between members of the company.
The following summarises how the Company’s Board fulfils its
duties under Section 172 and how we balance the interests of
our stakeholders and consider the long-term consequences of
its decisions.
Guiding Principles
Our Guiding Principles are at the core of the culture at Brooks
Macdonald and set the standards for the decisions we make
and the way we treat our clients, partners, and each other. For
more information on our culture and Guiding Principles, see
the Chairman’s statement on pages 6 to 7, the CEO’s review on
pages 8 to 11, and the Corporate responsibility report on pages
52 to 67.
Stakeholder engagement
Engaging with stakeholders is fundamental to our
business success. By listening to and collaborating with our
stakeholders, we can grow our business and deliver for our
customers and society over the long term.
Principal decisions
The Board engages with a variety of stakeholders, including
clients, regulators, and suppliers, to inform and enable
balanced decisions that incorporate multiple viewpoints,
whilst following the Company’s strategy. In making decisions,
the Board considers outcomes from engagements with
stakeholders, as well as the importance of maintaining the
Company’s integrity, brand and reputation and the long-term
consequences of any decisions. For an example of how this
happens in practice, see the case study on page 51 on the
acquisition of Integrity Wealth Solutions.
Consideration of stakeholders and outcomes
When considering their decisions and in setting the policies and strategy for Brooks Macdonald, the Directors are aware there are
a number of other stakeholders, in addition to shareholders, who will be affected by the actions of the Group. These include, for
example, our clients and advisers along with our employees. The below table outlines how we consider these stakeholders and
how we engage with them to continue driving our growth.
How we engage with our stakeholders and make informed decisions
Clients
Why we engage
How we engage
Outcomes
Our clients are the main
focus of the business. By
engaging with them, we
are able to gain a better
understanding of their
needs, develop long-term
relationships with them
and ensure that we can
provide them with the
products and services
that best suit their
individual circumstances.
We engage with our clients in a variety
of ways, driven by their requirements
and preferences. With all our clients,
across investment management and
financial planning, we hold face-to-face
meetings, provide investment updates and
quarterly statements, and provide market
commentary. Since the COVID-19 pandemic,
online interaction has supplemented face-
to-face meetings and we have increased
the content available to clients on our
website, including providing regular market
commentary.
Our desire to give our clients
better access to information
about their investments
resulted in the development
of the InvestBM platform as
part of our partnership with
SS&C. ESG continues to be an
important topic for our clients
and is reflected in the Group’s ESG
strategy, objectives and initiatives.
48
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Corporate governance
Financial statements
How we engage with our stakeholders and make informed decisions
Intermediaries
The following summarises how the Company’s Board fulfils its
stakeholders, as well as the importance of maintaining the
Shareholders
Why we engage
How we engage
Outcomes
Our focus is on working
with intermediaries to
support their clients and
our vision for Brooks
Macdonald is to be the
leading investment
management firm for
intermediaries. By
deepening our focus on
advisers, we can both
achieve our aim and also
help advisers make their
businesses successful.
We work closely with our advisers, offering
them a range of services to make Brooks
Macdonald easy to do business with and
to help them serve their, and our, clients’
needs. Again, our engagement is driven
by the individual adviser’s requirements
and preferences, from high-touch ongoing
strategic relationships with a small number
of larger firms, through to more arm’s length
provision of our consistent high-quality
investment management to others. In
the current uncertain times and difficult
markets, we have stepped up the frequency
of adviser engagement in the form of
investment bulletins, webinars and online
academies.
We have built long-standing
relationships with mutual
benefits with many advisers. The
services we provide to them have
grown to include business-to-
business Investment Solutions
offerings, explicitly tailored
to the adviser’s requirements
and preferences. In response to
demand from advisers, we have
also piloted an online, digital
onboarding facility which will be
rolled out more broadly over the
coming year.
We value our
shareholders’ support
and want to give them a
better understanding of
our business. In addition,
we have obligations as
an AIM-listed company
to provide information to
our shareholders.
This is done through face-to-face or virtual
meetings and by the provision of detailed
financial reports and presentations on the
business at the half-year and full-year points.
We engage with shareholders frequently
to discuss delivery of our strategy, current
performance and our plans for the business
through our Executive Directors, Chairman
and Committee Chairs.
This ongoing engagement has
helped us preserve the Group’s
reputation for integrity and
earned the trust and confidence
of our large, long-term, committed
shareholders in the business.
Employees
Our employees are
central to the delivery
of our offering for
advisers and clients and
we strive to attract and
retain the best people.
Developing an engaged
and motivated workforce
is key to our desire to be a
great employer and to the
success of the business.
The COVID-19 pandemic
increased our focus on the
wellbeing of our staff and as
restrictions have lifted, we have
maintained our commitment to
supporting our people. We run
regular employee engagement
surveys, the results of which
are closely monitored by the
Executive Committee and
other senior leaders. The results
demonstrate the support and care
our people have been offered
through these challenging times.
We have a stated people strategy, Our
Promise, which commits to providing
fulfilling careers and great reward in an
inclusive culture.
We have a comprehensive internal
communication programme to keep
employees fully aware of developments in
the business’s strategy and performance.
The CEO and other members of senior
management frequently engage with staff in
forums ranging from formal communications,
including all staff 'town hall' video
conferences, to more informal small group
discussions. In accordance with the 2018
Corporate Governance Code, John Linwood
is the designated Non-Executive Director
with responsibility for engagement with
the workforce. He and other Non-Executive
Directors have made office visits and held
meetings with groups of staff to better
understand their views.
How we engage with our stakeholders
Section 172, employee and other
stakeholder engagement
This part of the Annual Report serves as our statement
regarding Section 172 of the Companies Act 2006. This piece of
legislation states that a director of a company must act in the
way it considers, in good faith, would be most likely to promote
Guiding Principles
Our Guiding Principles are at the core of the culture at Brooks
Macdonald and set the standards for the decisions we make
and the way we treat our clients, partners, and each other. For
more information on our culture and Guiding Principles, see
the Chairman’s statement on pages 6 to 7, the CEO’s review on
pages 8 to 11, and the Corporate responsibility report on pages
the success of the company for the benefit of its members as a
whole. In doing so, a director of a company must have regard
52 to 67.
(amongst other matters) to:
Stakeholder engagement
a. The likely consequences of any decision in the long term;
Engaging with stakeholders is fundamental to our
b. The interests of the company’s employees;
c. The need to foster the company’s business relationships
with suppliers, customers and others;
d. The impact of the company’s operations on the
community and the environment;
e. The desirability of the company maintaining a reputation
for high standards of business conduct; and
f. The need to act fairly as between members of the company.
business success. By listening to and collaborating with our
stakeholders, we can grow our business and deliver for our
customers and society over the long term.
Principal decisions
The Board engages with a variety of stakeholders, including
clients, regulators, and suppliers, to inform and enable
balanced decisions that incorporate multiple viewpoints,
whilst following the Company’s strategy. In making decisions,
the Board considers outcomes from engagements with
duties under Section 172 and how we balance the interests of
Company’s integrity, brand and reputation and the long-term
our stakeholders and consider the long-term consequences of
consequences of any decisions. For an example of how this
its decisions.
happens in practice, see the case study on page 51 on the
acquisition of Integrity Wealth Solutions.
Consideration of stakeholders and outcomes
When considering their decisions and in setting the policies and strategy for Brooks Macdonald, the Directors are aware there are
a number of other stakeholders, in addition to shareholders, who will be affected by the actions of the Group. These include, for
example, our clients and advisers along with our employees. The below table outlines how we consider these stakeholders and
how we engage with them to continue driving our growth.
How we engage with our stakeholders and make informed decisions
Why we engage
How we engage
Outcomes
Clients
Our clients are the main
We engage with our clients in a variety
focus of the business. By
of ways, driven by their requirements
Our desire to give our clients
better access to information
engaging with them, we
and preferences. With all our clients,
about their investments
are able to gain a better
understanding of their
across investment management and
resulted in the development
financial planning, we hold face-to-face
of the InvestBM platform as
needs, develop long-term
meetings, provide investment updates and
part of our partnership with
relationships with them
quarterly statements, and provide market
SS&C. ESG continues to be an
and ensure that we can
commentary. Since the COVID-19 pandemic,
important topic for our clients
provide them with the
products and services
that best suit their
individual circumstances.
website, including providing regular market
the content available to clients on our
commentary.
online interaction has supplemented face-
and is reflected in the Group’s ESG
to-face meetings and we have increased
strategy, objectives and initiatives.
48
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Brooks Macdonald Group plc / Annual Report and Accounts 2022
49
How we engage with our stakeholders continued
How we engage with our stakeholders and make informed decisions
Why we engage
How we engage
Outcomes
Regulators
We focus on having
positive and interactive
relationships with our
regulators, who provide
oversight and guidance in
how we run our business.
Working constructively
with our regulators helps
us to best service the
needs and interests of our
clients.
Regulated entities within the Group
correspond with relevant regulators
during the financial year in respect of
their supervision activity. We also send
proactive correspondence to our regulators
throughout the year with respect to any
changes and developments in our business.
We provide timely submission of
all relevant regulatory reporting
and respond on a timely basis to
any regulatory requests.
We have a constructive
relationship to ensure alignment
with the relevant regulatory
frameworks and have met the
regulators’ expectations on the
topics of discussion.
We regularly attend meetings
with, and provide input to, the
industry bodies and associations
we are affiliated with to ensure
we are engaged with the latest
issues impacting our industry
and clients.
Community
and the
environment
We are a responsible
Group and seek both to
support our community
and to reduce our impact
on the environment as
much as possible.
The BM Foundation was set up in 2010 with
the aim of supporting charities that staff are
enthusiastic about. It acts as a conduit for
donations to be made to charity, and staff
members are able to request donations to
a registered charity of their choice. Staff are
also encouraged to do voluntary work and
are able to use a paid volunteering day each
year. We seek to reduce our carbon footprint
through the better use of technology and an
associated reduction in energy use and we
regularly review our processes to see if we
can reduce our impact on the environment.
The Foundation made donations
of over £46,000 during the year
to a variety of charities that
are important to our people
including Red Cross Ukraine and
Safer, a charity in Guernsey that
supports individuals in abusive
relationships.
We have introduced a structured
procurement process in order to
ensure that we select business
partners who are aligned with our
beliefs.
50
Brooks Macdonald Group plc / Annual Report and Accounts 2022
How we engage with our stakeholders continued
How we engage with our stakeholders and make informed decisions
Why we engage
How we engage
Outcomes
Regulators
We focus on having
Regulated entities within the Group
positive and interactive
correspond with relevant regulators
relationships with our
during the financial year in respect of
We provide timely submission of
all relevant regulatory reporting
and respond on a timely basis to
regulators, who provide
their supervision activity. We also send
any regulatory requests.
oversight and guidance in
proactive correspondence to our regulators
how we run our business.
throughout the year with respect to any
Working constructively
changes and developments in our business.
with our regulators helps
us to best service the
needs and interests of our
clients.
We have a constructive
relationship to ensure alignment
with the relevant regulatory
frameworks and have met the
regulators’ expectations on the
topics of discussion.
We regularly attend meetings
with, and provide input to, the
industry bodies and associations
we are affiliated with to ensure
we are engaged with the latest
issues impacting our industry
and clients.
Community
We are a responsible
The BM Foundation was set up in 2010 with
The Foundation made donations
and the
environment
Group and seek both to
the aim of supporting charities that staff are
of over £46,000 during the year
support our community
enthusiastic about. It acts as a conduit for
to a variety of charities that
and to reduce our impact
donations to be made to charity, and staff
are important to our people
on the environment as
members are able to request donations to
including Red Cross Ukraine and
much as possible.
a registered charity of their choice. Staff are
Safer, a charity in Guernsey that
also encouraged to do voluntary work and
supports individuals in abusive
are able to use a paid volunteering day each
relationships.
year. We seek to reduce our carbon footprint
through the better use of technology and an
associated reduction in energy use and we
regularly review our processes to see if we
can reduce our impact on the environment.
We have introduced a structured
procurement process in order to
ensure that we select business
partners who are aligned with our
beliefs.
Introduction
Strategic report
Corporate governance
Financial statements
Engagement in action: acquisition of Integrity Wealth Solutions
In May 2022, we announced our acquisition of Integrity Wealth Solutions (“Integrity”), subject to FCA approval. We
expect this transaction to complete by the end of the calendar year. Throughout the acquisition process, the Directors
had to consider and weigh up the interests of each of the Company’s stakeholders who will be affected by this
transaction.
Clients
Our clients are at the forefront of any
decisions that the Board makes. The
Board recognised that by scaling up the
Company’s Private Clients business and
by adding to the expertise in the team,
the Company can better service its
clients’ needs.
Community and
the environment
Corporate social
responsibility is central to
how the Company runs its
business. It was important
to ensure that Integrity
shared similar community
and environmental values,
and this formed a critical
part of the Chairman’s
meeting with Integrity’s
CEO. Integrity use
technology to reduce both
paper use and their carbon
footprint and also support
a number of local charities,
with the CEO being an
active member of his local
Round Table.
Regulators
The Company is required to obtain
change of control permission from the
Financial Conduct Authority before
this acquisition can complete. Prior to
approving the acquisition, the Board
considered the elements that the
regulator would look at in determining
whether to grant this permission.
Acquisition of
Integrity
Wealth
Solutions
Advisers
A key reason for making the acquisition
is to give the Company better insight
into the products and services that
high-quality IFA firms want from
discretionary fund managers. The
Directors realised, however, that there
was a potential risk that some IFAs in
our network in the West Midlands might
now see the Company as a competitor.
On balance, the Board agreed that the
value the acquisition brought in terms
of better understanding the needs
of its IFA intermediaries outweighed
this risk, which could be managed
by clear ground rules and careful
communication.
Shareholders
The additional scale, skills
and capability brought
into the Company will
help the business develop
and expand its Private
Clients business thereby
increasing shareholder
returns and value.
The Board felt that this
acquisition was therefore a
good use of funds.
Employees
An important reason for the Board
approving the acquisition is to allow the
Company’s existing Private Clients team
to enhance their skills and processes by
taking on board some of the methods
used by a successful, growing business
like Integrity. This should enable those
employees to further advance their
careers.
50
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Brooks Macdonald Group plc / Annual Report and Accounts 2022
51
Corporate responsibility report
Brooks Macdonald’s corporate responsibility strategy aims to ensure that social, environmental and ethical considerations are central
to the way that we run our business. We are focused on protecting the environment, supporting communities, and ensuring the
wellbeing of our employees. The Group continues to actively seek opportunities to play its part as a good employer and contribute to
the communities in which our clients and employees live and work.
Our sustainability strategy
Pillars
Our people
Our people are our greatest strength,
we care about every employee and
focus on their development and
wellbeing.
Our community
We support our communities through
the BM Foundation and encourage staff
volunteering and fundraising.
Our environment
We are a responsible Group and seek to
reduce our impact on the environment
as far as possible.
Our objectives
Our progress in the year
• Embed our promise to
support Brooks Macdonald
being an inclusive, inspiring
place to work
• Rolled out a leadership development
programme to all people leaders to
foster a high performance culture,
aligned to our Guiding Principles
• Develop leaders who
• Maintained a strong employee
prioritise engagement,
diversity and wellbeing
•
Increase employee
engagement
engagement score
• Rolled out a new performance
management framework that supports
everyone to be at their best
• Have fun and celebrate our
• Continued to effectively support
achievements
our people by enhancing employee
policies and benefits, focusing on
communication and wellbeing
• Continue to develop the BM
• The BM Foundation made over 22
Foundation
•
Support community causes
and events
• Encourage staff to complete
donations, totalling over £46,000 during
the year
• The Group matches all donations made
by the BM Foundation
voluntary work
• All staff are able to use a paid
volunteering day
• The Group has partnered with the Dame
Kelly Holmes Trust and is participating
in several events to raise over £30,000
for the charity
• Continue to evolve our
• Reused office refurbishments in
environmental procurement
strategy
• Operational environmental
tracker gathering data to
confirm ways of reducing our
Tier 1 and 2 impacts
• To identify what Tier 3 data
we could target and outline
where there are gaps
Tunbridge Wells
• Green car scheme – a benefit that
enables our staff to purchase green
vehicles through salary sacrifice
• Operational data collated and fed into
our Streamlined Energy and Carbon
Reporting (“SECR”). Gap analysis
captured and targets identified for 2023
52
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Corporate governance
Financial statements
Corporate responsibility report
Brooks Macdonald’s corporate responsibility strategy aims to ensure that social, environmental and ethical considerations are central
to the way that we run our business. We are focused on protecting the environment, supporting communities, and ensuring the
wellbeing of our employees. The Group continues to actively seek opportunities to play its part as a good employer and contribute to
the communities in which our clients and employees live and work.
Our sustainability strategy
Pillars
Our people
Our people are our greatest strength,
we care about every employee and
focus on their development and
wellbeing.
Our community
We support our communities through
the BM Foundation and encourage staff
volunteering and fundraising.
Our environment
Our objectives
Our progress in the year
• Embed our promise to
• Rolled out a leadership development
support Brooks Macdonald
programme to all people leaders to
being an inclusive, inspiring
foster a high performance culture,
place to work
aligned to our Guiding Principles
• Develop leaders who
• Maintained a strong employee
prioritise engagement,
diversity and wellbeing
engagement score
• Rolled out a new performance
•
Increase employee
management framework that supports
engagement
everyone to be at their best
• Have fun and celebrate our
• Continued to effectively support
achievements
our people by enhancing employee
policies and benefits, focusing on
communication and wellbeing
• Continue to develop the BM
• The BM Foundation made over 22
Foundation
donations, totalling over £46,000 during
•
Support community causes
the year
and events
• The Group matches all donations made
• Encourage staff to complete
by the BM Foundation
voluntary work
• All staff are able to use a paid
volunteering day
• The Group has partnered with the Dame
Kelly Holmes Trust and is participating
in several events to raise over £30,000
for the charity
• Continue to evolve our
• Reused office refurbishments in
environmental procurement
Tunbridge Wells
strategy
• Green car scheme – a benefit that
• Operational environmental
enables our staff to purchase green
tracker gathering data to
vehicles through salary sacrifice
confirm ways of reducing our
Tier 1 and 2 impacts
• Operational data collated and fed into
our Streamlined Energy and Carbon
• To identify what Tier 3 data
Reporting (“SECR”). Gap analysis
we could target and outline
captured and targets identified for 2023
We are a responsible Group and seek to
reduce our impact on the environment
as far as possible.
where there are gaps
52
Brooks Macdonald Group plc / Annual Report and Accounts 2022
June 2022 ‘Speak Up’
employee engagement score
June 2022 'Speak Up'
employee response rate
67
(FY21: 66 points)
84%
(FY21: 77%)
BM Foundation charitable
donations of over
£46,000
Number of employees by length of service (30 June 2022):
76
82
152
139
Under 2 years
2–4 years
5–9 years
10+ years
Total: 449
Number of employees by age (years) (30 June 2022):
86
98
117
148
18–29
30–39
40–49
50+
Total: 449
BM has long prided itself on its strong
culture and through the last 12 months have
taken the opportunity to take further steps to
strengthen what we offer to our people, which
in turn helps us nurture a culture that enables
our business to thrive.
Tom Emery
Chief People Officer
Corporate responsibility report continued
Our people
Engagement with our people
At Brooks Macdonald we have an inclusive culture that
inspires people to do their best work, build strong and
valuable relationships, and enjoy themselves. We know
that having a motivated and engaged workforce will lead
to better outcomes for our clients.
The aim of our people agenda is simple; to enable our
strategy by attracting, engaging and retaining the best
talent in the industry. We welcome talented people from all
backgrounds who live and breathe our Guiding Principles
and are focused on making a difference for clients and
advisers. At Brooks Macdonald, Our Promise is to offer an
inclusive culture, fulfilling careers, and great recognition.
Our Guiding Principles
We do the
right thing
We are
connected
We care
We make a
difference
Our Guiding Principles are at the core of our culture and
set the standards for the decisions we make and the way
we treat our clients, partners, and each other.
In November each year we celebrate our annual 'above
and beyond' awards, nominated and voted for by our
people. We present awards for each of our Guiding
Principles, with our diamond award presented to the
person who has shown outstanding and unwavering
commitment to all four throughout the year. In addition,
every month, members of our Executive Committee
recognise individuals who have been nominated by their
peers and leadership group who have gone above and
beyond by role modelling our Guiding Principles.
June 2022 Speak Up score – 67 (+1 from May 2021)
1. Overall engagement
11%
22%
67%
2. Advocacy
4%
14%
Overall score based on answers
to all questions
82%
I am happy to recommend Brooks
Macdonald to others as a great
place to work
3. Diversity and inclusion
Brooks Macdonald enables me to
be myself at work
7%
17%
76%
4. Wellbeing
10%
21%
69%
The Group has taken positive steps
to support my wellbeing
Positive
Neutral
Negative
54
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Corporate responsibility report continued
Our people
Engagement with our people
At Brooks Macdonald we have an inclusive culture that
June 2022 Speak Up score – 67 (+1 from May 2021)
inspires people to do their best work, build strong and
valuable relationships, and enjoy themselves. We know
that having a motivated and engaged workforce will lead
to better outcomes for our clients.
1. Overall engagement
The aim of our people agenda is simple; to enable our
22%
strategy by attracting, engaging and retaining the best
talent in the industry. We welcome talented people from all
backgrounds who live and breathe our Guiding Principles
and are focused on making a difference for clients and
advisers. At Brooks Macdonald, Our Promise is to offer an
inclusive culture, fulfilling careers, and great recognition.
Overall score based on answers
to all questions
11%
67%
2. Advocacy
4%
14%
7%
17%
76%
4. Wellbeing
10%
21%
69%
82%
I am happy to recommend Brooks
Macdonald to others as a great
place to work
3. Diversity and inclusion
Brooks Macdonald enables me to
be myself at work
The Group has taken positive steps
to support my wellbeing
Positive
Neutral
Negative
Our Guiding Principles
We do the
right thing
We are
We care
connected
We make a
difference
Our Guiding Principles are at the core of our culture and
set the standards for the decisions we make and the way
we treat our clients, partners, and each other.
In November each year we celebrate our annual 'above
and beyond' awards, nominated and voted for by our
people. We present awards for each of our Guiding
Principles, with our diamond award presented to the
person who has shown outstanding and unwavering
commitment to all four throughout the year. In addition,
every month, members of our Executive Committee
recognise individuals who have been nominated by their
peers and leadership group who have gone above and
beyond by role modelling our Guiding Principles.
Introduction
Strategic report
Corporate governance
Financial statements
Speak Up highlights
A record 84% of our people completed our most recent Speak
Up survey in May 2022, up from 74% in November 2021. This
high level of engagement with the survey shows it is a trusted
feedback channel that our people are keen to use.
Our survey asks questions across a broad range of areas
important to our people, including strategy, diversity, equity
and inclusion (“DEI”), leadership, wellbeing (including flexible
working), autonomy and communication. It gives us insights
into the overall engagement levels of our workforce, and the
opportunity to obtain both quantitative and qualitative data.
The results show continued strong engagement across the
Group. Particularly pleasing is the level of advocacy across
the Group, with a large proportion of our people reporting that
they say great things about working at Brooks Macdonald to
their friends and family. There are some variances between
individual business and functional scores but no pronounced
differences when analysed by gender, age or employment
status. Overwhelmingly, the things that our people love most
about working at Brooks Macdonald are the people and the
culture.
Each Executive Committee member receives an individual
report showing their anonymised detailed scores. This helps
them to have a conversation with their teams about the scores,
gain further insight, and put in place robust action plans at a
team level to improve engagement in their areas.
Transforming our culture
The Group has had a stated people strategy for the past few
years, focused around the three areas of Our Promise. Our
Promise lays out the actions that will ensure we attract, engage,
develop and retain the best talent in the marketplace, which in
turn will ensure we achieve our strategic objectives.
As the world emerges from the pandemic, different challenges
to those we faced before are developing and the competition
for talent is increasingly intense. We know culture is a primary
driver for attracting talent.
Brooks Macdonald has long prided itself on its strong culture,
and through the last 12 months has taken the opportunity to
take further steps to strengthen what we offer to our people,
which in turn helps us to nurture a culture that enables our
business to thrive.
Leadership development
We know that our people leaders set the tone and drive the
culture. We focus leadership skills on three core areas; leading
the business, leading others, and leading self.
During 2022 we rolled out 'Your Team At Its Best' to all people
leaders. 'Your Team At Its Best' is a leadership development
programme that aims to support all people leaders. The
programme focuses on:
• What it means to be a leader at Brooks Macdonald –
alignment to our vision, Guiding Principles and leadership
development framework, plus the latest theory and
insights.
• How to ensure your team is at its best everyday –
conscious role modelling, inspiring trust, ownership and
responsibility, resilience, and personal/team development.
• Process and procedures – everything leaders need to
know and where to find it, the culture of performance
management, alignment to Our Promise and signposting of
further support.
• Live examples and practice sessions – bringing to life key
learning, using ‘live’ examples in ‘break-out’ groups.
The programme is in the form of a self-directed learning guide
as well as facilitated face-to-face training.
In addition, we launched a 'Your Team At Its Best' community
of support; this utilises Microsoft Teams to house insights,
discussion, and best practice for alumni of the programme.
We hold regular practical skills-building sessions using the
tools within the 'Your Team At Its Best' skills guide including
developing high performing teams, whilst maintaining a
psychologically safe and inclusive team environment. We
focus on effective coaching for leaders, which research
suggests is a key element of effective leadership.
We believe the learning and tools from the 'Your Team At Its
Best' programme will help and support our leaders to continue
to develop a high performing culture.
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Brooks Macdonald Group plc / Annual Report and Accounts 2022
55
Corporate responsibility report continued
Talent and development
Nurturing our employees to reach their full potential is central
to our success as a business and a clear focus in Our Promise
to employees.
On an annual basis we assess the potential of our senior
employees and ensure development plans are in place
for all. We invest in our talent in several ways, including
apprenticeships, flagship development programmes,
external professional programmes, coaching and various
industry events. We foster a culture of on-the-job learning and
empower people managers to support their team’s personal
development.
During 2022, we are partnering with Future Talent Learning
to invest in a female only cohort of talented individuals
from Brooks Macdonald. This continues to show our
commitment to fostering a learning culture but also allows us
the opportunity to shine a light on under-represented groups,
particularly within wealth management.
We recognise the value in taking talented people on at
the beginning of their careers and our emerging talent
programmes are central to Our Promise of supporting people
to have fulfilling careers. Graduate and trainee programmes
have long been recognised as a great way of bringing in
diverse, high-potential talent that can contribute to the
commercial performance of a firm and both will support the
development of our emerging talent pipeline.
A day in the life of. . .
Chris Cowling (Investment20/20 finance trainee)
I joined Brooks Macdonald in October 2021 as part of the Investment20/20
programme, and in the short time I’ve currently been with the Company, I
have gained a lot of experience thanks to the support from my colleagues
across the Group. The biggest thing that I have taken away so far is that
it's okay to make mistakes, at the end of the day we’re only human.
But it’s important we learn from them! I couldn’t really ask for better
colleagues who are available to provide support and advice on tasks
big or small as well as the fact they won’t look at you any differently
for making mistakes or asking questions.
I have also developed and gained new skills both role specific as
well as company/industry based, mainly being able to step back
and look at the bigger picture and see how the work I do affects
the wider group both in finance and Brooks Macdonald.
Prior to joining Brooks Macdonald, I had a very limited
understanding of the wealth management industry, I knew
of its existence and roughly what it was, I never really had a
view on the industry prior to joining but I can now say it is a
very interesting area of the financial world - one with a lot of
depth and plenty of learning experiences.
Some advice I’d give to anyone thinking about joining
Brooks Macdonald is to go for it, with a wide range of job
roles it opens the door(s) for some great opportunities.
I’m happy with where my time in Brooks Macdonald
has taken me and I’m excited for my next steps!
If I were to describe Brooks Macdonald in three
words it would be: supportive, rewarding, inspiring.
56
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Corporate responsibility report continued
Talent and development
Nurturing our employees to reach their full potential is central
to our success as a business and a clear focus in Our Promise
to employees.
On an annual basis we assess the potential of our senior
employees and ensure development plans are in place
for all. We invest in our talent in several ways, including
apprenticeships, flagship development programmes,
external professional programmes, coaching and various
industry events. We foster a culture of on-the-job learning and
empower people managers to support their team’s personal
development.
During 2022, we are partnering with Future Talent Learning
to invest in a female only cohort of talented individuals
from Brooks Macdonald. This continues to show our
commitment to fostering a learning culture but also allows us
the opportunity to shine a light on under-represented groups,
particularly within wealth management.
We recognise the value in taking talented people on at
the beginning of their careers and our emerging talent
programmes are central to Our Promise of supporting people
to have fulfilling careers. Graduate and trainee programmes
have long been recognised as a great way of bringing in
diverse, high-potential talent that can contribute to the
commercial performance of a firm and both will support the
development of our emerging talent pipeline.
A day in the life of. . .
Chris Cowling (Investment20/20 finance trainee)
I joined Brooks Macdonald in October 2021 as part of the Investment20/20
programme, and in the short time I’ve currently been with the Company, I
have gained a lot of experience thanks to the support from my colleagues
across the Group. The biggest thing that I have taken away so far is that
it's okay to make mistakes, at the end of the day we’re only human.
But it’s important we learn from them! I couldn’t really ask for better
colleagues who are available to provide support and advice on tasks
big or small as well as the fact they won’t look at you any differently
for making mistakes or asking questions.
I have also developed and gained new skills both role specific as
well as company/industry based, mainly being able to step back
and look at the bigger picture and see how the work I do affects
the wider group both in finance and Brooks Macdonald.
Prior to joining Brooks Macdonald, I had a very limited
understanding of the wealth management industry, I knew
of its existence and roughly what it was, I never really had a
view on the industry prior to joining but I can now say it is a
very interesting area of the financial world - one with a lot of
depth and plenty of learning experiences.
Some advice I’d give to anyone thinking about joining
Brooks Macdonald is to go for it, with a wide range of job
roles it opens the door(s) for some great opportunities.
I’m happy with where my time in Brooks Macdonald
has taken me and I’m excited for my next steps!
If I were to describe Brooks Macdonald in three
words it would be: supportive, rewarding, inspiring.
Introduction
Strategic report
Corporate governance
Financial statements
Investment Management graduate
trainee programme
In January 2022, we had 10 Investment Management graduate
trainees start with BM. As part of our recruitment strategy, we
partnered with Investment20/20 to ensure we continue to
recruit from diverse, socio-economic backgrounds. As a firm
we want to improve both demographic and cognitive diversity
of future recruits and seek to break down barriers of the wealth
management industry. We had an overwhelming response to
the programme with over 600 applicants.
The 10 graduates all secured roles primarily in our client and
advisers-facing teams and were supported as they completed
a professional qualification via the apprenticeship route – level
4 Investment Advice Diploma.
We developed the assessment in conjunction with Zircon
BeTalent to ensure we were able to remove as much bias
from the selection process as possible and fully align it to our
Guiding Principles and Group capability framework. This
ensured we were recruiting candidates based on their skills
and values, rather than their backgrounds.
Inclusive futures
Investment20/20
One of the ways we develop our emerging talent is through
our successful partnership with Investment20/20 where, to
date, we have successfully recruited over 36 trainees since
2019. A number of these trainees have since taken up full time
positions in a variety of roles across BM including technology,
risk and compliance, finance and investment management.
A further four more trainees will join Brooks Macdonald in
October 2022.
Trainees join Brooks Macdonald on an initial 12-month
fixed-term contract. During this time, they are assigned to
a specific business area and gain the key skills required to
carry out their role. They also attend several events hosted by
Investment20/20 designed to help build and develop wider
industry knowledge.
The premise of the scheme is to encourage people from
wider socio-economic backgrounds to consider a career in
Investment Management. For school leavers, a traineeship
presents an opportunity to learn about an industry that might
not be widely promoted in their school or homelife, as well as
the opportunity to explore an alternative route to university.
For Brooks Macdonald, the benefits of taking trainees allow for
greater diversity at entry level roles, as well as the opportunity
to develop young people with no prior experience, and
making a positive contribution to the wider community.
A Day in the life of . . .
Trianna Inniss (Investment Management graduate trainee)
As a graduate Investment Manager on the ‘Inclusive futures programme’
at Brooks Macdonald, the clear focus on diversity and inclusion was one
of the reasons I was inspired to apply. My time at Brooks Macdonald
has empowered me to be my best through the appreciation of my
uniqueness, which has given me the freedom to grow and develop at
my own pace.
I have also been afforded the opportunity to attend events for
initiatives focused on fostering diversity and inclusion, such as
Female Folio. This has enabled the development of connectivity
and community with stakeholders across the business.
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57
Corporate responsibility report continued
Summer interns
We continue to partner with GAIN (Girls are Investors) and
10,000 Black Interns to bring in summer interns. This year
we had three summer interns, who started in June 2022. The
internship lasts for eight weeks and is designed to provide
young people from diverse backgrounds the opportunity to
learn more about a career within Investment Management in
areas where their demographic is typically under-represented.
Gender pay gap
In April 2022, we were pleased to report that we built on the
progress we reported in 2021. The results we published in
2022 reflect earnings paid to employees in the UK (but not the
Channel Islands) in the 12-month period up to April 2021.
We’ve continued to narrow our mean hourly pay gap and also
achieved further decreases in our mean and median bonus
pay gaps. From the work we’ve done, we know that our gender
pay gap is not caused by paying men and women differently
for like roles but from having fewer women in our client-facing
and senior management positions.
Despite encouraging progress resulting from our gender-
neutral remuneration policy, we acknowledge that our gender
pay gap continues to remain too wide. The improvement in our
results reflects the progress we’ve made in increasing female
representation in senior management roles, and demonstrates
the investment we’re making in our diversity, equity and
inclusion initiatives.
The DEI group is involved in
much more than performative
dates on the diversity
calendar. The group is one of
action, focusing on educating
and supporting fellow BM
colleagues.
Latoya Anderson
Member of the DEI group
Diversity, equity and inclusion (“DEI”)
At Brooks Macdonald, Our Promise is to nurture an inclusive
culture that values and supports our people and their
views, regardless of their background. Diverse perspectives,
experiences and backgrounds make us more creative and
dynamic in helping BM to grow.
Our Executive Committee has four women out of twelve, and
two out of eight on our Group Board.
Last year we commissioned an external consultancy to
conduct an audit across the Group around how successful
we are in building an inclusive culture and where we can do
more. We are pleased to report that we have delivered all the
key recommendations, including a full overview of policies
and procedures to ensure the language is inclusive. In addition,
we have developed and launched a suite of new policies to
support nurturing an inclusive culture, including:
• Domestic abuse
• Menopause at work
• Neurodiversity at work
• Mental health at work
• Dignity at work
• Gender transitioning guidance
• Family leave to include, miscarriage, still birth, abortion
and babies born too early or sick
To support our continued commitment to gender diversity
and reducing our gender pay gap, we have made further
enhancements to our primary parental leave (usually
maternity) benefit. We now support with six months’ full
pay. The enhancement to maternity pay further embeds
Our Promise to nurture an inclusive culture that supports all
working parents. We have already extended our paternity
leave to six weeks’ full pay.
We recently began an increased focus on equity to include
removing barriers for those that might face them, creating
equal access to opportunities for all. We have rolled out several
initiatives this year to drive our DEI agenda including the
launch of ‘Inclusive Culture’ training across the Group. These
sessions enabled all staff to take time away from their work
and consider what DEI means to them, our business and how
we can all play our part in nurturing a diverse culture.
We continue to meet with our DEI group to gain different views,
insights and feedback and have celebrated several DEI events
across the financial year. We still have lots more to do as a
business and within the industry, but we aim to shape all that
we do around improving diversity, equity and inclusion across
the business.
58
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Corporate responsibility report continued
Summer interns
Diversity, equity and inclusion (“DEI”)
We continue to partner with GAIN (Girls are Investors) and
At Brooks Macdonald, Our Promise is to nurture an inclusive
10,000 Black Interns to bring in summer interns. This year
culture that values and supports our people and their
we had three summer interns, who started in June 2022. The
views, regardless of their background. Diverse perspectives,
internship lasts for eight weeks and is designed to provide
experiences and backgrounds make us more creative and
young people from diverse backgrounds the opportunity to
dynamic in helping BM to grow.
learn more about a career within Investment Management in
areas where their demographic is typically under-represented.
Gender pay gap
In April 2022, we were pleased to report that we built on the
progress we reported in 2021. The results we published in
2022 reflect earnings paid to employees in the UK (but not the
Channel Islands) in the 12-month period up to April 2021.
Our Executive Committee has four women out of twelve, and
two out of eight on our Group Board.
Last year we commissioned an external consultancy to
conduct an audit across the Group around how successful
we are in building an inclusive culture and where we can do
more. We are pleased to report that we have delivered all the
key recommendations, including a full overview of policies
We’ve continued to narrow our mean hourly pay gap and also
and procedures to ensure the language is inclusive. In addition,
achieved further decreases in our mean and median bonus
we have developed and launched a suite of new policies to
pay gaps. From the work we’ve done, we know that our gender
support nurturing an inclusive culture, including:
pay gap is not caused by paying men and women differently
for like roles but from having fewer women in our client-facing
and senior management positions.
Despite encouraging progress resulting from our gender-
neutral remuneration policy, we acknowledge that our gender
• Domestic abuse
• Menopause at work
• Neurodiversity at work
• Mental health at work
pay gap continues to remain too wide. The improvement in our
• Dignity at work
results reflects the progress we’ve made in increasing female
• Gender transitioning guidance
representation in senior management roles, and demonstrates
the investment we’re making in our diversity, equity and
• Family leave to include, miscarriage, still birth, abortion
and babies born too early or sick
inclusion initiatives.
The DEI group is involved in
much more than performative
dates on the diversity
calendar. The group is one of
action, focusing on educating
and supporting fellow BM
colleagues.
Latoya Anderson
Member of the DEI group
To support our continued commitment to gender diversity
and reducing our gender pay gap, we have made further
enhancements to our primary parental leave (usually
maternity) benefit. We now support with six months’ full
pay. The enhancement to maternity pay further embeds
Our Promise to nurture an inclusive culture that supports all
working parents. We have already extended our paternity
leave to six weeks’ full pay.
We recently began an increased focus on equity to include
removing barriers for those that might face them, creating
equal access to opportunities for all. We have rolled out several
initiatives this year to drive our DEI agenda including the
launch of ‘Inclusive Culture’ training across the Group. These
sessions enabled all staff to take time away from their work
and consider what DEI means to them, our business and how
we can all play our part in nurturing a diverse culture.
We continue to meet with our DEI group to gain different views,
insights and feedback and have celebrated several DEI events
across the financial year. We still have lots more to do as a
business and within the industry, but we aim to shape all that
we do around improving diversity, equity and inclusion across
the business.
Introduction
Strategic report
Corporate governance
Financial statements
Latoya Anderson – member of the DEI group
and Co-chair of the BAME employee resource group
I joined the DEI (Diversity, Equity and Inclusion) group in 2020, one year after
joining Brooks Macdonald (BM). As the mother of two young black men,
the murder of George Floyd resonated with me strongly, and I wanted to
help BM play its part in supporting its diverse workforce and being truly
inclusive.
The DEI group is involved in much more than performative events to
mark dates on the diversity calendar, which while valuable, can feel like
a tick box exercise. The group is one of action, focusing on educating and
supporting fellow BM colleagues.
Like most firms, Brooks Macdonald still has some way to go on its DEI
journey but having passionate colleagues who involve themselves
in encouraging an inclusive culture that welcomes diversity in all its
forms is an important part of taking the agenda forward. The group is
focused on helping people feel comfortable in being themselves at
work, comfortable to speak up and be heard without prejudice. In
partnership with business leaders, we are breaking down barriers
in recruitment and helping retain diverse talent by looking at
existing frameworks, policies, and processes to ensure they are as
inclusive as they can be.
Being part of this group has been an interesting, eye-opening
experience that adds another valuable dimension to my
working day at BM. I am looking forward to continuing
connecting with my fellow colleagues across the business -
whether we agree or not - so that we can continue to learn
from each other.
We have continued our partnerships with LGBT Great,
#10000blackinterns, Investment20/20 and City Hive.
Through our partnership with LGBT Great we are proud to
have our Chief People Officer named in their Global Top
100 Gamechangers; recognising inspiring people who are
helping to change the game for LGBT+ diversity, equity and
inclusion across the industry. Through our partnership with
City Hive we are advertising all roles through their platform
to target a more diverse pool of candidates, as well as working
closely with them to understand what more we can do to
drive female representation. Through our partnership with
#10000blackinterns we have welcomed three summer interns
this year and through Investment20/20 we have recruited four
trainees starting later this year.
Flexible working and wellbeing
We made changes to our flexible working principles in
September 2021. These were designed to evolve our ways
of working to ensure that both our business and our people
succeed in the post-pandemic world. We are focused on
ensuring that our leaders and employees are empowered to
work in the way that suits them and their teams best, taking
into account the demands of their roles and their personal
preferences and ensuring that there is enough opportunity for
learning, collaboration and creativity.
Our thinking continues to evolve reflecting the market, the
feedback from our employees, and the recruitment market
where flexible working is increasingly seen as a non-negotiable
in attracting talent. We are focused on empowering our people
and leaders to be able to determine a work pattern that suits
their role, working style and personal preferences, and are keen
to ensure that all our people are successfully able to balance
their work with their personal priorities and preferences. We
also see this as a key enabler to improving our DEI.
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59
Corporate responsibility report continued
We also make sure the pay we offer to all our people is fair and
competitive by conducting rigorous annual benchmarking
and having a clear understanding of the contribution each
of our people makes. During early 2022, we recognised the
impact the changing cost of living was having, particularly
on our lower paid people, and we made some widespread
changes outside of our normal salary review cycle to
support them. As well as fair and competitive salaries, our
discretionary bonus scheme plays a key role in the Group
being able to attract, engage and retain our people. Its design
considers both regulatory best practices for firms in our sector
and in each year the performance of the Group and the long-
term outcomes of our clients.
Alongside our pay and benefits offering, we also foster an
environment where both individual and team successes are
celebrated, and achievements are recognised.
On a monthly basis, the Executive Committee recognise
individuals who have gone above and beyond to bring our
Guiding Principles to life. This helps to support and encourage
a ‘thank you’ culture.
Recognising and rewarding our people
To support our people to give their best and recognise
their changing social responsibility, wellbeing and flexible
working needs, over the past 12 months, we have continued
to grow our total rewards offering. We have added a UK
Government-approved electric car scheme, deepened our
family leave benefits to both support pregnancy loss and
reduce the pension gap experienced by parents who choose
to take longer leave periods, and have continued to invest in
our personal development budget to support all our people
explore their personal growth and skills improvement. What
we offer is already under review again and we are excited to be
planning the changes we hope to announce shortly.
Currently, our flexible benefits package offers a wide range of
benefits including:
• Pension
• Minimum 27 days’ holiday, with the option to
purchase additional days
• Enhanced family leave benefits (maternity,
paternity, shared parental, adoption)
• Private medical cover
•
Income protection insurance
• Critical illness cover
• Life assurance
• Electric car scheme
• Discounts on products and services
• Personal development budget to learn a new skill
not related to work
• Cycle to work scheme
•
Sharesave scheme
Support for our communities is
central to our Guiding Principles,
and by supporting not-for-profit
organisations, the donations we
make support the vital work of
charities in the UK and abroad.
Tom Emery
Chief People Officer
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Corporate responsibility report continued
Recognising and rewarding our people
To support our people to give their best and recognise
their changing social responsibility, wellbeing and flexible
working needs, over the past 12 months, we have continued
to grow our total rewards offering. We have added a UK
Government-approved electric car scheme, deepened our
family leave benefits to both support pregnancy loss and
reduce the pension gap experienced by parents who choose
to take longer leave periods, and have continued to invest in
our personal development budget to support all our people
explore their personal growth and skills improvement. What
we offer is already under review again and we are excited to be
planning the changes we hope to announce shortly.
term outcomes of our clients.
Currently, our flexible benefits package offers a wide range of
We also make sure the pay we offer to all our people is fair and
competitive by conducting rigorous annual benchmarking
and having a clear understanding of the contribution each
of our people makes. During early 2022, we recognised the
impact the changing cost of living was having, particularly
on our lower paid people, and we made some widespread
changes outside of our normal salary review cycle to
support them. As well as fair and competitive salaries, our
discretionary bonus scheme plays a key role in the Group
being able to attract, engage and retain our people. Its design
considers both regulatory best practices for firms in our sector
and in each year the performance of the Group and the long-
Alongside our pay and benefits offering, we also foster an
environment where both individual and team successes are
celebrated, and achievements are recognised.
On a monthly basis, the Executive Committee recognise
individuals who have gone above and beyond to bring our
Guiding Principles to life. This helps to support and encourage
a ‘thank you’ culture.
benefits including:
• Pension
• Minimum 27 days’ holiday, with the option to
purchase additional days
• Enhanced family leave benefits (maternity,
paternity, shared parental, adoption)
• Private medical cover
•
Income protection insurance
• Critical illness cover
• Life assurance
• Electric car scheme
• Discounts on products and services
• Personal development budget to learn a new skill
not related to work
• Cycle to work scheme
•
Sharesave scheme
Support for our communities is
central to our Guiding Principles,
and by supporting not-for-profit
organisations, the donations we
make support the vital work of
charities in the UK and abroad.
Tom Emery
Chief People Officer
Introduction
Strategic report
Corporate governance
Financial statements
Our community
The Group places a high importance on supporting the
communities that our clients and people live and work
in. Support for our communities is central to our Guiding
Principles to care, do the right thing, and make a difference, and
by supporting not-for-profit organisations, the donations we
make support the vital work of charities in the UK and abroad.
We do this primarily through the BM Foundation. This was
established in 2010 with the aim of supporting charities that
our staff members feel passionate and enthusiastic about,
and since then, has made 268 donations totalling £329,900. It
is funded by an annual donation from the Group and regular
contributions from staff members via the payroll. This year, we
have seen an increase in the number of staff members making
regular contributions.
The BM Foundation makes it possible for our people to request
donations for charities that they are involved in or feel are
particularly relevant or deserving, with requests approved by
a committee made up of staff members. The BM Foundation
has also taken the opportunity to use its funds to recognise
charities that are connected to specific events or celebrations,
such as a donations made to the Stephen Lawrence
Foundation and the LGBT+ anti-abuse charity, Galop.
As well as making an annual contribution to the BM
Foundation, the Group also matches the awards that it makes
on a pound-for-pound basis.
All our employees can access a paid day off to volunteer in the
community. Our people have used this day to support several
charities and initiatives close to their hearts.
The last 12 months has seen requests for donations to a variety
of charities important to our people. These have included
Red Cross Ukraine and Safer, a charity based in Guernsey
that supports individuals in abusive relationships. In total we
made over 22 donations from the Foundation during the year,
totalling over £46,000.
During FY22, in celebration of its 30th birthday, the Group
partnered with the Dame Kelly Holmes Trust and has been
participating in several events to raise £30,000 for the charity.
The initiatives include a Group-wide sports day, quiz night,
the Standard Chartered Great City 5km Race as well as a brave
group of employees who are heading to a castaway island.
You make a difference
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61
Corporate responsibility report continued
Our environment
We continue to widen our knowledge and expertise on
how we can improve the way we operate to improve our
environmental and social impact. Our next steps include
setting out our short-term and long-term greenhouse gas
(“GHG”) emission reduction targets by year end 2023, providing
the pathway to achieving net zero in our operations by 2030.
We know that setting goals will provide the benchmark needed
to accurately calculate our emissions.
Scope 1, 2 and 3 emissions
Scope 1, 2 and 3 is a way of categorising the different kinds of
carbon emissions a company creates in its own operations,
and in its wider value chain. The term first appeared in the
Greenhouse Gas Protocol of 2001 and today, scopes are the
basis for mandatory GHG reporting in the UK.
•
•
•
Scope 1 emissions — the greenhouse gas emissions that
we make directly — for example while running boilers and
vehicles.
Scope 2 emissions — the emissions we make indirectly
such as electricity or energy.
Scope 3 emissions — all the emissions that we are indirectly
responsible for, up and down our value chain, for example,
buying products from suppliers.
We see offsetting as an action to carry forward once we have
exhausted all that we can in controlling what we do and
putting into place all the steps needed to reduce our emissions.
So how are we doing?
Environment enhancements 2021 – 2022
Offsetting is a short-term solution that must be carefully
managed and, to achieve our long-term goal of net zero
operations, we must encourage emissions reduction and
behaviour changes. Progress toward our GHG reduction targets
will be tracked and communicated through annual public
reporting, aligned with Article 4.9 of the Paris Agreement.
Our target is to be operational net zero by 2030 and Gross
Internal Area (“GIA”) net zero by 2050.
Sustainable procurement
Our focus in this area has not waned as we constantly look to
do more. For the last few years, we have ramped up our efforts
to ensure we can meet our target of renewable energy. We are
now realising Scope 1 and Scope 2 improvements. Scope 3 is
far reaching and relies on ensuring we have the right business
partners to enable us to achieve our target of operational net
zero by 2030. Our procurement strategy has matured, and we
have introduced a matrix that all departments must follow as
part of their onboarding of new suppliers, or as contracts end,
applying our enhanced standards to ensure we are on target to
achieving Scope 3. We do have a choice about the businesses
we partner with and see alignment as a key indicator. We will
only work with suppliers who have ethical business practices
that align with our own, like paying the living wage (including
London living wage where appropriate) to their colleagues,
alongside sustainability and/or Corporate Social Responsibility
policies.
We benchmark all new and existing suppliers, and this is a key
differentiator in our quest to be operational net zero.
Workspace
Engagement
Wellness
Resources
• Holistic enhanced
• Cycle to work scheme
• Biophilia to improve the
workspaces that are
suitable and fit for purpose
to support different
workstyles
• Minimised our office fitout
environmental impact;
solvent free paints, cradle to
grave furniture, reusing and
repurposing most of our
furniture and what was left
was donated to charities
• Sustainable working group
• Electric car scheme
• Fairtrade and locally
sourced produce
• Sustainable working group
air and reduce stress in the
workplace
• Contemplation rooms for
relaxation, destressing,
prayer and to breathe
•
Inclusive office signage
including braille, pictures
and colours to assist
those with sight and
neurodiversity challenges
• Enhanced, measurable
procurement strategy
• Supplier and contract
management
• ESG governance defined
• Printers default double-
sided and black and white
• Recycling and recycled
products
• Removing single use plastic
62
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Corporate responsibility report continued
Our environment
We continue to widen our knowledge and expertise on
Offsetting is a short-term solution that must be carefully
how we can improve the way we operate to improve our
managed and, to achieve our long-term goal of net zero
environmental and social impact. Our next steps include
operations, we must encourage emissions reduction and
setting out our short-term and long-term greenhouse gas
behaviour changes. Progress toward our GHG reduction targets
(“GHG”) emission reduction targets by year end 2023, providing
will be tracked and communicated through annual public
the pathway to achieving net zero in our operations by 2030.
reporting, aligned with Article 4.9 of the Paris Agreement.
We know that setting goals will provide the benchmark needed
to accurately calculate our emissions.
Scope 1, 2 and 3 emissions
Scope 1, 2 and 3 is a way of categorising the different kinds of
carbon emissions a company creates in its own operations,
and in its wider value chain. The term first appeared in the
Greenhouse Gas Protocol of 2001 and today, scopes are the
basis for mandatory GHG reporting in the UK.
Our target is to be operational net zero by 2030 and Gross
Internal Area (“GIA”) net zero by 2050.
Sustainable procurement
Our focus in this area has not waned as we constantly look to
do more. For the last few years, we have ramped up our efforts
to ensure we can meet our target of renewable energy. We are
now realising Scope 1 and Scope 2 improvements. Scope 3 is
far reaching and relies on ensuring we have the right business
•
Scope 1 emissions — the greenhouse gas emissions that
partners to enable us to achieve our target of operational net
we make directly — for example while running boilers and
zero by 2030. Our procurement strategy has matured, and we
vehicles.
•
•
Scope 2 emissions — the emissions we make indirectly
such as electricity or energy.
Scope 3 emissions — all the emissions that we are indirectly
responsible for, up and down our value chain, for example,
buying products from suppliers.
have introduced a matrix that all departments must follow as
part of their onboarding of new suppliers, or as contracts end,
applying our enhanced standards to ensure we are on target to
achieving Scope 3. We do have a choice about the businesses
we partner with and see alignment as a key indicator. We will
only work with suppliers who have ethical business practices
that align with our own, like paying the living wage (including
We see offsetting as an action to carry forward once we have
London living wage where appropriate) to their colleagues,
exhausted all that we can in controlling what we do and
alongside sustainability and/or Corporate Social Responsibility
putting into place all the steps needed to reduce our emissions.
policies.
We benchmark all new and existing suppliers, and this is a key
differentiator in our quest to be operational net zero.
So how are we doing?
Environment enhancements 2021 – 2022
Workspace
Engagement
Wellness
Resources
• Holistic enhanced
workspaces that are
suitable and fit for purpose
to support different
workstyles
• Minimised our office fitout
environmental impact;
solvent free paints, cradle to
grave furniture, reusing and
repurposing most of our
furniture and what was left
was donated to charities
• Cycle to work scheme
• Biophilia to improve the
• Enhanced, measurable
• Sustainable working group
• Electric car scheme
• Fairtrade and locally
sourced produce
• Sustainable working group
air and reduce stress in the
procurement strategy
workplace
• Supplier and contract
• Contemplation rooms for
management
relaxation, destressing,
prayer and to breathe
•
Inclusive office signage
including braille, pictures
and colours to assist
those with sight and
neurodiversity challenges
• ESG governance defined
• Printers default double-
sided and black and white
• Recycling and recycled
products
• Removing single use plastic
Introduction
Strategic report
Corporate governance
Financial statements
Our workplaces
We have grown to 14 offices across the UK. Our office spaces
are designed to provide colleagues with a diversity of space
types that match their work style and set the stage for higher
productivity and morale. We consider the wellbeing of
everyone who enters our workplaces, which is why each office
includes a choice of working styles for quiet focused work,
collaboration spaces, biophilia, a space away from the desk to
eat, and places to relax. We have also consciously sought out
office spaces that successfully safeguard the health, safety, and
welfare of colleagues, whilst considering the bigger picture and
the future in terms of environmental credentials.
Despite the challenges brought on by the pandemic, we
have made positive changes across our property portfolio,
expanding our serviced office strategy in line with our
ambitions to be flexible, sustainable and right in the heart of
the community, making it easy for colleagues to shop locally
and build relationships with local businesses and the wider
community, without relying on a car for commuting. We have
also revised our workplace strategy to embed this vision.
We continue to embed our strategy of partnering with
charities and companies who take used and unwanted office
furniture destined for landfill and divert this resource to
community interest companies, social enterprises, and other
interested parties. Occupying serviced offices ensures we
are not repeating past practices of moving and clearing every
five years as we grow or reduce requirements. The flexibility
also enables our colleagues to have more choices within the
working environment with the shared resources available.
Property strategy
The way we work is changing and our workspaces are
upgrading and improving. Gone are the days of traditional
office spaces and rigid working days. The percentage of
people who work remotely in the UK has skyrocketed, as
conventional office spaces become obsolete.
Our property strategy is reviewed annually and is continually
updated to safeguard the health, safety and welfare of
colleagues, as well as considering the bigger picture and the
future view in terms of environmental credentials. We focus
on providing offices that boost engagement, trust, energy,
commitment, and productivity by selecting properties that
offer a flexible, hybrid approach.
Why serviced offices?
Environmentally serviced offices with shared spaces reduce
the impact on the environment. Simply, individual businesses
bringing in individual suppliers and services creates more
time, travel and cost and has a direct impact on the total
amount of energy used.
Our colleagues no longer need to navigate areas like
maintenance, reconciling multiple bills, completing
assessments, ordering supplies, cleaning etc.
Social interaction is a key component as landlords organise
and celebrate special days such as Valentines to encourage
wider collaboration.
Additional services and facilities that are offered by some of
our serviced offices include, but not limited to:
•
Shower facilities for cycling to work
• Gyms
• Golf simulators
• Terraces to relax and provide outside space
• Yoga classes
• Wellbeing talks around topics like nutrition designed to
boost employee mental health and wellbeing
Our office movers and shakers in the last year include:
• Fareham to Southampton
• Leamington Spa to Birmingham
• Reviewed and renewed at Tunbridge Wells
• New serviced office opened in Isle of Man
62
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
63
Corporate responsibility report continued
Reduce, reuse, recycle
Integrating reuse
and recycling into our
office refurbishments
provides a great
opportunity to
combine our
commercial and
environmental
objectives.
Eniitan Page
Director of Workplace and Sustainability
64
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Corporate governance
Financial statements
Traditionally, an office refurbishment has meant out with the old and in with the new, and office furniture has
often been treated as a short term disposable item. However, we are now integrating reuse and recycling into
all office refurbishments to deliver improved working environments, alongside costs savings. Any budget
made or saved is then diverted to creating better meeting, break out or relaxation areas.
Wherever possible, we will look to recycle and recirculate office furniture within our own network. When
clearing redundant items from an office, we prioritise reuse, avoiding the need to strip out existing finishes and
furniture as this is less wasteful and is a key factor for us in forging a more sustainable environment.
When moving offices, we review all items with a view as to how they can be reused or repurposed. An obvious
option is to recycle existing elements, finishes and furniture wherever we can. In recent refits, we have donated
furniture and equipment to schools, charities and social enterprises through our partnership with ‘Clear
Environment’. This not only benefits the recipients, but also contributes to our corporate social responsibility
agenda.
For incoming tenants, we negotiate the sale of our existing furniture and fittings for a donation to our charity –
the BM Foundation.
When we do buy new materials, we prioritise carbon neutrality and make sure we use the most sustainable
products available, with long life cycles and made from reclaimed and reused materials.
We continue to look to affordable solutions that reduce waste without compromising on design or quality.
Corporate responsibility report continued
Corporate responsibility report continued
Reduce, reuse, recycle
Integrating reuse
and recycling into our
office refurbishments
provides a great
opportunity to
combine our
commercial and
environmental
objectives.
Eniitan Page
Director of Workplace and Sustainability
64
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Corporate responsibility report continued
Energy
As a business, we continue to assess our impact on the environment with a view to mitigation or reduction where possible. Our
main environmental impacts are energy-related emissions from our network of offices in the UK and Crown Dependencies, and
from employee travel – as we have come out of the pandemic this has increased but not to the pre-pandemic numbers.
In line with the Streamlined Energy and Carbon Reporting (“SECR”) legislation, Brooks Macdonald is required to report its energy
consumption and greenhouse gas emissions arising in the UK. All Scope 1 and 2 sources of energy and emissions have been
disclosed as well as mandatory Scope 3 sources.
Source of energy and emissions
Combustion of natural gas
Scope 1 total
Generation of purchased electricity
Scope 2 total
Combustion of fuel in staff vehicles
Scope 3 total
Energy consumption
(MWh)
GHG emissions
(tCO2e)
2022
90.5
90.5
556.0
556.0
239.2
239.2
2021
99.3
99.3
526.4
526.4
52.2
52.2
2022
16.6
16.6
118.1
118.1
58.8
58.8
2021
18.2
18.2
122.4
122.4
13.1
13.1
Gross total
885.7
677.9
193.5
153.7
Carbon-neutral utility contracts
Net total
Intensity per 1000 m2 gross floor area
Intensity per £m turnover
N/A
N/A
185.4
7.3
N/A
N/A
124.3
5.7
(119.3)
74.2
15.5
0.6
(114.8)
38.9
7.1
0.3
Distribution of annual emissions by usage
43.4%
56.6%
Buildings
Transport – staff
Energy efficiency
Compared to last year, our total energy consumption has
increased by 207.8 MWh and our net greenhouse gas
emissions has slightly increased by 35.3 tonnes of CO2e. This
is primarily due to an increase in business travel as pandemic
restrictions have lifted, however, we continue to utilise
technology and remote working, which reflects in that we have
still reduced our overall emissions by 165 tonnes of CO2e when
comparing to our pre-pandemic results. We also collect more
detailed data than before, allowing us to accurately calculate
our environmental impact and we are currently exploring our
wider Scope 3 emissions to capture even more. A noticeable
positive change is our use of serviced offices reducing our
overall floor space for better utilisation of the space we occupy.
We have also increased the percentage of our utilities from
renewable sources to 88%, (last year this was 75%). Challenging
landlords to change how they procure energy has been key to
reducing our energy impact, but our biggest challenge is gas,
that said much of this is offset within the contract.
66
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Corporate responsibility report continued
Energy
As a business, we continue to assess our impact on the environment with a view to mitigation or reduction where possible. Our
main environmental impacts are energy-related emissions from our network of offices in the UK and Crown Dependencies, and
from employee travel – as we have come out of the pandemic this has increased but not to the pre-pandemic numbers.
In line with the Streamlined Energy and Carbon Reporting (“SECR”) legislation, Brooks Macdonald is required to report its energy
consumption and greenhouse gas emissions arising in the UK. All Scope 1 and 2 sources of energy and emissions have been
disclosed as well as mandatory Scope 3 sources.
Energy consumption
GHG emissions
(MWh)
(tCO2e)
2022
90.5
90.5
556.0
556.0
239.2
239.2
N/A
N/A
185.4
7.3
2021
99.3
99.3
526.4
526.4
52.2
52.2
N/A
N/A
124.3
5.7
2022
16.6
16.6
118.1
118.1
58.8
58.8
(119.3)
74.2
15.5
0.6
2021
18.2
18.2
122.4
122.4
13.1
13.1
(114.8)
38.9
7.1
0.3
885.7
677.9
193.5
153.7
Distribution of annual emissions by usage
43.4%
56.6%
Buildings
Transport – staff
Source of energy and emissions
Combustion of natural gas
Scope 1 total
Generation of purchased electricity
Scope 2 total
Combustion of fuel in staff vehicles
Scope 3 total
Gross total
Carbon-neutral utility contracts
Net total
Intensity per 1000 m2 gross floor area
Intensity per £m turnover
Energy efficiency
Compared to last year, our total energy consumption has
increased by 207.8 MWh and our net greenhouse gas
emissions has slightly increased by 35.3 tonnes of CO2e. This
is primarily due to an increase in business travel as pandemic
restrictions have lifted, however, we continue to utilise
technology and remote working, which reflects in that we have
still reduced our overall emissions by 165 tonnes of CO2e when
comparing to our pre-pandemic results. We also collect more
detailed data than before, allowing us to accurately calculate
our environmental impact and we are currently exploring our
wider Scope 3 emissions to capture even more. A noticeable
positive change is our use of serviced offices reducing our
overall floor space for better utilisation of the space we occupy.
We have also increased the percentage of our utilities from
renewable sources to 88%, (last year this was 75%). Challenging
landlords to change how they procure energy has been key to
reducing our energy impact, but our biggest challenge is gas,
that said much of this is offset within the contract.
Introduction
Strategic report
Corporate governance
Financial statements
Other fuels and emissions
No other fuels are used by the Group. Air conditioning
maintenance records did not contain any instances of
refrigerant leaks during the reference period. No other sources
of fugitive emissions have been identified.
Distribution of annual emissions by fuel
0.1%
21.1%
21.8%
7.8%
49.2%
Misc. transport
Electricity
Natural gas
Diesel
Petrol
Sustainability forum
An inclusive, collaborative approach is needed to embed
sustainability across the business to meet the changing
regulatory requirements, our commitments as signatories
to the United Nations Principals of Responsible Investing
(“UNPRI”), and to reflect our corporate values. To support
this, we have established a ‘Sustainability Forum’, which
brings together representatives from across the Group with
representation from all departments. The purpose of the forum
is to identify, prioritise and co-ordinate efforts on sustainability-
related initiatives across both our operational and commercial
activities, and to facilitate the sharing of ideas and information.
Although the Forum has broad representation, it establishes
focused working groups to drive progress, an example being
the Task Force on Climate-related Financial Disclosures
(“TCFD”) working group. The Sustainability Forum is chaired
by Eniitan Page (Director of Workplace and Sustainability) and
sponsored by our Chief Information Officer, Edward Park.
Utility calculation
Where possible, energy consumption expressed in kilowatt-
hours has been taken from suppliers’ invoices, and in the
absence of invoices, estimates have been made. Estimates
used equate to approximately 189 MWh or 10% of the total
consumption. The supplies that have been estimated are
all from carbon neutral sources and so have no impact on
the Company’s carbon footprint. All other sites have a full
year of invoiced electricity and natural gas consumption
data. The energy consumption from electricity and natural
gas consumption has been multiplied by the kgCO2 e/kWh
conversion factors for the average UK grid supply to calculate
the gross location-based greenhouse gas emissions. 88%
of energy supplied is from carbon neutral contracts. The
emissions from these supplies have been deducted to show
the net market-based emissions.
During the last 12 months, we have continued implementing
ways of being more sustainable. This includes the continuation
of our property review, closing inefficient offices for more
sustainable options, whilst increasing both client and staff
experience. All furniture from vacated sites has been re-
used, recycled, or donated to charity, and minimal structural
changes have been carried out during renovations. For
example, we have recently refurbished our Tunbridge Wells
site by re-using components from other sites from zip taps to
furniture but still providing a fresher, collaborative, and more
functional space, moving just one wall, reusing and repainting
everything else.
Additional environmental initiatives include chemical free
cleaning and rolling out alternative sustainable vegan snack
choices throughout catering offering.
Transport
Certain members of staff use their personal vehicles for
work-related purposes and are reimbursed through mileage
claims. The fuel type and size of the vehicles’ engines are
recorded with mileage claims. The KWh/mile and kg CO2e mile
conversion factors form the category 'Cars (by size)' have been
used to calculate greenhouse gas emissions and underlying
energy use.
We have launched a green car salary sacrifice scheme
enabling colleagues to access Ultra Low Emission Vehicles
(“ULEVs”).
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Brooks Macdonald Group plc / Annual Report and Accounts 2022
67
Corporate governance
An introduction to our Board of Directors,
Executive Committee, and our approach to
Corporate governance and remuneration
Introduction to Corporate governance
Board overview
Board and Committee structure
Board of Directors
Executive Committee
Audit Committee report
Nominations Committee report
Remuneration Committee report
Risk and Compliance Committee report
Report of the Directors
Statement of Directors’ responsibilities
Independent Auditors’ report
70
71
74
77
82
86
90
92
108
112
114
116
68
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Corporate governance
Financial statements
Corporate governance
An introduction to our Board of Directors,
Executive Committee, and our approach to
Corporate governance and remuneration
Introduction to Corporate governance
Board overview
Board and Committee structure
Board of Directors
Executive Committee
Audit Committee report
Nominations Committee report
Remuneration Committee report
Risk and Compliance Committee report
Report of the Directors
Statement of Directors’ responsibilities
Independent Auditors’ report
70
71
74
77
82
86
90
92
108
112
114
116
68
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction to Corporate governance
The Brooks Macdonald Board is committed to maintaining
a strong governance framework to support our mission to
protect and enhance our clients’ wealth.
As such, the Board has responsibility for promoting the
long-term strategy and success of the Group by providing
leadership, shaping the Group’s culture, and agreeing the
risk appetite and the appropriate systems of control for risk
management. The Board is also focused on ensuring that the
risk and compliance framework is appropriately embedded
within the Group’s day-to-day activities. The Board delegates
the day-to-day management of the Group to the CEO, who is
supported by an Executive Committee. Refer to page 82 for the
composition of the Executive Committee.
As well as having operational oversight of the Group’s day-
to-day activities, the Executive Committee focuses on the
formation and implementation of the Group’s strategy and
makes decisions that are not otherwise reserved for the Board.
The Executive Committee meets regularly, with a mixture of
formal and informal scheduled meetings, together with ad
hoc meetings as required, such as in relation to the completion
of the transition to SS&C platforms and systems as part of the
digital transformation project.
The Group’s Board and Committee structure is detailed on
page 74 and 75 together with the biographies of Board and
Committee members on pages 80 and 81.
The roles and responsibilities of each of the Committees, and
the activities carried out during the year, are set out in the
reports of the respective Committee Chairs. The Company
Secretary also plays a role in ensuring that Board procedures
are complied with and applicable rules are followed.
The Board, on the recommendation of the Nominations
Committee, considers that all of the Non-Executive Directors
are independent. While it can vary through the year, typically,
the Company would expect each Non-Executive Director to
devote around two days per month to the Group’s business. All
Board members are required to disclose any external positions
or interests, which might conflict with their directorship of
Brooks Macdonald, prior to their appointment and thereafter
on a continuous basis so that any potential conflict can be
properly assessed. If any conflicts of interest do arise, then they
can generally be managed by due process.
UK Corporate Governance Code
Compliance Statement
The Group follows the 2018 UK Corporate Governance Code
(“the Code”). This report, together with the Report of the
Directors and the Strategic report, describes how the Group
has applied the principles and complied with the provisions
of the Code, or sets out explanations of where the Group is not
complying with the Code. A copy of the Code can be found on
the Financial Reporting Council’s website at www.frc.org.uk.
Implementation of the 2018 UK Corporate Governance Code
Section of the Code How Brooks Macdonald have applied the Code
Further information
Board leadership
and company
purpose
The Board seeks to promote the long-term sustainable success of the Company,
setting out the Company’s purpose, values and strategy and ensuring that these
and the Company’s culture are aligned.
Read more in our Strategic
and Corporate responsibility
report on pages 52 to 67.
Division of
responsibilities
Composition,
succession
and evaluation
Audit, risk and
internal control
Remuneration
The Group Board, led by the Chairman, sits at the top of the Company’s
governance framework. The Board and its Committees have clearly defined
roles, with the list of matters reserved for the Board and the Committees’ terms of
reference being available on the Company’s website. A majority of the Board are
independent Non-Executive Directors.
The Nominations Committee oversees formal procedures both to evaluate
the Board and to ensure its composition provides an appropriate balance
of skills and experience. It also considers succession planning within the
Group. The Company seeks to promote diversity at both Board and senior
management level.
The Board and its Committees oversee procedures and processes by which
the Company manages the risks it is willing to take in order to achieve its long-
term objectives. This includes ensuring the independence and effectiveness
of the internal and external audit functions and monitoring the integrity of the
Company’s financial statements and formal announcements.
The Board and the Remuneration Committee develop and oversee policies and
practices, which are designed to promote the Company’s strategy and its long-
term success and to align the interests of senior management with those of the
Company’s shareholders.
Read more in our Board
overview on page 71 and
Committee structure on
page 74, plus reports of
the Committees on pages
86 to 111.
Read more about our Board
composition on pages 76 and
Nominations Committee on
pages 90 to 91.
Read more about our Audit
Committee on pages 86 to 89
and our Risk and Compliance
Committee on pages
108 to 111.
Read more about our
Remuneration Committee on
pages 92 to 107.
70
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction to Corporate governance
Board overview
Introduction
Strategic report
Corporate governance
Financial statements
The Brooks Macdonald Board is committed to maintaining
The roles and responsibilities of each of the Committees, and
a strong governance framework to support our mission to
the activities carried out during the year, are set out in the
protect and enhance our clients’ wealth.
As such, the Board has responsibility for promoting the
long-term strategy and success of the Group by providing
reports of the respective Committee Chairs. The Company
Secretary also plays a role in ensuring that Board procedures
are complied with and applicable rules are followed.
leadership, shaping the Group’s culture, and agreeing the
The Board, on the recommendation of the Nominations
risk appetite and the appropriate systems of control for risk
Committee, considers that all of the Non-Executive Directors
management. The Board is also focused on ensuring that the
are independent. While it can vary through the year, typically,
risk and compliance framework is appropriately embedded
the Company would expect each Non-Executive Director to
within the Group’s day-to-day activities. The Board delegates
devote around two days per month to the Group’s business. All
the day-to-day management of the Group to the CEO, who is
Board members are required to disclose any external positions
supported by an Executive Committee. Refer to page 82 for the
or interests, which might conflict with their directorship of
composition of the Executive Committee.
As well as having operational oversight of the Group’s day-
to-day activities, the Executive Committee focuses on the
formation and implementation of the Group’s strategy and
Brooks Macdonald, prior to their appointment and thereafter
on a continuous basis so that any potential conflict can be
properly assessed. If any conflicts of interest do arise, then they
can generally be managed by due process.
makes decisions that are not otherwise reserved for the Board.
UK Corporate Governance Code
The Executive Committee meets regularly, with a mixture of
formal and informal scheduled meetings, together with ad
hoc meetings as required, such as in relation to the completion
of the transition to SS&C platforms and systems as part of the
digital transformation project.
The Group’s Board and Committee structure is detailed on
page 74 and 75 together with the biographies of Board and
Committee members on pages 80 and 81.
Compliance Statement
The Group follows the 2018 UK Corporate Governance Code
(“the Code”). This report, together with the Report of the
Directors and the Strategic report, describes how the Group
has applied the principles and complied with the provisions
of the Code, or sets out explanations of where the Group is not
complying with the Code. A copy of the Code can be found on
the Financial Reporting Council’s website at www.frc.org.uk.
Implementation of the 2018 UK Corporate Governance Code
Section of the Code How Brooks Macdonald have applied the Code
Further information
Board leadership
The Board seeks to promote the long-term sustainable success of the Company,
setting out the Company’s purpose, values and strategy and ensuring that these
and the Company’s culture are aligned.
and company
purpose
Division of
responsibilities
The Group Board, led by the Chairman, sits at the top of the Company’s
governance framework. The Board and its Committees have clearly defined
roles, with the list of matters reserved for the Board and the Committees’ terms of
reference being available on the Company’s website. A majority of the Board are
independent Non-Executive Directors.
Composition,
succession
and evaluation
The Nominations Committee oversees formal procedures both to evaluate
the Board and to ensure its composition provides an appropriate balance
of skills and experience. It also considers succession planning within the
Group. The Company seeks to promote diversity at both Board and senior
pages 90 to 91.
management level.
Audit, risk and
internal control
The Board and its Committees oversee procedures and processes by which
the Company manages the risks it is willing to take in order to achieve its long-
term objectives. This includes ensuring the independence and effectiveness
Read more about our Audit
Committee on pages 86 to 89
and our Risk and Compliance
of the internal and external audit functions and monitoring the integrity of the
Committee on pages
Company’s financial statements and formal announcements.
108 to 111.
Remuneration
The Board and the Remuneration Committee develop and oversee policies and
Read more about our
practices, which are designed to promote the Company’s strategy and its long-
Remuneration Committee on
term success and to align the interests of senior management with those of the
pages 92 to 107.
Company’s shareholders.
Read more in our Strategic
and Corporate responsibility
report on pages 52 to 67.
Read more in our Board
overview on page 71 and
Committee structure on
page 74, plus reports of
the Committees on pages
86 to 111.
Read more about our Board
composition on pages 76 and
Nominations Committee on
The Brooks Macdonald Board is responsible for the Group’s corporate governance system and is committed to maintaining a
strong governance framework to support our mission to protect and enhance our clients’ wealth. In order to achieve this, the
Board meets on a regular basis. During the year to 30 June 2022, there were seven scheduled Board meetings and details of
attendance at these is shown on page 76. In addition, further unscheduled meetings may be convened where necessary to
consider matters that are time-sensitive in nature and cannot wait until the next scheduled meeting. Historically, subjects have
included acquisitions and the Group’s response to the COVID-19 pandemic.
Matters discussed by the Board in the year
Regular
updates
• CEO’s report,
including
business
performance
• Chief Financial
Officer’s report
• Chief Investment
Officer’s report
• Chief People
Officer’s report
• Committee
Chairs’ updates
Financials
Projects
Governance
and regulatory
Strategy
• Annual and
• Acquisition of
• Reviews of
•
Strategy refresh
Integrity Wealth
• Partnership with
SS&C
Interim Report
and Accounts
• Dividend payments
recommendations
• Budget and
Medium-Term Plan
Committee terms
of reference
• M&A
• AGM
arrangements
•
SMCR regime
• Board
effectiveness
review
• Modern Slavery
statement
• PDMR list review
•
ICAAP review
Assessing and monitoring culture
The Board monitors the Group’s culture through regular reports from the CEO and the Chief People Officer to ensure this is
aligned with the Group’s purpose and strategy. In addition, we have a designated Non-Executive Director who has responsibility
for engaging with the workforce and who regularly holds meetings with different members of staff. Other Non-Executive
Directors have also held informal meetings with employees from across the business to help the Board better understand the
views of the Group’s staff. The results of the Group’s regular staff surveys are also reviewed and discussed at Board meetings. For
further information on this, see ‘How we engage with our stakeholders’ on pages 48 to 51 and our Corporate responsibility report
on pages 52 to 67 of the Strategic report.
Director training and induction
On appointment to the Board, new Directors are given a comprehensive induction programme. This allows them to familiarise
themselves with the Group’s business, policies and key issues. The induction programme is tailored to the individuals concerned
and involves meetings with key individuals within the Group, as well as, external advisers to the Company. Peel Hunt, the Group’s
NOMAD, also provide an overview of the Directors’ responsibilities as a Board member of an AIM-listed entity.
Training is provided for Directors on an ongoing basis. During the year, the Board received training on the AIM rules and
regulations among other matters.
External appointments
Directors are only permitted to take on external appointments with the approval of the Board. Such approval will only be given
where the appointment will not impact on the Director’s ability to devote sufficient time to their responsibilities with the Group.
The Board did not consider that any new appointments taken on during the year raised an issue in this respect.
Annual Board evaluation
The Board undergoes an annual evaluation of its performance. Further details of this are set out in the Nominations Committee
report on page 90.
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71
FY22 Company timeline
Company events
Meetings and topics
July 2021
• Appointment of Andrew Shepherd
and Lynsey Cross on 13 July 2021 to
the Group Board
• Opened Cheltenham and Exeter
offices
Group Board meeting
• Q4 trading update
• Update on CSR strategy and goals
• Board effectiveness
September 2021
Group Board meeting
• CEO 100 days’ review
• FY21 results, dividend and annual report
• AGM arrangements
October 2021
• Group AGM
Group Board meeting
•
•
Insurance
ICAAP
November 2021
• Opened Isle of Man office
• Brooks Macdonald 30th birthday
December 2021
Group Board strategy day
Group Board meeting
• Board strategy
• Modern Slavery statement
• Update on CSR
January 2022
• Opened Birmingham and
Southampton offices
Group Board meeting
• Q2 trading update
March 2022
April 2022
• Female Folio launch
Group Board meeting
•
• Update on Russia/Ukraine
Interim Report and Accounts
• Announcement of intended
acquisition of Integrity Wealth
Solutions Limited
• Completion of Channel Islands entity
simplification project
May 2022
June 2022
72
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Group Board meeting
• Medium-Term Plan
•
Jersey office visit with Group Board
FY22 Company timeline
Company events
Meetings and topics
July 2021
• Appointment of Andrew Shepherd
and Lynsey Cross on 13 July 2021 to
the Group Board
• Opened Cheltenham and Exeter
offices
Group Board meeting
• Q4 trading update
• Update on CSR strategy and goals
• Board effectiveness
September 2021
Group Board meeting
• CEO 100 days’ review
• FY21 results, dividend and annual report
• AGM arrangements
October 2021
• Group AGM
Group Board meeting
•
•
Insurance
ICAAP
November 2021
• Opened Isle of Man office
• Brooks Macdonald 30th birthday
Group Board strategy day
Group Board meeting
• Board strategy
• Modern Slavery statement
• Update on CSR
Group Board meeting
•
Interim Report and Accounts
• Update on Russia/Ukraine
January 2022
• Opened Birmingham and
Southampton offices
Group Board meeting
• Q2 trading update
December 2021
March 2022
May 2022
June 2022
April 2022
• Female Folio launch
• Announcement of intended
acquisition of Integrity Wealth
Solutions Limited
• Completion of Channel Islands entity
simplification project
Introduction
Strategic report
Corporate governance
Financial statements
The acquisition of
Integrity Wealth Solutions Limited
In May 2022, the Company announced (subject to regulatory approval) the acquisition of Integrity Wealth
Solutions Limited, a successful and rapidly growing independent financial adviser (“IFA”) firm with assets
under advice of c. £250 million and c. 800 clients. The acquisition brings scale, capability and management
expertise to Brooks Macdonald’s Private Clients business, as well as giving deeper insight into the
products and services a high-quality, growing IFA firm values from a discretionary fund manager.
2014
Integrity Wealth Solutions first start offering Brooks Macdonald products and services
2020
Integrity make initial contact with Brooks Macdonald regarding a possible sale of their business
September 2021
Discussions progress far enough for this matter to be brought before the Board for consideration.
Management explain the benefits and structure of the proposed acquisition to the Board. The Board
ask for further details about how the integration of the two businesses would work and agree that
the Company should submit an indicative, non-binding offer to the sellers.
December 2021
The Board are advised that discussions with the sellers continue to progress and that due
diligence was currently being carried out. The Board strategy day addresses both the
Company’s approach to M&A and also the organisation of its Private Client business, with
this potential acquisition being relevant to both subjects.
January 2022
The Board are advised that due diligence was largely complete, including detailed file
review of a number of client files, particularly those related to defined benefit pension
transfers. Based on the evidence of the due diligence so far, management remain keen
to conclude the acquisition once that is completed. In particular, they emphasise
the quality of the Integrity management team. The Board agree that the Chairman
should meet with Integrity CEO, given that it is intended that he plays a key role in
the Company’s Private Clients team post acquisition. The Board also consider
any impact that the acquisition may have on the Company’s relationships with
other IFAs.
Group Board meeting
• Medium-Term Plan
•
Jersey office visit with Group Board
March 2022
Management report that they are close to being able to complete the
acquisition. Noting that Integrity are based in Nuneaton, the Board
emphasise the importance of their team sharing ideas with the Company’s
team in London. Following a discussion, the Board agree to approve
moving to exchange of contracts.
72
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Brooks Macdonald Group plc / Annual Report and Accounts 2022
73
Board and Committee structure
The Board
The Board has responsibility for promoting the long-term strategy and success of the Group by providing leadership,
shaping the Group’s culture, and agreeing the risk appetite and the appropriate systems of control for risk management.
The Board delegates certain of its responsibilities to the Committees shown below.
Audit
Committee
Nominations
Committee
Remuneration
Committee
Risk and Compliance
Committee
The Risk and Compliance
Committee assists the
Board in meeting its risk
management, regulatory,
compliance and internal
control responsibilities.
In discharging these
governance responsibilities,
the Committee Chair liaises
closely with the Chair of
the Audit Committee to
ensure a clear allocation of
responsibilities between the
two Committees, ensuring
governance completeness
across the risk landscape.
The Audit Committee
assists the Board in meeting
its responsibilities for the
integrity of the Group’s
internal financial controls
and its financial reporting.
In particular, this involves
reviewing and challenging
the Group’s accounting
policies and significant
judgement areas and the
integrity of its financial
reporting. It also provides
oversight and monitoring
of the internal and external
audit functions and works
in conjunction with the Risk
and Compliance Committee
to review the effectiveness
of the Group’s risk
management framework
and internal controls.
The Nominations
Committee is responsible
for recommending
Board and Committee
appointments and
reviewing the composition
of the Board and the Board
Committees to ensure they
are suitably constituted,
with an appropriate balance
of skills, experience,
knowledge and diversity.
This includes conducting
the annual Board
effectiveness review. The
Committee also monitors
succession planning at
the Group’s leadership
levels to ensure the
Group’s continued ability
to implement its strategy
and operate effectively.
The Committee is also
responsible for reviewing
and recommending to the
Board any material changes
to the structure, size and
composition of the Group’s
regulated subsidiary
company boards.
The Remuneration
Committee exercises
independent judgement
in the determination,
implementation and
operation of the overall
Remuneration Policy for
the Group. It provides
oversight of the design
and application of the
Remuneration Policy and
makes recommendation
to the Board of the
overarching principles
for all Group employees,
it ensures the policy is
consistent with the risk
appetite of the Group and
its strategic goals and it
reviews and approves the
remuneration policies
and remuneration for
the Executive Directors,
members of the Executive
Committee, Material Risk
Takers and any other
employees for whom
enhanced oversight is
either appropriate, or a
regulatory requirement.
74
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Corporate governance
Financial statements
The Board
Brooks Macdonald Group Board
Alan Carruthers (Chairman)
Andrew Shepherd1
Ben Thorpe
Lynsey Cross1
Richard Price
John Linwood
Dagmar Kershaw
Robert Burgess
Audit
Committee
Nominations
Committee
Remuneration
Committee
Risk and Compliance
Committee
• Richard Price (Chair)
• Alan Carruthers (Chair)
• John Linwood (Chair)
• Robert Burgess (Chair)
• John Linwood
• Dagmar Kershaw
• Robert Burgess
• Richard Price
• John Linwood
• Richard Price
• Dagmar Kershaw
• Richard Price
• John Linwood
• Dagmar Kershaw
• Robert Burgess
• Dagmar Kershaw
• Robert Burgess
Executive Committee
Andrew Shepherd (Chair)
Sarah Ackland2
Caroline Abbondanza3
Simon Broomfield3
Lynsey Cross
Robin Eggar
1. Appointed 13 July 2021.
2. Appointed 5 September 2022.
3. Appointed 28 February 2022.
Tom Emery
Richard Hughes
Alick Mackay
Edward Park
Ben Thorpe
Priti Verma
Board and Committee structure
The Board has responsibility for promoting the long-term strategy and success of the Group by providing leadership,
shaping the Group’s culture, and agreeing the risk appetite and the appropriate systems of control for risk management.
The Board delegates certain of its responsibilities to the Committees shown below.
Audit
Committee
Nominations
Committee
Remuneration
Committee
Risk and Compliance
Committee
The Audit Committee
The Nominations
The Remuneration
assists the Board in meeting
Committee is responsible
Committee exercises
The Risk and Compliance
Committee assists the
its responsibilities for the
for recommending
independent judgement
Board in meeting its risk
integrity of the Group’s
Board and Committee
internal financial controls
appointments and
in the determination,
implementation and
and its financial reporting.
reviewing the composition
operation of the overall
management, regulatory,
compliance and internal
control responsibilities.
In particular, this involves
of the Board and the Board
Remuneration Policy for
In discharging these
reviewing and challenging
Committees to ensure they
the Group. It provides
are suitably constituted,
oversight of the design
governance responsibilities,
the Committee Chair liaises
judgement areas and the
of skills, experience,
Remuneration Policy and
the Audit Committee to
integrity of its financial
knowledge and diversity.
makes recommendation
ensure a clear allocation of
with an appropriate balance
and application of the
closely with the Chair of
the Group’s accounting
policies and significant
responsibilities between the
two Committees, ensuring
governance completeness
across the risk landscape.
reporting. It also provides
This includes conducting
to the Board of the
oversight and monitoring
the annual Board
overarching principles
of the internal and external
effectiveness review. The
for all Group employees,
audit functions and works
Committee also monitors
it ensures the policy is
in conjunction with the Risk
succession planning at
consistent with the risk
and Compliance Committee
the Group’s leadership
appetite of the Group and
to review the effectiveness
levels to ensure the
its strategic goals and it
of the Group’s risk
Group’s continued ability
reviews and approves the
management framework
to implement its strategy
and internal controls.
and operate effectively.
The Committee is also
remuneration policies
and remuneration for
the Executive Directors,
responsible for reviewing
members of the Executive
and recommending to the
Committee, Material Risk
Board any material changes
Takers and any other
to the structure, size and
employees for whom
composition of the Group’s
enhanced oversight is
regulated subsidiary
company boards.
either appropriate, or a
regulatory requirement.
74
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
75
Board and Committee structure continued
List of Board meetings and attendance
Board
Audit Nominations Remuneration
Risk and
Compliance
Disclosure
Number of meetings held during the year
Andrew Shepherd
Executive Director
Ben Thorpe
Executive Director
Lynsey Cross
Executive Director
Alan Carruthers
Chairman
John Linwood
Richard Price
Dagmar Kershaw
Robert Burgess
Independent
Non-Executive Director
Independent
Non-Executive Director
Independent
Non-Executive Director
Independent
Non-Executive Director
Attended
Meetings
7
7 7
7 7
7 7
7 7
6 7
7 7
7 7
7 7
6
–
–
–
–
6
6
6
6
6
6
6
6
2
–
–
–
2 2
1 2
2 2
2 2
2 2
4
–
–
–
–
4 4
4 4
4 4
4 4
5
–
–
–
5 5
5 5
5 5
5 5
5 5
0
–
–
–
–
–
–
–
–
Board composition statistics as at 14 September 2022
Gender diversity
Independence
Board tenure
2
6
Male
Female
1
3
4
1
1
2
4
Chairman
Executive Directors
Non-Executive
Directors
< 2 years
2–4 years
4–6 years
> 6 years
76
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Board and Committee structure continued
Board of Directors
Introduction
Strategic report
Corporate governance
Financial statements
Chair of the Board
Role and responsibilities
• Leading and managing the Board and is responsible
Senior Independent Director
Role and responsibilities
• Acting as a sounding board for the Chairman
Board
Audit Nominations Remuneration
Compliance
Disclosure
for its overall effectiveness
•
Setting the agenda, including discussion of issues of
strategy, performance, accountability and risk
• Providing and promoting constructive challenge to
management and facilitating the contribution of the
Non-Executive Directors
•
Setting clear expectations on culture, values and
behaviours
• Performance evaluation of the Board and CEO
• Acting as an intermediary for the other Directors
• Providing an alternative channel of communication
for investors, primarily on Corporate governance
matters
• Leading the evaluation of the Chairman and leading
the search for a new Chairman when necessary
CEO
Role and responsibilities
• Leading the Group and day-to-day responsibility for
Independent Non-Executive Directors
Role and responsibilities
• Contributing independent oversight and constructive,
running the Group’s business
rigorous challenge
• Developing, recommending and executing strategies
• Assisting in the development of the Company’s
and strategic priorities
strategy
• Maintaining relationships with shareholders and
other stakeholders
• Developing the Group’s executive management
capability
• Overall development of Group policies and
communicating the Company’s values
• Ensuring the integrity of financial information,
controls and risk management processes
•
•
Scrutinising the performance of the Executive
Directors against agreed goals and objectives
Serving on Board Committees
Chief Financial Officer
Role and responsibilities
•
Supporting the CEO in developing and implementing
strategy
Chief Operating Officer
Role and responsibilities
•
Supporting the CEO in developing and implementing
the operational strategy
• Providing strategic financial leadership and day-to-
• Leading the transformation of the Group’s operating
day management of the finance function
platform in partnership with SS&C
• With the CEO, explaining performance to shareholders
• Responsibility for the Group’s Technology and
• Responsibility for the Group’s product and service
innovation agenda
• Responsibility for the Group’s legal and company
secretarial functions
Operations, including the Business Continuity plans
during remote working
• Oversight of the Group’s real estate and corporate
social responsibility agenda
List of Board meetings and attendance
Number of meetings held during the year
Andrew Shepherd
Executive Director
Ben Thorpe
Executive Director
Lynsey Cross
Executive Director
Alan Carruthers
Chairman
John Linwood
Richard Price
Dagmar Kershaw
Robert Burgess
Independent
Non-Executive Director
Independent
Non-Executive Director
Independent
Non-Executive Director
Independent
Non-Executive Director
Attended
Meetings
7
7 7
7 7
7 7
7 7
6 7
7 7
7 7
7 7
6
–
–
–
–
6
6
6
6
6
6
6
6
2
–
–
–
2 2
1 2
2 2
2 2
2 2
4
–
–
–
–
4 4
4 4
4 4
4 4
Risk and
5
–
–
–
5 5
5 5
5 5
5 5
5 5
0
–
–
–
–
–
–
–
–
Board composition statistics as at 14 September 2022
Gender diversity
Independence
Board tenure
2
6
Male
Female
1
3
4
1
1
2
4
Chairman
Executive Directors
Non-Executive
Directors
< 2 years
2–4 years
4–6 years
> 6 years
76
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
77
Board of Directors continued
Read the Board biographies
on pages 80 to 81
Board of Directors continued
Read the Board biographies
on pages 80 to 81
Introduction
Strategic report
Corporate governance
Financial statements
Board of Directors continued
Chairman
Executive Directors
Alan
Carruthers
Non-Executive Chairman
Andrew
Shepherd
CEO
Key skills and experience
•
•
Effective Chairman, leading from the front, while also leveraging
the skills and experiences of his Board colleagues
Experienced financial services practitioner
Alan joined Brooks Macdonald as the Chairman in March 2019. He
is Chair of both the Nominations Committee and the Disclosure
Committee. Alan has over 27 years’ equity markets experience
working for leading financial services firms and held senior positions
as Head of Global Sales Trading at Morgan Stanley (1996 – 2003),
Global Head of Equities at Cazenove (2003 – 2010) and Head of Europe,
Middle East and Africa (“EMEA”) Cash Equities at JP Morgan Cazenove
(2010 – 2011).
Key skills and experience
• Distinctive people leader
• Unrivalled experience of the industry
• Deep affinity with the Brooks Macdonald culture
Andrew joined Brooks Macdonald in 2002 and was appointed CEO in
2021. He has held numerous roles across the Group, including Group
Deputy CEO since 2015, and most recently CEO of the International
business since 2019.
Andrew has worked in investment management and financial
services since 1994. Prior to joining Brooks Macdonald, Andrew
worked at Shepherd Associates Financial Management, holding the
position of investment director.
Non-Executive Directors
Richard
Price
Senior Independent
Non-Executive Director
Robert
Burgess
Independent
Non-Executive Director
Key skills and experience
Key skills and experience
• Appointment as Senior Independent Director reflects his deep
understanding of the Group’s history and strategy
•
Big Four accounting experience underpins leadership of the Audit
Committee
Richard joined Brooks Macdonald in 2014 as a Non-Executive
Director. He is the Senior Independent Director and Chair of the Audit
Committee and a member of the Risk and Compliance, Remuneration,
and Nominations Committees.
•
•
•
Brings significant executive and non-executive experience to the
Board and the role of Risk and Compliance Chair
Broad financial services experience, particularly in wealth
management, asset management, banking and fintech
Significant experience of high growth businesses
Robert joined Brooks Macdonald as a Non-Executive Director in
August 2020 and is Chair of the Risk and Compliance Committee and
a member of the Audit, Remuneration and Nominations Committees.
Prior to joining Brooks Macdonald, Richard was a partner at KPMG
for 17 years, where he had considerable exposure to financial services
clients, holding a number of roles, including the UK Head of KPMG’s
Financial Sector Transaction Services practice.
Currently a Non-Executive Director at OakNorth Bank, Robert chairs
both the Risk and Compliance Committee and the Credit Committee.
Robert is also the Chairman of Invest & Fund, a specialist fintech
business.
Richard is also a Non-Executive Director of Hampshire Trust Bank plc
and Alpha Bank London Limited.
Robert has over 25 years of financial services experience across
leading banking, wealth, asset management and fintech firms. He has
held senior executive positions including at Lloyds Banking Group
and Scottish Widows, and he was previously a Board Director of
Alliance Trust plc and CEO of Alliance Trust Savings.
80
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Corporate governance
Financial statements
Board of Directors continued
Chairman
Executive Directors
Executive Directors
Alan
Carruthers
Non-Executive Chairman
Andrew
Shepherd
CEO
Ben
Thorpe
Chief Financial Officer
Lynsey
Cross
Chief Operating Officer
Key skills and experience
Key skills and experience
Key skills and experience
Key skills and experience
Effective Chairman, leading from the front, while also leveraging
• Distinctive people leader
•
•
the skills and experiences of his Board colleagues
Experienced financial services practitioner
• Unrivalled experience of the industry
• Deep affinity with the Brooks Macdonald culture
Alan joined Brooks Macdonald as the Chairman in March 2019. He
is Chair of both the Nominations Committee and the Disclosure
Committee. Alan has over 27 years’ equity markets experience
working for leading financial services firms and held senior positions
as Head of Global Sales Trading at Morgan Stanley (1996 – 2003),
Global Head of Equities at Cazenove (2003 – 2010) and Head of Europe,
Middle East and Africa (“EMEA”) Cash Equities at JP Morgan Cazenove
(2010 – 2011).
Andrew joined Brooks Macdonald in 2002 and was appointed CEO in
2021. He has held numerous roles across the Group, including Group
Deputy CEO since 2015, and most recently CEO of the International
business since 2019.
Andrew has worked in investment management and financial
services since 1994. Prior to joining Brooks Macdonald, Andrew
worked at Shepherd Associates Financial Management, holding the
position of investment director.
Non-Executive Directors
Non-Executive Directors
•
•
Brings strong commercial perspective to leadership of the
business
Extensive experience of senior finance roles in wealth
management and banking
Ben joined Brooks Macdonald in August 2018 as Chief Financial
Officer and an Executive Director on the Group Board. Alongside
Finance, Ben is also responsible for product insight and innovation,
and both the company secretarial and legal teams.
He has 20 years of financial services experience. He was formerly
Head of Finance at Brewin Dolphin. Prior to Brewin, Ben spent 14 years
working in the financial planning and analysis teams at Morgan Stanley,
RBS and Barclays Capital with his last role being Managing Director,
Strategy and Change at Standard Bank South Africa in Johannesburg.
Ben is a graduate of the LSE and a fellow of the Chartered Institute of
Management Accountants.
•
•
Broad experience across financial services
Track record in variety of C-suite roles
Lynsey joined Brooks Macdonald in May 2020 as Chief Operating
Officer (“COO”). Lynsey is responsible for advancing how the Group
serves our advisers and clients and leads the Group’s investment in
technology, systems and processes.
With over 25 years of financial services experience, Lynsey has
worked in a number of senior roles across both asset management
and insurance. More recently, she was CEO of ANV Group until she
led the company through its acquisition to AmTrust. She was then
appointed COO of AmTrust International to oversee their complex
integration program.
Additionally, Lynsey is Chair of Diversity and Inclusion at Insurance
Institute London and is a Non-Executive Director of MSE NHS
Foundation Trust.
Richard
Price
Senior Independent
Non-Executive Director
Robert
Burgess
Independent
Non-Executive Director
Dagmar
Kershaw
Independent
Non-Executive Director
John
Linwood
Independent
Non-Executive Director
Key skills and experience
Key skills and experience
Key skills and experience
Key skills and experience
• Appointment as Senior Independent Director reflects his deep
Brings significant executive and non-executive experience to the
understanding of the Group’s history and strategy
Board and the role of Risk and Compliance Chair
•
Big Four accounting experience underpins leadership of the Audit
Broad financial services experience, particularly in wealth
Committee
Richard joined Brooks Macdonald in 2014 as a Non-Executive
Director. He is the Senior Independent Director and Chair of the Audit
Committee and a member of the Risk and Compliance, Remuneration,
and Nominations Committees.
Prior to joining Brooks Macdonald, Richard was a partner at KPMG
for 17 years, where he had considerable exposure to financial services
clients, holding a number of roles, including the UK Head of KPMG’s
Financial Sector Transaction Services practice.
Richard is also a Non-Executive Director of Hampshire Trust Bank plc
and Alpha Bank London Limited.
•
•
•
management, asset management, banking and fintech
Significant experience of high growth businesses
Robert joined Brooks Macdonald as a Non-Executive Director in
August 2020 and is Chair of the Risk and Compliance Committee and
a member of the Audit, Remuneration and Nominations Committees.
Currently a Non-Executive Director at OakNorth Bank, Robert chairs
both the Risk and Compliance Committee and the Credit Committee.
Robert is also the Chairman of Invest & Fund, a specialist fintech
business.
Robert has over 25 years of financial services experience across
leading banking, wealth, asset management and fintech firms. He has
held senior executive positions including at Lloyds Banking Group
and Scottish Widows, and he was previously a Board Director of
Alliance Trust plc and CEO of Alliance Trust Savings.
•
•
Senior financial services professional with broad experience,
particularly in business development
Significant expertise across the investment management sector
Dagmar joined Brooks Macdonald in July 2020 as a Non-Executive
Director. She is a member of the Nominations, Remuneration, Audit
and Risk and Compliance Committees.
Currently a senior adviser to Strategic Value Partners and Non-
Executive Chair of both Volta Finance and Aberdeen Smaller
Companies Income Trust plc. Dagmar is also a Trustee of Laurus Trust.
Dagmar has over 25 years’ experience in debt and fixed income
markets, with a particular focus on alternative and structured
investing. Dagmar previously spent eight years at Intermediate Capital
Group as Head of Credit Fund Management, and 10 years in senior
positions at M&G Investments.
• A deep understanding of technology, cyber security, AI and
digital transformation having held senior roles at some of the
world’s largest global organisations in the technology and media
industries
•
•
Brings wide-ranging business and leadership experience to the
role of Remuneration Committee Chair
Experienced Non-Executive Director across FTSE, AIM and
private companies as well as Government institutions
John joined Brooks Macdonald as a Non-Executive Director in 2018.
He is Chairman of the Remuneration Committee and is a member of
the Audit, Nominations and Risk and Compliance Committees. Prior
to joining Brooks Macdonald, John was the Executive Vice President
and Chief Technology Officer of Wood Mackenzie, Chief Technology
Officer for the BBC, and a Senior Vice President of International
Engineering at Yahoo inc. He has also held a number of senior
positions at Microsoft corp. (1993 – 2004). John is a Non-Executive
Director of National Grid ESO and a Strategic Technology Advisor to
the UK Ministry of Defence.
80
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
81
Executive Committee
Executive Directors
Executive Committee Members
Andrew
Shepherd
CEO
Caroline
Abbondanza
Chief Technology Officer
Sarah
Ackland
Global Head of Distribution
Caroline Abbondanza is the Chief
Technology Officer of the Brooks Macdonald
Group, and a member of the Executive
Committee. Joining Brooks Macdonald
in 2019, Caroline owns all areas of the
technology, digital and cyber strategy and
delivery agenda, including the management
of outsourced partnerships.
Caroline has over 20 years’ experience
working in technology in financial services,
previously holding group executive
committee positions at FNZ and Travelex.
She also chairs the Investment Association
Technology Forum and is a member of
their cyber resilience and tech innovation
committees. Caroline has a degree in
social anthropology and politics and
has completed the executive leadership
programme at the University of Cambridge.
Sarah Ackland is Global Head of Distribution
for the Brooks Macdonald Group, and a
member of the Executive Committee.
Joining Brooks Macdonald in 2022, Sarah
leads the distribution and marketing teams
across the UK and International markets.
Sarah has spent more than 25 years in
investment management and has a
deep knowledge and understanding of
distribution and marketing in the sector.
She joins Brooks Macdonald from Liontrust,
where she was Head of Multi-Asset Business.
She was previously Head of UK Funds at the
Architas UK Investment Business, prior to its
purchase by Liontrust.
Sarah has a BA in Psychology and Art from
Liverpool University and is IMC qualified.
See Andrew’s biography
on page 80
Ben
Thorpe
Chief Financial Officer
See Ben’s biography
on page 81
Lynsey
Cross
Chief Operating Officer
See Lynsey’s biography
on page 81
82
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Executive Committee
Executive Directors
Executive Committee Members
Executive Committee Members
Introduction
Strategic report
Corporate governance
Financial statements
Caroline
Abbondanza
Sarah
Ackland
Chief Technology Officer
Global Head of Distribution
Caroline Abbondanza is the Chief
Sarah Ackland is Global Head of Distribution
Technology Officer of the Brooks Macdonald
for the Brooks Macdonald Group, and a
Group, and a member of the Executive
member of the Executive Committee.
Committee. Joining Brooks Macdonald
Joining Brooks Macdonald in 2022, Sarah
in 2019, Caroline owns all areas of the
leads the distribution and marketing teams
technology, digital and cyber strategy and
across the UK and International markets.
delivery agenda, including the management
of outsourced partnerships.
Sarah has spent more than 25 years in
investment management and has a
Caroline has over 20 years’ experience
deep knowledge and understanding of
working in technology in financial services,
distribution and marketing in the sector.
previously holding group executive
She joins Brooks Macdonald from Liontrust,
committee positions at FNZ and Travelex.
where she was Head of Multi-Asset Business.
She also chairs the Investment Association
She was previously Head of UK Funds at the
Technology Forum and is a member of
Architas UK Investment Business, prior to its
their cyber resilience and tech innovation
purchase by Liontrust.
committees. Caroline has a degree in
social anthropology and politics and
has completed the executive leadership
programme at the University of Cambridge.
Sarah has a BA in Psychology and Art from
Liverpool University and is IMC qualified.
Simon
Broomfield
General Counsel
Simon Broomfield is the General Counsel
of Brooks Macdonald and a member of
the Executive Committee. Joining Brooks
Macdonald in 2008, Simon is responsible for
advising the Group Directors and employees
on all legal matters affecting the Group in
all jurisdictions. He is also responsible for
managing the Group legal team and acts as
the Company’s data protection officer.
Simon was called to the Bar of England and
Wales in 2002 and admitted as a Solicitor of
the Senior Courts of England and Wales in
2009. He has significant experience in civil
litigation, corporate and commercial law,
banking and financial services law, M&A,
consumer credit, and data protection.
Simon has an MBA from Imperial College
and is Vice President and former Chair of
the Bar Association for Commerce, Finance
and Industry. He is a Chartered Member of
the Chartered Institute of Securities and
Investments.
Robin
Eggar
Managing Director, Head of UK
Investment Management
Robin is Managing Director, Head of
UK Investment Management at Brooks
Macdonald Group and a member of the
Executive Committee. In his role, Robin has
overall responsibility for running the UK
Investment Management and private clients
arm of the business and a focus to deliver on
the agreed strategy of the Group.
Robin joined Brooks Macdonald in 2001 as
a Trainee Investment Manager as part of
the Group’s graduate training programme.
Before becoming MD, Robin established his
career in Brooks Macdonald by building and
growing his own investment team before
assuming management of the wider London
Investment Teams.
Robin is a qualified Investment Manager,
holds a master’s degree in Economic History
from the University of Edinburgh and is a
chartered member of the CISI.
Tom
Emery
Chief People Officer
Tom is the Chief People Officer of the
Brooks Macdonald Group and a member of
the Executive Committee. Joining Brooks
Macdonald in 2017, Tom owns all areas
of the HR and people strategy including
HR business partnering, performance
and reward, HR operations, talent and
development, and HR governance.
Tom has spent over 15 years working in HR in
industries such as finance, retail, technology
and local government. Prior to joining
Brooks Macdonald, Tom worked at HSBC
for seven years in various roles, including
leading HR for First Direct Bank and running
HR Operations.
Tom was one of LGBT Great’s #50For50
Executives, and since then has regularly
appeared in LGBT Great’s top 100 executive
allies. Tom has a degree in Linguistics from
the University of Manchester and a post-
graduate diploma in Human Resources
Management from the University of Salford.
Andrew
Shepherd
CEO
See Andrew’s biography
on page 80
Ben
Thorpe
Chief Financial Officer
See Ben’s biography
on page 81
Lynsey
Cross
Chief Operating Officer
See Lynsey’s biography
on page 81
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83
Executive Committee continued
Executive Committee Members
Richard
Hughes
CEO International
Richard joined Brooks Macdonald in
2013 and oversaw the firm’s international
marketing, distribution and business
development strategy. In 2019, Richard
assumed the role of Deputy CEO,
International before taking over as CEO
International in 2021, sitting on the Executive
Committee.
Richard previously held the position
of Business Development Director at
Vistra Group. Prior to this, Richard was
a Relationship Manager at BNP Paribas
Securities Services where he advised global
asset manager clients around the provision
of fund administration, custodian and
depository services.
Richard is a Chartered Member of the
Chartered Institute for Securities &
Investment (“CISI”) and the Institute of
Directors (“IoD”).
Richard is Chairman of Cancer Research UK
Jersey, a voluntary position.
Alick
Mackay
Strategy and Corporate
Development Director
Alick Mackay is the Strategy and
Corporate Development Director of the
Brooks Macdonald Group, and a member
of the Executive Committee. Joining
Brooks Macdonald in 2017, Alick owns
all areas of the strategy and corporate
development agenda, including the
Group’s approach to potential acquisitions
and disposals.
Alick has spent over 30 years working in
financial services, principally in wealth
management and banking, in roles
covering strategy, consulting, COO and
technology. Immediately prior to joining
Brooks Macdonald, Alick worked at Royal
Bank of Scotland for 10 years, leading the
strategy team in the investment bank and
playing a COO role in the capital markets
business. He has also worked for ABN
AMRO and McKinsey.
Alick has a degree in Mathematics and
Natural Philosophy from the University of
Aberdeen, an MSc in Mathematics from
the Open University and an MBA from
Columbia Business School, New York.
Edward
Park
Chief Investment Officer
Edward joined Brooks Macdonald
in 2009 and is the Chief Investment
Officer sitting on the Executive
Committee. He is responsible for the
construction and implementation
of our investment process through
oversight of the investment buylist, our
investment rules and the firm’s asset
allocation positioning. Edward sits on the
Investment, Asset Selection and Asset
Allocation Committees and is a leading
spokesperson for Brooks Macdonald.
In addition to his role within the
Centralised Investment Proposition,
Edward retains private client relationships
to ensure he is involved throughout the
investment process.
Edward is a Chartered Financial Analyst
(“CFA”) Charterholder.
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Executive Committee continued
Executive Committee Members
Introduction
Strategic report
Corporate governance
Financial statements
Group’s approach to potential acquisitions
allocation positioning. Edward sits on the
Richard
Hughes
CEO International
Richard joined Brooks Macdonald in
2013 and oversaw the firm’s international
marketing, distribution and business
development strategy. In 2019, Richard
assumed the role of Deputy CEO,
International before taking over as CEO
International in 2021, sitting on the Executive
Committee.
Richard previously held the position
of Business Development Director at
Vistra Group. Prior to this, Richard was
a Relationship Manager at BNP Paribas
Securities Services where he advised global
asset manager clients around the provision
of fund administration, custodian and
depository services.
Richard is a Chartered Member of the
Chartered Institute for Securities &
Investment (“CISI”) and the Institute of
Directors (“IoD”).
Richard is Chairman of Cancer Research UK
Jersey, a voluntary position.
Alick
Mackay
Strategy and Corporate
Development Director
Alick Mackay is the Strategy and
Corporate Development Director of the
Brooks Macdonald Group, and a member
of the Executive Committee. Joining
Brooks Macdonald in 2017, Alick owns
all areas of the strategy and corporate
development agenda, including the
and disposals.
Alick has spent over 30 years working in
financial services, principally in wealth
management and banking, in roles
covering strategy, consulting, COO and
technology. Immediately prior to joining
Brooks Macdonald, Alick worked at Royal
Bank of Scotland for 10 years, leading the
strategy team in the investment bank and
playing a COO role in the capital markets
business. He has also worked for ABN
AMRO and McKinsey.
Alick has a degree in Mathematics and
Natural Philosophy from the University of
Aberdeen, an MSc in Mathematics from
the Open University and an MBA from
Columbia Business School, New York.
Edward
Park
Chief Investment Officer
Edward joined Brooks Macdonald
in 2009 and is the Chief Investment
Officer sitting on the Executive
Committee. He is responsible for the
construction and implementation
of our investment process through
oversight of the investment buylist, our
investment rules and the firm’s asset
Investment, Asset Selection and Asset
Allocation Committees and is a leading
spokesperson for Brooks Macdonald.
In addition to his role within the
Centralised Investment Proposition,
Edward retains private client relationships
to ensure he is involved throughout the
investment process.
Edward is a Chartered Financial Analyst
(“CFA”) Charterholder.
Priti
Verma
Chief Risk Officer
Priti is Chief Risk Officer (“CRO”) of
Brooks Macdonald Group and a
member of the Executive Committee.
Priti joined the Group in 2018 and led
a risk management transformational
project with responsibility for the Group
Risk, Investment Risk, Compliance and
Financial Crime functions and day-to-day
oversight of the outsourced internal audit
relationship.
Having started her career at Deloitte,
Priti has over 20 years of experience
in financial services, predominantly
overseeing risk, compliance and internal
audit activities in asset and wealth
management firms.
Priti has a Master’s in Chemical
Engineering where she studied the
principles of risk management and
process optimisation and has delivered
multiple regulatory projects throughout
her career, interacting with regulators in
multiple jurisdictions. Priti currently sits
on the Investment Association Strategic
Business and Risk Committee.
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85
Audit Committee report
The Committee placed
additional emphasis on
the Group’s alternative
performance measures
during the year.
Richard Price
Audit Committee Chair
Role and responsibilities
The Audit Committee assists the Board in meeting its
responsibilities for the integrity of the Group’s internal financial
controls and its financial reporting. The Audit Committee’s
responsibilities can be grouped into the following aspects:
• To review and challenge the Group’s accounting policies
and significant judgement areas and the integrity of its
financial reporting
• To provide oversight and monitoring of the internal
and external audit functions, including appraising their
performance and approving their fees
•
To work in conjunction with the Risk and Compliance
Committee to review the effectiveness of the Group’s risk
management framework and internal controls
The full responsibilities of the Audit Committee are set out in
its Terms of Reference, which are reviewed annually and are
available on the Group’s website.
Composition and meetings
The Audit Committee comprised Richard Price (Chair),
John Linwood, Dagmar Kershaw and Robert Burgess for the
entire year. Membership of the Audit Committee is restricted
to independent Non-Executive Directors. The CEO, Chief
Financial Officer, Chief Risk Officer, Chief Operating Officer and
representatives of the internal and external auditors routinely
attend meetings. The Committee meets with representatives
of the internal and external auditors without management
present at least once a year. Richard Price has recent and
relevant financial experience, and the Company believes that
the Committee as a whole has competence relevant to the
sector in which the Company operates.
The Audit Committee’s attendance during the year ended
30 June 2022 is set out in the summary table on page 76.
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Brooks Macdonald Group plc / Annual Report and Accounts 2022
Audit Committee report
The Committee placed
additional emphasis on
the Group’s alternative
performance measures
during the year.
Richard Price
Audit Committee Chair
Role and responsibilities
Composition and meetings
The Audit Committee assists the Board in meeting its
The Audit Committee comprised Richard Price (Chair),
responsibilities for the integrity of the Group’s internal financial
John Linwood, Dagmar Kershaw and Robert Burgess for the
controls and its financial reporting. The Audit Committee’s
entire year. Membership of the Audit Committee is restricted
responsibilities can be grouped into the following aspects:
to independent Non-Executive Directors. The CEO, Chief
• To review and challenge the Group’s accounting policies
and significant judgement areas and the integrity of its
financial reporting
• To provide oversight and monitoring of the internal
and external audit functions, including appraising their
performance and approving their fees
Financial Officer, Chief Risk Officer, Chief Operating Officer and
representatives of the internal and external auditors routinely
attend meetings. The Committee meets with representatives
of the internal and external auditors without management
present at least once a year. Richard Price has recent and
relevant financial experience, and the Company believes that
the Committee as a whole has competence relevant to the
•
To work in conjunction with the Risk and Compliance
sector in which the Company operates.
The Audit Committee’s attendance during the year ended
30 June 2022 is set out in the summary table on page 76.
Committee to review the effectiveness of the Group’s risk
management framework and internal controls
The full responsibilities of the Audit Committee are set out in
its Terms of Reference, which are reviewed annually and are
available on the Group’s website.
Introduction
Strategic report
Corporate governance
Financial statements
The Audit Committee’s areas of focus
Financial
reporting
• Reviewed the Interim and Annual Report and Accounts, ensuring these are fair, balanced and
understandable for shareholders and other end users;
•
Reviewed the polices, key assumptions and judgements applied in the preparation of the Interim and
Annual Report and Accounts, including the external auditors’ feedback on financial reporting changes and
the Group’s financial controls;
• Reviewed the accounting, judgements applied and presentation of the costs and capital expenditure
incurred by the Group in connection with the transition to the new operating platform under the strategic
partnership entered into with SS&C Technologies;
• Reviewed the updates from management on the Group’s tax matters, including the accounting and
judgements applied and the presentation of the tax provisions and other tax-related entries included in the
Interim and Annual Report and Accounts;
• Reviewed the overall presentation of alternative performance measures (“APMs”) to ensure they are not
given undue prominence, reviewed the nature of the adjusting items excluded from the statutory results
and evaluated the clarity and explanations of APM reconciliations;
• Reviewed the key reporting considerations for the Group’s Interim and Annual Report and Accounts
presented by management with reference to the Financial Reporting Council thematic reviews issued
during the year on APMs; provisions, contingent liabilities and contingent assets; and viability and going
concern; and
• Reviewed the Group’s going concern assumptions and the Viability statement.
• Approved the annual external audit plan, the terms of reappointment, remuneration, and Terms of
Engagement;
• Provided oversight of the Group’s external auditors, PricewaterhouseCoopers LLP (“PwC”), including
assessing their independence, objectivity and effectiveness;
• Reviewed audit findings, including key issues, accounting and audit judgements and recommendations,
guidance and observations around the Group’s internal controls environment; and
• Reviewed management representation letters and associated responses.
• Developed an internal audit plan alongside the Group’s internal auditors, KPMG. Monitored and reviewed
the effectiveness of the plan and its alignment to key risks;
• Provided oversight of the internal auditors and considered and approved the scope of each engagement;
• Monitored and reviewed KPMG’s review of the CASS controls and processes in connection with the
migration of the Group’s custody assets to the SS&C Technologies’ operating platform and systems;
• Reviewed the results of individual internal audit reports and considered the effectiveness of actions agreed
with management; and
External
audit
Internal
audit
• Received regular summary reports from the internal auditors, including their conclusions on the changes to
controls and processes made by management.
Control
oversight
•
In conjunction with the Risk and Compliance Committee, reviewed the adequacy and effectiveness of the
Group’s internal financial controls;
• Reviewed and considered CASS-related matters, including PwC’s CASS audit findings;
• Reviewed and approved the Group’s policy on non-audit services (for both external and internal audit); and
• Reviewed the adequacy and security of the Group’s whistleblowing policy and procedures, including
ensuring employees are able to raise concerns confidentially and without repercussion.
•
Reviewed the Committee’s composition, minutes of prior meetings and its Terms of Reference.
Routine
matters
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87
Audit Committee report continued
Internal audit
The Group has outsourced its internal audit function to KPMG
since September 2018. KPMG formally report to Richard Price,
Chair of the Audit Committee, with Priti Verma, Chief Risk
Officer, being the principal point of day-to-day contact.
A risk-based three-year audit plan was developed by the
Committee and KPMG, seeking to provide assurance in
areas of high risk. It was created following discussions and
review with the Chairs of the Audit Committee and Risk and
Compliance Committee, the CEO and the Chief Risk Officer,
alongside KPMG’s input on the Group’s activities and the
overall industry. The plan is reviewed by the Committee at
regular intervals, taking into account any changes in areas
deemed high risk.
External audit
The Group’s external auditors are PricewaterhouseCoopers
LLP (“PwC”), who have been appointed since 2011. Jeremy
Jensen is the audit partner in charge of the Group’s audit,
with the current year being his second year. As an AIM-listed
company, Brooks Macdonald is not required to rotate its
audit firm after 10 years, although the Group will consider
undertaking a tender process when it feels the time is
appropriate.
During the year, the Audit Committee monitored the Group’s
policy on external audit and evaluated and reviewed the
independence and effectiveness of PwC in their role. No
material issues were raised during the course of the year. The
Committee agreed the external audit and assurance fees and
reviewed the audit engagement letter. Details of the auditors’
remuneration is provided in Note 7 to the Consolidated
financial statements included within the Annual Report and
Accounts.
The Audit Committee is satisfied that PwC has conducted an
effective audit for the year ended 30 June 2022.
Independence and non-audit services
The Audit Committee recognises the fact that, given their
knowledge of the business, there are advantages in using PwC
and KPMG to provide certain non-audit services on particular
occasions. If there is a business case to use the auditors to
provide non-audit services, sign-off is required from the
Committee to ensure that there is no impact on the auditors’
objectivity and independence. Monetary sign-off limits are
provided within the framework of the Non-Audit Services
Policy, which was reviewed by the Committee during the year,
and any non-audit services provided to the Group reviewed in
line with the Policy.
Financial reporting
The Committee reviewed the significant issues set out below
in relation to the Group’s Annual Report and Accounts for
the year ended 30 June 2022. Discussions were held with
management throughout the year and the Committee is
comfortable the Consolidated financial statements included
within the Annual Report and Accounts address the
judgements and estimates applied, as well as, the disclosures
agreed. These significant issues were also reviewed with the
external auditors with the Committee’s conclusions being in
line with those of the auditors.
Issue
Goodwill
(see Note 14)
Amortisation
of client
relationships
(see Note 14)
New
operating
platform
transition
costs
Key considerations and conclusions
The Committee reviewed the value-
in-use calculations presented by
management supporting the value of
goodwill held on the Group’s balance
sheet in respect of previously acquired
businesses. The Committee is satisfied
that the goodwill value is adequately
supported by the respective value-in-
use calculations.
In determining the useful economic
life of the Group’s client relationship
intangible assets, the Committee
reviewed relevant analysis presented
by management. The Committee was
in agreement and satisfied that the
client relationship intangible assets are
adequately supported by the respective
impairment tests and reviews.
The Committee reviewed management’s
accounting of the costs incurred in
connection with the transition to
the new operating platform and is in
agreement with the treatment of the
capitalised costs on the balance sheet
and the dual running costs recognised
during the year within APMs.
Approval
This report in its entirety has been approved by the Audit
Committee and the Board of Directors on its behalf by:
Richard Price
Audit Committee Chair
14 September 2022
88
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Corporate governance
Financial statements
Audit Committee report continued
Internal audit
Financial reporting
The Group has outsourced its internal audit function to KPMG
The Committee reviewed the significant issues set out below
since September 2018. KPMG formally report to Richard Price,
in relation to the Group’s Annual Report and Accounts for
Chair of the Audit Committee, with Priti Verma, Chief Risk
the year ended 30 June 2022. Discussions were held with
Officer, being the principal point of day-to-day contact.
management throughout the year and the Committee is
A risk-based three-year audit plan was developed by the
Committee and KPMG, seeking to provide assurance in
areas of high risk. It was created following discussions and
review with the Chairs of the Audit Committee and Risk and
Compliance Committee, the CEO and the Chief Risk Officer,
alongside KPMG’s input on the Group’s activities and the
overall industry. The plan is reviewed by the Committee at
regular intervals, taking into account any changes in areas
deemed high risk.
External audit
The Group’s external auditors are PricewaterhouseCoopers
LLP (“PwC”), who have been appointed since 2011. Jeremy
Jensen is the audit partner in charge of the Group’s audit,
with the current year being his second year. As an AIM-listed
company, Brooks Macdonald is not required to rotate its
audit firm after 10 years, although the Group will consider
undertaking a tender process when it feels the time is
appropriate.
During the year, the Audit Committee monitored the Group’s
policy on external audit and evaluated and reviewed the
independence and effectiveness of PwC in their role. No
material issues were raised during the course of the year. The
Committee agreed the external audit and assurance fees and
reviewed the audit engagement letter. Details of the auditors’
remuneration is provided in Note 7 to the Consolidated
financial statements included within the Annual Report and
Accounts.
The Audit Committee is satisfied that PwC has conducted an
effective audit for the year ended 30 June 2022.
Independence and non-audit services
The Audit Committee recognises the fact that, given their
knowledge of the business, there are advantages in using PwC
and KPMG to provide certain non-audit services on particular
occasions. If there is a business case to use the auditors to
provide non-audit services, sign-off is required from the
Committee to ensure that there is no impact on the auditors’
objectivity and independence. Monetary sign-off limits are
provided within the framework of the Non-Audit Services
Policy, which was reviewed by the Committee during the year,
and any non-audit services provided to the Group reviewed in
line with the Policy.
comfortable the Consolidated financial statements included
within the Annual Report and Accounts address the
judgements and estimates applied, as well as, the disclosures
agreed. These significant issues were also reviewed with the
external auditors with the Committee’s conclusions being in
line with those of the auditors.
Issue
Key considerations and conclusions
Goodwill
(see Note 14)
The Committee reviewed the value-
in-use calculations presented by
management supporting the value of
goodwill held on the Group’s balance
sheet in respect of previously acquired
businesses. The Committee is satisfied
that the goodwill value is adequately
supported by the respective value-in-
use calculations.
life of the Group’s client relationship
intangible assets, the Committee
reviewed relevant analysis presented
by management. The Committee was
in agreement and satisfied that the
client relationship intangible assets are
adequately supported by the respective
impairment tests and reviews.
The Committee reviewed management’s
accounting of the costs incurred in
connection with the transition to
the new operating platform and is in
agreement with the treatment of the
capitalised costs on the balance sheet
and the dual running costs recognised
during the year within APMs.
of client
relationships
(see Note 14)
New
operating
platform
transition
costs
Amortisation
In determining the useful economic
Approval
This report in its entirety has been approved by the Audit
Committee and the Board of Directors on its behalf by:
Richard Price
Audit Committee Chair
14 September 2022
88
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Nominations Committee report
The Committee encouraged and
supported management’s continued focus
on diversity, equity and inclusion and the
roll out of ‘Inclusive Culture’ training across
the Group.
Alan Carruthers
Nominations Committee Chair
Role and responsibilities
The Nominations Committee is responsible for reviewing
the composition of the Board and the Board Committees to
ensure they are suitably constituted, with an appropriate
balance of skills, experience, knowledge and diversity. This
includes conducting the annual Board effectiveness review.
The Committee also recommends Board and Board Committee
appointments, and monitors succession planning at the Group’s
leadership levels to ensure the Group’s continued ability to
implement its strategy and operate effectively. The Committee is
also responsible for reviewing and recommending to the Board
any material changes to the structure, size and composition of
the Group’s regulated subsidiary company boards.
The full responsibilities of the Committee are set out in the
Committee’s Terms of Reference, which are reviewed annually
and are available on the Group’s website.
Composition and meetings
The Committee comprises Alan Carruthers (Chair), Richard
Price, John Linwood, Dagmar Kershaw and Robert Burgess. Only
members of the Committee may vote on Committee business
but other members of the Board and the Chief People Officer
may attend all, or part, of a meeting by invitation. The attendance
of each Committee member during the year is shown on page 76.
Main activities during the year
Last year’s Nominations Committee report detailed the
appointment of Andrew Shepherd as CEO and the appointment
of both him and Lynsey Cross, our COO to the Board. Both
formally joined the Board on 13 July 2021. As existing employees,
neither required the full induction programme that we offer
to new directors coming from outside the business but both
received briefings from the Company’s Nominated Adviser,
giving a market overview and explaining AIM requirements as
well as being reminded of the Senior Managers and Certification
Regime (“SMCR”) and other regulatory responsibilities that their
new roles would entail.
Talent development and succession planning
The Committee is committed to maintaining an effective policy
for the orderly succession of Executive Directors, Executive
Committee members and other senior management roles
across the business. This was showcased in 2021 when Andrew
Shepherd and Lynsey Cross were appointed to the Board
and Edward Park and Richard Hughes joined the Executive
Committee. The pipeline of talent joining the Executive
Committee continued in 2022 as Simon Broomfield, our General
Counsel, and Caroline Abbondanza, our Chief Technology
Officer, further strengthened the committee. Both have brought
valuable skill sets and knowledge, which add to the quality of
debate at meetings. Where there is no suitable internal candidate
for a senior management role, management are encouraged to
look outside the business for the skills that the Company needs.
Such was the case for the new Global Head of Distribution role
and, following a robust selection process, Sarah Ackland was
appointed to this Executive Committee position.
90
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Nominations Committee report
The Committee encouraged and
supported management’s continued focus
on diversity, equity and inclusion and the
roll out of ‘Inclusive Culture’ training across
the Group.
Alan Carruthers
Nominations Committee Chair
Role and responsibilities
Main activities during the year
The Nominations Committee is responsible for reviewing
Last year’s Nominations Committee report detailed the
the composition of the Board and the Board Committees to
appointment of Andrew Shepherd as CEO and the appointment
ensure they are suitably constituted, with an appropriate
of both him and Lynsey Cross, our COO to the Board. Both
balance of skills, experience, knowledge and diversity. This
formally joined the Board on 13 July 2021. As existing employees,
includes conducting the annual Board effectiveness review.
neither required the full induction programme that we offer
The Committee also recommends Board and Board Committee
to new directors coming from outside the business but both
appointments, and monitors succession planning at the Group’s
received briefings from the Company’s Nominated Adviser,
leadership levels to ensure the Group’s continued ability to
giving a market overview and explaining AIM requirements as
implement its strategy and operate effectively. The Committee is
well as being reminded of the Senior Managers and Certification
also responsible for reviewing and recommending to the Board
Regime (“SMCR”) and other regulatory responsibilities that their
any material changes to the structure, size and composition of
new roles would entail.
the Group’s regulated subsidiary company boards.
The full responsibilities of the Committee are set out in the
Committee’s Terms of Reference, which are reviewed annually
and are available on the Group’s website.
Composition and meetings
The Committee comprises Alan Carruthers (Chair), Richard
Price, John Linwood, Dagmar Kershaw and Robert Burgess. Only
members of the Committee may vote on Committee business
but other members of the Board and the Chief People Officer
may attend all, or part, of a meeting by invitation. The attendance
of each Committee member during the year is shown on page 76.
Talent development and succession planning
The Committee is committed to maintaining an effective policy
for the orderly succession of Executive Directors, Executive
Committee members and other senior management roles
across the business. This was showcased in 2021 when Andrew
Shepherd and Lynsey Cross were appointed to the Board
and Edward Park and Richard Hughes joined the Executive
Committee. The pipeline of talent joining the Executive
Committee continued in 2022 as Simon Broomfield, our General
Counsel, and Caroline Abbondanza, our Chief Technology
Officer, further strengthened the committee. Both have brought
valuable skill sets and knowledge, which add to the quality of
debate at meetings. Where there is no suitable internal candidate
for a senior management role, management are encouraged to
look outside the business for the skills that the Company needs.
Such was the case for the new Global Head of Distribution role
and, following a robust selection process, Sarah Ackland was
appointed to this Executive Committee position.
Introduction
Strategic report
Corporate governance
Financial statements
The Chair undertook to discuss these matters with his colleagues
and agree an action plan to address them. The progress against
these actions will be reported on in next year’s Annual Report
and Accounts. The use of an externally facilitated Board
evaluation is also under consideration for a future year.
Last year, a small number of issues for consideration were
raised in the Board evaluation. Over the course of the year, the
Company took steps to address these matters in order to assist
the Board in improving its performance. Further details of the
actions involved are given below.
• The Board was very keen to return to having both in-
person Board meetings and other gatherings – the easing
of COVID-19 restrictions over the last year has allowed the
Board to return to having in-person meetings. The June
2022 meeting was held at our Jersey office, which allowed
the Board to spend more time both together and with key
members of our International team.
• Directors would like to have broader debates on a range of
subjects – the Board arranged a strategy day in December
to encourage wide debate on the Company’s future strategy.
The CEO’s reports to the Board now focus on a smaller
number of subjects, allowing broader discussion on these
items, with culture and flexible working being topics of
particular debate.
Corporate governance
The Company has chosen to follow the Corporate Governance
Code and this is the third year that the Company has reported
against the 2018 version of the Code.
Approval
This report in its entirety has been approved by the Committee
and the Board of Directors on its behalf by:
Alan Carruthers
Nominations Committee Chair
14 September 2022
Leadership development is a key part of growing our talent
and succession planning and during 2022 we rolled out ‘Your
Team At Its Best’ to all people leaders across the Group. This
is a leadership development programme, which will help to
nurture our business leaders and support them as they drive
a high-performing culture. The Committee is also committed
to maintaining an appropriate balance of skills, experience,
independence and diversity across the wider Group. Further
information on the Group’s approach to succession planning
and leadership development can be found in the Corporate
responsibility report on page 55.
Diversity, equity and inclusion
The Committee takes an active role in setting and monitoring
diversity objectives and strategies undertaken by the Group and
embraces the benefits of having a diverse Board drawing on the
knowledge, understanding, skills, experience and expertise of
directors from a range of backgrounds. The Committee will also
take the opportunity to improve the Board’s diversity where
appropriate. Whenever external search consultancies are used
in the recruitment of Board and senior members of management,
they are asked to provide diverse lists of candidates. The
Committee strongly supports management’s efforts to nurture
an inclusive culture within the Group. Diverse perspectives,
experiences and backgrounds across our workforce help us to
understand better the needs of our clients and, therefore, to grow
the business. Further details on the Group’s approach to diversity
are included in the Corporate responsibility report on page
57 with details of the gender balance of the Company’s senior
management shown on page 58.
Board effectiveness
The Committee is responsible for overseeing an annual
evaluation of the Board, its Committees, the Chair and individual
Directors. This includes a review of the composition, diversity
and effectiveness of the Board and its Committees and the
contribution of each Director. This year’s Board evaluation
was carried out internally in June 2022. A secure, online
questionnaire was employed, which ensured the anonymity
of responses received. This provided an opportunity for each
of the Directors to review the processes and procedures of the
Board and to scrutinise the performance of themselves and their
colleagues. The feedback received was very positive in nature,
both concerning the Board as a whole and its Committees. A
small number of points were raised for further consideration:
• Directors would like more information on competitors and
market intelligence.
• Greater use of NED-only sessions and Board dinners to allow
informal discussions and the socialisation of ideas and
observations.
• Earlier NED involvement in some business decisions.
90
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Brooks Macdonald Group plc / Annual Report and Accounts 2022
91
Remuneration Committee report
During a year of strong performance, we
have continued to ensure alignment between
the remuneration of our people and the
sustainable outcomes of our clients.
John Linwood
Remuneration Committee Chair
Introduction
On behalf of the Remuneration Committee and the Board, I
am pleased to present the Directors’ Remuneration report for
the financial year ended 30 June 2022, which comprises my
Annual Statement, the Annual Report on Remuneration and
the Directors’ Remuneration Policy. The Annual Report on
Remuneration provides a detailed account of each Director’s
individual total remuneration and sets out the variable pay
earned for each Director and how this relates to the Group’s
performance outcomes for the year and over the longer
term and will be presented as an advisory resolution to
shareholders at the upcoming Annual General Meeting in
October 2022. The Directors’ Remuneration Policy sets out the
framework within which Executive Directors are paid.
Activities of the Committee
The Committee continued to ensure its overall approach to
remuneration was competitive, market aligned and fulfils
its role in optimising our risk culture and driving the right
commercial outcomes aligned to long-term shareholder
interests. This has been particularly important and challenging
given the continued market volatility and its impact on our
business and people.
Key activities of the Committee during the year have included:
•
Implementation of the new performance-based long-term
incentive awards for Executive Directors reported in last
year’s Annual Report and Accounts: this is more closely
aligned to shareholder interest in order to help deliver the
Group’s ambitious strategic aims and deliver sustainable
value to shareholders.
• Taking steps to align the pension contributions of
Executive Directors and other senior employees with
those of the wider workforce. All employees now receive a
uniform 6% employer’s pension contribution.
• Overseeing the details and publication of the Group’s fifth
annual gender pay gap report. The Group was pleased to
report a further reduction in both mean gender pay and
bonus gaps, while identifying that the median pay gaps
were not seeing the required level of progress.
• Reviewing and approving individual remuneration
for all employees in Material Risk Taker and senior
Risk and Compliance roles as required under the FCA
Remuneration Code, as well as the remuneration offers for
new members of senior management.
• The execution of its other regulatory oversight
responsibilities, including the review and appropriate risk
and performance adjustment of all incentive funding,
approval of any guaranteed variable remuneration
arrangements and the setting of an appropriate fixed to
variable pay ratio.
• The development and ongoing monitoring of a MIFIDPRU
Remuneration Code implementation plan to ensure the
Group is fully compliant with the changing regulatory
requirements under the new code, effective from the 2023
financial reporting period.
• The Committee also received regular updates around
developments in the governance and regulation of
remuneration structures from both internal and external
sources, and has taken action to ensure the Group’s
remuneration approach reflects best practice in this regard
as well as rewarding high performance and conduct
aligned to our risk management framework and Guiding
Principles. At the invitation of the Committee Chair, the
CEO, Chief People Officer, and Group Head of Reward
attend some or all of each meeting. The CRO also advises
the Committee on matters relating to remuneration as
required. However, no Executive is present when matters
relating to their own remuneration are being discussed.
92
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Remuneration Committee report
During a year of strong performance, we
have continued to ensure alignment between
the remuneration of our people and the
sustainable outcomes of our clients.
John Linwood
Remuneration Committee Chair
Introduction
On behalf of the Remuneration Committee and the Board, I
am pleased to present the Directors’ Remuneration report for
the financial year ended 30 June 2022, which comprises my
Annual Statement, the Annual Report on Remuneration and
• Overseeing the details and publication of the Group’s fifth
annual gender pay gap report. The Group was pleased to
report a further reduction in both mean gender pay and
bonus gaps, while identifying that the median pay gaps
were not seeing the required level of progress.
the Directors’ Remuneration Policy. The Annual Report on
• Reviewing and approving individual remuneration
Remuneration provides a detailed account of each Director’s
for all employees in Material Risk Taker and senior
individual total remuneration and sets out the variable pay
Risk and Compliance roles as required under the FCA
earned for each Director and how this relates to the Group’s
Remuneration Code, as well as the remuneration offers for
performance outcomes for the year and over the longer
new members of senior management.
term and will be presented as an advisory resolution to
shareholders at the upcoming Annual General Meeting in
October 2022. The Directors’ Remuneration Policy sets out the
framework within which Executive Directors are paid.
Activities of the Committee
The Committee continued to ensure its overall approach to
remuneration was competitive, market aligned and fulfils
its role in optimising our risk culture and driving the right
commercial outcomes aligned to long-term shareholder
interests. This has been particularly important and challenging
given the continued market volatility and its impact on our
business and people.
Key activities of the Committee during the year have included:
•
Implementation of the new performance-based long-term
incentive awards for Executive Directors reported in last
year’s Annual Report and Accounts: this is more closely
aligned to shareholder interest in order to help deliver the
Group’s ambitious strategic aims and deliver sustainable
value to shareholders.
• Taking steps to align the pension contributions of
Executive Directors and other senior employees with
• The execution of its other regulatory oversight
responsibilities, including the review and appropriate risk
and performance adjustment of all incentive funding,
approval of any guaranteed variable remuneration
arrangements and the setting of an appropriate fixed to
variable pay ratio.
• The development and ongoing monitoring of a MIFIDPRU
Remuneration Code implementation plan to ensure the
Group is fully compliant with the changing regulatory
requirements under the new code, effective from the 2023
financial reporting period.
• The Committee also received regular updates around
developments in the governance and regulation of
remuneration structures from both internal and external
sources, and has taken action to ensure the Group’s
remuneration approach reflects best practice in this regard
as well as rewarding high performance and conduct
aligned to our risk management framework and Guiding
Principles. At the invitation of the Committee Chair, the
CEO, Chief People Officer, and Group Head of Reward
attend some or all of each meeting. The CRO also advises
the Committee on matters relating to remuneration as
those of the wider workforce. All employees now receive a
required. However, no Executive is present when matters
uniform 6% employer’s pension contribution.
relating to their own remuneration are being discussed.
Introduction
Strategic report
Corporate governance
Financial statements
Incentive outcomes for the year
The Group has maintained good performance, with
underlying profit before tax increasing by 12.7% to £34.5 million,
ahead of the £30.6 million reported in FY21. Underlying profit
before tax margin rose from 25.9% to 28.2% in line with our
ongoing and continued commitment to increase profit margins
in the medium term. Funds under management went from
£16.5 billion to £15.7 billion, a change of (4.8)%, which reflects the
volatile market conditions experienced in the second half of
the financial year.
From 13 July 2021, the Board has had three Executive Directors
(Chief Executive Officer, Chief Financial Officer and Chief
Operating Officer), with the former Chief Executive Officer,
Caroline Connellan, having resigned at 27 May 2021 and
holding no directorships in the 2022 financial reporting
period. All three Directors present for FY22 were awarded
bonuses in respect of their contributions during the year. In
line with previous years, the Executive Director bonus was
awarded against three financial measures: net organic growth
in funds under management, underlying profit before tax, and
underlying profit before tax margin, and one non-financial
measure for strategic and personal objectives. The weightings
of the metrics remained the same as previous years with equal
weighting to the financial metrics (20% each) and 40% on
strategic and personal objectives.
Despite challenging market conditions, the business has made
good progress this year and has increased both underlying
profit before tax and underlying profit margin. In addition,
excellent progress has been made against non-financial targets
and this has resulted in a bonus outcome of 130.9% of base
salary (out of a maximum 150% of base salary opportunity)
for the three Executive Directors. One-third of the bonus
earned will be deferred into shares for up to three years. The
Remuneration Committee is satisfied that the bonus outcome
reflects the overall performance of the Group over the year.
The conditional awards granted in 2019 under the 2018 Long-
Term Incentive Plan will vest to Ben Thorpe on 30 September
2022. This award is subject to the following performance
underpins being met:
• Average Group FUM for the financial year immediately
prior to the vest date exceeding the average Group FUM
for the financial year ending immediately prior to the date
of grant.
• Total dividend for the financial year immediately prior to
the vest date exceeding the total dividend for the financial
year ending immediately prior to the date of grant.
•
Satisfactory risk, compliance, governance and internal
control environment across the vesting period.
An assessment against the performance conditions has been
made and the Remuneration Committee has confirmed that
these have been met. All Long-Term Incentive Plan (“LTIP”)
awards are subject to a two-year holding period post vest date.
After review, the Remuneration Committee has not applied
any discretion in amending the bonus or LTIP outcomes.
Andrew Shepherd was awarded a conditional share award
in April 2019 on appointment to his previous role of Chief
Executive Officer, International. The performance conditions
necessary for vesting related to the net flows and financial
contribution of the International division. This award vested
on 30 June 2022 at 13% of maximum opportunity.
Long-term incentive awards granted
during the year
Awards of performance shares were made to the Executive
Directors under the 2018 Long-Term Incentive Plan at 30
September 2021.
The metrics for the awards granted were based on underlying,
diluted earnings per share (“EPS”) as well as a basket of ESG-
based metrics. 90% of the award was based on the EPS target
and 10% on ESG targets. The grant levels for the CEO and CFO
were 200% of base salary and the COO’s award was 100% of
base salary. These awards will only vest based on achieving
significantly challenging targets and participating executives
remaining in employment with the Group. These awards have
a vesting date of 30 September 2024.
Workforce engagement
During FY22, John Linwood continued to be the designated
Non-Executive Director to lead the Board’s engagement with
our people. Various engagement activities, including staff
discussion groups, were undertaken to encourage dialogue, get
a sense of employee engagement and morale and to provide
an opportunity for employee feedback to be brought to the
attention of the Board, including how executive remuneration
aligns with the wider pay policy. The Group also runs a regular
staff survey, which elicits feedback from staff around a number
of areas, including compensation and benefits. Executive
Directors regularly meet with employees through other
mechanisms such as all-staff town halls, focus groups, visiting
regional offices and joining team meetings. It has been possible
to move some of these activities in-person now that COVID-19
restrictions have been lifted.
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93
Remuneration Committee report continued
For FY23, the Executive Directors’ annual bonus structure will
remain unchanged from last year and will continue to be based
on performance against three financial measures: net organic
growth in funds under management, underlying profit before
tax, and underlying profit before tax margin; and strategic and
personal objectives. There is no change to the weighting of the
financial and non-financial elements in FY23.
With the exception of realignment of executive director
pension contributions to the workforce average, no changes
are proposed to key benefits in FY23.
The Committee believes the proposed approach to
remuneration is appropriate to retain and incentivise a
talented management team and is in line with shareholder
interests and appropriately benchmarked against market data.
We hope that shareholders will be supportive of the advisory
remuneration resolution, which will be tabled at the Annual
General Meeting on 27 October 2022.
Approach to remuneration in FY23
The Committee undertook a review of the base salaries of
the three Executive Directors and approved salary increases
of 4% to each. This is aligned to the average remuneration
increase of the wider workforce during the same review
period. All salary increases were effective from 1 July 2022.
The Remuneration Committee considers these salary levels
to be both affordable and commensurate with the skills,
competencies and experience necessary to successfully lead
an organisation of the Group’s commercial and regulatory
complexity and strategic ambition. The salaries for all three
Executive Director roles were also benchmarked against close
peer market data.
The Group will continue to operate the performance share
approach to long-term incentive awards in FY23 that operated
in FY22. The metrics for the award to be granted in FY23 will
again be based on underlying, diluted EPS as well as a basket of
ESG-based metrics. 90% of the award will be based on the EPS
target and 10% will be based on ESG targets. The grant levels
for the CEO and CFO will be 200% of base salary and the COO’s
award will be 100% of base salary. These awards will only vest
based on achieving significantly challenging targets. Formulaic
adjustments for actual dilution and effective tax rates operate
within the LTIP performance assessment to ensure the final
outturn reflects executive management contribution and
performance. We believe that continuing to use performance
shares will promote engagement from the Executive Directors
and fully align their long-term remuneration arrangements
with shareholder and broader stakeholder outcomes.
94
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Remuneration Committee report continued
For FY23, the Executive Directors’ annual bonus structure will
remain unchanged from last year and will continue to be based
on performance against three financial measures: net organic
growth in funds under management, underlying profit before
tax, and underlying profit before tax margin; and strategic and
personal objectives. There is no change to the weighting of the
financial and non-financial elements in FY23.
With the exception of realignment of executive director
pension contributions to the workforce average, no changes
are proposed to key benefits in FY23.
The Committee believes the proposed approach to
remuneration is appropriate to retain and incentivise a
talented management team and is in line with shareholder
interests and appropriately benchmarked against market data.
We hope that shareholders will be supportive of the advisory
remuneration resolution, which will be tabled at the Annual
General Meeting on 27 October 2022.
Approach to remuneration in FY23
The Committee undertook a review of the base salaries of
the three Executive Directors and approved salary increases
of 4% to each. This is aligned to the average remuneration
increase of the wider workforce during the same review
period. All salary increases were effective from 1 July 2022.
The Remuneration Committee considers these salary levels
to be both affordable and commensurate with the skills,
competencies and experience necessary to successfully lead
an organisation of the Group’s commercial and regulatory
complexity and strategic ambition. The salaries for all three
Executive Director roles were also benchmarked against close
peer market data.
The Group will continue to operate the performance share
approach to long-term incentive awards in FY23 that operated
in FY22. The metrics for the award to be granted in FY23 will
again be based on underlying, diluted EPS as well as a basket of
ESG-based metrics. 90% of the award will be based on the EPS
target and 10% will be based on ESG targets. The grant levels
for the CEO and CFO will be 200% of base salary and the COO’s
award will be 100% of base salary. These awards will only vest
based on achieving significantly challenging targets. Formulaic
adjustments for actual dilution and effective tax rates operate
within the LTIP performance assessment to ensure the final
outturn reflects executive management contribution and
performance. We believe that continuing to use performance
shares will promote engagement from the Executive Directors
and fully align their long-term remuneration arrangements
with shareholder and broader stakeholder outcomes.
Introduction
Strategic report
Corporate governance
Financial statements
Annual report on remuneration
Total remuneration for the financial year ended 30 June 2022
Salary
and
fees
Pension-
related
benefits
Taxable
benefits1
Annual
bonus2
Long-term
incentives3
Sharesave
Other
deduction4
Total
Total fixed
remuner-
ation
Total
variable
remuner-
ation
£’000
Executives
Andrew Shepherd5
Ben Thorpe
Lynsey Cross6
2022 400 28
–
–
2021
25
350
2022
24
323
2021
20
290
2022
–
–
2021
Caroline Connellan7 2022
–
–
26
364
2021
73
1,040
2022
50
687
2021
3 524 469
–
–
576
2
–
2
–
3
–
–
–
–
155
4
1,045
8
155
6
–
458
397
380
–
–
–
1,362
397
–
–
–
4
–
–
–
–
–
4
(5)
–
(7)
–
–
–
–
–
(12)
–
1,419 426 993
–
–
–
1,034
370
1,404
401
349
750
380
313
693
–
–
–
–
–
–
155
394
549
2,407
1,109
3,516
556
743
1,299
Richard Price
John Linwood
Dagmar Kershaw
Non-Executives
Alan Carruthers
(Chairman)
Robert Burgess
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Total remuneration 2022
2021
Diane Seymour–
Williams8
David Stewart9
200
200
74
64
64
60
74
70
84
79
–
20
–
7
496
500
1,536
1,187
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
73
50
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8
6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,362
397
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,045
155
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(12)
–
200
200
74
64
64
60
74
70
84
79
–
20
–
7
496
500
4,012
1,799
200
200
74
64
64
60
74
70
84
79
–
20
–
7
496
500
1,605
1,243
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,407
556
Notes to the total remuneration table
1. Taxable benefits relate to private medical insurance.
2. The amounts represent the total annual bonus value awarded in respect of the relevant financial year, comprising both cash and share awards. For FY22, the cash
payment comprised 66.7% of total annual bonus value and the deferred share award 33.3%.
3. Represents the market value on vest date of any long-term incentive awards vested and exercised during the relevant financial year. The share awards that vested
during the year for Andrew Shepherd comprise 14,705 LTIS awards, and 4,827 LTIP awards, at a market value of £23.02 and £27.00 respectively. The share awards
that vested during the year for Ben Thorpe comprise 16,103 LTIS awards, and 7,912 DBP awards, at a market value of £23.25 and £25.01 respectively. The long-term
incentive values shown for Caroline Connellan in 2021 reflect restricted share awards made in a lower opportunity structure relative to the awards made to
executive directors in 2022 under a performance share plan.
4. Other deductions relate to the car benefit scheme that Andrew Shepherd and Ben Thorpe elected to utilise in FY22.
5. Appointed 13 July 2021.
6. Appointed 13 July 2021.
7. Resigned 27 May 2021. 2021 salary shown reflects part -year earnings with annual salary being £410,000 at time of resignation.
8. Resigned 27 October 2020.
9. Resigned 31 July 2020.
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95
Remuneration Committee report continued
Annual variable pay outcomes for financial year ended 30 June 2022
The FY22 bonus was based on a balanced scorecard of metrics and targets designed to achieve a direct link between
performance against the Group’s strategic and commercial goals and the overall bonuses awarded. Under the FY22 structure, a
maximum bonus opportunity of 150% of base salary applied to each Executive Director. While the Committee has the discretion
to adjust the final outcome to take account of overall performance and exceptional events, no discretion will be applied this year;
the Committee considers that the Remuneration Policy has operated as intended both in terms of Company performance and
quantum.
Annual bonus performance targets
For the financial year ended 30 June 2022, the bonus was based on the following four metrics (percentage weighting within total
bonus opportunity indicated), all of which are aligned to the Group’s strategic targets.
• Underlying profit before tax compared to the budget (20%);
• Net organic growth in funds under management (“Net flows”) compared to the target (20%);
• Underlying profit before tax margin (20%); and
•
Strategic and personal objectives (40%).
For all three financial metrics, a sliding scale of targets were set around the budget for the year and account was taken of market
consensus and sector performance. Strategic, non-financial objectives were set with a focus on strategy, client, risk and people.
Overall outcome of annual bonus
The overall bonus outcome, including strong performance across all key strategic and personal non-financial measures, resulted
in an annual bonus award of 130.9% of base salary paid to the Chief Executive Officer, Chief Financial Officer and the Chief
Operating Officer. A third of the bonus payable is deferred into shares, which vest in equal tranches over three years to encourage
further alignment with our shareholders’ priorities. Both cash and share portions are subject to malus and clawback provisions.
Performance against financial criteria
Underlying PBT
Net flows
Underlying PBT margin (%)
Total
Weighting
20.0%
20.0%
20.0%
60.0%
30.0%
30.0%
30.0%
90.0%
£30.6m £34.0m
5.0%
25.7%
2.5%
25.0%
maximum Threshold1 Target1 Maximum1
Actual
for FY22
£37.0m £34.5m
4.8%
28.2%
7.5%
26.9%
% of
salary at
% of base
salary
awarded
for these
criteria
21.7%
19.2%
30.0%
70.9%
1. 33.3% of maximum is payable for Threshold performance, 66.7% of maximum for Target performance and 100% of maximum for Maximum performance.
96
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Remuneration Committee report continued
Annual variable pay outcomes for financial year ended 30 June 2022
The FY22 bonus was based on a balanced scorecard of metrics and targets designed to achieve a direct link between
performance against the Group’s strategic and commercial goals and the overall bonuses awarded. Under the FY22 structure, a
maximum bonus opportunity of 150% of base salary applied to each Executive Director. While the Committee has the discretion
to adjust the final outcome to take account of overall performance and exceptional events, no discretion will be applied this year;
the Committee considers that the Remuneration Policy has operated as intended both in terms of Company performance and
quantum.
Annual bonus performance targets
For the financial year ended 30 June 2022, the bonus was based on the following four metrics (percentage weighting within total
bonus opportunity indicated), all of which are aligned to the Group’s strategic targets.
• Underlying profit before tax compared to the budget (20%);
• Net organic growth in funds under management (“Net flows”) compared to the target (20%);
• Underlying profit before tax margin (20%); and
•
Strategic and personal objectives (40%).
For all three financial metrics, a sliding scale of targets were set around the budget for the year and account was taken of market
consensus and sector performance. Strategic, non-financial objectives were set with a focus on strategy, client, risk and people.
Overall outcome of annual bonus
The overall bonus outcome, including strong performance across all key strategic and personal non-financial measures, resulted
in an annual bonus award of 130.9% of base salary paid to the Chief Executive Officer, Chief Financial Officer and the Chief
Operating Officer. A third of the bonus payable is deferred into shares, which vest in equal tranches over three years to encourage
further alignment with our shareholders’ priorities. Both cash and share portions are subject to malus and clawback provisions.
Performance against financial criteria
Weighting
maximum Threshold1 Target1 Maximum1
for FY22
Actual
£30.6m £34.0m
£37.0m £34.5m
2.5%
25.0%
5.0%
25.7%
7.5%
26.9%
4.8%
28.2%
% of
salary at
30.0%
30.0%
30.0%
90.0%
20.0%
20.0%
20.0%
60.0%
% of base
salary
awarded
for these
criteria
21.7%
19.2%
30.0%
70.9%
Underlying PBT
Net flows
Underlying PBT margin (%)
Total
1. 33.3% of maximum is payable for Threshold performance, 66.7% of maximum for Target performance and 100% of maximum for Maximum performance.
Introduction
Strategic report
Corporate governance
Financial statements
Performance against non-financial criteria
Strategic
objective
Strategy
People
Client
Risk
Extent
to which
objective has
been met
Achieved
Achieved
Achieved
Performance in FY22
•
Significant progress made in delivering the Group’s strategy
including the acquisition of Integrity Wealth Solutions, subject
to regulatory approval, complementing organic growth
actions, which have seen the Group record net flows every
quarter.
• A strong full year result, ahead of last year’s in terms of both
underlying profit and underlying profit margin, despite the
deteriorating market conditions caused by inflation, rising
commodity prices, and the conflict in Ukraine.
•
•
•
•
•
Significant progress made towards delivering the adviser and
client experience transformation, partnering with SS&C, with
go-live completed on 25 July 2022.
Continued development of post-pandemic culture with focus
on leadership development, launch of ‘Your Team At Its Best’
development programme and community for all leaders,
‘Mentoring Marketplace,’ connected working, as well as
ongoing focus on managing underperformance.
Continued reduction in mean gender pay gap year on
year, led broader diversity and inclusion agenda, including
delivering inclusive cultures programme to all leaders
and staff members, launch of inclusive futures graduate
programme, extending participation in the #100blackinterns
programme for a second year, enhancing parental leave
provisions, and introducing several new inclusive policies,
such as mental health at work and guidance to support
neurodivergent employees and those going through the
menopause.
Continued focus on employee engagement, positively
reflected in consistently strong engagement scores and
focus on employee wellbeing. Employee engagement and
wellbeing have remained high over the course of the year, and
turnover relatively low.
Supported clients and advisers through the continued
macroeconomic challenges through client and adviser
information, including webinars, tools and ongoing
communications to provide better macroeconomic oversight.
• Worked closely with IFAs to enhance client outcomes and
adviser business strategies through the development of our
Brooks Macdonald Investment Solutions proposition.
• Made further progress in transforming client and adviser
experience through digital enhancements including digital
onboarding, and delivered improvements in operations,
largely through developing partnership with SS&C.
•
Continued steps taken in the ongoing enhancement and
embedding of Group-wide risk management framework.
Achieved
• Maintained active regulatory engagement in both the UK
and Channel Islands to support regulatory requirements and
business objectives.
• Development and implementation of enhanced approach to
operational resilience in line with regulation and best practice.
Objective
Continued delivery of
organic growth strategy
including successful
implementation of business
transformation initiatives,
complemented by selective
high-quality acquisitions
and successful integration
of previous acquisitions
Ongoing leadership,
capability and career
development as part of a
broader high-performing
culture, with continued
focus on employee
engagement and diversity
Focus on consistent
delivery of high-quality
client and IFA experience,
leveraging process and
digital improvements,
making us easier to do
business with. Continued
focus on proposition
development to meet client
needs and support IFAs
Ongoing evolution
and embedding of risk
management framework
and supporting culture
and mitigating risk
appropriately. Maintain
a positive and proactive
relationship with regulators
and high standards in
managing regulatory
matters
96
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
97
Remuneration Committee report continued
Overall outcome of the FY22 bonus
Strategic and personal objectives
Financial objectives (as above)
Total
Weighting
40.0%
60.0%
100.0%
% of
salary at
maximum
60.0%
90.0%
150.0%
% of base salary
awarded for
these criteria
60.0%
70.9%
130.9%
Following the calculation of bonus awards against the stated performance measures, additional risk adjustments were
considered by the Committee. No risk adjustments were made for any Executive Director. Final awards made are detailed in the
table below:
Name
Andrew Shepherd
Ben Thorpe
Lynsey Cross
Role
Chief Executive Officer
Chief Financial Officer
Chief Operating Officer
Cash
(2/3)
£’000
349
305
253
Deferred
shares
(1/3)
£’000
175
153
127
Total
£’000
524
458
380
% of base
salary1
130.9%
130.9%
130.9%
1. Based on base salary of the Chief Executive Officer (£400,000), Chief Financial Officer (£350,000) and the Chief Operating Officer (£290,000) respectively.
Monetary value of awards made under LTIP and deferred element of annual bonus
during FY22
Name
Andrew Shepherd
Ben Thorpe
Lynsey Cross
Total
FY21
deferred
bonus
£’000
103
132
96
331
FY21
LTIPs
£’000
800
700
290
1,790
One-off
award
£’000
–
–
–
–
Total
£’000
903
832
386
2,121
Deferred bonus share awards granted during the year
One-third of the FY21 bonus was awarded to the Executive Director in the form of deferred nil cost share options. These awards
will vest over three years in three equal tranches after 12, 24 and 36 months.
Name
Andrew Shepherd
Ben Thorpe
Lynsey Cross
Basis of award
1/3 of annual bonus
1/3 of annual bonus
1/3 of annual bonus
Date of
award
30 Sep 2021
30 Sep 2021
30 Sep 2021
No. of
awards
4,247
5,476
3,971
Face value
of awards1
£’000
103
132
96
Vesting date
30 Sept 2022/2023/2024
30 Sept 2022/2023/2024
30 Sept 2022/2023/2024
1. Based on a share price of £24.18, being the average mid-market closing price over the five-day period prior to 30 September 2021.
98
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Corporate governance
Financial statements
Overall outcome of the FY22 bonus
LTIP awards granted during the year
Name
Andrew Shepherd
Ben Thorpe
Lynsey Cross
Basis of award
200% of salary
200% of salary
100% of salary
Date of
award
30 Sept 2021
30 Sept 2021
30 Sept 2021
No. of
awards
33,086
28,950
11,994
Face value
of awards
£’000
End of
holding
Vesting
period
date
800 30 Sept 2024 30 Sept 2026
700 30 Sept 2024 30 Sept 2026
290 30 Sept 2024 30 Sept 2026
A performance share award under the LTIP was granted to Executive Directors in September 2021 with a face value of 100% of
base salary (Lynsey Cross) or 200% of base salary (Andrew Shepherd and Ben Thorpe) based on a share price of £24.18, being
the average mid-market closing price over the five-day period prior to grant date. These awards will vest after three years and
a further two-year post-vesting holding period will apply. The LTIP awards are subject to continued service and performance
conditions relating to:
• diluted earnings per share (90% weighting); and
•
a basket of ESG metrics (10% weighting) .
The awards will also be subject to the following underpin:
•
•
the maintenance of a satisfactory risk, compliance, governance and internal control environment; and
general good health of the Company as assessed by the Remuneration Committee.
All LTIP awards are subject to malus and clawback provisions in the event of circumstances including, but not limited to, material
misstatement of financial results, material adverse event (e.g. regulatory censure, regulator sanction, reputational damage) or
error in the calculation of the awards. The Committee is able to exercise discretion in circumstances where it considers the award
outcomes do not reflect the true performance of the business or individual over that period.
To the extent that they vest, these awards will be shown in the total remuneration table for the financial year ending 30 June 2025.
Dilution
All share awards are made in accordance with the Board’s dilution policy so that in any rolling period of 10 years, not more
than 10% of the issued ordinary share capital of the Company (adjusted for bonus and rights issues) will be issued for all share
incentive schemes operated by the Company. In addition, a further limit within this has been set of a 5% ten-year dilution level
with respect to Executive Long-Term Incentive Plan awards. The Company satisfies the various equity-based schemes it operates
using a combination of market purchased and newly issued shares. The dilutive effect of LTIP awards issued to date is nil, as
these awards are satisfied using market purchased shares.
Remuneration Committee report continued
Following the calculation of bonus awards against the stated performance measures, additional risk adjustments were
considered by the Committee. No risk adjustments were made for any Executive Director. Final awards made are detailed in the
Strategic and personal objectives
Financial objectives (as above)
Total
table below:
Name
Role
Andrew Shepherd
Chief Executive Officer
Ben Thorpe
Lynsey Cross
Chief Financial Officer
Chief Operating Officer
during FY22
Name
Andrew Shepherd
Ben Thorpe
Lynsey Cross
Total
% of
% of base salary
salary at
awarded for
Weighting
maximum
these criteria
40.0%
60.0%
100.0%
60.0%
90.0%
150.0%
60.0%
70.9%
130.9%
Cash
(2/3)
£’000
349
305
253
Deferred
shares
(1/3)
£’000
175
153
127
Total
£’000
% of base
salary1
524
458
380
130.9%
130.9%
130.9%
FY21
deferred
bonus
£’000
103
132
96
331
FY21
LTIPs
£’000
800
700
290
1,790
One-off
award
£’000
–
–
–
–
Total
£’000
903
832
386
2,121
1. Based on base salary of the Chief Executive Officer (£400,000), Chief Financial Officer (£350,000) and the Chief Operating Officer (£290,000) respectively.
Monetary value of awards made under LTIP and deferred element of annual bonus
Deferred bonus share awards granted during the year
One-third of the FY21 bonus was awarded to the Executive Director in the form of deferred nil cost share options. These awards
will vest over three years in three equal tranches after 12, 24 and 36 months.
Face value
Date of
award
No. of
of awards1
awards
£’000
Name
Basis of award
Andrew Shepherd
1/3 of annual bonus
30 Sep 2021
Ben Thorpe
Lynsey Cross
1/3 of annual bonus
30 Sep 2021
1/3 of annual bonus
30 Sep 2021
4,247
5,476
3,971
Vesting date
103
132
96
30 Sept 2022/2023/2024
30 Sept 2022/2023/2024
30 Sept 2022/2023/2024
1. Based on a share price of £24.18, being the average mid-market closing price over the five-day period prior to 30 September 2021.
98
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
99
Remuneration Committee report continued
Directors’ share interests
At 30 June 2022, active Directors’ shareholdings were as set out below:
Number of shares
Executives
Andrew Shepherd
Ben Thorpe
Lynsey Cross
Non-Executives
Alan Carruthers (Chairman)
Richard Price (Senior Independent
Director)
John Linwood
Dagmar Kershaw
Robert Burgess
Total
Minimum
shareholding
requirement
(% of salary)
Beneficially
owned
shares
200%
200%
200%
N/A
N/A
N/A
N/A
N/A
45,583
21,321
–
1,450
1,450
300
840
3,044
73,988
Unvested
qualifying
shares
(deferred
bonus
shares) net
of tax
Shares
vested
but not
exercised
net of tax
6,421
–
–
–
–
–
–
–
6,421
4,435
5,550
2,055
–
–
–
–
–
12,040
Value at
30 June
20221
£’000
Shareholding
as % of base
salary
1,256
598
46
N/A
N/A
N/A
N/A
N/A
314%
171%
16%
N/A
N/A
N/A
N/A
N/A
1. Value based on mid-market close average share price on 30 June 2022 of £22.25.
Vesting profile of all share awards
The following tables set out details of the Directors’ share awards and their vesting profile.
Long-Term Incentive Scheme (“LTIS”)
The Long-Term Incentive Scheme was approved by shareholders at the 2010 Annual General Meeting. Awards made to Directors
under this scheme were for deferral of annual bonuses and to match awards forgone from previous employers. This scheme has
been replaced by the Long-Term Incentive Plan and no awards were made under the previous scheme during the year.
The Long-Term Incentive Scheme has no performance conditions attached but is subject to continued employment by the Group.
A Shepherd
Grant date
14/10/2014
29/10/2015
07/11/2016
03/11/2017
Total
B Thorpe
Grant date
21/12/2018
21/12/2018
21/12/2018
Total
Exercise
price (p)
–
–
–
–
Options at
1 July 2021
2,833
4,876
4,961
2,035
14,705
Granted
during year
–
–
–
–
–
Exercised
during year
(2,833)
(4,876)
(4,961)
(2,035)
(14,705)
Lapsed
during year
–
–
–
–
–
Vesting
date
Options at
Expiry
30 June
date
2022
–
14/10/2017 14/10/2024
– 29/10/2018 29/10/2025
– 07/11/2019 07/11/2026
– 03/11/2020 03/11/2027
–
Exercise
price (p)
–
–
–
Options at
1 July 2021
6,498
7,079
2,526
16,103
Granted
during year
–
–
–
–
Exercised
during year
(6,498)
(7,079)
(2,526)
(16,103)
Lapsed
during year
–
–
–
–
Vesting
date
Options at
Expiry
30 June
date
2022
–
30/11/2019 21/12/2028
– 30/11/2020 21/12/2028
21/12/2028
–
–
31/10/2021
100
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Remuneration Committee report continued
Directors’ share interests
At 30 June 2022, active Directors’ shareholdings were as set out below:
Unvested
qualifying
shares
Minimum
(deferred
Value at
shareholding
Beneficially
bonus
30 June
Shareholding
requirement
(% of salary)
owned
shares
exercised
shares) net
net of tax
of tax
20221
£’000
as % of base
salary
Shares
vested
but not
6,421
–
–
–
–
–
–
–
4,435
5,550
2,055
–
–
–
–
–
1,256
598
46
N/A
N/A
N/A
N/A
N/A
314%
171%
16%
N/A
N/A
N/A
N/A
N/A
Number of shares
Executives
Andrew Shepherd
Ben Thorpe
Lynsey Cross
Non-Executives
Director)
John Linwood
Dagmar Kershaw
Robert Burgess
Total
Alan Carruthers (Chairman)
Richard Price (Senior Independent
200%
200%
200%
N/A
N/A
N/A
N/A
N/A
45,583
21,321
–
1,450
1,450
300
840
3,044
73,988
1. Value based on mid-market close average share price on 30 June 2022 of £22.25.
Vesting profile of all share awards
The following tables set out details of the Directors’ share awards and their vesting profile.
6,421
12,040
Long-Term Incentive Scheme (“LTIS”)
The Long-Term Incentive Scheme was approved by shareholders at the 2010 Annual General Meeting. Awards made to Directors
under this scheme were for deferral of annual bonuses and to match awards forgone from previous employers. This scheme has
been replaced by the Long-Term Incentive Plan and no awards were made under the previous scheme during the year.
The Long-Term Incentive Scheme has no performance conditions attached but is subject to continued employment by the Group.
A Shepherd
Grant date
14/10/2014
29/10/2015
07/11/2016
03/11/2017
Total
B Thorpe
Grant date
21/12/2018
21/12/2018
21/12/2018
Total
Exercise
Options at
Granted
Exercised
Lapsed
30 June
Vesting
price (p)
1 July 2021
during year
during year
during year
2022
date
Expiry
date
–
–
–
–
–
–
–
2,833
4,876
4,961
2,035
14,705
6,498
7,079
2,526
16,103
–
–
–
–
–
–
–
–
–
(2,833)
(4,876)
(4,961)
(2,035)
(14,705)
(6,498)
(7,079)
(2,526)
(16,103)
Options at
Options at
–
–
–
–
–
–
–
–
–
–
–
–
–
–
14/10/2017 14/10/2024
– 29/10/2018 29/10/2025
– 07/11/2019 07/11/2026
– 03/11/2020 03/11/2027
30/11/2019 21/12/2028
– 30/11/2020 21/12/2028
31/10/2021
21/12/2028
Exercise
Options at
Granted
Exercised
Lapsed
30 June
Vesting
price (p)
1 July 2021
during year
during year
during year
2022
date
Expiry
date
Introduction
Strategic report
Corporate governance
Financial statements
Deferred Bonus Plan (“DBP”)
The Long-Term Incentive Plan was approved by shareholders at the 2018 Annual General Meeting and encompasses deferral of
both annual bonuses (DBP) and conditional awards (LTIP).
The Deferred Bonus Plan awards have no performance conditions attached but are subject to continued employment by
the Group.
A Shepherd
Exercise
price (p)
–
–
–
–
–
–
–
–
Exercise
price (p)
–
–
–
–
–
–
–
–
–
–
–
Grant date
31/10/2019
31/10/2019
30/09/2020
30/09/2020
30/09/2020
30/09/2021
30/09/2021
30/09/2021
Total
B Thorpe
Grant date
27/11/2018
27/11/2018
31/10/2019
31/10/2019
31/10/2019
30/09/2020
30/09/2020
30/09/2020
30/09/2021
30/09/2021
30/09/2021
Total
L Cross
Options at
1 July 2021
1,120
1,122
1,289
1,289
1,290
–
–
–
6,110
Options at
1 July 2021
1,452
1,453
1,589
1,589
1,589
1,829
1,829
1,831
–
–
–
13,161
Granted
during
year
–
–
–
–
–
1,415
1,415
1,417
4,247
Exercised
during
year
–
–
–
–
–
–
–
–
–
Granted
during
year
–
–
–
–
–
–
–
–
1,825
1,825
1,826
5,476
Exercised
during
year
(1,452)
(1,453)
(1,589)
(1,589)
–
(1,829)
–
–
–
–
–
(7,912)
Grant date
30/09/2021
30/09/2021
30/09/2021
Total
Exercise
price (p)
–
–
–
Options at
1 July 2021
–
–
–
–
Granted
during
year
1,323
1,323
1,325
3,971
Exercised
during
year
–
–
–
–
Lapsed
during
year
–
–
–
–
–
–
–
–
–
Lapsed
during
year
–
–
–
–
–
–
–
–
–
–
–
–
Lapsed
during
year
–
–
–
–
Forfeited
during
year
–
–
–
–
–
–
–
–
–
Forfeited
during
year
–
–
–
–
–
–
–
–
–
–
–
–
Forfeited
during
year
–
–
–
–
Options at
30 June 2022
Expiry
Vesting
date
date
1,120 30/09/2021 30/09/2029
1,122 30/09/2022 30/09/2029
1,289 30/09/2021 30/09/2030
1,289 30/09/2022 30/09/2030
1,290 30/09/2023 30/09/2030
30/09/2031
1,415 30/09/2022
1,415 30/09/2023
30/09/2031
1,417 30/09/2024 30/09/2031
10,357
Options at
30 June 2022
–
–
–
–
1,589
–
1,829
1,831
1,825
1,825
1,826
10,725
Expiry
Vesting
date
date
27/11/2028
31/08/2019
31/08/2020
27/11/2028
30/09/2020 30/09/2029
30/09/2021 30/09/2029
30/09/2022 30/09/2029
30/09/2021 30/09/2030
30/09/2022 30/09/2030
30/09/2023 30/09/2030
30/09/2031
30/09/2022
30/09/2023
30/09/2031
30/09/2024 30/09/2031
Options at
30 June 2022
Expiry
Vesting
date
date
1,323 30/09/2022 30/09/2031
1,323 30/09/2023 30/09/2031
1,325 30/09/2024 30/09/2031
3,971
100
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
101
Remuneration Committee report continued
Long-Term Incentive Plan (“LTIP”) Conditional Awards
The Long-Term Incentive Plan conditional awards are discretionary awards subject to the performance conditions as determined
by the Remuneration Committee (specific conditions for FY22 awards are detailed earlier in this report) and continued
employment with the Group. All LTIP awards are subject to a two-year holding period post vest date.
A Shepherd
Grant date
01/04/2020
24/11/2020
09/06/2021
30/09/2021
Total
B Thorpe
Grant date
31/10/2019
30/09/2020
09/06/2021
09/06/2021
Total
L Cross
Grant date
30/09/2020
09/06/2021
30/09/2021
Total
Exercise
price (p)
–
–
–
–
Conditional
shares at
1 July 2021
44,053
2,040
8,715
–
54,808
Granted
during
year
–
–
–
33,086
33,086
Exercised
during
year
–
–
–
–
–
Lapsed
during
year
(38,326)
–
–
–
(38,326)
Conditional
shares at
Vesting
30 June
date
2022
5,727
30/06/2022
2,040 30/09/2023
8,715 09/06/2024
30/09/2024
33,086
49,568
Holding
period
24 months
24 months
24 months
24 months
Exercise
price (p)
–
–
–
–
Exercise
price (p)
–
–
–
Conditional
shares at
1 July 2021
7,001
7,870
7,626
–
22,497
Conditional
shares at
1 July 2021
4,466
6,319
–
10,785
Granted
during
year
–
–
–
28,950
28,950
Exercised
during
year
–
–
–
–
–
Granted
during
year
–
–
11,994
11,994
Exercised
during
year
–
–
–
–
Lapsed
during
year
–
–
–
–
–
Lapsed
during
year
–
–
–
–
Forfeited
during
year
–
–
–
–
–
Forfeited
during
year
–
–
–
–
Conditional
shares at
30 June 2022
Holding
Vesting
period
date
7,001 30/09/2022 24 months
7,870 30/09/2023 24 months
7,626 09/06/2024 24 months
28,950 30/09/2024 24 months
51,447
Conditional
shares at
30 June 2022
Vesting
Holding
period
date
4,466 30/09/2023 24 months
6,319 09/06/2024 24 months
11,994 30/09/2024 24 months
22,779
Company Share Option Plan (“CSOP”)
The CSOP was approved by shareholders at the Annual General Meeting on 17 October 2013 and by HMRC on 21 November 2013.
The scheme is a discretionary scheme whereby employees or Directors are granted an option to purchase the Company’s shares
in the future at a price set on the date of the grant. The maximum award under the terms of the scheme for an individual at any
one time is a total market value of £30,000. There are performance conditions attaching to the scheme whereby there must be an
increase in the underlying diluted EPS of the Company of at least 2% more than the increase in RPI over the three years starting
with the financial year in which the option is granted. No awards were made under the scheme during FY22.
A Shepherd
Grant date
21/11/2013
Total
Exercise
price (p)
1,452.0
Options at
1 July 2021
2,067
2,067
Granted
during year
–
–
Exercised
during year
–
–
Lapsed
during year
–
–
Options at
30 June
2022
2,067
2,067
Vesting
date
21/11/2016
Expiry
date
21/11/2023
102
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Remuneration Committee report continued
Long-Term Incentive Plan (“LTIP”) Conditional Awards
The Long-Term Incentive Plan conditional awards are discretionary awards subject to the performance conditions as determined
by the Remuneration Committee (specific conditions for FY22 awards are detailed earlier in this report) and continued
employment with the Group. All LTIP awards are subject to a two-year holding period post vest date.
Conditional
Granted
Exercised
Exercise
shares at
price (p)
1 July 2021
during
year
during
year
–
–
–
–
44,053
2,040
8,715
–
54,808
–
–
–
33,086
33,086
Conditional
shares at
30 June
Vesting
date
Holding
period
30/06/2022
24 months
2022
5,727
2,040 30/09/2023
24 months
8,715 09/06/2024
24 months
33,086
30/09/2024
24 months
Lapsed
during
year
(38,326)
–
–
–
–
–
–
–
–
(38,326)
49,568
Conditional
Granted
Exercised
Lapsed
Forfeited
Conditional
Exercise
shares at
during
during
during
during
shares at
Grant date
price (p)
1 July 2021
year
year
year
year
30 June 2022
–
–
–
–
–
–
–
7,001
7,870
7,626
–
22,497
4,466
6,319
–
10,785
–
–
–
–
–
28,950
28,950
11,994
11,994
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Vesting
date
Holding
period
7,001 30/09/2022 24 months
7,870 30/09/2023 24 months
7,626 09/06/2024 24 months
28,950 30/09/2024 24 months
51,447
Vesting
date
Holding
period
4,466 30/09/2023 24 months
6,319 09/06/2024 24 months
11,994 30/09/2024 24 months
22,779
–
–
–
–
–
–
–
–
–
Conditional
Granted
Exercised
Lapsed
Forfeited
Conditional
Exercise
shares at
during
during
during
during
shares at
Grant date
price (p)
1 July 2021
year
year
year
year
30 June 2022
Company Share Option Plan (“CSOP”)
The CSOP was approved by shareholders at the Annual General Meeting on 17 October 2013 and by HMRC on 21 November 2013.
The scheme is a discretionary scheme whereby employees or Directors are granted an option to purchase the Company’s shares
in the future at a price set on the date of the grant. The maximum award under the terms of the scheme for an individual at any
one time is a total market value of £30,000. There are performance conditions attaching to the scheme whereby there must be an
increase in the underlying diluted EPS of the Company of at least 2% more than the increase in RPI over the three years starting
with the financial year in which the option is granted. No awards were made under the scheme during FY22.
Exercise
Options at
Granted
Exercised
Lapsed
30 June
Vesting
price (p)
1 July 2021
during year
during year
during year
2022
date
Expiry
date
1,452.0
2,067
2,067
–
–
–
–
–
–
2,067
2,067
21/11/2016
21/11/2023
Options at
A Shepherd
Grant date
01/04/2020
24/11/2020
09/06/2021
30/09/2021
Total
B Thorpe
31/10/2019
30/09/2020
09/06/2021
09/06/2021
Total
L Cross
30/09/2020
09/06/2021
30/09/2021
Total
A Shepherd
Grant date
21/11/2013
Total
Introduction
Strategic report
Corporate governance
Financial statements
Save As You Earn (“Sharesave”)
All Directors are entitled to take part in the HMRC-approved Brooks Macdonald Group Sharesave Scheme on the same terms as
all other employees. Annual invitations to participate in the scheme, which commences each year on 1 June, are sent to Directors
and option grants are made at 80% of the closing mid-market price on the day of the offer.
The benefit shown in the total remuneration table is the value of the discount on the Sharesave options granted in the year.
A Shepherd
Grant date
13/05/2020
Total
B Thorpe
Grant date
13/05/2020
Total
L Cross
Grant date
11/05/2021
Total
Exercise
price (p)
1,172.0
Options at
1 July 2021
1,535
1,535
Granted
during year
–
–
Exercised
during year
–
–
Lapsed
during year
–
–
Exercise
price (p)
1,172.0
Options at
1 July 2021
1,535
1,535
Granted
during year
–
–
Exercised
during year
–
–
Lapsed
during year
–
–
Exercise
price (p)
1,704.0
Options at
1 July 2021
1,056
1,056
Granted
during year
–
–
Exercised
during year
–
–
Lapsed
during year
–
–
Options at
Expiry
Vesting
30 June
2022
date
date
1,535 01/06/2023 01/12/2023
1,535
Options at
Expiry
Vesting
30 June
2022
date
date
1,535 01/06/2023 01/12/2023
1,535
Options at
Expiry
Vesting
30 June
2022
date
date
1,056 01/06/2024 01/12/2024
1,056
Departure of Executive Director
Caroline Connellan resigned on 27 May 2021 and left the Group on 14 October 2021. No payment for loss of office nor payment in
lieu of notice was payable.
Service contracts for Executive Directors
The Group has service contracts with its Executive Directors with a notice period of 12 months and it is Group policy that such
contracts should not normally contain notice periods of more than 12 months.
Remuneration Committee
The current members of the Remuneration Committee comprise myself as Chair, Richard Price, Dagmar Kershaw and Robert
Burgess. There have been no appointments or retirements from the Committee during FY22.
The Committee met on five occasions during the year ended 30 June 2022 and members’ attendance is set out in the summary
table on page 76.
The Committee exercises independent judgement in the determination, implementation and operation of the overall
Remuneration Policy for the Group. The Committee also:
• provides oversight of the design and application of the Remuneration Policy and makes recommendation to the Board of the
•
•
overarching principles for all Group employees;
ensures the policy is consistent with the risk appetite of the Group and its strategic goals; and
reviews and approves the remuneration policies and remuneration for the Executive Directors, members of the Executive
Committee, Material Risk Takers (“MRTs”) and any other employees for whom enhanced oversight is either appropriate or a
regulatory requirement.
The full responsibilities of the Committee are set out in the Committee’s Terms of Reference, which are reviewed annually and are
available on the Group’s website.
102
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
103
Remuneration Committee report continued
During the year, the Committee continued to receive independent advice from FIT Remuneration Consultants LLP (“FIT”). FIT
was appointed by the Remuneration Committee Chair in 2019 and has provided regular advice to the Committee since then. Fees
were charged on a time and materials basis; the total fees paid to FIT in respect of its services to the Committee were £6,000 + VAT.
No other services were provided by FIT during the year, and the Committee is satisfied that the advice received is objective and
independent.
Non-Executive Directors’ fees
Following a market-based review, no change was made to the Chairman’s fee during FY22.
To reflect the increasing complexity and time commitment requirements of the Group’s Non-Executive Director roles, the base
fee was increased from £60,000 to £65,000 on 1 September 2021.
Confirmation of the change in free structure between FY22 and FY21 is shown in the below table.
Chairman
Base fee
Senior Independent Director
Committee Chair
FY22
£’000
200
65
10
10
FY21
£’000
200
60
10
10
Change
in fees
–
8.3%
–
–
How the policy will be applied to Executive Director remuneration for the financial year
ending 30 June 2023
Base salary review
The Committee undertook a review of the base salaries of the three Executive Directors and approved salary increases of 4% to
each. This is aligned to the average remuneration increase of the wider workforce. All salary increases were effective from 1 July
2022. The Remuneration Committee considers the salary levels to be reflective of the contribution, experience and calibre of the
Executive Directors and the salaries for all three Executive Director roles were benchmarked against available market data.
Performance targets for the FY23 annual bonus
For FY23, the annual bonus will be based on performance against a balanced scorecard comprising the following key
performance areas:
Underlying PBT
Net flows
Underlying profit margin
Strategic and personal objectives
Total
Weighting
20%
20%
20%
40%
100%
Threshold
10%
10%
10%
20%
50%
% of base
salary at
Target
20%
20%
20%
40%
100%
Maximum
30%
30%
30%
60%
150%
The Committee will set challenging non-financial performance targets for the Executive Directors aligned to the priorities of
the Group, including areas of strategy delivery, client, risk management, people and leadership. The performance targets will be
disclosed in the FY23 Annual Report for reasons of commercial sensitivity.
104
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Remuneration Committee report continued
During the year, the Committee continued to receive independent advice from FIT Remuneration Consultants LLP (“FIT”). FIT
was appointed by the Remuneration Committee Chair in 2019 and has provided regular advice to the Committee since then. Fees
were charged on a time and materials basis; the total fees paid to FIT in respect of its services to the Committee were £6,000 + VAT.
No other services were provided by FIT during the year, and the Committee is satisfied that the advice received is objective and
independent.
Non-Executive Directors’ fees
Following a market-based review, no change was made to the Chairman’s fee during FY22.
To reflect the increasing complexity and time commitment requirements of the Group’s Non-Executive Director roles, the base
fee was increased from £60,000 to £65,000 on 1 September 2021.
Confirmation of the change in free structure between FY22 and FY21 is shown in the below table.
FY22
£’000
200
65
10
10
FY21
£’000
200
60
10
10
Change
in fees
8.3%
–
–
–
How the policy will be applied to Executive Director remuneration for the financial year
The Committee undertook a review of the base salaries of the three Executive Directors and approved salary increases of 4% to
each. This is aligned to the average remuneration increase of the wider workforce. All salary increases were effective from 1 July
2022. The Remuneration Committee considers the salary levels to be reflective of the contribution, experience and calibre of the
Executive Directors and the salaries for all three Executive Director roles were benchmarked against available market data.
Performance targets for the FY23 annual bonus
For FY23, the annual bonus will be based on performance against a balanced scorecard comprising the following key
performance areas:
Chairman
Base fee
Senior Independent Director
Committee Chair
ending 30 June 2023
Base salary review
Underlying PBT
Net flows
Underlying profit margin
Strategic and personal objectives
Total
% of base
salary at
20%
20%
20%
40%
100%
30%
30%
30%
60%
150%
20%
20%
20%
40%
100%
10%
10%
10%
20%
50%
The Committee will set challenging non-financial performance targets for the Executive Directors aligned to the priorities of
the Group, including areas of strategy delivery, client, risk management, people and leadership. The performance targets will be
disclosed in the FY23 Annual Report for reasons of commercial sensitivity.
Introduction
Strategic report
Corporate governance
Financial statements
LTIP
The Group will continue to operate the performance share approach to long-term incentive awards in FY23 that operated in FY22.
The metrics for the award to be granted in FY23 will again be based on underlying diluted EPS as well as a basket of ESG-based
metrics. 90% of the award will be based on the EPS target and 10% will be based on ESG targets. The EPS targets are considered
by the Committee to be market sensitive and will be disclosed in the Annual Report and Accounts in September 2025. The grant
levels for the CEO and CFO will be 200% of base salary and the COO’s award will be 100% of base salary. These awards will only
vest based on achieving significantly challenging targets. We believe that continuing to use performance shares will promote
engagement from the Executive Directors and fully align their long-term remuneration arrangements with shareholder and
broader stakeholder outcomes.
LTIP Performance metric
Three -year underlying diluted EPS
Growth
ESG – to have the following policies in
place being effectively implemented
and their goals met:
– Diversity Policy
– Anti-slavery Policy
– Carbon zero plan
– Regular employee pulse surveys
– ESG Policy
Total as % of award
Total as % of base salary for CEO and
CFO
Total as % of base salary for COO
Award payout (% of LTIP award)
Weighting
90%
Threshold
22.5%
Target Maximum Measurement period
45%
90% Measured over the three
financial years ending FY25,
using FY22 as the base year
10%
2.5%
5%
10%
25%
50%
25%
50%
100%
100%
50%
200%
100%
Weighting
Threshold
Target
Maximum
Votes received on the Directors’ Remuneration Report at the 2021 AGM
Pension
Pension allowances to the Executive Directors have been reduced from 8% to 6% to align fully with other Group employees.
Compliance with the FCA Remuneration Code
The Committee regularly reviews its Remuneration Policy’s compliance with the principles of the Remuneration Code of the UK
financial services regulator, as applicable to the Group and appropriate to its size and complexity.
Votes for
%
Votes
against
%
Approval of the Directors’ Remuneration report
8,967,178
68.1%
4,209,698
31.9%
Directors’ Remuneration Policy
The Directors’ Remuneration Policy (“the Policy”) is determined by the Committee.
Remuneration Policy principles
The Policy is designed to:
• provide a framework to attract, motivate, retain and reward employees;
•
•
•
align remuneration with our business strategy, objectives, Guiding Principles and long-term interests of the Group and
shareholders;
ensure that remuneration is set at an appropriate level, taking into account market rates and best practice;
ensure the ratio between fixed and variable remuneration is appropriate and does not encourage excessive risk-taking;
• be consistent with and promote sound and effective risk management; and
•
comply with all regulatory requirements.
104
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
105
Remuneration Committee report continued
Summary of remuneration elements for Executive Directors for FY23
Element
Base
salary
Pension
Benefits
Annual
bonus
LTIP
Purpose
Provides fixed
remuneration at an
appropriate level to
attract and retain talent.
To aid retention of
key talent.
To provide valued
benefits to the
individual.
Rewards annual
Group and personal
performance and aligns
reward with longer-term
performance through
deferral into shares.
Rewards performance
over the long term.
Maximum
opportunity
Benchmarked
against
relevant
market levels.
6% of base
salary.
In line with
Group Policy.
150% of base
salary.
Up to 200%
of base salary
for the CEO
and CFO.
Up to 100%
for the COO.
(in face value
of shares at
grant).
Detail
Individual levels of base salary are reviewed annually with any
increases effective from 1 July, unless there are any exceptional
reasons for increases at another time of the year.
Executive Directors receive a pension contribution from the
Company equal to 6% of salary, which can either be paid into
the Group’s defined contribution pension scheme, paid into an
alternative pension scheme, or taken in cash (in part or in full).
Executive Directors receive benefits including private medical
insurance, private health insurance, life assurance, critical illness
cover, as well as, an annual health assessment.
Based on financial and non-financial performance metrics.
One-third of annual bonus is deferred into shares over three
years with tranche vesting in three equal portions after 12, 24 and
36 months.
Malus and clawback principles apply to annual bonus awards
under the Group’s malus and clawback policy.
Executive Directors may be considered for performance-based
LTIP awards up to 200/100% of base salary.
The award vests after three years subject to meeting
performance targets determined at grant. The metrics for the
2023 grant will be based on:
• Diluted EPS – 90%
•
ESG-based metrics – 10%
The Remuneration Committee may apply different measures
and weightings for future awards under the scheme.
Post-vesting, recipients are required to hold the shares, net of
sales to settle income tax and National Insurance contributions
due on vesting, for a further two years. This will create further
long-term alignment with shareholders’ interests by creating a
combined vesting and holding period of five years.
Malus and clawback principles apply under the Group’s malus
and clawback policy.
FY23
Y1
Y2
Y3
Y4
Y5
Basic pay
Base pay and benefits
67% in cash
Bonus
33% vests in one year
33% deferred in shares
33% vests in two years
33% vests in three years
Long-term
incentives
Three-year vesting
Two-year holding period
In accordance with the 2018 Corporate Governance Code, the Committee has ensured that the remuneration structure above
is clear, transparent, and predictable, given that the maximum opportunity of variable pay is capped. The annual bonus metrics
and deferral have been kept simple and easy to measure.
106
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Remuneration Committee report continued
Summary of remuneration elements for Executive Directors for FY23
Element
Purpose
Detail
Base
salary
Provides fixed
remuneration at an
appropriate level to
attract and retain talent.
Pension
To aid retention of
key talent.
Individual levels of base salary are reviewed annually with any
Benchmarked
increases effective from 1 July, unless there are any exceptional
reasons for increases at another time of the year.
Executive Directors receive a pension contribution from the
Company equal to 6% of salary, which can either be paid into
the Group’s defined contribution pension scheme, paid into an
alternative pension scheme, or taken in cash (in part or in full).
Benefits
To provide valued
Executive Directors receive benefits including private medical
In line with
benefits to the
individual.
insurance, private health insurance, life assurance, critical illness
Group Policy.
cover, as well as, an annual health assessment.
Annual
bonus
Rewards annual
Based on financial and non-financial performance metrics.
150% of base
Group and personal
One-third of annual bonus is deferred into shares over three
salary.
performance and aligns
years with tranche vesting in three equal portions after 12, 24 and
reward with longer-term
36 months.
performance through
Malus and clawback principles apply to annual bonus awards
deferral into shares.
under the Group’s malus and clawback policy.
LTIP
Rewards performance
Executive Directors may be considered for performance-based
over the long term.
LTIP awards up to 200/100% of base salary.
Maximum
opportunity
against
relevant
market levels.
6% of base
salary.
Up to 200%
of base salary
for the CEO
and CFO.
Up to 100%
for the COO.
(in face value
of shares at
grant).
The award vests after three years subject to meeting
performance targets determined at grant. The metrics for the
2023 grant will be based on:
• Diluted EPS – 90%
•
ESG-based metrics – 10%
The Remuneration Committee may apply different measures
and weightings for future awards under the scheme.
Post-vesting, recipients are required to hold the shares, net of
sales to settle income tax and National Insurance contributions
due on vesting, for a further two years. This will create further
long-term alignment with shareholders’ interests by creating a
combined vesting and holding period of five years.
Malus and clawback principles apply under the Group’s malus
and clawback policy.
FY23
Y1
Y2
Y3
Y4
Y5
Basic pay
Base pay and benefits
67% in cash
Bonus
33% vests in one year
33% deferred in shares
33% vests in two years
33% vests in three years
Long-term
incentives
Three-year vesting
Two-year holding period
In accordance with the 2018 Corporate Governance Code, the Committee has ensured that the remuneration structure above
is clear, transparent, and predictable, given that the maximum opportunity of variable pay is capped. The annual bonus metrics
and deferral have been kept simple and easy to measure.
Introduction
Strategic report
Corporate governance
Financial statements
The delivery of variable pay, part in cash and share awards that
are subject to malus and clawback mitigates risk and ensures
that the Executive Directors are aligned to the interests of
shareholders. The balanced scorecard of metrics and targets
provides a clear link between performance against the Group’s
strategic and commercial goals and individual awards, with
behaviours consistent with Our Guiding Principles forming a
key part of this assessment.
Shareholding requirements
Executive Directors are required to build and maintain a
holding in Brooks Macdonald shares or rights to shares equal
to 200% of base salary within five years of commencing
in role, or the date of adoption of the Policy. A formal post-
employment shareholding policy was duly considered
again during FY22, and it was concluded that this was not
appropriate for the Group. This is a departure from the
Corporate Governance Code, however, we believe the five
year combined vesting and holding period on all LTIPs as well
as the Group’s Malus and Clawback Policy is sufficient. The
Group, nonetheless, has committed to continue to review this
position in the future.
Statement of consideration of
shareholder views
The Committee regularly compares the Policy with
shareholder guidelines and takes account of the results of
shareholder votes on remuneration. The Remuneration
Committee Chair consults with major investors ahead of
any material changes to the Policy and is available to meet
with institutional shareholders to discuss any of the policy-
related disclosures or outcomes contained in this Directors’
Remuneration Report. During FY21, consultations with major
investors took place to seek feedback on proposed changes to
Executive Director LTIPs and their views taken into account
when determining the performance metrics.
Statement of consideration of employment
conditions elsewhere in the Company
A consistent remuneration philosophy is applied to all
employees across the Group. For the financial year ended
30 June 2022, all employees continue to be eligible for
discretionary performance-related annual bonus based on a
balanced scorecard of financial and non-financial metrics. The
principle of bonus deferral applies to annual bonuses for all
employees whose bonuses exceed certain monetary thresholds.
Employees are able to provide direct feedback on the Group’s
remuneration policies to their manager or the HR department
and as part of our regular ‘Speak Up’ employee engagement
survey. In addition, the Chief People Officer equally brings
items around people and the people agenda to meetings of the
Executive Committee, which cover, inter alia feedback on the
effectiveness of the Group’s Remuneration Policy and how it is
viewed by employees. The Chief People Officer also provides
similar updates to the Board.
External appointments
Executive Directors are normally permitted to take on one
external appointment as a Non-Executive Director. Prior Board
approval is required for any new appointment. Fees in excess
of £15,000 per annum are paid to the Group.
Approach to remuneration for new
Executive Director appointments
The Executive Director contracts have no fixed duration.
The remuneration package for a new Executive Director
is set in line with the terms and maximum levels of the
Group’s approved Remuneration Policy in force at the time
of appointment. Currently, for annual bonus and LTIPs, the
maximum opportunity is 150% and 200% of base salary
respectively. The Committee may also offer additional cash
and/or share-based elements to replace awards or potential
earnings forgone on becoming an Executive Director (if in the
interests of the Group and shareholders and in accordance
with regulatory requirements). In considering any such
payments, the Committee could take account of the amount
forgone and its nature, vesting dates and any performance
requirements attached.
Service contracts and loss of office payments
Service contracts normally continue until the Executive
Director’s retirement date unless otherwise agreed, and the
service contracts provide a mechanism for early termination.
The Group is able to enter into settlement agreements with
Executive Directors and to pay compensation in resolution
of potential legal claims. The default treatment of any
outstanding share-based entitlements granted to an Executive
Director under the Group’s LTIP or other share plans is that
any outstanding awards lapse on cessation of employment.
This treatment was applied to Caroline Connellan upon her
departure from the Group in accordance with the Share Plan
rules. In certain prescribed circumstances, such as death,
disability, redundancy, retirement or other circumstances
at the discretion of the Committee (taking into account the
individual’s performance and the reasons for their departure),
‘good leaver’ status can be applied. In such cases, the normal
practice is for LTIP awards held to be retained and prorated
(where necessary) on the original vesting schedule, with
the performance conditions continuing to apply, with the
exception of Deferred Bonus shares, which vest in full on the
original vesting schedule.
Approval
This report in its entirety has been approved by the Committee
and the Board of Directors on its behalf by:
John Linwood
Remuneration Committee Chair
14 September 2022
106
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Brooks Macdonald Group plc / Annual Report and Accounts 2022
107
Risk and Compliance Committee report
The Committee had a continued focus
on change management and resilience,
alongside its data driven agenda.
Robert Burgess
Risk and Compliance Committee Chair
Over the past year, the macroeconomic environment,
geopolitical challenges and regulatory agenda, in addition to
the Group’s idiosyncratic risks, particularly as it transitioned to
a new operating model, have been material areas of focus for
the Committee.
Composition and meetings
The Committee comprises only independent Non-Executive
Directors. The members include Robert Burgess, John
Linwood, Richard Price and Dagmar Kershaw. Robert Burgess
was the Chair of the Committee during the year.
Collectively, the Committee considers that its membership
has the appropriate expertise to discharge its responsibilities
effectively, including relevant wealth management, financial,
risk management, compliance, regulatory, legal, and cyber and
resilience experience.
The Committee’s attendance during the year ended 30 June
2022 is set out in the summary table on page 76.
Role and responsibilities
The Risk and Compliance Committee (“RCC”) assists the
Board in meeting its risk management, regulatory, compliance
and internal control responsibilities. In discharging these
governance responsibilities, the Committee Chair liaised
closely with the Chair of the Audit Committee to ensure a clear
allocation of responsibilities between the two Committees,
ensuring governance completeness across the risk landscape.
The commonality in the membership of each Committee
ensures effective management of any remaining risks.
The Committee considers best practice, taking account of the
requirements of the Code, where appropriate, and those of the
FCA and other relevant regulatory bodies, including guidance
on risk management and internal controls, as well as, other
requirements set by the Board.
The full responsibilities of the Committee are set out in the
Committee’s Terms of Reference, which are reviewed annually
and available on the Group’s website.
108
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Risk and Compliance Committee report
The Committee had a continued focus
on change management and resilience,
alongside its data driven agenda.
Robert Burgess
Risk and Compliance Committee Chair
Over the past year, the macroeconomic environment,
geopolitical challenges and regulatory agenda, in addition to
the Group’s idiosyncratic risks, particularly as it transitioned to
a new operating model, have been material areas of focus for
the Committee.
Role and responsibilities
Composition and meetings
The Committee comprises only independent Non-Executive
Directors. The members include Robert Burgess, John
Linwood, Richard Price and Dagmar Kershaw. Robert Burgess
was the Chair of the Committee during the year.
Collectively, the Committee considers that its membership
The Risk and Compliance Committee (“RCC”) assists the
has the appropriate expertise to discharge its responsibilities
Board in meeting its risk management, regulatory, compliance
effectively, including relevant wealth management, financial,
and internal control responsibilities. In discharging these
risk management, compliance, regulatory, legal, and cyber and
governance responsibilities, the Committee Chair liaised
resilience experience.
The Committee’s attendance during the year ended 30 June
2022 is set out in the summary table on page 76.
closely with the Chair of the Audit Committee to ensure a clear
allocation of responsibilities between the two Committees,
ensuring governance completeness across the risk landscape.
The commonality in the membership of each Committee
ensures effective management of any remaining risks.
The Committee considers best practice, taking account of the
requirements of the Code, where appropriate, and those of the
FCA and other relevant regulatory bodies, including guidance
on risk management and internal controls, as well as, other
requirements set by the Board.
The full responsibilities of the Committee are set out in the
Committee’s Terms of Reference, which are reviewed annually
and available on the Group’s website.
Introduction
Strategic report
Corporate governance
Financial statements
The Committee’s areas of focus
Risk appetite,
strategy and
exposure
management
• Overseeing and recommending to the Board, the Group’s Risk Appetite Statement, and limits and
policies for controlling risk within the Board’s stated appetite;
• Reviewing any red-rated risks and assessing the adequacy of mitigating or remedial actions;
• Monitoring steps taken by management to bring red-rated risks in line with the Board’s Risk
Appetite; and
• Assessing regularly and updating, where appropriate, the Risk Appetite Statement, involving a
regular reassessment of the Group’s Principal Risks and Uncertainties, underpinned by key metrics,
which articulate the status and tolerance levels of key business risks. The process is underpinned
by the capture of outputs from the assessment of risks undertaken by the Executive Committee and
independent challenge provided by the CRO and the Group Risk team.
Capital
requirements
• Overseeing the Group’s 2021/22 Internal Capital Adequacy Assessment Process (“ICAAP”) and its
compliance with regulatory capital and liquidity requirements;
• Recommending the risks to be considered and stress tested in the 2021/22 ICAAP, as well as, liquidity
stress tests to be undertaken;
• Reviewing and challenging the methodology and output of stress tests, considering recommended
management responses, and ensuring that results are incorporated appropriately in the Group’s capital
and liquidity planning; and
• Ensuring that ongoing consideration is given to capital and liquidity matters as decisions are taken by
the Group Board and Executive Committee.
Top-down and
emerging risks
• Monitoring external developments, for example competition, market conditions, macroeconomic
environment, and regulatory, taxation and legal developments in order to assess the potential impact
on the Group;
• Periodically reviewing the Group’s potential risk exposures, and considering and challenging
management’s methodology to identify and address such exposures; and
• Recommending to the Board the Principal Risks and Uncertainties to be reported in the Annual Report
and Accounts.
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Brooks Macdonald Group plc / Annual Report and Accounts 2022
109
Risk and Compliance Committee report continued
The Committee’s areas of focus continued
Risk
management
framework
• Reviewing, on at least an annual basis, the adequacy and effectiveness of the Group’s risk and control
processes to support its strategy and objectives, and monitoring the implementation of enhancements
identified;
• Reviewing the Group’s approach to the management of outsourcing arrangements;
• Maintaining oversight of material issues, errors, breaches and complaints, including consideration of
the adequacy of management actions proposed and any consequent implications for the Group’s Risk
Appetite status and framework; and
• Overseeing the scope and effectiveness of second line assurance work, and considering the results of
work undertaken by the third line insofar as it affects the Committee’s areas of responsibilities, ensuring
that the second line assurance programme is adequate in view of the complexity and risk profile of the
Group, monitoring its completion and overseeing remedial actions arising as appropriate.
Overseeing
regulatory
compliance
Oversight of the
effectiveness
of the Risk and
Compliance
functions
• Considering regulatory developments and the potential impact on the Group;
• Reviewing key regulatory topics through reports prepared by second line teams; and
• Overseeing regulatory-related projects.
•
Safeguarding the independence of the Risk and Compliance teams, and reviewing the adequacy of
resources, reporting any concerns to the Board;
• Receiving reports from second-line teams, and in particular the CRO, and promoting an open and
transparent risk culture;
• Maintaining effective oversight of the Risk and Compliance functions, monitoring performance against
plan; and
• Reviewing key communications with regulators and fostering a culture of co-operation and
compliance.
110
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Risk and Compliance Committee report continued
The Committee’s areas of focus continued
Risk
management
framework
identified;
• Reviewing, on at least an annual basis, the adequacy and effectiveness of the Group’s risk and control
processes to support its strategy and objectives, and monitoring the implementation of enhancements
• Reviewing the Group’s approach to the management of outsourcing arrangements;
• Maintaining oversight of material issues, errors, breaches and complaints, including consideration of
the adequacy of management actions proposed and any consequent implications for the Group’s Risk
Appetite status and framework; and
• Overseeing the scope and effectiveness of second line assurance work, and considering the results of
work undertaken by the third line insofar as it affects the Committee’s areas of responsibilities, ensuring
that the second line assurance programme is adequate in view of the complexity and risk profile of the
Group, monitoring its completion and overseeing remedial actions arising as appropriate.
• Considering regulatory developments and the potential impact on the Group;
• Reviewing key regulatory topics through reports prepared by second line teams; and
• Overseeing regulatory-related projects.
Oversight of the
•
Safeguarding the independence of the Risk and Compliance teams, and reviewing the adequacy of
resources, reporting any concerns to the Board;
• Receiving reports from second-line teams, and in particular the CRO, and promoting an open and
• Maintaining effective oversight of the Risk and Compliance functions, monitoring performance against
• Reviewing key communications with regulators and fostering a culture of co-operation and
transparent risk culture;
plan; and
compliance.
Overseeing
regulatory
compliance
effectiveness
of the Risk and
Compliance
functions
Introduction
Strategic report
Corporate governance
Financial statements
Main activities during the year
Some of the Committee’s key considerations are outlined in the table below:
Key risks
against risk
appetite
Reviewed key risks faced by the Group, including emerging risks with particular focus on operational,
investment, resilience, outsourcing and suitability risks that could impact the business strategy and
operational model.
Change agenda
Oversight of the change agenda and specifically the impact on the strategic transition to a new
operating model.
Regulatory
development
Reviewed key risks in relation to regulatory change with specific focus on Operational Resilience and
Consumer Duty.
Cybercrime
and resilience
Reviewed activities undertaken by the Cyber Security function and the ongoing programme of
enhancements made in response to current geopolitical events, including heightened attacks from Russia.
Geopolitical
matters
Reviewed the Group’s very limited exposure to Russian assets and Russian connected clients and the
impact this could have had on the Group’s investment position, corporate stance and reputation.
Supervised the 2021/22 ICAAP undertaken in the year, including development of risk scenarios and stress
tests and reporting to the Board on the level of capital and liquidity resources required.
ICAAP,
Liquidity Risk
Management
Framework
(“LRMF”) and
Wind Down
Plan (“WDP”)
Extreme
market events
Assessed the impact of the Russian invasion of Ukraine on global markets and economic environments
and the outcome of continuous monitoring and review as part of the Centralised Investment Process.
Looking forward
Key priorities for the Committee in the coming year include ensuring continued business model resilience in the current
challenging geopolitical and economic environment, a sustained focus on investment and suitability risks, along with
further enhancements to the operational resilience and third-party oversight frameworks, and the bedding in of the new
operating model.
Approval
This report in its entirety has been approved by the Committee and the Board of Directors on its behalf by:
Robert Burgess
Risk and Compliance Committee Chair
14 September 2022
110
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
111
Report of the Directors
The Directors present herewith their Annual Report, together
with the audited Financial statements of the Group for the year
ended 30 June 2022.
Principal activities and business review
Brooks Macdonald specialises in providing investment
management services in the UK and internationally. The
Company is a public limited company whose shares are traded
on the Alternative Investment Market of the London Stock
Exchange. A review of the business, together with its strategic
outlook and future developments is set out in the Strategic
report on pages 6 to 67, which is incorporated by reference in
this Report.
Section 172, employee and other
stakeholder engagement
When making decisions and setting the Company’s strategy,
the Directors of Brooks Macdonald consider the long-term
interests of the Group. In doing so, they weigh the competing
interests of the Company’s stakeholders and the effect their
decision may have on the Company’s reputation. Further
information on how the Company considers the interests
of its stakeholders can be found on pages 48 to 51 and more
details of how the Company seeks to limit its impact on the
environment are provided in the Corporate responsibility
report starting on page 52.
Results and dividends
The Group’s statutory profit before taxation for the year
ended 30 June 2022 was £29,546,000 (FY21: £25,091,000)
and the statutory profit after taxation was £23,411,000
(FY21: £19,642,000).
The Directors recommend a final dividend of 45.0p (FY21:
40.0p) per share subject to approval by the shareholders at the
AGM on 27 October 2022. Once approved, this will be paid on 4
November 2022 to shareholders on the Company’s register at
close of business on 23 September 2022. An interim dividend
of 26.0p (FY21: 23.0p) per share was paid on 14 April 2022. This
results in total dividends for the year ended 30 June 2022 of
71.0p (FY21: 63.0p) per share, representing a total estimated
distribution to shareholders of £7,031,000 (FY21: £9,802,000).
Share capital
Details of the Company’s authorised and issued share
capital, and movements thereof, are set out in Note 28 of
the Consolidated financial statements. The Company has
no preference shares in issue and has one class of ordinary
shares which carry no right to fixed income. There are no
specific restrictions on the size of a holding nor on the transfer
of shares, which are both governed by the general provisions
of the Articles of Association and prevailing legislation. The
Directors are not aware of any agreements between holders
of the Company’s shares that may result in restrictions on the
transfer of securities or on voting rights.
Directors and their interests
The Directors of the Company, who were in office during the
year and up to the date of signing the Financial statements, are
listed below together with their beneficial interests in the share
capital of the Company.
Number of shares
Chair
Alan Carruthers
Executives
Andrew Shepherd1
Ben Thorpe
Lynsey Cross2
Non-Executives
Richard Price
John Linwood
Dagmar Kershaw
Robert Burgess
At 30 June
2022
At 30 June
2021
1,450
1,450
45,583
21,321
–
1,450
300
840
3,044
N/A
10,408
N/A
1,450
300
–
3,044
1. Andrew Shepherd was appointed on 13 July 2021. Andrew held 34,367 shares
in the Company at this date. At 30 June 2022, Andrew Shepherd held 6,421
share options that had vested but had not yet been exercised, net of tax.
2. Lynsey Cross was appointed on 13 July 2021 and did not have any beneficial
interests in the share capital of the Company on this date.
Details of share options held by the Directors at the beginning
and end of the year can be found in the Remuneration
Committee report on pages 92 to 107.
Employee share plans
Details of employee share plans are outlined in Note 30 to the
Consolidated financial statements. Our Employee Sharesave
Scheme is administered by Morgan Stanley Shareworks. Our
share-based long-term incentive plans are administered by
Investec.
Employee Benefit Trust
In 2010, the Group established an Employee Benefit Trust
(“EBT”) to acquire shares in the Company to satisfy awards
made under the Group’s share-based incentive schemes. JTC
Employer Solutions Trustee Limited act as the trustee of the
EBT. During the year, the EBT purchased 124,297 shares and
sold or transferred out 152,174 shares.
Retirement and reappointment of Directors
All of the Directors of the Group Board will retire at the AGM and
are eligible to nominate themselves for election or re-election.
Employees
Details of the Group’s employment practices, and its policies
on diversity and inclusion, are set out in the Corporate
responsibility report on pages 52 to 60.
Political donations
The Group did not make any political donations during the
year (FY21: £nil).
112
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Report of the Directors
The Directors present herewith their Annual Report, together
with the audited Financial statements of the Group for the year
Directors and their interests
ended 30 June 2022.
Principal activities and business review
Brooks Macdonald specialises in providing investment
management services in the UK and internationally. The
The Directors of the Company, who were in office during the
year and up to the date of signing the Financial statements, are
listed below together with their beneficial interests in the share
capital of the Company.
At 30 June
At 30 June
2022
2021
Company is a public limited company whose shares are traded
Number of shares
on the Alternative Investment Market of the London Stock
Chair
Exchange. A review of the business, together with its strategic
Alan Carruthers
1,450
1,450
outlook and future developments is set out in the Strategic
report on pages 6 to 67, which is incorporated by reference in
this Report.
Section 172, employee and other
stakeholder engagement
When making decisions and setting the Company’s strategy,
the Directors of Brooks Macdonald consider the long-term
interests of the Group. In doing so, they weigh the competing
interests of the Company’s stakeholders and the effect their
decision may have on the Company’s reputation. Further
information on how the Company considers the interests
of its stakeholders can be found on pages 48 to 51 and more
details of how the Company seeks to limit its impact on the
environment are provided in the Corporate responsibility
report starting on page 52.
Results and dividends
The Group’s statutory profit before taxation for the year
ended 30 June 2022 was £29,546,000 (FY21: £25,091,000)
and the statutory profit after taxation was £23,411,000
(FY21: £19,642,000).
The Directors recommend a final dividend of 45.0p (FY21:
40.0p) per share subject to approval by the shareholders at the
AGM on 27 October 2022. Once approved, this will be paid on 4
Investec.
November 2022 to shareholders on the Company’s register at
close of business on 23 September 2022. An interim dividend
of 26.0p (FY21: 23.0p) per share was paid on 14 April 2022. This
results in total dividends for the year ended 30 June 2022 of
71.0p (FY21: 63.0p) per share, representing a total estimated
distribution to shareholders of £7,031,000 (FY21: £9,802,000).
Share capital
Details of the Company’s authorised and issued share
capital, and movements thereof, are set out in Note 28 of
the Consolidated financial statements. The Company has
no preference shares in issue and has one class of ordinary
shares which carry no right to fixed income. There are no
specific restrictions on the size of a holding nor on the transfer
of shares, which are both governed by the general provisions
of the Articles of Association and prevailing legislation. The
Directors are not aware of any agreements between holders
of the Company’s shares that may result in restrictions on the
transfer of securities or on voting rights.
Executives
Andrew Shepherd1
Ben Thorpe
Lynsey Cross2
Non-Executives
Richard Price
John Linwood
Dagmar Kershaw
Robert Burgess
45,583
21,321
–
1,450
300
840
3,044
N/A
10,408
N/A
1,450
300
–
3,044
1. Andrew Shepherd was appointed on 13 July 2021. Andrew held 34,367 shares
in the Company at this date. At 30 June 2022, Andrew Shepherd held 6,421
share options that had vested but had not yet been exercised, net of tax.
2. Lynsey Cross was appointed on 13 July 2021 and did not have any beneficial
interests in the share capital of the Company on this date.
Details of share options held by the Directors at the beginning
and end of the year can be found in the Remuneration
Committee report on pages 92 to 107.
Employee share plans
Details of employee share plans are outlined in Note 30 to the
Consolidated financial statements. Our Employee Sharesave
Scheme is administered by Morgan Stanley Shareworks. Our
share-based long-term incentive plans are administered by
Employee Benefit Trust
In 2010, the Group established an Employee Benefit Trust
(“EBT”) to acquire shares in the Company to satisfy awards
made under the Group’s share-based incentive schemes. JTC
Employer Solutions Trustee Limited act as the trustee of the
EBT. During the year, the EBT purchased 124,297 shares and
sold or transferred out 152,174 shares.
Retirement and reappointment of Directors
All of the Directors of the Group Board will retire at the AGM and
are eligible to nominate themselves for election or re-election.
Employees
Details of the Group’s employment practices, and its policies
on diversity and inclusion, are set out in the Corporate
responsibility report on pages 52 to 60.
Political donations
year (FY21: £nil).
The Group did not make any political donations during the
Introduction
Strategic report
Corporate governance
Financial statements
Insurance and Directors’ indemnities
The Company maintains appropriate insurance cover
in respect of litigation against Directors and Officers. The
Company has granted indemnities to all of its Directors on
terms consistent with the applicable statutory provisions.
Accordingly, qualifying third-party indemnity provisions, as
defined by Section 234 of the Companies Act 2006, were in
place during the financial year and remain in force at the date
of this Report.
Internal controls and risk management
The Directors confirm that they have carried out a robust
assessment of the emerging and principal risks facing Brooks
Macdonald, including those that could threaten the Group’s
business model, future performance, solvency or liquidity.
The Board considers that the information it receives enables
it to review the effectiveness of the Group’s internal controls
in accordance with the FRC’s Guidance on Risk Management,
Internal Control and Related Financial and Business
Reporting. Details on how the Board monitors the Group’s risk
management and internal controls are contained in the Risk
management and principal risks section of the Strategic report,
starting on page 40.
Substantial shareholdings
As at 30 June 2022, the Company’s largest shareholders were
as follows:
Liontrust Asset Management
Octopus Investments
Brooks Macdonald Asset
Management
Chelverton Asset Management
Aberdeen Standard Investments
Invesco
Fidelity International
Brooks Macdonald Employee
Benefit Trust
Gresham House Asset
Management
Canaccord Genuity Wealth
Management
Number of
shares
3, 1 7 1 , 1 2 7
2,696, 34 3
% of total
voting rights
19.57
16.64
1, 1 2 7,702
900,000
879,569
825, 8 1 7
6 1 3 ,024
590, 3 5 4
566, 2 7 5
549, 5 5 2
6.96
5.55
5.43
5.10
3.78
3.64
3.49
3.39
Financial risk management and policies
Details of the Group’s financial risk management objectives
and policies are set out in Note 31 to the Consolidated financial
statements.
Events since the end of the year
Details of events after the reporting date are set out in Note 36
to the Consolidated financial statements.
Independent Auditors
The Audit Committee has recommended to the Board that
the incumbent auditor, PricewaterhouseCoopers LLP, are
reappointed for a further term. PricewaterhouseCoopers LLP
have expressed their willingness to continue in office as the
Group’s appointed auditor and a resolution to reappoint them
will be proposed at the forthcoming AGM.
Each of the Directors in office at the date of the signing of
this report confirms that, so far as they are aware, there is no
relevant audit information of which the Group’s auditor is
unaware. Each Director has taken all reasonable steps that they
ought to have taken as a director in order to make themself
aware of any relevant audit information and to establish that
the Group’s auditor is aware of that information.
Going concern
The Group’s business activities, performance and position,
together with the risks it faces and the factors likely to affect its
future development are set out in the Strategic report.
In view of the market volatility and economic uncertainty
experienced during the financial year, the Directors reviewed
the Group financial forecasts prepared by Management.
These covered the Group’s expected future profitability,
dividend policy and capital and liquidity projections, including
stressed scenarios, such as a prolonged market downturn.
Management’s mitigating actions, should these scenarios
unveil, were also assessed by the Directors.
As noted in the Viability statement on page 46, the Directors
have considered the Group’s prospects for a period exceeding
12 months from the date the Financial statements are approved
and have concluded that the Group has adequate financial
resources over that period and, accordingly, are satisfied that
the going concern basis for the preparation of these Financial
statements is appropriate.
Annual General Meeting
The 2022 AGM will be held on 27 October 2022 at 21 Lombard
Street, London, EC3V 9AH. The notice of the meeting together
with details of the resolutions proposed and explanatory notes
are enclosed with this Report and can also be found on the
Group’s website. Full details of the meeting arrangements are
given in the AGM Notice of Meeting.
By order of the Board of Directors
Phil Naylor
Company Secretary
14 September 2022
112
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
113
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report
and Accounts and the Financial statements in accordance with
applicable law and regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law, the Directors
have prepared the Group and the parent Company Financial
statements in accordance with UK-adopted international
accounting standards.
Directors’ confirmations
The Directors consider that the Annual Report and Accounts,
taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to assess
the Group’s and parent Company’s position and performance,
business model and strategy.
In the case of each Director in office at the date the Report of
the Directors is approved:
so far as the Director is aware, there is no relevant audit
information of which the Group’s and parent Company’s
auditors are unaware; and
they have taken all the steps that they ought to have
taken as a director in order to make themselves aware of
any relevant audit information and to establish that the
Group’s and parent Company’s auditors are aware of that
information.
The Statement of Directors’ responsibilities has been approved
by the Board of Directors and signed on its behalf by:
Andrew Shepherd
CEO
14 September 2022
Under company law, directors must not approve the Financial
statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Group and parent
Company and of the profit or loss of the Group for that period.
In preparing the Financial statements, the Directors are
required to:
•
•
•
•
select suitable accounting policies and then apply them
consistently;
state whether applicable UK-adopted international
accounting standards have been followed, subject to
any material departures disclosed and explained in the
Financial statements;
• make judgements and accounting estimates that are
reasonable and prudent; and
• prepare the Financial statements on the going concern
basis unless it is inappropriate to presume that the Group
and parent Company will continue in business.
The Directors are responsible for safeguarding the assets of the
Group and parent Company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The Directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group’s and parent Company’s transactions and disclose
with reasonable accuracy at any time the financial position of
the Group and parent Company and enable them to ensure
that the Financial statements comply with the Companies
Act 2006.
The Directors are responsible for the maintenance and
integrity of the parent Company’s website. Legislation in the
United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other
jurisdictions.
114
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Corporate governance
Financial statements
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report
and Accounts and the Financial statements in accordance with
Directors’ confirmations
The Directors consider that the Annual Report and Accounts,
taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to assess
the Group’s and parent Company’s position and performance,
business model and strategy.
In the case of each Director in office at the date the Report of
the Directors is approved:
•
so far as the Director is aware, there is no relevant audit
information of which the Group’s and parent Company’s
auditors are unaware; and
•
they have taken all the steps that they ought to have
taken as a director in order to make themselves aware of
any relevant audit information and to establish that the
The Statement of Directors’ responsibilities has been approved
by the Board of Directors and signed on its behalf by:
information.
Andrew Shepherd
CEO
14 September 2022
select suitable accounting policies and then apply them
Group’s and parent Company’s auditors are aware of that
applicable law and regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law, the Directors
have prepared the Group and the parent Company Financial
statements in accordance with UK-adopted international
accounting standards.
Under company law, directors must not approve the Financial
statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Group and parent
Company and of the profit or loss of the Group for that period.
In preparing the Financial statements, the Directors are
required to:
consistently;
•
•
state whether applicable UK-adopted international
accounting standards have been followed, subject to
any material departures disclosed and explained in the
Financial statements;
• make judgements and accounting estimates that are
reasonable and prudent; and
• prepare the Financial statements on the going concern
basis unless it is inappropriate to presume that the Group
and parent Company will continue in business.
The Directors are responsible for safeguarding the assets of the
Group and parent Company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The Directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group’s and parent Company’s transactions and disclose
with reasonable accuracy at any time the financial position of
the Group and parent Company and enable them to ensure
that the Financial statements comply with the Companies
Act 2006.
The Directors are responsible for the maintenance and
integrity of the parent Company’s website. Legislation in the
United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other
jurisdictions.
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Brooks Macdonald Group plc / Annual Report and Accounts 2022
Independent Auditors’ report
to the members of Brooks Macdonald Group plc
Report on the audit of the financial
statements
Opinion
In our opinion, Brooks Macdonald Group plc’s group financial
statements and company financial statements (the “financial
statements”):
•
give a true and fair view of the state of the group’s and of the
company’s affairs as at 30 June 2022 and of the group’s and
company’s profit and the group’s and company’s cash flows
for the year then ended;
• have been properly prepared in accordance with UK-
adopted international accounting standards; and
• have been prepared in accordance with the requirements
of the Companies Act 2006.
We have audited the financial statements, included within
the Annual Report and Accounts (the “Annual Report”), which
comprise: the Consolidated statement of financial position and
Company statement of financial position as at 30 June 2022;
the Consolidated statement of comprehensive income, the
Consolidated statement of cash flows and Company statement
of cash flows, the Consolidated statement of changes in equity
and the Company statement of changes in equity for the year
then ended; and the notes to the financial statements, which
include a description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described
in the Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We remained independent of the group in accordance with
the ethical requirements that are relevant to our audit of
the financial statements in the UK, which includes the FRC’s
Ethical Standard, as applicable to other listed entities of public
interest, and we have fulfilled our other ethical responsibilities
in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-
audit services prohibited by the FRC’s Ethical Standard were
not provided.
Other than those disclosed in Note 7, we have provided no non-
audit services to the company or its controlled undertakings in
the period under audit.
Our audit approach
Overview
Audit scope
• The scope of our audit and the nature, timing and extent of
audit procedures performed were determined based on
our risk assessment. The group comprised 14 legal entities
across the UK and Channel Islands during the reporting
period. We conducted audit testing over 7 legal entities,
including 1 entity in the Channel Islands. Taken together, our
audit work accounted for more than 95% of group revenues.
Key audit matters
• Recognition of investment management fees (group)
•
Impairment of investment in subsidiaries (parent)
Materiality
• Overall group materiality: £1,400,000 (FY21: £1,000,000)
based on 5% of profit before tax adjusted for two non-
recurring items, firstly relating to a reduction of £3m for
non-operating income (Note 10) and, secondly, adding back
£2.4m for dual-running costs of operating platform (Note 3).
• Overall company materiality: £1,087,000 (FY21: £700,000)
based on 1% of net assets.
• Performance materiality: £1,050,000 (FY21: £750,000)
(group) and £815,000 (FY21: £525,000) (company).
The scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements.
Key audit matters
Key audit matters are those matters that, in the auditors’
professional judgement, were of most significance in the audit
of the financial statements of the current period and include
the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by the auditors, including
those which had the greatest effect on: the overall audit strategy;
the allocation of resources in the audit; and directing the efforts
of the engagement team. These matters, and any comments we
make on the results of our procedures thereon, were addressed
in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Impairment of investment in subsidiaries is a new key
audit matter this year. Acquisition of Brooks Macdonald
International Fund Managers Limited (“BMIFML”) and the
ongoing impact of COVID-19, which were key audit matters
last year, are no longer included because of the timing of the
acquisition of BMIFML, which occurred in the prior year and
the ongoing impact from COVID-19 on the group and company
during the year has been limited. Otherwise, the key audit
matters below are consistent with last year.
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Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Corporate governance
Financial statements
Report on the audit of the financial
Our audit approach
Key audit matter
How our audit addressed the key audit matter
Recognition of investment management fee revenue (group)
Investment management fees are generated by Brooks
Macdonald Asset Management Limited (“BMAM”) and Brooks
Macdonald Asset Management (International) Limited (“BMI”)
and are set out in Note 4 to the financial statements. Investment
management fees of £83m represent approximately 68% of the
group’s £122m total revenue.
Recognition of investment management fees is a key audit
matter due to its size and the significant audit effort involved
in testing this revenue stream. Investment management fees
are calculated by applying each client’s fee rate to their funds
under management (“FuM”).
The calculation is largely automated, however there are a
number of inherent risks including the manual input of fee
rates from client contracts and the existence and valuation of
funds under management, which could result in errors.
Impairment of investment in subsidiaries (parent)
The Parent company holds investment in subsidiaries of
£102m which is set out in Note 42 of the company financial
statements.
The impairment assessment of the investment in subsidiaries
balance is a key audit matter due to the magnitude of the
balance in the context of the net assets of the company.
Management performed an impairment assessment where
judgment is required to be applied in considering whether
an impairment trigger has occurred utilising a number of
assumptions, such as forecast cash flows, discount rates and
long-term growth rates.
We performed the following procedures in relation to
investment management fees:
• We understood and evaluated the design and
implementation of key controls, including relevant
Information Technology (“IT”) controls, in place around
the investment management fee process;
• For quarter ends, we reperformed the reconciliations
of client cash and stockholding positions to external
custody and bank confirmations and obtained evidence
for any differences on a sample basis;
• We agreed, on a sample basis, fee rates to client contracts
• We tested the valuation for a sample of investment
positions by agreeing the prices used to calculate FuM to
independent market prices; and
• We tested the accuracy of investment management fees
using data techniques, by reperforming the calculation
ourselves.
Based on the audit procedures performed and evidence
obtained, our testing did not identify any evidence of
material misstatement.
We performed the following procedures in relation to the
impairment of investment in subsidiaries on a sample basis:
• Obtained and assessed management’s impairment
assessment;
• Assessed the forecast cash flows generated by the
company’s subsidiaries; and
• Assessed the appropriateness of the discount rates and
long-term growth rate assumptions applied.
Based on the audit procedures performed and evidence
obtained, our testing did not identify any evidence of
material misstatement.
Independent Auditors’ report
to the members of Brooks Macdonald Group plc
• have been prepared in accordance with the requirements
of the Companies Act 2006.
Materiality
statements
Opinion
statements”):
In our opinion, Brooks Macdonald Group plc’s group financial
statements and company financial statements (the “financial
•
give a true and fair view of the state of the group’s and of the
company’s affairs as at 30 June 2022 and of the group’s and
company’s profit and the group’s and company’s cash flows
for the year then ended;
• have been properly prepared in accordance with UK-
adopted international accounting standards; and
We have audited the financial statements, included within
the Annual Report and Accounts (the “Annual Report”), which
comprise: the Consolidated statement of financial position and
Company statement of financial position as at 30 June 2022;
the Consolidated statement of comprehensive income, the
Consolidated statement of cash flows and Company statement
of cash flows, the Consolidated statement of changes in equity
and the Company statement of changes in equity for the year
then ended; and the notes to the financial statements, which
include a description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described
in the Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We remained independent of the group in accordance with
the ethical requirements that are relevant to our audit of
the financial statements in the UK, which includes the FRC’s
Ethical Standard, as applicable to other listed entities of public
interest, and we have fulfilled our other ethical responsibilities
in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-
audit services prohibited by the FRC’s Ethical Standard were
not provided.
Other than those disclosed in Note 7, we have provided no non-
audit services to the company or its controlled undertakings in
the period under audit.
Overview
Audit scope
• The scope of our audit and the nature, timing and extent of
audit procedures performed were determined based on
our risk assessment. The group comprised 14 legal entities
across the UK and Channel Islands during the reporting
period. We conducted audit testing over 7 legal entities,
including 1 entity in the Channel Islands. Taken together, our
audit work accounted for more than 95% of group revenues.
Key audit matters
• Recognition of investment management fees (group)
•
Impairment of investment in subsidiaries (parent)
• Overall group materiality: £1,400,000 (FY21: £1,000,000)
based on 5% of profit before tax adjusted for two non-
recurring items, firstly relating to a reduction of £3m for
non-operating income (Note 10) and, secondly, adding back
£2.4m for dual-running costs of operating platform (Note 3).
• Overall company materiality: £1,087,000 (FY21: £700,000)
based on 1% of net assets.
• Performance materiality: £1,050,000 (FY21: £750,000)
(group) and £815,000 (FY21: £525,000) (company).
The scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements.
Key audit matters
Key audit matters are those matters that, in the auditors’
professional judgement, were of most significance in the audit
of the financial statements of the current period and include
the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by the auditors, including
those which had the greatest effect on: the overall audit strategy;
the allocation of resources in the audit; and directing the efforts
of the engagement team. These matters, and any comments we
make on the results of our procedures thereon, were addressed
in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Impairment of investment in subsidiaries is a new key
audit matter this year. Acquisition of Brooks Macdonald
International Fund Managers Limited (“BMIFML”) and the
ongoing impact of COVID-19, which were key audit matters
last year, are no longer included because of the timing of the
acquisition of BMIFML, which occurred in the prior year and
the ongoing impact from COVID-19 on the group and company
during the year has been limited. Otherwise, the key audit
matters below are consistent with last year.
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Independent Auditors’ report continued
to the members of Brooks Macdonald Group plc
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of
the group and the company, the accounting processes and
controls, and the industry in which they operate.
these 3 legal entities. We performed audit testing on 2 further
legal entities’ complete financial information based on our
professional judgement. Together with the audit procedures
performed at the group level on the consolidation, our audit
work gave us the evidence we needed for our opinion on the
financial statements as a whole.
The group comprised 14 legal entities across the UK and
Channel Islands during the reporting period. We conducted
audit testing over 7 legal entities, including 1 entity in the
Channel Islands audited by PwC Channel Islands under our
instruction and oversight. Across these legal entities, 2 were
considered financially significant due to their contribution
to the group’s and company’s results, and were subject to an
audit of their complete financial information. A further 3 legal
entities were assessed by us as contributing to significant audit
risk areas impacting the group’s financial statements and so we
also performed audits of the complete financial information of
A significant proportion of the group’s trading, operational
and financial processes are based in the UK resulting in the
majority of the audit procedures being performed by the group
audit team in the UK. The group audit team issued instructions
to PwC Channel Islands for the legal entity, BMIFML, because
that entity’s trading, operational and financial processes
are based in the Channel Islands. We received inter-firm
reporting from PwC Channel Islands with respect to their
audit of BMIFML and performed appropriate oversight of their
audit work.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall
materiality
How we
determined it
Rationale for
benchmark
applied
Financial statements - group
Financial statements - company
£1,400,000 (FY21: £1,000,000).
£1,087,000 (FY21: £700,000).
5% of profit before tax adjusted for two non-recurring
items, firstly relating to a reduction of £3m for other
non-operating income (Note 10) and, secondly,
adding back £2.4m for dual-running costs of
operating platform (Note 3)
1% of net assets
The most appropriate benchmark for group
materiality is adjusted profit before tax on the basis
that the group is primarily measured on its financial
performance via its consolidated statement of
comprehensive income, adjusted as appropriate for
non-recurring items. Adjusted profit before tax was
the benchmark used in prior year.
A benchmark of net assets has been used as
the company’s primary purpose is to act as a
holding company with investments in the group’s
subsidiaries, not to generate operating profits and
therefore a profit based measure was not considered
appropriate. 1% of net assets was the benchmark
used in prior year.
For each component in the scope of our group audit, we
allocated a materiality that is less than our overall group
materiality. The range of materiality allocated across
components was between £2,173 and £1,170,000. Certain
components were audited to a local statutory audit materiality
that was also less than our overall group materiality.
We use performance materiality to reduce to an appropriately
low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds overall materiality.
Specifically, we use performance materiality in determining
the scope of our audit and the nature and extent of our testing
of account balances, classes of transactions and disclosures,
for example in determining sample sizes. Our performance
materiality was 75% (FY21: 75%) of overall materiality,
amounting to £1,050,000 (FY21: £750,000) for the group
financial statements and £815,000 (FY21: £525,000) for the
company financial statements.
In determining the performance materiality, we considered
a number of factors - the history of misstatements, risk
assessment and aggregation risk and the effectiveness of
controls - and concluded that an amount at the lower end of
our normal range was appropriate.
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Independent Auditors’ report continued
to the members of Brooks Macdonald Group plc
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of
the group and the company, the accounting processes and
controls, and the industry in which they operate.
these 3 legal entities. We performed audit testing on 2 further
legal entities’ complete financial information based on our
professional judgement. Together with the audit procedures
performed at the group level on the consolidation, our audit
work gave us the evidence we needed for our opinion on the
financial statements as a whole.
The group comprised 14 legal entities across the UK and
Channel Islands during the reporting period. We conducted
audit testing over 7 legal entities, including 1 entity in the
Channel Islands audited by PwC Channel Islands under our
instruction and oversight. Across these legal entities, 2 were
considered financially significant due to their contribution
to the group’s and company’s results, and were subject to an
audit of their complete financial information. A further 3 legal
A significant proportion of the group’s trading, operational
and financial processes are based in the UK resulting in the
majority of the audit procedures being performed by the group
audit team in the UK. The group audit team issued instructions
to PwC Channel Islands for the legal entity, BMIFML, because
that entity’s trading, operational and financial processes
are based in the Channel Islands. We received inter-firm
reporting from PwC Channel Islands with respect to their
audit of BMIFML and performed appropriate oversight of their
entities were assessed by us as contributing to significant audit
risk areas impacting the group’s financial statements and so we
audit work.
also performed audits of the complete financial information of
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements - group
Financial statements - company
£1,400,000 (FY21: £1,000,000).
£1,087,000 (FY21: £700,000).
Overall
materiality
How we
5% of profit before tax adjusted for two non-recurring
1% of net assets
determined it
items, firstly relating to a reduction of £3m for other
non-operating income (Note 10) and, secondly,
adding back £2.4m for dual-running costs of
operating platform (Note 3)
Rationale for
benchmark
applied
The most appropriate benchmark for group
A benchmark of net assets has been used as
materiality is adjusted profit before tax on the basis
the company’s primary purpose is to act as a
that the group is primarily measured on its financial
holding company with investments in the group’s
performance via its consolidated statement of
subsidiaries, not to generate operating profits and
comprehensive income, adjusted as appropriate for
therefore a profit based measure was not considered
non-recurring items. Adjusted profit before tax was
appropriate. 1% of net assets was the benchmark
the benchmark used in prior year.
used in prior year.
For each component in the scope of our group audit, we
for example in determining sample sizes. Our performance
allocated a materiality that is less than our overall group
materiality was 75% (FY21: 75%) of overall materiality,
materiality. The range of materiality allocated across
amounting to £1,050,000 (FY21: £750,000) for the group
components was between £2,173 and £1,170,000. Certain
financial statements and £815,000 (FY21: £525,000) for the
components were audited to a local statutory audit materiality
company financial statements.
that was also less than our overall group materiality.
In determining the performance materiality, we considered
We use performance materiality to reduce to an appropriately
a number of factors - the history of misstatements, risk
low level the probability that the aggregate of uncorrected
assessment and aggregation risk and the effectiveness of
and undetected misstatements exceeds overall materiality.
controls - and concluded that an amount at the lower end of
Specifically, we use performance materiality in determining
our normal range was appropriate.
the scope of our audit and the nature and extent of our testing
of account balances, classes of transactions and disclosures,
Introduction
Strategic report
Corporate governance
Financial statements
We agreed with those charged with governance that we would
report to them misstatements identified during our audit
above £65,000 (group audit) (FY21: £50,000) and £54,000
(company audit) (FY21: £35,000) as well as misstatements
below those amounts that, in our view, warranted reporting for
qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group’s and
the company’s ability to continue to adopt the going concern
basis of accounting included:
• Obtaining the Directors’ annual going concern assessment
and challenging the rationale for assumptions including
review of management’s stress testing and scenario
analyses using our knowledge of the business; and
• Assessing management’s forecasts for 12 months from the
point of signing the FY22 audit opinion to determine the
adequacy of the going concern basis.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on
the group’s and the company’s ability to continue as a going
concern for a period of at least twelve months from when the
financial statements are authorised for issue.
In auditing the financial statements, we have concluded that
the directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be
predicted, this conclusion is not a guarantee as to the group’s
and the company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have
applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the directors’
statement in the financial statements about whether the
directors considered it appropriate to adopt the going concern
basis of accounting.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Reporting on other information
The other information comprises all of the information in the
Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for the
other information. Our opinion on the financial statements
does not cover the other information and, accordingly, we do
not express an audit opinion or, except to the extent otherwise
explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially
misstated. If we identify an apparent material inconsistency or
material misstatement, we are required to perform procedures
to conclude whether there is a material misstatement of the
financial statements or a material misstatement of the other
information. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact. We have
nothing to report based on these responsibilities.
With respect to the Strategic report and Report of the Directors,
we also considered whether the disclosures required by the
UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit,
the Companies Act 2006 requires us also to report certain
opinions and matters as described below.
Strategic report and Report of the Directors
In our opinion, based on the work undertaken in the course
of the audit, the information given in the Strategic report
and Report of the Directors for the year ended 30 June 2022
is consistent with the financial statements and has been
prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and
company and their environment obtained in the course of the
audit, we did not identify any material misstatements in the
Strategic report and Report of the Directors.
Corporate governance statement
ISAs (UK) require us to review the directors’ statements in
relation to going concern, longer-term viability and that part of
the corporate governance statement relating to the company’s
compliance with the provisions of the UK Corporate
Governance Code, which the Listing Rules of the Financial
Conduct Authority specify for review by auditors of premium
listed companies. Our additional responsibilities with respect
to the corporate governance statement as other information
are described in the Reporting on other information section of
this report.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the corporate
governance statement is materially consistent with the
financial statements and our knowledge obtained during the
audit, and we have nothing material to add or draw attention to
in relation to:
• The directors’ confirmation that they have carried out a
robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those
principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being
managed or mitigated;
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119
Independent Auditors’ report continued
to the members of Brooks Macdonald Group plc
• The directors’ statement in the financial statements about
whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their
identification of any material uncertainties to the group’s
and company’s ability to continue to do so over a period
of at least twelve months from the date of approval of the
financial statements;
• The directors’ explanation as to their assessment of
the group’s and company’s prospects, the period this
assessment covers and why the period is appropriate; and
• The directors’ statement as to whether they have a
reasonable expectation that the company will be able
to continue in operation and meet its liabilities as they
fall due over the period of its assessment, including any
related disclosures drawing attention to any necessary
qualifications or assumptions.
Our review of the directors’ statement regarding the longer-
term viability of the group was substantially less in scope
than an audit and only consisted of making inquiries and
considering the directors’ process supporting their statement;
checking that the statement is in alignment with the relevant
provisions of the UK Corporate Governance Code; and
considering whether the statement is consistent with the
financial statements and our knowledge and understanding of
the group and company and their environment obtained in the
course of the audit.
In addition, based on the work undertaken as part of our audit,
we have concluded that each of the following elements of the
corporate governance statement is materially consistent with
the financial statements and our knowledge obtained during
the audit:
• The directors’ statement that they consider the
Annual Report, taken as a whole, is fair, balanced and
understandable, and provides the information necessary
for the members to assess the group’s and company’s
position, performance, business model and strategy;
• The section of the Annual Report that describes the review
of effectiveness of risk management and internal control
systems; and
• The section of the Annual Report describing the work of
the audit committee.
We have nothing to report in respect of our responsibility to
report when the directors’ statement relating to the company’s
compliance with the Code does not properly disclose a
departure from a relevant provision of the Code specified
under the Listing Rules for review by the auditors.
Responsibilities for the financial statements
and the audit
Responsibilities of the directors for
the financial statements
As explained more fully in the Statement of Directors’
responsibilities, the directors are responsible for the
preparation of the financial statements in accordance with the
applicable framework and for being satisfied that they give a
true and fair view. The directors are also responsible for such
internal control as they determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the company’s
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern
basis of accounting unless the directors either intend to
liquidate the group or the company or to cease operations, or
have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of
the financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting
irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we
identified that the principal risks of non-compliance with
laws and regulations related to breaches of the UK regulatory
principles, such as those governed by the Financial Conduct
Authority, and we considered the extent to which non-
compliance might have a material effect on the financial
statements.
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Independent Auditors’ report continued
to the members of Brooks Macdonald Group plc
• The directors’ statement in the financial statements about
whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their
identification of any material uncertainties to the group’s
and company’s ability to continue to do so over a period
of at least twelve months from the date of approval of the
financial statements;
• The directors’ explanation as to their assessment of
the group’s and company’s prospects, the period this
assessment covers and why the period is appropriate; and
Responsibilities for the financial statements
and the audit
Responsibilities of the directors for
the financial statements
As explained more fully in the Statement of Directors’
responsibilities, the directors are responsible for the
preparation of the financial statements in accordance with the
applicable framework and for being satisfied that they give a
true and fair view. The directors are also responsible for such
internal control as they determine is necessary to enable the
• The directors’ statement as to whether they have a
preparation of financial statements that are free from material
reasonable expectation that the company will be able
misstatement, whether due to fraud or error.
to continue in operation and meet its liabilities as they
fall due over the period of its assessment, including any
related disclosures drawing attention to any necessary
qualifications or assumptions.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the company’s
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern
Our review of the directors’ statement regarding the longer-
basis of accounting unless the directors either intend to
term viability of the group was substantially less in scope
liquidate the group or the company or to cease operations, or
than an audit and only consisted of making inquiries and
have no realistic alternative but to do so.
considering the directors’ process supporting their statement;
checking that the statement is in alignment with the relevant
provisions of the UK Corporate Governance Code; and
considering whether the statement is consistent with the
financial statements and our knowledge and understanding of
the group and company and their environment obtained in the
course of the audit.
In addition, based on the work undertaken as part of our audit,
we have concluded that each of the following elements of the
corporate governance statement is materially consistent with
the financial statements and our knowledge obtained during
the audit:
• The directors’ statement that they consider the
Annual Report, taken as a whole, is fair, balanced and
understandable, and provides the information necessary
for the members to assess the group’s and company’s
position, performance, business model and strategy;
Auditors’ responsibilities for the audit of
the financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material
• The section of the Annual Report that describes the review
misstatements in respect of irregularities, including fraud.
of effectiveness of risk management and internal control
The extent to which our procedures are capable of detecting
• The section of the Annual Report describing the work of
systems; and
the audit committee.
We have nothing to report in respect of our responsibility to
report when the directors’ statement relating to the company’s
compliance with the Code does not properly disclose a
departure from a relevant provision of the Code specified
under the Listing Rules for review by the auditors.
irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we
identified that the principal risks of non-compliance with
laws and regulations related to breaches of the UK regulatory
principles, such as those governed by the Financial Conduct
Authority, and we considered the extent to which non-
compliance might have a material effect on the financial
statements.
Introduction
Strategic report
Corporate governance
Financial statements
We also considered those laws and regulations that have
a direct impact on the financial statements such as the
Companies Act 2006. We evaluated management’s incentives
and opportunities for fraudulent manipulation of the financial
statements (including the risk of override of controls), and
determined that the principal risks were related to risk of fraud
in revenue recognition through the posting of inappropriate
journal entries. The group engagement team shared this risk
assessment with the component auditors so that they could
include appropriate audit procedures in response to such
risks in their work. Audit procedures performed by the group
engagement team and/or component auditors included:
•
Identifying and testing journal entries, in particular any
journal entries posted with unusual account combinations;
entries posted containing unusual account descriptions
and entries posted with unusual amounts, where any such
journals were identified;
• Reviewing relevant board minutes;
A further description of our responsibilities for the audit of
the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and
only for the company’s members as a body in accordance
with Chapter 3 of Part 16 of the Companies Act 2006 and for
no other purpose. We do not, in giving these opinions, accept
or assume responsibility for any other purpose or to any other
person to whom this report is shown or into whose hands it
may come save where expressly agreed by our prior consent
in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to
you if, in our opinion:
• Designing audit procedures to incorporate unpredictability
• we have not obtained all the information and explanations
around the nature, timing or extent of our testing;
we require for our audit; or
• Enquiries with management, risk, compliance and legal,
including consideration of known or suspected instances
of non-compliance with laws and regulations and
fraud; and
• Assessing methods, significant assumptions and data
used by management in making significant accounting
estimates.
•
•
•
adequate accounting records have not been kept by the
company, or returns adequate for our audit have not been
received from branches not visited by us; or
certain disclosures of directors’ remuneration specified by
law are not made; or
the company financial statements are not in agreement
with the accounting records and returns.
We have no exceptions to report arising from this
responsibility.
Jeremy Jensen (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
14 September 2022
There are inherent limitations in the audit procedures
described above. We are less likely to become aware of
instances of non-compliance with laws and regulations that
are not closely related to events and transactions reflected
in the financial statements. Also, the risk of not detecting a
material misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
Our audit testing might include testing complete populations
of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting
a limited number of items for testing, rather than testing
complete populations. We will often seek to target particular
items for testing based on their size or risk characteristics. In
other cases, we will use audit sampling to enable us to draw
a conclusion about the population from which the sample is
selected.
120
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
121
Consolidated
financial statements
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
124
125
126
127
128
122
122
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
Consolidated
financial statements
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
124
125
126
127
128
122
122
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Consolidated statement of
comprehensive income
For the year ended 30 June 2022
Revenue
Administrative costs
Gross profit
Other gains/(losses) - net
Operating profit
Finance income
Finance costs
Other non-operating income
Gain on bargain purchase
Profit before tax
Taxation
Profit for the year attributable to equity holders of the Company
Other comprehensive income
Total comprehensive income for the year
Earnings per share
Basic
Diluted
1. See Note 12 for details regarding the restatement of diluted earnings per share.
Note
4
5
6
7
8
8
10
11
9
2022
£’000
122,210
(95,288)
26,922
20211
£’000
118,206
(96,012)
22,194
(55)
(1,438)
26,867
20,756
68
(372)
2,983
–
29,546
47
(678)
–
4,966
25,091
(6,135)
(5,449)
23,411
19,642
–
–
23,411
19,642
12
12
149.0p
144.4p
125.3p
121.3p
The accompanying notes on pages 128 to 167 form an integral part of the Consolidated financial statements.
124
124
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Consolidated statement of
comprehensive income
For the year ended 30 June 2022
Consolidated statement of
financial position
As at 30 June 2022
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
Revenue
Administrative costs
Gross profit
Other gains/(losses) - net
Operating profit
Finance income
Finance costs
Other non-operating income
Gain on bargain purchase
Profit before tax
Taxation
Profit for the year attributable to equity holders of the Company
Other comprehensive income
Total comprehensive income for the year
Earnings per share
Basic
Diluted
1. See Note 12 for details regarding the restatement of diluted earnings per share.
The accompanying notes on pages 128 to 167 form an integral part of the Consolidated financial statements.
Note
4
5
6
7
8
8
9
10
11
2022
£’000
122,210
(95,288)
26,922
20211
£’000
118,206
(96,012)
22,194
(55)
(1,438)
26,867
20,756
68
(372)
2,983
–
29,546
47
(678)
–
4,966
25,091
(6,135)
(5,449)
23,411
19,642
–
–
23,411
19,642
12
12
149.0p
144.4p
125.3p
121.3p
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Financial assets at fair value through other comprehensive income
Deferred tax assets
Total non-current assets
Current assets
Financial assets at fair value through profit or loss
Trade and other receivables
Current tax receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Non-current liabilities
Lease liabilities
Provisions
Deferred consideration
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Current liabilities
Lease liabilities
Provisions
Deferred consideration
Trade and other payables
Current tax liabilities
Total current liabilities
Net assets
Equity
Share capital
Share premium account
Other reserves
Retained earnings
Total equity
30 June 2022
£’000
30 June 2021
£’000
Note
14
15
16
17
19
18
20
21
22
23
24
19
26
22
23
24
25
28
28
29
29
85,887
2,202
4,971
500
3,002
96,562
784
30,473
–
61,328
92,585
189,147
(4,075)
(326)
–
(7,959)
(570)
(12,930)
(1,952)
(819)
(327)
(23,861)
(833)
(27,792)
148,425
162
79,141
9,962
59,160
148,425
89,897
2,756
5,979
500
2,736
101,868
624
28,449
32
54,899
84,004
185,872
(5,422)
(279)
(303)
(8,902)
(548)
(15,454)
(1,447)
(1,979)
(5,934)
(27,055)
–
(36,415)
134,003
161
78,703
8,467
46,672
134,003
The Consolidated financial statements on pages 124 to 167 were approved by the Board of Directors and authorised for issue on 14
September 2022, and signed on their behalf by:
Andrew Shepherd
CEO
Ben Thorpe
Chief Financial Officer
Company registration number: 4402058
The accompanying notes on pages 128 to 167 form an integral part of the Consolidated financial statements.
124
124
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
125
125
Consolidated statement of
changes in equity
For the year ended 30 June 2022
Balance at 1 July 2020
Comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners
Issue of ordinary shares
Share-based payments
Share options exercised
Purchase of own shares by Employee Benefit
Trust
Tax on share options
Dividends paid
Total transactions with owners
Balance at 30 June 2021
Comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners
Issue of ordinary shares
Share-based payments
Share options exercised
Purchase of own shares by Employee Benefit
Trust
Tax on share options
Dividends paid
Total transactions with owners
28
13
28
13
Note
Share
capital
£’000
161
Share
premium
account
£’000
77,982
Other
reserves
£’000
6,398
Retained
earnings
£’000
39,000
Total
equity
£’000
123,541
19,642
–
19,642
721
2,991
–
(5,210)
890
(8,572)
(9,180)
–
–
–
–
–
–
–
–
–
–
–
–
–
721
–
–
–
–
–
721
–
–
–
–
2,991
(1,812)
–
890
–
2,069
19,642
–
19,642
–
–
1,812
(5,210)
–
(8,572)
(11,970)
161
78,703
8,467
46,672
134,003
–
–
–
1
–
–
–
–
–
1
–
–
–
438
–
–
–
–
–
438
–
–
–
–
2,779
(2,494)
–
1,210
–
1,495
23,411
–
23,411
–
–
2,494
(3,100)
–
(10,317)
(10,923)
23,411
–
23,411
439
2,779
–
(3,100)
1,210
(10,317)
(8,989)
Balance at 30 June 2022
162
79,141
9,962
59,160
148,425
The accompanying notes on pages 128 to 167 form an integral part of the Consolidated financial statements.
126
126
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Consolidated statement of
changes in equity
For the year ended 30 June 2022
Consolidated statement of
cash flows
For the year ended 30 June 2022
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
Balance at 1 July 2020
Comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners
Issue of ordinary shares
Share-based payments
Share options exercised
Trust
Tax on share options
Dividends paid
Purchase of own shares by Employee Benefit
Comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners
Issue of ordinary shares
Share-based payments
Share options exercised
Trust
Tax on share options
Dividends paid
Total transactions with owners
Purchase of own shares by Employee Benefit
28
13
28
13
Note
Share
capital
£’000
161
Share
premium
account
£’000
77,982
Other
reserves
£’000
6,398
Retained
earnings
£’000
39,000
Total
equity
£’000
123,541
19,642
–
19,642
721
2,991
–
(5,210)
890
(8,572)
(9,180)
23,411
–
23,411
439
2,779
–
(3,100)
1,210
(10,317)
(8,989)
–
–
–
–
–
–
–
–
–
–
–
–
–
1
–
–
–
–
–
1
721
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
438
438
–
–
–
–
–
–
–
–
–
–
–
–
2,991
(1,812)
890
2,779
(2,494)
1,210
1,495
19,642
19,642
1,812
(5,210)
(8,572)
(11,970)
23,411
23,411
–
–
–
–
–
–
–
–
2,494
(3,100)
(10,317)
(10,923)
Total transactions with owners
721
2,069
Balance at 30 June 2021
161
78,703
8,467
46,672
134,003
Balance at 30 June 2022
162
79,141
9,962
59,160
148,425
The accompanying notes on pages 128 to 167 form an integral part of the Consolidated financial statements.
Cash flows from operating activities
Cash generated from operations
Corporation Tax paid
Tax refund
Net cash generated from operating activities
Cash flows from investing activities
Purchase of computer software
Purchase of property, plant and equipment
Purchase of financial assets at fair value through profit or loss
Consideration paid
Deferred consideration paid
Interest received
Net cash used in investing activities
Cash flows from financing activities
Proceeds of issue of shares
Payment of lease liabilities
Purchase of own shares by Employee Benefit Trust
Dividends paid to shareholders
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Note
27
10
14
15
18
11
24
8
28
22
28
13
21
2022
£’000
32,826
(5,269)
2,983
30,540
(2,912)
(289)
(215)
–
(6,000)
68
(9,348)
439
(1,785)
(3,100)
(10,317)
(14,763)
2021
£’000
36,907
(5,804)
–
31,103
(3,061)
(620)
–
(5,287)
(2,421)
47
(11,342)
721
(1,969)
(5,210)
(8,572)
(15,030)
6,429
4,731
54,899
61,328
50,168
54,899
The accompanying notes on pages 128 to 167 form an integral part of the Consolidated financial statements.
126
126
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
127
127
Notes to the consolidated financial
statements
For the year ended 30 June 2022
1. General information
Brooks Macdonald Group plc (“the Company”) is the Parent Company of a group of companies (”the Group”), which offers a range
of investment management services to private high net worth individuals, pension funds, institutions, charities and trusts. The
Group also provides financial planning as well as international investment management, and acts as fund manager to a range of
onshore and international funds.
The Company is a public limited company, incorporated and domiciled in the United Kingdom under the Companies Act 2006
and listed on AIM. The address of its registered office is 21 Lombard Street, London, EC3V 9AH.
2. Principal accounting policies
The general accounting policies applied in the preparation of these Financial statements are set out below. These policies have
been applied consistently to all years presented, unless otherwise stated.
a. Basis of preparation
The Group’s Consolidated financial statements for the year ended 30 June 2022 have been prepared in accordance with UK-
adopted International Accounting Standards (“IFRS”) and with the requirements of the Companies Act 2006 as applicable to
companies reporting under those standards. These Consolidated financial statements have been prepared on a historical cost
basis, except for the revaluation of financial assets at fair value through other comprehensive income, financial assets and
financial liabilities at fair value through profit or loss and deferred consideration such that they are measured at their fair value.
At the time of approving the Financial statements, the Directors have a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the
going concern basis in preparing the Financial statements. For further details on the Group’s going concern assessment, see the
Viability statement on page 46 and Audit Committee report on page 86. There have been no post balance sheet events that have
materially impacted the Group’s liquidity headroom and going concern assessment.
b. Basis of consolidation
The Group’s Financial statements are a consolidation of the financial statements of the Company and its subsidiaries. The
underlying financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent
accounting policies. Subsidiaries and structured entities are all entities controlled by the Company, deemed to exist where the
Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity. The financial statements of the subsidiaries are included from the date on which control
is transferred to the Group to the date that control ceases.
All intercompany transactions and balances between Group companies are eliminated on consolidation.
The Group has interests in structured entities, with one consolidated structured entity, being the Brooks Macdonald Group
Employee Benefit Trust (Note 28). The Group has interests in other structured entities as a result of contractual arrangements
arising from the management of assets on behalf of its clients, but are not consolidated as the Group does not commit to
financially support its funds, nor guarantee for repayment of any borrowings (Note 35). The Group has disclosed all of its
subsidiary undertakings in Note 42 of the Company’s Financial statements.
c. Changes in accounting policies
The Group’s accounting policies that have been applied in preparing these Financial statements are consistent with those
disclosed in the Annual Report and Accounts for the year ended 30 June 2021, except as explained below.
New accounting standards, amendments and interpretations adopted in the year
In the year ended 30 June 2022, the Group did not adopt any new standards or amendments issued by the International
Accounting Standards Board (“IASB”) or interpretations by the IFRS Interpretations Committee (“IFRS IC”) that have had a material
impact on the Consolidated financial statements.
Other new standards, amendments and interpretations listed in the following table were newly adopted by the Group but have
not had a material impact on the amounts reported in these Financial statements. They may, however, impact the accounting for
future transactions and arrangements.
128
128
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Notes to the consolidated financial
statements
For the year ended 30 June 2022
1. General information
Brooks Macdonald Group plc (“the Company”) is the Parent Company of a group of companies (”the Group”), which offers a range
of investment management services to private high net worth individuals, pension funds, institutions, charities and trusts. The
Group also provides financial planning as well as international investment management, and acts as fund manager to a range of
onshore and international funds.
The Company is a public limited company, incorporated and domiciled in the United Kingdom under the Companies Act 2006
and listed on AIM. The address of its registered office is 21 Lombard Street, London, EC3V 9AH.
2. Principal accounting policies
The general accounting policies applied in the preparation of these Financial statements are set out below. These policies have
been applied consistently to all years presented, unless otherwise stated.
a. Basis of preparation
The Group’s Consolidated financial statements for the year ended 30 June 2022 have been prepared in accordance with UK-
adopted International Accounting Standards (“IFRS”) and with the requirements of the Companies Act 2006 as applicable to
companies reporting under those standards. These Consolidated financial statements have been prepared on a historical cost
basis, except for the revaluation of financial assets at fair value through other comprehensive income, financial assets and
financial liabilities at fair value through profit or loss and deferred consideration such that they are measured at their fair value.
At the time of approving the Financial statements, the Directors have a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the
going concern basis in preparing the Financial statements. For further details on the Group’s going concern assessment, see the
Viability statement on page 46 and Audit Committee report on page 86. There have been no post balance sheet events that have
materially impacted the Group’s liquidity headroom and going concern assessment.
b. Basis of consolidation
The Group’s Financial statements are a consolidation of the financial statements of the Company and its subsidiaries. The
underlying financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent
accounting policies. Subsidiaries and structured entities are all entities controlled by the Company, deemed to exist where the
Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity. The financial statements of the subsidiaries are included from the date on which control
is transferred to the Group to the date that control ceases.
All intercompany transactions and balances between Group companies are eliminated on consolidation.
The Group has interests in structured entities, with one consolidated structured entity, being the Brooks Macdonald Group
Employee Benefit Trust (Note 28). The Group has interests in other structured entities as a result of contractual arrangements
arising from the management of assets on behalf of its clients, but are not consolidated as the Group does not commit to
financially support its funds, nor guarantee for repayment of any borrowings (Note 35). The Group has disclosed all of its
subsidiary undertakings in Note 42 of the Company’s Financial statements.
c. Changes in accounting policies
The Group’s accounting policies that have been applied in preparing these Financial statements are consistent with those
disclosed in the Annual Report and Accounts for the year ended 30 June 2021, except as explained below.
New accounting standards, amendments and interpretations adopted in the year
In the year ended 30 June 2022, the Group did not adopt any new standards or amendments issued by the International
Accounting Standards Board (“IASB”) or interpretations by the IFRS Interpretations Committee (“IFRS IC”) that have had a material
impact on the Consolidated financial statements.
Other new standards, amendments and interpretations listed in the following table were newly adopted by the Group but have
not had a material impact on the amounts reported in these Financial statements. They may, however, impact the accounting for
future transactions and arrangements.
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
2. Principal accounting policies continued
Standard, Amendment or Interpretation
Deferral of IFRS 9 (Amendments to IFRS 4)
Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 4, IFRS 16)
COVID-19-related Rent Concessions (Amendment to IFRS 16)
Effective date
1 January 2021
1 January 2021
1 April 2021
d. Critical accounting estimates and judgements
The preparation of financial information requires the use of assumptions, estimates and judgements about future conditions.
Use of currently available information and application of judgement are inherent in the formation of estimates. Actual results
in the future may differ from those reported. In this regard, the Directors believe that the accounting policies, where important
estimations are used, relate to the measurement of intangible assets and the estimation of the fair value of share-based payments.
There have been no critical judgements required in applying the Group’s accounting policies in this period, but there have been
the use of important estimations detailed separately below.
The underlying assumptions made are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
year in which the estimate is revised only if the revision affects both current and future periods.
Further information about key assumptions and sources of estimation uncertainty is set out below.
Intangible assets
The Group has acquired client relationships and the associated investment management contracts as part of business
combinations, through separate purchase or with newly employed teams of fund managers, as described in Note 14. In assessing
the fair value of these assets, the Group has estimated their finite life based on information about the typical length of existing
client relationships. Contracts acquired with fund managers and acquired client relationship contracts are amortised on a
straight-line basis over their estimated useful lives, ranging from 5 to 20 years.
Of the client-relationship intangible assets held by the Group at 30 June 2022, the expected amortisation charge for the year
ending 30 June 2023 is £5,443,000. If the useful economic lives were to reduce by one year, the charge would increase by
£1,302,000.
Goodwill recognised as part of a business combination is reviewed annually for impairment, or when a change in circumstances
indicates that it might be impaired. The recoverable amounts of cash-generating units (“CGU”) are determined by value-in-use
calculations, which require the use of estimates to derive the projected future cash flows attributable to each unit. Details of the
more significant assumptions and sensitivity analysis are given in Note 14.
In assessing the value of client relationships and the associated investment management contracts and goodwill or gain on
bargain purchase arising as part of a business combination, the Group prepares forecasts for the cash flows acquired and
discounts to a net present value. The Group uses a pre-tax discount rate, adjusting from a post-tax discount rate calculated by the
Group’s weighted average cost of capital (“WACC”), adjusted for any specific risks for the relevant CGU. The Group uses the capital
asset pricing model (“CAPM”) to estimate the WACC, which is calculated at the point of acquisition for a business combination, or
the relevant reporting period. The key inputs are the risk-free rate, market risk premium, the Group’s adjusted beta with reference
to beta data from peer listed companies, small company premium and any risk adjusted premium for the relevant CGU. See Note
14 for further details on the discount rate for the various CGUs.
Share-based payments
The Group operates various share-based payment schemes in respect of services received from certain employees. Estimating
the fair value of these share-based payments requires the Group to apply an appropriate valuation model and determine the
inputs to that model (Note 30). The charge to the Consolidated statement of comprehensive income in respect of share-based
payments is calculated using assumptions about the number of eligible employees that will leave the Group and the number of
employees that will satisfy the relevant performance conditions. These estimates are reviewed regularly. A decrease of 10% in the
total options would decrease the share-based payment charge and the associated national insurance charge in the Consolidated
statement of comprehensive income for the year by £891,000 and £159,000 respectively. The key inputs into the fair value
calculations for the options granted during the year are disclosed in Note 30.
128
128
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
129
129
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
2. Principal accounting policies continued
e. Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured at the fair value of
the aggregate amount of the consideration transferred at the acquisition date, irrespective of the extent of any minority interest.
Acquisition costs are charged to the Consolidated statement of comprehensive income when incurred.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic circumstances and pertinent conditions at the acquisition date.
If the business combination is achieved in stages, the fair value of the Group’s previously held equity interest is remeasured at the
acquisition date and the difference is credited or charged to the Consolidated statement of comprehensive income. Identifiable
assets and liabilities assumed on acquisition are recognised in the Consolidated statement of financial position at their fair value
at the date of acquisition.
Any deferred consideration to be paid by the Group to the vendor is recognised at its fair value at the acquisition date, in
accordance with IAS 39. Subsequent changes to the fair value of deferred consideration are recognised in accordance with IFRS 9
in the Consolidated statement of comprehensive income.
Goodwill is initially measured at cost, being the excess of the consideration transferred over the acquired company’s net
identifiable assets and liabilities assumed. If the consideration is lower than the fair value of the net assets acquired, the difference
is recognised as a gain on a bargain purchase in the Consolidated statement of comprehensive income.
Impairment
Goodwill and other intangible assets with an indefinite life are tested annually for impairment. For the purposes of impairment
testing, goodwill acquired in a business combination is allocated to each of the Group’s cash-generating units (“CGUs”) that are
expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquisition are assigned to
those units. The carrying amount of each CGU is compared to its recoverable amount, which is determined using a discounted
future cash flow model.
Where goodwill forms part of a CGU and part of the operation within that unit is disposed of, the goodwill associated with the
operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the
operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and
the portion of the CGU retained.
f. Revenue
Investment management fees
Investment management fees are earned for the management services provided to clients. Fees are billed quarterly in arrears
but are recognised over the period the service is provided. Fees are calculated based on a percentage of the value of the portfolio
at the billing date. Fees are only recognised when the fee amount can be estimated reliably, and it is probable that the fee will be
received. Amounts are shown net of rebates paid to significant investors.
Performance fees are earned from some clients when contractually agreed performance levels are exceeded within specified
performance measurement periods. They are only recognised, at the end of these performance periods, when a reliable estimate
of the fee can be made and it is virtually certain that it will be received.
Fund management fees
Fund management fees are earned for the management services provided to several open-ended investment companies
(“OEICs”). Fees are billed monthly in arrears but are recognised over the period the service is provided. Fees are calculated daily
based on a percentage of the value of each fund. Fees are only recognised when the fee amount can be estimated reliably, and it is
probable that the fee will be received. Amounts are shown net of rebates paid to significant investors.
Transactional income
Transactional income is earned through dealing and admin charges levied on trades at the time a deal is placed for a client.
Revenue is recognised at the point of the trade being placed.
Wealth management
Wealth management income relates to fees for the provision of financial advice. Fees are charged to clients using an hourly rate,
by a fixed fee arrangement, or by a fund-based arrangement whereby fees are calculated based on a percentage of the value
of the portfolio at the billing date. All fees are recognised over the period the service is provided. Commissions receivable and
payable are accounted for in the period in which they are earned.
130
130
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
2. Principal accounting policies continued
Interest turn
Interest turn is bank interest earned on client cash deposits. Income is recognised over the period for which the deposit is held
with the bank. Amounts shown are net of any interest passed on to clients.
g. Cash and cash equivalents
Cash comprises cash in hand and call deposits held with banks. Cash equivalents comprise short-term, highly liquid investments,
with a maturity of less than three months from the date of acquisition.
h. Share-based payments
The Group engages in equity-settled share-based payment transactions in respect of services received from certain employees.
The fair value of the services received is measured by reference to the fair value of the shares or share options on the grant
date. This cost is then recognised in the Consolidated statement of comprehensive income over the vesting period, with a
corresponding credit to equity.
The fair value of the options granted is determined using option pricing models, which take into account the exercise price of the
option, the current share price, the risk-free rate of interest, the expected volatility of the Company’s share price over the life of the
award and other relevant factors.
Segmental reporting
i.
The Group determines and presents operating segments based on the information that is provided internally to the Group Board
of Directors, which is the Group’s chief operating decision-maker.
Fiduciary activities
j.
The Group commonly acts as trustee and in other fiduciary capacities that result in the holding or placing of assets on behalf of
individuals, trusts, retirement benefit plans and other institutions. These assets and income arising thereon are excluded from
these Financial statements, as they are not assets of the Group.
The Group holds money on behalf of some clients in accordance with the client money rules of the Financial Conduct Authority
(“FCA”). Such monies and the corresponding liability to clients are not included within the Consolidated statement of financial
position as the Group is not beneficially entitled thereto.
k. Property, plant and equipment
All property, plant and equipment is included in the Consolidated statement of financial position at historical cost less
accumulated depreciation and impairment. Costs include the original purchase cost of the asset and the costs attributable to
bringing the asset into a working condition for its intended use.
Provision is made for depreciation to write off the cost less estimated residual value of each asset, using a straight-line method,
over its expected useful life as follows:
Leasehold improvements
Fixtures, fittings and office equipment – 5 years
IT equipment
– 4 or 5 years
– over the lease term
The assets’ residual values and useful economic lives are reviewed, and adjusted if appropriate, at the end of each reporting
period. Gains and losses arising on disposal are determined by comparing the proceeds with the carrying amount. These are
included in the Consolidated statement of comprehensive income.
Intangible assets
l.
Amortisation of intangible assets is charged to administrative expenses in the Consolidated statement of comprehensive income
on a straight-line basis over the estimated useful lives of the assets (4 to 20 years).
Acquired client relationship contracts and contracts acquired with fund managers
Intangible assets are recognised where client relationship contracts are either separately acquired or acquired with investment
managers who are employed by the Group. These are initially recognised at cost and are subsequently amortised on a straight-
line basis over their estimated useful economic life. Separately acquired client relationship contracts are amortised over 6 to 20
years and those acquired with fund managers over 5 years. Both types of intangible asset are reviewed annually to determine
whether there exists an indicator of impairment or an indicator that the assumed useful economic life has changed.
130
130
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
131
131
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
2. Principal accounting policies continued
e. Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured at the fair value of
the aggregate amount of the consideration transferred at the acquisition date, irrespective of the extent of any minority interest.
Acquisition costs are charged to the Consolidated statement of comprehensive income when incurred.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic circumstances and pertinent conditions at the acquisition date.
If the business combination is achieved in stages, the fair value of the Group’s previously held equity interest is remeasured at the
acquisition date and the difference is credited or charged to the Consolidated statement of comprehensive income. Identifiable
assets and liabilities assumed on acquisition are recognised in the Consolidated statement of financial position at their fair value
at the date of acquisition.
Any deferred consideration to be paid by the Group to the vendor is recognised at its fair value at the acquisition date, in
accordance with IAS 39. Subsequent changes to the fair value of deferred consideration are recognised in accordance with IFRS 9
in the Consolidated statement of comprehensive income.
Goodwill is initially measured at cost, being the excess of the consideration transferred over the acquired company’s net
identifiable assets and liabilities assumed. If the consideration is lower than the fair value of the net assets acquired, the difference
is recognised as a gain on a bargain purchase in the Consolidated statement of comprehensive income.
Goodwill and other intangible assets with an indefinite life are tested annually for impairment. For the purposes of impairment
testing, goodwill acquired in a business combination is allocated to each of the Group’s cash-generating units (“CGUs”) that are
expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquisition are assigned to
those units. The carrying amount of each CGU is compared to its recoverable amount, which is determined using a discounted
Impairment
future cash flow model.
Where goodwill forms part of a CGU and part of the operation within that unit is disposed of, the goodwill associated with the
operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the
operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and
the portion of the CGU retained.
f. Revenue
Investment management fees
Investment management fees are earned for the management services provided to clients. Fees are billed quarterly in arrears
but are recognised over the period the service is provided. Fees are calculated based on a percentage of the value of the portfolio
at the billing date. Fees are only recognised when the fee amount can be estimated reliably, and it is probable that the fee will be
received. Amounts are shown net of rebates paid to significant investors.
Performance fees are earned from some clients when contractually agreed performance levels are exceeded within specified
performance measurement periods. They are only recognised, at the end of these performance periods, when a reliable estimate
of the fee can be made and it is virtually certain that it will be received.
Fund management fees
Fund management fees are earned for the management services provided to several open-ended investment companies
(“OEICs”). Fees are billed monthly in arrears but are recognised over the period the service is provided. Fees are calculated daily
based on a percentage of the value of each fund. Fees are only recognised when the fee amount can be estimated reliably, and it is
probable that the fee will be received. Amounts are shown net of rebates paid to significant investors.
Transactional income is earned through dealing and admin charges levied on trades at the time a deal is placed for a client.
Revenue is recognised at the point of the trade being placed.
Transactional income
Wealth management
Wealth management income relates to fees for the provision of financial advice. Fees are charged to clients using an hourly rate,
by a fixed fee arrangement, or by a fund-based arrangement whereby fees are calculated based on a percentage of the value
of the portfolio at the billing date. All fees are recognised over the period the service is provided. Commissions receivable and
payable are accounted for in the period in which they are earned.
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
2. Principal accounting policies continued
Computer software
Costs incurred on internally developed computer software are initially recognised at cost, and when the software is available for
use, the costs are amortised on a straight-line basis over an estimated useful life of four years. Initial research costs and planning
prior to a decision to proceed with development of software are recognised in the Consolidated statement of comprehensive
income when incurred.
Goodwill
Goodwill arising as part of a business combination is initially measured at cost, being the excess of the fair value of the
consideration transferred over the Group’s interest in the net fair value of the separately identifiable assets, liabilities and
contingent liabilities of the subsidiary at the date of acquisition. In accordance with IFRS 3 ‘Business Combinations’, goodwill is
not amortised but is reviewed annually for impairment and is therefore stated at cost less any provision for impairment of value.
Any impairment is recognised immediately in the Consolidated statement of comprehensive income and is not subsequently
reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. On
acquisition, any goodwill acquired is allocated to CGUs for the purposes of impairment testing. If the cost of the acquisition is less
than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the Consolidated statement
of comprehensive income.
m. Financial investments
The Group classifies financial assets in the following categories: fair value through profit or loss; fair value through other
comprehensive income; and amortised cost. The classification is determined by management on initial recognition of the
financial asset, which depends on the purpose for which it was acquired.
Fair value through profit or loss
Financial investments are classified as fair value through profit or loss if they are either held for trading or specifically designated
in this category on initial recognition. Assets in this category are initially recognised at fair value and subsequently remeasured,
with gains or losses arising from changes in fair value being recognised in the Consolidated statement of comprehensive income.
Financial assets at fair value through profit or loss include investments in regulated OEICs, which are managed and evaluated on
a fair value basis in line with the market value.
Fair value through other comprehensive income
Financial investments are classified as fair value through other comprehensive income if the objective of the business model
is achieved by both collecting contractual cash flows and selling financial assets and that the asset’s contractual cash flows
represents solely payment of principal and interest. Assets in this category are initially recognised at fair value and subsequently
remeasured, with gains or losses arising from changes in fair value being recognised in other comprehensive income.
Financial assets at fair value through other comprehensive income relates to an investment of redeemable preference shares,
which are held to collect contractual cash flows via an annual fixed preferential dividend.
Amortised cost
Financial instruments are classified as amortised cost if the asset is held to collect contractual cash flows and the asset’s
contractual cash flows represent solely payment of principal and interest.
n. Foreign currency translation
The Group’s functional and presentational currency is Pound Sterling. Foreign currency transactions are translated using the
exchange rate prevailing at the transaction date. At the reporting date, monetary assets and liabilities that are denominated
in foreign currencies are retranslated at the prevailing rates on that date. Foreign exchange gains and losses resulting from
settlement of such transactions and from the translation of period-end monetary assets and liabilities are recognised in the
Consolidated statement of comprehensive income.
o. Retirement benefit costs
Contributions in respect of the Group’s defined contribution pension scheme are charged to the Consolidated statement of
comprehensive income as they fall due.
132
132
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
2. Principal accounting policies continued
Computer software
income when incurred.
Goodwill
Costs incurred on internally developed computer software are initially recognised at cost, and when the software is available for
use, the costs are amortised on a straight-line basis over an estimated useful life of four years. Initial research costs and planning
prior to a decision to proceed with development of software are recognised in the Consolidated statement of comprehensive
Goodwill arising as part of a business combination is initially measured at cost, being the excess of the fair value of the
consideration transferred over the Group’s interest in the net fair value of the separately identifiable assets, liabilities and
contingent liabilities of the subsidiary at the date of acquisition. In accordance with IFRS 3 ‘Business Combinations’, goodwill is
not amortised but is reviewed annually for impairment and is therefore stated at cost less any provision for impairment of value.
Any impairment is recognised immediately in the Consolidated statement of comprehensive income and is not subsequently
reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. On
acquisition, any goodwill acquired is allocated to CGUs for the purposes of impairment testing. If the cost of the acquisition is less
than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the Consolidated statement
of comprehensive income.
m. Financial investments
The Group classifies financial assets in the following categories: fair value through profit or loss; fair value through other
comprehensive income; and amortised cost. The classification is determined by management on initial recognition of the
financial asset, which depends on the purpose for which it was acquired.
Fair value through profit or loss
Financial investments are classified as fair value through profit or loss if they are either held for trading or specifically designated
in this category on initial recognition. Assets in this category are initially recognised at fair value and subsequently remeasured,
with gains or losses arising from changes in fair value being recognised in the Consolidated statement of comprehensive income.
Financial assets at fair value through profit or loss include investments in regulated OEICs, which are managed and evaluated on
a fair value basis in line with the market value.
Fair value through other comprehensive income
Financial investments are classified as fair value through other comprehensive income if the objective of the business model
is achieved by both collecting contractual cash flows and selling financial assets and that the asset’s contractual cash flows
represents solely payment of principal and interest. Assets in this category are initially recognised at fair value and subsequently
remeasured, with gains or losses arising from changes in fair value being recognised in other comprehensive income.
Financial assets at fair value through other comprehensive income relates to an investment of redeemable preference shares,
which are held to collect contractual cash flows via an annual fixed preferential dividend.
Amortised cost
Financial instruments are classified as amortised cost if the asset is held to collect contractual cash flows and the asset’s
contractual cash flows represent solely payment of principal and interest.
n. Foreign currency translation
The Group’s functional and presentational currency is Pound Sterling. Foreign currency transactions are translated using the
exchange rate prevailing at the transaction date. At the reporting date, monetary assets and liabilities that are denominated
in foreign currencies are retranslated at the prevailing rates on that date. Foreign exchange gains and losses resulting from
settlement of such transactions and from the translation of period-end monetary assets and liabilities are recognised in the
Consolidated statement of comprehensive income.
o. Retirement benefit costs
comprehensive income as they fall due.
Contributions in respect of the Group’s defined contribution pension scheme are charged to the Consolidated statement of
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
2. Principal accounting policies continued
p. Taxation
Tax on the profit for the year comprises current and deferred tax. Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect
of previous years.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the Group’s Financial statements. Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply to the period when the asset is realised or the liability settled based on tax rates (and laws) that
have been enacted or substantively enacted at the reporting date.
Deferred tax assets are only recognised to the extent that it is probable that future taxable profit will be available against which the
temporary differences can be utilised.
q. Trade receivables
Trade receivables represent amounts due for services performed in the ordinary course of business. They are recognised in
trade and other receivables and, if collection is expected within one year, they are recognised as a current asset and if collection is
expected in greater than one year, they are recognised as a non-current asset. Trade receivables are measured at amortised cost
less any expected credit losses.
Trade payables
r.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from
suppliers. These are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of
the business if longer). Otherwise, they are presented as non-current liabilities in the Consolidated statement of financial position.
Trade payables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest
method.
s. Employee Benefit Trust (“EBT”)
The Company provides finance to an EBT to purchase the Company’s shares on the open market in order to meet its obligation to
provide shares when an employee exercises certain options or awards made under the Group’s share-based payment schemes.
The administration and finance costs connected with the EBT are charged to the Consolidated statement of comprehensive
income. The cost of the shares held by the EBT is deducted from equity. A transfer is made between other reserves and retained
earnings over the vesting periods of the related share options or awards to reflect the ultimate proceeds receivable from
employees on exercise. The trustees have waived their rights to receive dividends on the shares.
The EBT is considered to be a structured entity, as defined in Note 35. In substance, the activities of the trust are being conducted
on behalf of the Group according to its specific business needs, in order to obtain benefits from its operation. On this basis, the
assets held by the trust are consolidated into the Group’s Financial statements.
Share capital
t.
Ordinary share capital is classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options
are shown in equity as a deduction, net of tax, from the proceeds.
Where the Company purchases its own equity share capital (treasury shares), the consideration paid, including any directly
incremental costs (i.e. net of income taxes) is deducted from equity attributable to the Company’s equity holders until the shares
are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received (net of any directly
attributable incremental transaction costs and the related income tax effects) is included within equity attributable to the
Company’s equity holders.
u. Dividend distribution
The dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s Financial statements in the
period in which the dividend is authorised and no longer at the discretion of the Company. Final dividends are recognised when
approved by the Company’s shareholders at the Annual General Meeting and interim dividends are recognised when paid.
v. Other non-operating income
Other non-operating income is that which, in the opinion of the Board, is material by size and irregular in nature and therefore
requires separate disclosure within the Consolidated statement of comprehensive income in order to assist the users of the
Consolidated financial statements in understanding the underlying business performance of the Group.
132
132
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
133
133
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
3. Segmental information
For management purposes, the Group’s activities are organised into two operating divisions: UK Investment Management and
International. The Group’s other activity, offering nominee and custody services to clients, is included within UK Investment
Management. These divisions are the basis on which the Group reports its primary segmental information to the Group Board of
Directors, which is the Group’s chief operating decision-maker. In accordance with IFRS 8 ‘Operating Segments’, disclosures are
required to reflect the information which the Board of Directors uses internally for evaluating the performance of its operating
segments and allocating resources to those segments. The information presented in this Note is consistent with the presentation
for internal reporting.
The UK Investment Management segment offers a range of investment management services to private high net worth
individuals, pension funds, institutions, charities and trusts, as well as wealth management services to high net worth individuals
and families, giving independent ‘whole of market’ financial advice enabling clients to build, manage and protect their
wealth. The International segment is based in the Channel Islands and the Isle of Man, offering a similar range of investment
management and wealth management services as the UK Investment Management segment. The Group segment principally
comprises the Group Board’s management and associated costs, along with the consolidation adjustments.
Revenues and expenses are allocated to the business segment that originated the transaction. Sales between segments are
carried out at arm’s length. Centrally incurred expenses are allocated to business segments on an appropriate pro rata basis.
UK
Investment
Management
£’000
Group and
consolidation
adjustments
£’000
International
£’000
105,550
(4,496)
101,054
(43,469)
57,585
(25,129)
(254)
32,202
(2,978)
2,983
(2,119)
–
214
30,302
21,156
–
21,156
(14,016)
7,140
(3,152)
(15)
3,973
(2,465)
–
(309)
(12)
(214)
973
–
–
–
(29,932)
(29,932)
28,281
–
(1,651)
–
–
–
(78)
–
(1,729)
UK
Investment
Management
£’000
Group and
consolidation
adjustments
£’000
International
£’000
2,888
2,014
20
917
498
23
3,117
–
–
Total
£’000
126,706
(4,496)
122,210
(87,417)
34,793
–
(269)
34,524
(5,443)
2,983
(2,428)
(90)
–
29,546
(6,135)
23,411
Total
£’000
6,922
2,512
43
Year ended 30 June 2022
Total revenue
Inter segment revenue
External revenue
Underlying administrative costs
Operating contribution
Allocated costs
Net finance costs
Underlying profit/(loss) before tax
Amortisation of client relationships
Other non-operating income
Dual running costs of operating platform
Finance cost of deferred consideration
Profit/(loss) mark-up on Group allocated costs
Profit/(loss) before tax
Taxation
Profit for the period attributable to equity holders of the Company
Year ended 30 June 2022
Statutory operating costs included the following:
Amortisation
Depreciation
Interest income
134
134
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
3. Segmental information
For management purposes, the Group’s activities are organised into two operating divisions: UK Investment Management and
International. The Group’s other activity, offering nominee and custody services to clients, is included within UK Investment
Management. These divisions are the basis on which the Group reports its primary segmental information to the Group Board of
Directors, which is the Group’s chief operating decision-maker. In accordance with IFRS 8 ‘Operating Segments’, disclosures are
required to reflect the information which the Board of Directors uses internally for evaluating the performance of its operating
segments and allocating resources to those segments. The information presented in this Note is consistent with the presentation
for internal reporting.
The UK Investment Management segment offers a range of investment management services to private high net worth
individuals, pension funds, institutions, charities and trusts, as well as wealth management services to high net worth individuals
and families, giving independent ‘whole of market’ financial advice enabling clients to build, manage and protect their
wealth. The International segment is based in the Channel Islands and the Isle of Man, offering a similar range of investment
management and wealth management services as the UK Investment Management segment. The Group segment principally
comprises the Group Board’s management and associated costs, along with the consolidation adjustments.
Revenues and expenses are allocated to the business segment that originated the transaction. Sales between segments are
carried out at arm’s length. Centrally incurred expenses are allocated to business segments on an appropriate pro rata basis.
Year ended 30 June 2022
Total revenue
Inter segment revenue
External revenue
Underlying administrative costs
Operating contribution
Allocated costs
Net finance costs
Underlying profit/(loss) before tax
Amortisation of client relationships
Other non-operating income
Dual running costs of operating platform
Finance cost of deferred consideration
Profit/(loss) mark-up on Group allocated costs
Profit/(loss) before tax
Taxation
Profit for the period attributable to equity holders of the Company
Year ended 30 June 2022
Statutory operating costs included the following:
Amortisation
Depreciation
Interest income
UK
Investment
Management
International
adjustments
Group and
consolidation
£’000
£’000
105,550
(4,496)
101,054
(43,469)
57,585
(25,129)
(254)
32,202
(2,978)
2,983
(2,119)
–
214
30,302
£’000
21,156
–
21,156
(14,016)
7,140
(3,152)
(15)
3,973
(2,465)
–
(309)
(12)
(214)
973
(29,932)
(29,932)
28,281
(1,651)
–
–
–
–
–
–
–
UK
Investment
Group and
consolidation
Management
International
adjustments
£’000
£’000
£’000
2,888
2,014
20
917
498
23
3,117
–
–
Total
£’000
126,706
(4,496)
122,210
(87,417)
34,793
–
(269)
34,524
(5,443)
2,983
(2,428)
(90)
–
(6,135)
23,411
Total
£’000
6,922
2,512
43
(78)
–
(1,729)
29,546
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
3. Segmental information continued
Year ended 30 June 2021
Total revenue
Inter segment revenue
External revenue
Underlying administrative costs
Operating contribution
Allocated costs
Net finance (costs)/income
Underlying profit/(loss) before tax
Gain on bargain purchase
Amortisation of client relationships
Acquisition-related costs
Impairment of client relationships
Dual running costs of operating platform
Finance cost of deferred consideration
Changes in fair value of deferred consideration
Profit/(loss) mark-up on Group allocated costs
Profit/(loss) before tax
Taxation
Profit for the period attributable to equity holders of the Company
Year ended 30 June 2021
Statutory operating costs included the following:
Amortisation
Depreciation
Interest income
UK
Investment
Management
£’000
Group and
consolidation
adjustments
£’000
International
£’000
102,998
(3,003)
99,995
(45,738)
54,257
(25,067)
(285)
28,905
–
(1,770)
(467)
–
(1,000)
–
–
143
25,811
18,211
–
18,211
(10,804)
7,407
(2,864)
(21)
4,522
–
(992)
(2,244)
(1,210)
–
(7)
–
(147)
(78)
–
–
–
(30,870)
(30,870)
27,931
109
(2,830)
4,966
(2,166)
39
(303)
–
(292)
(60)
4
(642)
UK
Investment
Management
£’000
Group and
consolidation
adjustments
£’000
International
£’000
4,307
2,142
3
1,209
495
10
2,166
–
–
Total
£’000
121,209
(3,003)
118,206
(87,412)
30,794
–
(197)
30,597
4,966
(4,928)
(2,672)
(1,513)
(1,000)
(299)
(60)
–
25,091
(5,449)
19,642
Total
£’000
7,682
2,637
13
134
134
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
135
135
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
4. Revenue
Year ended 30 June 2022
Investment management fees
Transactional income
Fund management fees
Wealth management fees
Interest turn
Other income
Total revenue
Year ended 30 June 20211
Investment management fees
Transactional income
Fund management fees
Wealth management fees
Interest turn
Total revenue
UK
Investment
Management
£’000
International
£’000
70,161
12,209
13,187
4,082
1,377
38
101,054
13,182
2,491
4,441
832
210
–
21,156
UK
Investment
Management
£’000
International
£’000
67,301
15,008
12,538
3,721
1,427
99,995
11,452
2,766
2,815
963
215
18,211
Total
£’000
83,343
14,700
17,628
4,914
1,587
38
122,210
Total
£’000
78,753
17,774
15,353
4,684
1,642
118,206
1. The revenue note has been updated to provide a more appropriate breakdown of how revenue is recorded and monitored by the Directors. As a result, the prior year
revenue breakdown has been reclassified to ensure a consistent, like-for-like comparison to the current year.
Investment management fees
Investment management fees are earned for the management services provided to clients. Fees are billed quarterly in arrears
but are recognised over the period the service is provided. Fees are calculated based on a percentage of the value of the portfolio
at the billing date. Fees are only recognised when the fee amount can be estimated reliably, and it is probable that the fee will be
received. Amounts are shown net of rebates paid to significant investors.
Performance fees are earned from some clients when contractually agreed performance levels are exceeded within specified
performance measurement periods. They are only recognised, at the end of these performance periods, when a reliable estimate
of the fee can be made and is virtually certain that it will be received.
Transactional income
Transactional income is earned through dealing and admin charges levied on trades at the time a deal is placed for a client.
Revenue is recognised at the point of the trade being placed.
Foreign exchange trading fees are also included, that are charged on client trades placed in non-base currencies, and therefore
requiring a foreign currency exchange in order to action the trade. Revenue is recognised at the point of the trade being placed.
Fund management fees
Fund management fees are earned for the management services provided to several OEICs. Fees are billed monthly in arrears but
are recognised over the period the service is provided. Fees are calculated daily based on a percentage of the value of each fund.
Fees are only recognised when the fee amount can be estimated reliably, and it is probable that the fee will be received. Amounts
are shown net of rebates paid to significant investors.
136
136
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
4. Revenue
Year ended 30 June 2022
Investment management fees
Transactional income
Fund management fees
Wealth management fees
Interest turn
Other income
Total revenue
Year ended 30 June 20211
Investment management fees
Transactional income
Fund management fees
Wealth management fees
Interest turn
Total revenue
Investment management fees
UK
Investment
Management
International
£’000
70,161
12,209
13,187
4,082
1,377
38
£’000
67,301
15,008
12,538
3,721
1,427
99,995
£’000
13,182
2,491
4,441
832
210
–
£’000
11,452
2,766
2,815
963
215
18,211
Total
£’000
83,343
14,700
17,628
4,914
1,587
38
Total
£’000
78,753
17,774
15,353
4,684
1,642
118,206
101,054
21,156
122,210
UK
Investment
Management
International
1. The revenue note has been updated to provide a more appropriate breakdown of how revenue is recorded and monitored by the Directors. As a result, the prior year
revenue breakdown has been reclassified to ensure a consistent, like-for-like comparison to the current year.
Investment management fees are earned for the management services provided to clients. Fees are billed quarterly in arrears
but are recognised over the period the service is provided. Fees are calculated based on a percentage of the value of the portfolio
at the billing date. Fees are only recognised when the fee amount can be estimated reliably, and it is probable that the fee will be
received. Amounts are shown net of rebates paid to significant investors.
Performance fees are earned from some clients when contractually agreed performance levels are exceeded within specified
performance measurement periods. They are only recognised, at the end of these performance periods, when a reliable estimate
of the fee can be made and is virtually certain that it will be received.
Transactional income
Transactional income is earned through dealing and admin charges levied on trades at the time a deal is placed for a client.
Revenue is recognised at the point of the trade being placed.
Foreign exchange trading fees are also included, that are charged on client trades placed in non-base currencies, and therefore
requiring a foreign currency exchange in order to action the trade. Revenue is recognised at the point of the trade being placed.
Fund management fees
Fund management fees are earned for the management services provided to several OEICs. Fees are billed monthly in arrears but
are recognised over the period the service is provided. Fees are calculated daily based on a percentage of the value of each fund.
Fees are only recognised when the fee amount can be estimated reliably, and it is probable that the fee will be received. Amounts
are shown net of rebates paid to significant investors.
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Corporate governance
Financial statements
Financial statements
4. Revenue continued
Wealth management fees
Wealth management fees relate to fees for the provision of financial advice. Fees are charged to clients using an hourly rate, by
a fixed fee arrangement, or by a fund-based arrangement whereby fees are calculated based on a percentage of the value of the
portfolio at the billing date. All fees are recognised over the period the service is provided. Commissions receivable and payable
are accounted for in the period in which they are earned.
Interest turn
Interest turn is bank interest earned on client cash deposits. Income is recognised over the period for which the deposit is held
with the bank. Amounts shown are net of any interest passed on to clients.
a. Geographic analysis
The Group’s operations are located in the United Kingdom, the Channel Islands and the Isle of Man. The following table presents
external revenue analysed by the geographical location of the Group entity providing the service.
United Kingdom
Channel Islands
Isle of Man
Total revenue
2022
£’000
101,054
21,079
77
122,210
2021
£’000
99,995
18,211
–
118,206
b. Major clients
The Group is not reliant on any one client or group of connected clients for the generation of revenues.
5. Employee information
Administrative costs are recognised as the services are received. The biggest component of the Group’s administrative costs is the
costs of employee benefits as shown below. Other costs incurred in administrative costs can be seen in Note 7.
a. Payroll costs
Salaries and bonuses
Social security costs
Other pension costs
Share-based payments
Redundancy costs
Total payroll costs
Pension costs relate entirely to a defined contribution scheme.
b. Number of employees
The average monthly number of employees during the year, including Directors, was as follows:
Business staff
Functional staff
Total staff
2022
£’000
43,528
5,751
2,303
2,184
104
53,870
2021
£’000
41,855
5,351
1,909
2,502
330
51,947
2022
Number of
employees
2021
Number of
employees
264
190
454
262
181
443
136
136
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
137
137
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
5. Employee information continued
c. Key management compensation
The compensation of the key management personnel of the Group, defined as the Group Board of Directors including both the
Executives and Non-Executives, is set out below.
Short-term employee benefits
Post-employment benefits
Share-based payments
Total compensation
2022
£’000
2,894
73
1,045
4,012
2021
£’000
1,851
50
36
1,937
The current year total compensation includes three Executive Directors, including bonuses. The prior year total compensation
includes two Executive Directors, however only one Executive Director received a bonus in the prior year following the CEO’s
resignation towards the end of FY21 as discussed in the Remuneration Committee Report on pages 92 to 107.
d. Directors’ emoluments
Further details of Directors’ emoluments are included within the Remuneration Committee report on pages 92 to 107.
Salaries and bonuses
Non-Executive Directors’ fees
Benefits in kind
Pension contributions
Amounts receivable under long-term incentive schemes
Total Directors’ remuneration
2022
£’000
2,390
496
8
2,894
73
1,045
4,012
2021
£’000
1,084
500
6
1,590
50
159
1,799
The aggregate amount of gains made by Directors on the exercise of share options during the year was £1,045,000
(FY21: £293,000). Retirement benefits are accruing to three Directors (FY21: two) under a defined contribution pension scheme.
The remuneration of the highest paid Director during the year was as follows:
Remuneration and benefits in kind
Amounts received under long-term incentive schemes
Total remuneration
2022
£’000
950
469
1,419
2021
£’000
722
–
722
The amount of gains made by the highest paid Director on the exercise of share options during the year was £469,000
(FY21: £293,000).
6. Other gains/(losses) – net
Other gains/(losses) – net represent the net changes in the fair value of the Group’s financial instruments and intangible assets
recognised in the Consolidated statement of comprehensive income.
Client relationship contracts impairment (Note 14)
Changes in fair value of financial assets at fair value through profit or loss (Note 18)
Other gains/(losses) – net
2022
£’000
–
(55)
(55)
2021
£’000
(1,513)
75
(1,438)
138
138
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Notes to the consolidated financial
The compensation of the key management personnel of the Group, defined as the Group Board of Directors including both the
The current year total compensation includes three Executive Directors, including bonuses. The prior year total compensation
includes two Executive Directors, however only one Executive Director received a bonus in the prior year following the CEO’s
resignation towards the end of FY21 as discussed in the Remuneration Committee Report on pages 92 to 107.
d. Directors’ emoluments
Further details of Directors’ emoluments are included within the Remuneration Committee report on pages 92 to 107.
statements continued
For the year ended 30 June 2022
5. Employee information continued
c. Key management compensation
Executives and Non-Executives, is set out below.
Short-term employee benefits
Post-employment benefits
Share-based payments
Total compensation
Salaries and bonuses
Non-Executive Directors’ fees
Benefits in kind
Pension contributions
Amounts receivable under long-term incentive schemes
Total Directors’ remuneration
2022
£’000
2,894
73
1,045
4,012
2022
£’000
2,390
496
8
2,894
73
1,045
4,012
2022
£’000
950
469
1,419
2021
£’000
1,851
50
36
1,937
2021
£’000
1,084
500
6
1,590
50
159
1,799
2021
£’000
722
–
722
Remuneration and benefits in kind
Amounts received under long-term incentive schemes
Total remuneration
(FY21: £293,000).
6. Other gains/(losses) – net
The amount of gains made by the highest paid Director on the exercise of share options during the year was £469,000
Other gains/(losses) – net represent the net changes in the fair value of the Group’s financial instruments and intangible assets
recognised in the Consolidated statement of comprehensive income.
Client relationship contracts impairment (Note 14)
Changes in fair value of financial assets at fair value through profit or loss (Note 18)
Other gains/(losses) – net
2022
£’000
–
(55)
(55)
2021
£’000
(1,513)
75
(1,438)
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Corporate governance
Financial statements
Financial statements
7. Operating profit
Operating profit is stated after charging:
Payroll costs (Note 5)
Amortisation of client relationships (Note 14)
Dual running costs of operating platform
Depreciation of right-of-use assets (Note 16)
Amortisation of computer software (Note 14)
Financial Services Compensation Scheme levy (see below)
Auditors’ remuneration (see below)
Depreciation of property, plant and equipment (Note 15)
Acquisition-related costs (Note 11)
Impairment of client relationship contracts (Note 14)
A more detailed analysis of auditors’ remuneration is provided below:
Fees payable to the Company’s auditors for the audit of the consolidated Group and Parent
Company financial statements
Fees payable to the Company’s auditors and its associates for other services:
Audit of the Company’s subsidiaries pursuant to legislation
Audit-related assurance services
Non-audit-related services
Total remuneration
2022
£’000
53,870
5,443
2,428
1,669
1,479
1,234
995
843
–
–
2022
£’000
267
416
310
2
995
2021
£’000
51,947
4,928
1,000
1,613
2,754
2,219
851
1,045
2,672
1,513
2021
£’000
260
304
285
2
851
The aggregate amount of gains made by Directors on the exercise of share options during the year was £1,045,000
(FY21: £293,000). Retirement benefits are accruing to three Directors (FY21: two) under a defined contribution pension scheme.
Financial Services Compensation Scheme levies
Administrative costs for the year ended 30 June 2022 include a charge of £1,234,000 (FY21: £2,219,000) in respect of the Financial
Services Compensation Scheme (“FSCS”) levy, all of which is in respect of the estimated levy for the 2022/23 scheme year.
The remuneration of the highest paid Director during the year was as follows:
8. Finance income and finance costs
Finance income
Dividends on preference shares
Bank interest on deposits
Total finance income
Finance costs
Finance cost of lease liabilities (Note 22)
Change in fair value of deferred consideration (Note 24)
Finance cost of deferred consideration (Note 24)
Total finance costs
2022
£’000
2021
£’000
25
43
68
282
–
90
372
34
13
47
319
60
299
678
138
138
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
139
139
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
9. Taxation
The tax charge on profit for the year was as follows:
UK Corporation Tax at 19% (FY21: 19%)
Over provision in prior years
Total current tax
Deferred tax credits
Under provision of deferred tax in prior years
Income tax expense
2022
£’000
6,441
(307)
6,134
(211)
212
6,135
2021
£’000
5,466
(127)
5,339
(6)
116
5,449
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the time apportioned tax rate
applicable to profits of the consolidated entities in the UK as follows, split out between underlying and statutory profits:
Year ended 30 June 2022
Profit before taxation
Profit multiplied by the standard rate of tax in the UK of 19%
Tax effect of amounts that are not deductible/(taxable) in calculating taxable
income:
− Depreciation and amortisation
− Non-taxable income
− Overseas tax losses not available for UK tax purposes
− Lower tax rates in other jurisdictions in which the Group operates
− Disallowable expenses
− Share-based payments
− Over provision in prior years
Income tax expense
Underlying
profit
£’000
Underlying
profit
adjustments
£’000
34,524
(4,978)
Statutory
profit
£’000
29,546
6,560
(946)
5,614
609
(8)
(293)
(201)
309
315
(110)
7,181
(207)
–
–
92
15
–
–
(1,046)
402
(8)
(293)
(109)
324
315
(110)
6,135
Effective tax rate
20.8%
n/a
20.8%
140
140
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Notes to the consolidated financial
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the time apportioned tax rate
applicable to profits of the consolidated entities in the UK as follows, split out between underlying and statutory profits:
statements continued
For the year ended 30 June 2022
9. Taxation
The tax charge on profit for the year was as follows:
UK Corporation Tax at 19% (FY21: 19%)
Over provision in prior years
Total current tax
Deferred tax credits
Income tax expense
Under provision of deferred tax in prior years
Year ended 30 June 2022
Profit before taxation
income:
− Depreciation and amortisation
− Non-taxable income
− Disallowable expenses
− Share-based payments
− Over provision in prior years
Income tax expense
− Overseas tax losses not available for UK tax purposes
− Lower tax rates in other jurisdictions in which the Group operates
2022
£’000
6,441
(307)
6,134
(211)
212
6,135
2021
£’000
5,466
(127)
5,339
(6)
116
5,449
Underlying
Underlying
profit
Statutory
profit
£’000
34,524
adjustments
£’000
(4,978)
profit
£’000
29,546
609
(8)
(293)
(201)
309
315
(110)
7,181
(207)
92
15
–
–
–
–
(1,046)
402
(8)
(293)
(109)
324
315
(110)
6,135
Effective tax rate
20.8%
n/a
20.8%
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Corporate governance
Corporate governance
Financial statements
Financial statements
9. Taxation continued
Year ended 30 June 2021
Profit before taxation
Profit multiplied by the standard rate of tax in the UK of 19%
Tax effect of amounts that are not deductible/(taxable) in calculating taxable
income:
− Depreciation and amortisation
− Non-taxable income
− Overseas tax losses not available for UK tax purposes
− Disallowable expenses
− Impairment charges
− Share-based payments
− Over provision of deferred tax in prior years
Income tax expense
Underlying
profit
£’000
Underlying
profit
adjustments
£’000
Statutory
profit
£’000
30,597
(5,506)
25,091
5,813
(1,046)
4,767
749
(7)
(541)
174
–
30
(9)
6,209
670
(944)
–
273
287
–
–
(760)
1,419
(951)
(541)
447
287
30
(9)
5,449
Effective tax rate
20.3%
n/a
21.7%
Profit multiplied by the standard rate of tax in the UK of 19%
6,560
(946)
5,614
Tax effect of amounts that are not deductible/(taxable) in calculating taxable
The deferred tax charges/(credits) for the year arise from:
Share-based payments
Accelerated capital allowances
Accelerated capital allowances on research and development
Dilapidations
Amortisation of acquired client relationship contracts
Trading losses carried forward
Under provision in prior years
Deferred tax charge
2022
£’000
399
73
(63)
12
(880)
248
212
1
2021
£’000
(77)
(53)
(16)
15
309
(184)
116
110
On 1 April 2017, the standard rate of Corporation Tax in the UK was reduced to 19%. As a result, the effective rate of Corporation
Tax applied to the taxable profit for the year ended 30 June 2022 is 19% (FY21: 19%).
It was outlined in the Finance Bill 2021 (11 March 2021) and substantively enacted having received royal ascent on the 10 June
2021 that the UK Corporation Tax rate would increase to 25% from 1 April 2023 and remain at 19% until that date. As a result, the
relevant deferred tax balances have been remeasured. Deferred tax assets and liabilities are calculated at the rate that is expected
to be in force when the temporary differences unwind, however limited to the extent that such rates have been substantively
enacted.
140
140
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
141
141
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
10. Other non-operating income
During the year, the Group received confirmation from HMRC that the supply of certain group services were exempt from VAT.
As a result, the Group received a refund from HMRC in respect of VAT arising on those services during the period from 1 July 2017
to 30 June 2020 of £2,983,000. This has been treated as non-operating income in view of its non-recurring nature and given it is
outside the ordinary course of business. This other non-operating income is fully taxable for Corporation Tax purposes.
11. Business combinations
2022
On 23 May 2022, the Group announced, subject to regulatory approval, the acquisition of Integrity Wealth (Holdings) Limited,
together with its subsidiary, Integrity Wealth Solutions Limited (“IWS”), a successful and rapidly growing Independent Financial
Adviser (“IFA”) firm with funds under management of c.£250m and c.800 clients. The acquisition consists of acquiring 100%
of the issued share capital of Integrity Wealth (Holdings) Limited and Integrity Wealth Bidco Limited (intermediate holding
company), and this will be funded through existing financial resources.
Under the terms of the acquisition, the purchase consideration includes an initial up front portion and a deferred contingent
element. The acquisition will be accounted for in the Group’s books following regulatory approval, expected in H1 FY23.
2021
On 30 November 2020, the Group acquired Lloyds Bank International’s Channel Islands wealth management and funds business
(“Lloyds Channel Islands acquisition”). The acquisition brings a high-quality discretionary client base, adds a multi-asset and fixed
income fund range to the Group’s offering, and increases distribution reach through well-established intermediary relationships.
The acquisition consisted of the entire share capital of Lloyds Investment Fund Managers Limited (renamed Brooks Macdonald
International Fund Managers Limited following acquisition), and a portfolio of discretionary management private clients.
The acquisition was accounted for using the acquisition method and details of the purchase consideration are as follows:
Business consideration
Business consideration adjustment
Initial business consideration – Discretionary business
Shares consideration
Excess for net assets
Initial shares consideration – Funds business
Initial cash paid
Deferred contingent consideration at fair value
Total purchase consideration
2021
£’000
4,650
(1,070)
4,650
95
Note
i
ii
iii
2021
£’000
3,580
4,745
8,325
308
8,633
i. Following completion, an adjustment was made to the business consideration in relation to the revenue that has transferred
to the Group. The adjustment reflects the fall in revenue acquired by the Group compared to the expected revenue that would
transfer to the Group in the Sale and Purchase Agreement (“SPA”).
ii. Per the SPA, the completion balance sheet was to contain net assets of £2,500,000 to be acquired by the Group. Any excess or
deficit of the actual net assets acquired would be paid or recouped by the Group. The actual net assets acquired by the Group
were £2,595,000 resulting in the Group paying additional consideration of £95,000.
iii. The total cash deferred contingent consideration is £334,000, payable in two years following completion, based on the client
attrition of the funds under management acquired over the two-year period.
142
142
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
10. Other non-operating income
During the year, the Group received confirmation from HMRC that the supply of certain group services were exempt from VAT.
As a result, the Group received a refund from HMRC in respect of VAT arising on those services during the period from 1 July 2017
to 30 June 2020 of £2,983,000. This has been treated as non-operating income in view of its non-recurring nature and given it is
outside the ordinary course of business. This other non-operating income is fully taxable for Corporation Tax purposes.
11. Business combinations
2022
On 23 May 2022, the Group announced, subject to regulatory approval, the acquisition of Integrity Wealth (Holdings) Limited,
together with its subsidiary, Integrity Wealth Solutions Limited (“IWS”), a successful and rapidly growing Independent Financial
Adviser (“IFA”) firm with funds under management of c.£250m and c.800 clients. The acquisition consists of acquiring 100%
of the issued share capital of Integrity Wealth (Holdings) Limited and Integrity Wealth Bidco Limited (intermediate holding
company), and this will be funded through existing financial resources.
Under the terms of the acquisition, the purchase consideration includes an initial up front portion and a deferred contingent
element. The acquisition will be accounted for in the Group’s books following regulatory approval, expected in H1 FY23.
2021
On 30 November 2020, the Group acquired Lloyds Bank International’s Channel Islands wealth management and funds business
(“Lloyds Channel Islands acquisition”). The acquisition brings a high-quality discretionary client base, adds a multi-asset and fixed
income fund range to the Group’s offering, and increases distribution reach through well-established intermediary relationships.
The acquisition consisted of the entire share capital of Lloyds Investment Fund Managers Limited (renamed Brooks Macdonald
International Fund Managers Limited following acquisition), and a portfolio of discretionary management private clients.
The acquisition was accounted for using the acquisition method and details of the purchase consideration are as follows:
Business consideration
Business consideration adjustment
Initial business consideration – Discretionary business
Shares consideration
Excess for net assets
Initial shares consideration – Funds business
Initial cash paid
Deferred contingent consideration at fair value
Total purchase consideration
2021
£’000
4,650
(1,070)
4,650
95
Note
i
ii
iii
2021
£’000
3,580
4,745
8,325
308
8,633
i. Following completion, an adjustment was made to the business consideration in relation to the revenue that has transferred
to the Group. The adjustment reflects the fall in revenue acquired by the Group compared to the expected revenue that would
transfer to the Group in the Sale and Purchase Agreement (“SPA”).
ii. Per the SPA, the completion balance sheet was to contain net assets of £2,500,000 to be acquired by the Group. Any excess or
deficit of the actual net assets acquired would be paid or recouped by the Group. The actual net assets acquired by the Group
were £2,595,000 resulting in the Group paying additional consideration of £95,000.
iii. The total cash deferred contingent consideration is £334,000, payable in two years following completion, based on the client
attrition of the funds under management acquired over the two-year period.
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Corporate governance
Financial statements
Financial statements
11. Business combinations continued
The fair value of the deferred consideration liability has been remeasured at 30 June 2022, and remains unchanged, which
assumes the deferred consideration criteria will be met, resulting in the full £334,000 to be paid in December 2022. The client
attrition has been forecast using a similar outflows pattern to that experienced by the rest of the Group. The client attrition is
dependent on several unpredictable variables, including client sentiment and market conditions.
Client relationship intangible assets of £9,080,000 and £3,147,000 were recognised on acquisition in respect of the expected cash
inflows and economic benefit from the discretionary and fund management contracts acquired respectively. A gain on bargain
purchase of £4,284,000 was recognised on acquisition in relation to the discretionary business and a gain on bargain purchase of
£682,000 was recognised on acquisition in relation to the funds business as the net identifiable assets acquired were greater than
the total purchase consideration, which was recognised in the Consolidated statement of comprehensive income. The fair value
of the assets acquired were the gross contractual amounts and were all considered to be fully recoverable. The fair value of the
identifiable assets and liabilities acquired, at the date of acquisition, are detailed in (a) below.
Directly attributable acquisition costs of £nil (FY21: £19,000) and integration costs of £nil (FY21: £2,225,000) were incurred in
the acquisition and integration of the Lloyds Channel Islands acquisition, which were charged to administrative costs in the
Consolidated statement of comprehensive income but excluded from underlying profit.
a. Net assets acquired through business combination
Trade and other receivables
Cash at bank
Trade and other payables
Corporation tax payable
Total net assets recognised by acquired companies
Fair value adjustments:
Client relationship contracts – discretionary business
Client relationship contracts – fund-management business
Deferred tax liabilities
Net identifiable assets
Gain on bargain purchase
Total purchase consideration
2021
£’000
35
3,038
(367)
(115)
2,591
9,080
3,147
(1,219)
13,599
(4,966)
8,633
The trade and other receivables were recognised at their fair value, being the gross contractual amounts, deemed fully
recoverable.
Impact on reported results from date of acquisition
b.
In the period from acquisition to 30 June 2021, the Lloyds Channel Islands acquisition earned revenue of £5,315,000 and statutory
profit before tax of £3,005,000.
c. Net cash outflow resulting from business combinations
Total purchase consideration
Less deferred cash consideration at fair value
Cash paid to acquire Lloyds Channel Islands
Less cash held by Lloyds Channel Islands
Net cash outflow – investing activities
2021
£’000
8,633
(308)
8,325
(3,038)
5,287
142
142
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
143
143
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
12. Earnings per share
The Directors believe that underlying earnings per share provides an appropriate reflection of the Group’s performance in the
year. Underlying earnings per share, which is an alternative performance measure (“APM”), is calculated based on ‘underlying
earnings’, which is also an APM. Refer to page 181 for a glossary of the Group’s APMs, their definition and criteria for how
underlying adjustments are considered. The tax effect of the underlying adjustments to statutory earnings has also been
considered, refer to Note 9 for the taxation on underlying and statutory profit.
Earnings for the year used to calculate earnings per share as reported in these Consolidated financial statements were as follows:
Earnings attributable to ordinary shareholders
Amortisation of acquired client relationship contracts (Note 14)
Other non-operating income (Note 10)
Dual running costs of operating platform
Finance cost of deferred consideration (Note 24)
Gain on bargain purchase (Note 11)
Acquisition-related costs (Note 11)
Impairment of acquired client relationship contracts (Note 14)
Changes in fair value of deferred consideration (Note 24)
Tax impact of adjustments
Underlying earnings attributable to ordinary shareholders
2022
£’000
23,411
5,443
(2,983)
2,428
90
–
–
–
–
(1,046)
27,343
2021
£’000
19,642
4,928
–
1,000
299
(4,966)
2,672
1,513
60
(760)
24,388
Basic earnings per share is calculated by dividing earnings attributable to ordinary shareholders by the weighted average
number of shares in issue throughout the year. Diluted earnings per share represents the basic earnings per share adjusted for
the effect of dilutive potential shares issuable on exercise of employee share options under the Group’s share-based payment
schemes, weighted for the relevant period.
The weighted average number of shares in issue during the year was as follows:
Weighted average number of shares in issue
Effect of dilutive potential shares issuable on exercise of employee share options
Diluted weighted average number of shares in issue
Earnings per share for the year attributable to equity holders of the Company were:
Based on reported earnings:
Basic earnings per share
Diluted earnings per share
Based on underlying earnings:
Basic earnings per share
Diluted earnings per share
2022
Number
of shares
15,707,706
502,259
16,209,965
20211
Number
of shares
15,671,672
521,547
16,193,219
2022
p
149.0
144.4
174.1
168.7
20211
p
125.3
121.3
155.6
150.6
1. The Group previously reported the dilutive effect of potential shares issuable on exercise of employee share options for employee share options that are satisfied
from newly created shares. This did not take into account share options that are satisfied from shares bought in the market and held in the Group’s Employee Benefit
Trust (“EBT”). The Group now considers it is appropriate to also take into account the share options that are satisfied from shares held in the EBT where the average
market price of the ordinary shares during the period exceeds the exercise price of the options, in calculating the dilutive weighted average number of shares
in issue. Accordingly, the diluted weighted average number of shares in issue and diluted earnings per share for the comparative period has been restated to be
consistent with the current period calculation.
For the year ended 30 June 2021, the reported effect of dilutive potential shares was 50,891 and the reported diluted weighted average number of shares in issue was
15,722,563. For the year ended 30 June 2021, the reported diluted earnings per share on statutory and underlying earnings was 124.9p and 155.1p respectively.
144
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Brooks Macdonald Group plc / Annual Report and Accounts 2022
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
12. Earnings per share
The Directors believe that underlying earnings per share provides an appropriate reflection of the Group’s performance in the
year. Underlying earnings per share, which is an alternative performance measure (“APM”), is calculated based on ‘underlying
earnings’, which is also an APM. Refer to page 181 for a glossary of the Group’s APMs, their definition and criteria for how
underlying adjustments are considered. The tax effect of the underlying adjustments to statutory earnings has also been
considered, refer to Note 9 for the taxation on underlying and statutory profit.
Earnings for the year used to calculate earnings per share as reported in these Consolidated financial statements were as follows:
Earnings attributable to ordinary shareholders
Amortisation of acquired client relationship contracts (Note 14)
Other non-operating income (Note 10)
Dual running costs of operating platform
Finance cost of deferred consideration (Note 24)
Gain on bargain purchase (Note 11)
Acquisition-related costs (Note 11)
Impairment of acquired client relationship contracts (Note 14)
Changes in fair value of deferred consideration (Note 24)
Tax impact of adjustments
Underlying earnings attributable to ordinary shareholders
2022
£’000
23,411
5,443
(2,983)
2,428
90
–
–
–
–
(1,046)
27,343
2021
£’000
19,642
4,928
–
1,000
299
(4,966)
2,672
1,513
60
(760)
24,388
2022
Number
of shares
20211
Number
of shares
15,707,706
15,671,672
502,259
521,547
16,209,965
16,193,219
2022
p
149.0
144.4
174.1
168.7
20211
p
125.3
121.3
155.6
150.6
Basic earnings per share is calculated by dividing earnings attributable to ordinary shareholders by the weighted average
number of shares in issue throughout the year. Diluted earnings per share represents the basic earnings per share adjusted for
the effect of dilutive potential shares issuable on exercise of employee share options under the Group’s share-based payment
schemes, weighted for the relevant period.
The weighted average number of shares in issue during the year was as follows:
Weighted average number of shares in issue
Effect of dilutive potential shares issuable on exercise of employee share options
Diluted weighted average number of shares in issue
Earnings per share for the year attributable to equity holders of the Company were:
Based on reported earnings:
Basic earnings per share
Diluted earnings per share
Based on underlying earnings:
Basic earnings per share
Diluted earnings per share
1. The Group previously reported the dilutive effect of potential shares issuable on exercise of employee share options for employee share options that are satisfied
from newly created shares. This did not take into account share options that are satisfied from shares bought in the market and held in the Group’s Employee Benefit
Trust (“EBT”). The Group now considers it is appropriate to also take into account the share options that are satisfied from shares held in the EBT where the average
market price of the ordinary shares during the period exceeds the exercise price of the options, in calculating the dilutive weighted average number of shares
in issue. Accordingly, the diluted weighted average number of shares in issue and diluted earnings per share for the comparative period has been restated to be
consistent with the current period calculation.
For the year ended 30 June 2021, the reported effect of dilutive potential shares was 50,891 and the reported diluted weighted average number of shares in issue was
15,722,563. For the year ended 30 June 2021, the reported diluted earnings per share on statutory and underlying earnings was 124.9p and 155.1p respectively.
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
13. Dividends
Amounts recognised as distributions to equity holders of the Company in the year were as follows:
Final dividend paid for the year ended 30 June 2021 of 40.0p (FY20: 32.0p) per share
Interim dividend paid for the year ended 30 June 2022 of 26.0p (FY21: 23.0p) per share
Total dividends
2022
£’000
6,251
4,066
10,317
2021
£’000
4,999
3,573
8,572
Final dividend proposed for the year ended 30 June 2022 of 45.0p (FY21: 40.0p) per share
7,031
6,229
The interim dividend of 26.0p (FY21: 23.0p) per share was paid on 14 April 2022.
A final dividend for the year ended 30 June 2022 of 45.0p (FY21: 40.0p) per share was declared by the Board of Directors on
14 September 2022 and is subject to approval by the shareholders at the Company’s Annual General Meeting. It will be paid on
4 November 2022 to shareholders who are on the register at the close of business on 23 September 2022. In accordance with
IAS 10 ‘Events After the Reporting Period’, the aggregate amount of the proposed dividend expected to be paid out of retained
earnings is not recognised as a liability in these Financial statements.
14. Intangible assets
Cost
At 1 July 2020
Additions
Disposals
At 30 June 2021
Additions
Disposals
At 30 June 2022
Accumulated amortisation and impairment
At 1 July 2020
Amortisation charge
Accumulated amortisation on disposals
Impairment
At 30 June 2021
Amortisation charge
Accumulated amortisation on disposals
At 30 June 2022
Net book value
At 1 July 2020
At 30 June 2021
At 30 June 2022
Goodwill
£’000
Computer
software
£’000
Acquired
client
relationship
contracts
£’000
Contracts
acquired with
fund
managers
£’000
51,887
–
–
51,887
–
–
51,887
11,213
–
–
–
11,213
–
–
11,213
40,674
40,674
40,674
10,503
3,061
(2,166)
11,398
2,912
(7,380)
6,930
5,564
2,754
(2,166)
–
6,152
1,479
(7,380)
251
4,939
5,246
6,679
57,784
12,227
–
70,011
–
–
70,011
19,593
4,928
–
1,513
26,034
5,443
–
31,477
38,191
43,977
38,534
3,521
–
–
3,521
–
–
3,521
3,521
–
–
–
3,521
–
–
3,521
–
–
–
Total
£’000
123,695
15,288
(2,166)
136,817
2,912
(7,380)
132,349
39,891
7,682
(2,166)
1,513
46,920
6,922
(7,380)
46,462
83,804
89,897
85,887
The amortisation charge of intangible assets is recognised within administrative costs in the Consolidated statement of
comprehensive income.
At 30 June 2022, intangible assets totalling £76,140,000 are recognised in the United Kingdom and £9,747,000 are recognised in
the Channel Islands.
144
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Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
145
145
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
14. Intangible assets continued
a. Goodwill
Goodwill acquired in a business combination is allocated at acquisition to the cash-generating units (“CGUs”) that are expected to
benefit from that business combination. The carrying amount of goodwill in respect of these CGUs within the operating segments
of the Group comprises:
Funds
Braemar Group Limited (“Braemar”)
International
Brooks Macdonald Asset Management (International) Limited and Brooks Macdonald
Retirement Services (International) Limited (collectively “Brooks Macdonald International”)
Cornelian
Cornelian Asset Managers Group Limited (“Cornelian”)
Total goodwill
2022
£’000
2021
£’000
3,320
3,320
21,243
21,243
16,111
16,111
40,674
40,674
Goodwill is reviewed annually for impairment and its recoverability has been assessed at 30 June 2022 by comparing the
carrying amount of the CGUs to their expected recoverable amount, estimated on a value-in-use basis. The value-in-use of
each CGU has been calculated using pre-tax discounted cash flow projections based on the most recent budgets and forecasts
approved by the relevant subsidiary company boards of directors. The most recent budgets prepared are part of the detailed
budget process for the year ending 30 June 2023, and then extrapolated over a longer period for the following four years, resulting
in the budgets and forecasts covering a period of five years. Cash flows are then extrapolated beyond the five-year budget and
forecast period using an expected long-term growth rate, with the long-term growth rate considered reasonable against the
budgeted and forecast growth.
The Cornelian CGU recoverable amount was calculated as £61,502,000 at 30 June 2022, giving a surplus over the Cornelian
CGU carrying amount of £29,182,000, indicating that there is no impairment. The key underlying assumptions of the calculation
are the discount rate, the short-term growth in earnings and the long-term growth rate of the business. The revenue growth
forecasts range between 13% and 21% annually over the five-year period. Revenue growth is forecast using new business targets,
expected outflows and estimated impact of market performance on FUM, multiplied by estimated fee yields. Expenditure
growth is forecast between 4% and 6% annually over the five-year period. Both the revenue growth and expenditure growth
reflect historic actual growth and planned management actions and are considered to be reasonable in the current market and
industry conditions. A pre-tax discount rate of 16% has been used (FY21: 13%), based on the Group’s assessment of the risk-free
rate of interest and specific risks relating to Cornelian. The recoverable amount was based on the estimated cash inflows over the
next five financial years, the period covered by the most recent forecasts, which reflect planned management actions and are
considered to be reasonable in the current market and industry conditions. The 2% long-term growth rate applied is considered
prudent in the context of the long-term average growth rate for the funds and investment management industries in which the
CGU operates.
The Directors do not believe that any reasonably possible change would result in an impairment however to provide additional
analysis, sensitivity analysis has been performed to show what may be required for an impairment to be recognised.
• An increase of the pre-tax discount rate by 12%, from 16% to 28% would result in an impairment.
• The 2% perpetuity growth rate would need to reduce by 24% to -22% to trigger an impairment.
• The forecast pre-tax cash flows would need to reduce by 40% to result in an impairment.
146
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Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
14. Intangible assets continued
Based on a value-in-use calculation, the recoverable amount of the Brooks Macdonald International CGU at 30 June 2022 was
£64,453,000, giving a surplus over the Brooks Macdonald International CGU carrying amount of £32,200,000, indicating that
there is no impairment. The key underlying assumptions of the calculation are the discount rate, the short-term growth in
earnings and the long-term growth rate of the business. A pre-tax discount rate of 14% (FY21: 12%) has been used, based on the
Group’s assessment of the risk-free rate of interest and specific risks relating to Brooks Macdonald International. The key input
in forecasting revenue is FUM, which is forecast to grow between 8% and 12% annually over the five-year period, based on new
business targets, expected outflows and estimated impact of market performance. Annual cash flow growth rates range between
14% and 47% over the next five financial years, the period covered by the most recent forecasts, which reflect historic actual
growth and planned management actions and are considered to be reasonable in the current market and industry conditions.
The 2% long-term growth rate applied is considered prudent in the context of the long-term average growth rate for the funds,
investment management and financial planning industries in which the CGU operates.
The Directors do not believe that any reasonably possible change would result in an impairment however to provide additional
analysis, sensitivity analysis has been performed to show what may be required for an impairment to be recognised.
• An increase of the pre-tax discount rate by 10%, from 14% to 24% would result in an impairment.
Cornelian Asset Managers Group Limited (“Cornelian”)
16,111
16,111
• The 2% perpetuity growth rate would need to reduce by 23% to -21% to trigger an impairment.
• The forecast pre-tax cash flows would need to reduce by 47% to result in an impairment.
Based on a value-in-use calculation, the recoverable amount of the Braemar CGU at 30 June 2022 was £17,847,000, giving a
surplus over the Braemar CGU carrying amount of £3,299,000 indicating that there is no impairment. A pre-tax discount rate
of 17% (FY21: 14%) has been used, based on the Group’s assessment of the risk-free rate of interest and specific risks relating to
Braemar. The key underlying assumptions of the calculation are the discount rate, the growth in FUM of the funds business
and the long-term growth rate. The revenue generated in the cash flow forecasts is based on FUM forecasts multiplied by the
relevant yields, with FUM growth ranging between 9% and 11% annually over the five-year period. FUM growth is forecast using
estimated new business targets, expected outflows and estimated impact of market performance. Expenditure growth is forecast
between 1% and 12% annually over the five-year period. The inputs to the forecast cash inflows over the next five financial years,
reflect historic actual growth and planned management activities and are considered to be reasonable in the current market and
industry conditions. The 2% long-term growth rate applied is considered prudent in the context of the long-term average growth
rate for the funds industry in which the CGU operates.
The Directors do not believe that any reasonably possible change would result in an impairment however to provide additional
analysis, sensitivity analysis has been performed to show what may be required for an impairment to be recognised.
• An increase of the pre-tax discount rate by 48%, from 17% to 65% would result in an impairment.
• The 2% perpetuity growth rate could reduce by 100% to -98% and an impairment would still not be triggered.
• The forecast pre-tax cash flows would need to reduce by 83% to result in an impairment.
At 30 June 2022, headroom exists in the calculations of the respective recoverable amounts of these CGUs over the carrying
amounts of the goodwill allocated to them. On this basis, the Directors have concluded that there is no impairment required to the
goodwill balances at 30 June 2022.
b. Computer software
Costs incurred on internally developed computer software are initially recognised at cost and when the software is available for
use, the costs are amortised on a straight-line basis over an estimated useful life of four years.
During the year ended 30 June 2022, the Group received £2,039,000 from SS&C towards the costs incurred in the transition of
the client- and adviser-facing processes to their platform and systems, which has been utilised against capitalised spend on the
project. The gross computer software additions during the year were £4,951,000, with the net amount recognised of £2,912,000,
after the amount received from SS&C.
During the year ended 30 June 2022, the Group conducted a review of the computer software assets and retired assets from the
fixed asset register with a £nil net book value, and no longer used in the business. This resulted in disposals of computer software,
with cost and accumulated amortisation both totalling £7,380,000.
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
14. Intangible assets continued
a. Goodwill
Goodwill acquired in a business combination is allocated at acquisition to the cash-generating units (“CGUs”) that are expected to
benefit from that business combination. The carrying amount of goodwill in respect of these CGUs within the operating segments
of the Group comprises:
2022
£’000
2021
£’000
3,320
3,320
Brooks Macdonald Asset Management (International) Limited and Brooks Macdonald
Retirement Services (International) Limited (collectively “Brooks Macdonald International”)
21,243
21,243
Funds
Braemar Group Limited (“Braemar”)
International
Cornelian
Total goodwill
40,674
40,674
Goodwill is reviewed annually for impairment and its recoverability has been assessed at 30 June 2022 by comparing the
carrying amount of the CGUs to their expected recoverable amount, estimated on a value-in-use basis. The value-in-use of
each CGU has been calculated using pre-tax discounted cash flow projections based on the most recent budgets and forecasts
approved by the relevant subsidiary company boards of directors. The most recent budgets prepared are part of the detailed
budget process for the year ending 30 June 2023, and then extrapolated over a longer period for the following four years, resulting
in the budgets and forecasts covering a period of five years. Cash flows are then extrapolated beyond the five-year budget and
forecast period using an expected long-term growth rate, with the long-term growth rate considered reasonable against the
budgeted and forecast growth.
The Cornelian CGU recoverable amount was calculated as £61,502,000 at 30 June 2022, giving a surplus over the Cornelian
CGU carrying amount of £29,182,000, indicating that there is no impairment. The key underlying assumptions of the calculation
are the discount rate, the short-term growth in earnings and the long-term growth rate of the business. The revenue growth
forecasts range between 13% and 21% annually over the five-year period. Revenue growth is forecast using new business targets,
expected outflows and estimated impact of market performance on FUM, multiplied by estimated fee yields. Expenditure
growth is forecast between 4% and 6% annually over the five-year period. Both the revenue growth and expenditure growth
reflect historic actual growth and planned management actions and are considered to be reasonable in the current market and
industry conditions. A pre-tax discount rate of 16% has been used (FY21: 13%), based on the Group’s assessment of the risk-free
rate of interest and specific risks relating to Cornelian. The recoverable amount was based on the estimated cash inflows over the
next five financial years, the period covered by the most recent forecasts, which reflect planned management actions and are
considered to be reasonable in the current market and industry conditions. The 2% long-term growth rate applied is considered
prudent in the context of the long-term average growth rate for the funds and investment management industries in which the
CGU operates.
The Directors do not believe that any reasonably possible change would result in an impairment however to provide additional
analysis, sensitivity analysis has been performed to show what may be required for an impairment to be recognised.
• An increase of the pre-tax discount rate by 12%, from 16% to 28% would result in an impairment.
• The 2% perpetuity growth rate would need to reduce by 24% to -22% to trigger an impairment.
• The forecast pre-tax cash flows would need to reduce by 40% to result in an impairment.
146
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Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
147
147
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
14. Intangible assets continued
c. Acquired client relationship contracts
This asset represents the fair value of future benefits accruing to the Group from acquired client relationship contracts. The
amortisation of client relationships is charged to the Consolidated statement of comprehensive income on a straight-line basis
over their estimated useful lives (6 to 20 years).
During the year ended 30 June 2021, the Group acquired client relationship contracts totalling £12,227,000, as part of the Lloyds
Channel Islands acquisition (Note 11), which were recognised as separately identifiable intangible assets in the Consolidated
statement of financial position. The additions included contracts related to the Lloyds Channel Islands discretionary business
of £9,080,000, with a useful economic life of 15 years, and £3,147,000 related to the Lloyds Channel Islands funds-management
business, with a useful economic life of six years.
During the year ended 30 June 2021, the Group recognised an impairment of £1,513,000 on the client-relationship intangible
assets as the expected useful economic life was reduced from 15 to 12 years.
d. Contracts acquired with fund managers
This asset represents the fair value of the future benefits accruing to the Group from contracts acquired with fund managers.
Payments made to acquire such contracts are stated at cost and amortised on a straight-line basis over an estimated useful life of
five years.
15. Property, plant and equipment
Cost
At 1 July 2020
Additions
Disposals
At 30 June 2021
Additions
Disposals
At 30 June 2022
Accumulated depreciation
At 1 July 2020
Depreciation charge
Depreciation on disposals
At 30 June 2021
Depreciation charge
Depreciation on disposals
At 30 June 2022
Net book value
At 1 July 2020
At 30 June 2021
At 30 June 2022
Leasehold
improvements
£’000
Fixtures,
fittings
and office
equipment
£’000
IT
equipment
£’000
3,944
434
(1,748)
2,630
146
(88)
2,688
2,045
476
(1,748)
773
446
(88)
1,131
1,899
1,857
1,557
1,017
29
(322)
724
28
(11)
741
641
104
(322)
423
101
(11)
513
376
301
228
2,482
157
(697)
1,942
115
(811)
1,246
1,576
465
(697)
1,344
296
(811)
829
906
598
417
Total
£’000
7,443
620
(2,767)
5,296
289
(910)
4,675
4,262
1,045
(2,767)
2,540
843
(910)
2,473
3,181
2,756
2,202
During the year ended 30 June 2022, the Group conducted a review of the property, plant and equipment assets and retired
assets from the fixed asset register with a £nil net book value, and no longer used in the business. This resulted in disposals of
property, plant and equipment with cost and accumulated depreciation both totalling £910,000.
Property, plant and equipment totalling £1,902,000 at 30 June 2022 are recognised in the United Kingdom and £300,000 are
recognised in the Channel Islands.
148
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Brooks Macdonald Group plc / Annual Report and Accounts 2022
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
14. Intangible assets continued
c. Acquired client relationship contracts
This asset represents the fair value of future benefits accruing to the Group from acquired client relationship contracts. The
amortisation of client relationships is charged to the Consolidated statement of comprehensive income on a straight-line basis
over their estimated useful lives (6 to 20 years).
During the year ended 30 June 2021, the Group acquired client relationship contracts totalling £12,227,000, as part of the Lloyds
Channel Islands acquisition (Note 11), which were recognised as separately identifiable intangible assets in the Consolidated
statement of financial position. The additions included contracts related to the Lloyds Channel Islands discretionary business
of £9,080,000, with a useful economic life of 15 years, and £3,147,000 related to the Lloyds Channel Islands funds-management
business, with a useful economic life of six years.
During the year ended 30 June 2021, the Group recognised an impairment of £1,513,000 on the client-relationship intangible
assets as the expected useful economic life was reduced from 15 to 12 years.
d. Contracts acquired with fund managers
This asset represents the fair value of the future benefits accruing to the Group from contracts acquired with fund managers.
Payments made to acquire such contracts are stated at cost and amortised on a straight-line basis over an estimated useful life of
five years.
15. Property, plant and equipment
Cost
At 1 July 2020
Additions
Disposals
At 30 June 2021
Additions
Disposals
At 30 June 2022
Accumulated depreciation
At 1 July 2020
Depreciation charge
Depreciation on disposals
At 30 June 2021
Depreciation charge
Depreciation on disposals
At 30 June 2022
Net book value
At 1 July 2020
At 30 June 2021
At 30 June 2022
Leasehold
improvements
£’000
Fixtures,
fittings
and office
equipment
£’000
IT
equipment
£’000
3,944
434
(1,748)
2,630
146
(88)
2,688
2,045
476
(1,748)
773
446
(88)
1,131
1,899
1,857
1,557
1,017
29
(322)
724
28
(11)
741
641
104
(322)
423
101
(11)
513
376
301
228
2,482
157
(697)
1,942
115
(811)
1,246
1,576
465
(697)
1,344
296
(811)
829
906
598
417
Total
£’000
7,443
620
(2,767)
5,296
289
(910)
4,675
4,262
1,045
(2,767)
2,540
843
(910)
2,473
3,181
2,756
2,202
During the year ended 30 June 2022, the Group conducted a review of the property, plant and equipment assets and retired
assets from the fixed asset register with a £nil net book value, and no longer used in the business. This resulted in disposals of
property, plant and equipment with cost and accumulated depreciation both totalling £910,000.
Property, plant and equipment totalling £1,902,000 at 30 June 2022 are recognised in the United Kingdom and £300,000 are
recognised in the Channel Islands.
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
16. Right-of-use assets
Cost
At 1 July 2020
Additions
At 30 June 2021
Additions
At 30 June 2022
Accumulated depreciation
At 1 July 2020
Depreciation charge
At 30 June 2021
Depreciation charge
At 30 June 2022
Net book value
At 1 July 2020
At 30 June 2021
At 30 June 2022
Cars
£’000
Property
£’000
–
–
–
328
328
–
–
–
37
37
–
–
291
8,491
601
9,092
333
9,425
1,500
1,613
3,113
1,632
4,745
6,991
5,979
4,680
Total
£’000
8,491
601
9,092
661
9,753
1,500
1,613
3,113
1,669
4,782
6,991
5,979
4,971
During the year ended 30 June 2022, the Group entered into a new car leasing arrangement to provide a salary sacrifice car
leasing scheme for employees. Each vehicle leased to individual employees creates a separate right-of-use asset and lease
liability measured at present value of the remaining lease payments, discounted using the lessee’s estimated incremental
borrowing rate (see Note 22).
The property additions relate to three new leases that commenced during the year ended 30 June 2022.
Right-of-use assets totalling £4,723,000 at 30 June 2022 are recognised in the United Kingdom and £248,000 are recognised in the
Channel Islands.
17. Financial assets at fair value through other comprehensive income
At 1 July
Change in fair value
At 30 June
2022
£’000
500
–
500
2021
£’000
500
–
500
At 30 June 2022, the Group held an investment of redeemable £500,000 preference shares in an unlisted company incorporated
in the UK. The preference shares carry an entitlement to a fixed preferential dividend at a rate of 4% per annum. Unlisted
preference shares are classified as financial assets at fair value through other comprehensive income.
The following table provides an analysis of the financial assets and liabilities that, subsequent to initial recognition, are measured
at fair value. These are grouped into the following levels within the fair value hierarchy, based on the degree to which the inputs
used to determine the fair value are observable:
• Level 1 – derived from quoted prices in active markets for identical assets or liabilities at the measurement date;
• Level 2 – derived from inputs other than quoted prices included within Level 1 that are observable, either directly or
indirectly; and
• Level 3 – derived from inputs that are not based on observable market data.
148
148
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
149
149
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
17. Financial assets at fair value through other comprehensive income continued
Financial assets
At 1 July 2021
Additions
Changes in fair value
At 30 June 2022
Comprising:
Financial assets at fair value through other comprehensive income
Financial assets at fair value through profit and loss (Note 18)
Total financial assets
Level 1
£’000
Level 2
£’000
Level 3
£’000
624
215
(55)
784
–
784
784
–
–
–
–
–
–
–
500
–
–
500
500
–
500
Total
£’000
1,124
215
(55)
1,284
500
784
1,284
The Level 3 assets include unlisted preference shares which are valued using a perpetuity income model, based upon the
preference dividend cash flows. The fair value of the assets are not deemed to be impacted by changes in the unobservable
inputs as the dividend cash flows are contractual.
Financial liabilities
At 1 July 2021
Finance cost of deferred consideration
Payments made
At 30 June 2022
Comprising:
Deferred consideration (Note 24)
Total financial liabilities
Level 1
£’000
Level 2
£’000
–
–
–
–
–
–
–
–
–
–
–
–
Level 3
£’000
6,237
90
(6,000)
327
Total
£’000
6,237
90
(6,000)
327
327
327
327
327
The Level 3 financial liabilities consist of deferred consideration, valued using the net present value of the expected future
amounts payable. The key inputs are management-approved forecasts and expectations against the criteria of the deferred
consideration to set expectations of future amounts payable. The deferred consideration is reviewed and revalued at regular
intervals over the deferred consideration period (Note 24). The fair value is sensitive to the change in management-approved
forecasts; however, at each reporting date, the relevant management-approved forecasts are deemed to be the most accurate and
relevant input to the fair value measurement.
18. Financial assets at fair value through profit or loss
At 1 July
Additions
Changes in fair value
At 30 June
2022
£’000
624
215
(55)
784
2021
£’000
549
–
75
624
The Group holds 500,000 shares in five of the SVS Cornelian Risk Managed Passive Funds. During the year ended 30 June 2022,
the Group recognised a loss on these investments of £36,000. The Group’s holding in the SVS Cornelian Risk Managed Passive
Funds at 30 June 2022 was £588,000.
In September 2021, the Group invested £215,000 in the Blueprint Multi Asset Fund range across the various models within the
fund range. During the period from acquisition to 30 June 2022, the Group recognised a loss on these investments of £19,000.
The Group’s holding in the Blueprint Multi Asset Fund range at 30 June 2022 was £196,000.
150
150
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
17. Financial assets at fair value through other comprehensive income continued
Level 1
£’000
Level 2
£’000
Level 3
£’000
Financial assets at fair value through other comprehensive income
Financial assets at fair value through profit and loss (Note 18)
Total financial assets
The Level 3 assets include unlisted preference shares which are valued using a perpetuity income model, based upon the
preference dividend cash flows. The fair value of the assets are not deemed to be impacted by changes in the unobservable
inputs as the dividend cash flows are contractual.
Level 1
£’000
Level 2
£’000
624
215
(55)
784
–
784
784
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
£’000
1,124
215
(55)
1,284
500
784
1,284
Total
£’000
6,237
90
(6,000)
327
500
–
–
500
500
–
500
Level 3
£’000
6,237
90
(6,000)
327
327
327
327
327
2022
£’000
624
215
(55)
784
2021
£’000
549
–
75
624
The Level 3 financial liabilities consist of deferred consideration, valued using the net present value of the expected future
amounts payable. The key inputs are management-approved forecasts and expectations against the criteria of the deferred
consideration to set expectations of future amounts payable. The deferred consideration is reviewed and revalued at regular
intervals over the deferred consideration period (Note 24). The fair value is sensitive to the change in management-approved
forecasts; however, at each reporting date, the relevant management-approved forecasts are deemed to be the most accurate and
relevant input to the fair value measurement.
18. Financial assets at fair value through profit or loss
The Group holds 500,000 shares in five of the SVS Cornelian Risk Managed Passive Funds. During the year ended 30 June 2022,
the Group recognised a loss on these investments of £36,000. The Group’s holding in the SVS Cornelian Risk Managed Passive
Funds at 30 June 2022 was £588,000.
In September 2021, the Group invested £215,000 in the Blueprint Multi Asset Fund range across the various models within the
fund range. During the period from acquisition to 30 June 2022, the Group recognised a loss on these investments of £19,000.
The Group’s holding in the Blueprint Multi Asset Fund range at 30 June 2022 was £196,000.
Financial assets
At 1 July 2021
Additions
Changes in fair value
At 30 June 2022
Comprising:
Finance cost of deferred consideration
Financial liabilities
At 1 July 2021
Payments made
At 30 June 2022
Comprising:
Deferred consideration (Note 24)
Total financial liabilities
At 1 July
Additions
Changes in fair value
At 30 June
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19. Deferred income tax
Deferred income tax assets are only recognised to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised. An analysis of the Group’s deferred assets and deferred tax liabilities is
shown below.
Deferred tax assets
Deferred tax assets to be settled after more than one year
Deferred tax assets to be settled within one year
Total deferred tax assets
Deferred tax liabilities
Deferred tax liabilities to be settled after more than one year
Deferred tax liabilities to be settled within one year
Total deferred tax liabilities
The gross movement on the deferred income tax account during the year was as follows:
At 1 July
Additional liability on acquisition of client-relationship intangible assets (Note 11)
Adjustment on acquisition of business combination
Charge to the Consolidated statement of comprehensive income (Note 9)
Credit recognised in equity
At 30 June
The change in deferred income tax assets and liabilities during the year was as follows:
2022
£’000
1,486
1,516
3,002
(7,019)
(940)
(7,959)
2022
£’000
(6,166)
–
–
(1)
1,210
(4,957)
Deferred tax assets
At 1 July 2020
Adjustment on acquisition of business combination
Under provision in prior years
Credit/(charge) to the Consolidated statement of
comprehensive income
Credit to equity
At 30 June 2021
(Under)/over provision in prior years
Charge to the Consolidated statement of
comprehensive income
Credit to equity
At 30 June 2022
Share-based
payments
£’000
Trading
losses carried
forward
£’000
Dilapidations
£’000
Accelerated
capital
allowances
£’000
889
–
–
77
890
1,856
–
(399)
1,210
2,667
457
–
–
184
–
641
(260)
(248)
–
133
–
–
44
(15)
–
29
48
(12)
–
65
178
(21)
–
53
–
210
–
(73)
–
137
2021
£’000
2,022
714
2,736
(8,022)
(880)
(8,902)
2021
£’000
(5,706)
(1,219)
(21)
(110)
890
(6,166)
Total
£’000
1,524
(21)
44
299
890
2,736
(212)
(732)
1,210
3,002
The carrying amount of the deferred tax asset is reviewed at each reporting date and is only recognised to the extent that it is
probable that future taxable profits of the Group will allow the asset to be recovered.
150
150
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
151
151
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
19. Deferred income tax continued
Deferred tax liabilities
At 1 July 2020
Additional liability on acquisition of client-relationship intangible assets
(Credit)/charge to the Consolidated statement of comprehensive income
Under provision in prior years
At 30 June 2021
Credit to the Consolidated statement of comprehensive income
At 30 June 2022
20. Trade and other receivables
Trade receivables
Other receivables
Prepayments and accrued income
Total current trade and other receivables
Accelerated
capital
allowances on
research and
development
£’000
Intangible
asset
amortisation
£’000
308
–
(16)
160
452
(63)
389
6,922
1,219
309
–
8,450
(880)
7,570
2022
£’000
3,690
1,666
25,117
30,473
Total
£’000
7,230
1,219
293
160
8,902
(943)
7,959
2021
£’000
1,820
447
26,182
28,449
The credit risk balance is immaterial in relation to trade receivables, refer to Note 31(c) for details on the credit risk assessment.
Accrued income includes portfolio management fee income for the quarter ended 30 June 2022, outstanding at the Consolidated
statement of financial position date.
Included in other receivables is a balance of £1,500,000 receivable from SS&C towards the costs incurred in the transition of the
client- and adviser-facing processes to their platform and systems, which was received in July 2022.
21. Cash and cash equivalents
Cash and cash equivalents are distributed across a range of financial institutions with high credit ratings in accordance with the
Group’s treasury policy. Cash at bank comprises current accounts and immediately accessible deposit accounts.
152
152
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
19. Deferred income tax continued
Deferred tax liabilities
At 1 July 2020
Additional liability on acquisition of client-relationship intangible assets
(Credit)/charge to the Consolidated statement of comprehensive income
Under provision in prior years
At 30 June 2021
At 30 June 2022
Credit to the Consolidated statement of comprehensive income
20. Trade and other receivables
Trade receivables
Other receivables
Prepayments and accrued income
Total current trade and other receivables
Accelerated
capital
allowances on
research and
Intangible
asset
development
amortisation
£’000
£’000
308
–
(16)
160
452
(63)
389
6,922
1,219
309
–
8,450
(880)
7,570
2022
£’000
3,690
1,666
25,117
30,473
Total
£’000
7,230
1,219
293
160
8,902
(943)
7,959
2021
£’000
1,820
447
26,182
28,449
The credit risk balance is immaterial in relation to trade receivables, refer to Note 31(c) for details on the credit risk assessment.
Accrued income includes portfolio management fee income for the quarter ended 30 June 2022, outstanding at the Consolidated
statement of financial position date.
Included in other receivables is a balance of £1,500,000 receivable from SS&C towards the costs incurred in the transition of the
client- and adviser-facing processes to their platform and systems, which was received in July 2022.
21. Cash and cash equivalents
Cash and cash equivalents are distributed across a range of financial institutions with high credit ratings in accordance with the
Group’s treasury policy. Cash at bank comprises current accounts and immediately accessible deposit accounts.
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22. Lease liabilities
At 1 July 2020
Additions
Payments made against lease liabilities
Finance cost of lease liabilities
At 30 June 2021
Additions
Payments made against lease liabilities
Finance cost of lease liabilities
At 30 June 2022
Analysed as:
Amounts falling due within one year
Amounts falling due after more than one year
Total lease liabilities
Cars
£’000
Property
£’000
–
–
–
–
–
328
(41)
5
292
90
202
292
7,934
585
(1,969)
319
6,869
333
(1,744)
277
5,735
1,862
3,873
5,735
Total
£’000
7,934
585
(1,969)
319
6,869
661
(1,785)
282
6,027
1,952
4,075
6,027
In the year ended 30 June 2022, the Group entered into a new car leasing arrangement to provide a salary sacrifice car leasing
scheme for employees. Each vehicle leased to individual employees creates a separate right-of-use asset (Note 16) and lease
liability measured at present value of the remaining lease payments, discounted using the lessee’s estimated incremental
borrowing rate.
23. Provisions
Exceptional
costs of
resolving
legacy
matters
£’000
608
Client
compensation
£’000
38
FSCS levy
£’000
1,501
Leasehold
dilapidations
£’000
380
Tax-related
£’000
–
At 1 July 2020
Charge to the Consolidated statement
of comprehensive income
Utilised during the year
At 30 June 2021
Charge to the Consolidated statement
of comprehensive income
Transfer from trade and other
payables
Utilised during the year
At 30 June 2022
Analysed as:
Amounts falling due within one year
Amounts falling due after more than
one year
Total provisions
347
(385)
–
398
–
(286)
112
112
–
112
–
(8)
600
2,218
(2,474)
1,245
–
1,304
–
(600)
–
–
(2,163)
386
–
–
–
386
–
386
136
(103)
413
126
–
(172)
367
41
326
367
Total
£’000
2,527
2,701
(2,970)
2,258
–
–
–
162
1,990
1,217
(1,099)
280
1,217
(4,320)
1,145
280
–
280
819
326
1,145
152
152
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
153
153
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
23. Provisions continued
a. Client compensation
Client compensation provisions relate to the potential liability arising from client complaints against the Group. Complaints are
assessed on a case-by-case basis and provisions for compensation are made where judged necessary. The amount recognised
within provisions for client compensation represents management’s best estimate of the potential liability. The timing of the
corresponding outflows is uncertain as these are made as and when claims arise.
b. Exceptional costs of resolving legacy matters
Following a review into legacy matters arising from the former Spearpoint business, which was acquired by the Group in 2012,
a provision was recognised for costs of resolving these, including associated expenses in the years ended 30 June 2017 and 30
June 2018. These matters related to a number of discretionary portfolios formerly managed by Spearpoint, now managed by
the Group and a Dublin-based fund, for which Spearpoint acted as investment manager. The Directors deem the legacy matters
to be resolved and therefore a provision is no longer required. The amount utilised during the year of £600,000 represents the
remaining offers paid to claimants and associated legal fees during the year ended 30 June 2022. There are a small number of
clients who have rejected the goodwill offers, and the Group has recognised a contingent liability as a result of these, see Note 33
for further details.
c. FSCS levy
Following confirmation by the FSCS in July 2022 of its final industry levy for the 2022/23 scheme year, the Group has made a
provision of £386,000 (FY21: £1,245,000) for its estimated share.
d. Leasehold dilapidations
Leasehold dilapidations relate to dilapidation provisions expected to arise on leasehold premises held by the Group, and monies
due under the contract with the assignee of leases on the Group’s leased properties.
e. Tax-related
During the year ended 30 June 2022, the Group recognised a provision in relation to an input VAT review, making a voluntary
disclosure to HM Revenue and Customs (“HMRC”), totalling £162,000.
At 1 July 2021, the Group reclassified other tax-related provisions from trade and other payables, totalling £1,217,000. These
amounts were previously voluntarily disclosed to HMRC, however HMRC had not responded on the disclosures and it was
therefore deemed more appropriate to reclassify the balance as a provision.
As discussed in Note 10, the Group received a refund from HMRC in relation to previously paid VAT on certain Group services.
As disclosed in the 2020 Annual Report and Accounts, the Group previously recognised an estimated VAT liability due to HMRC
in relation to certain Group services. Following HMRC’s confirmation that this VAT is no longer payable on these services, the
Group released £1,044,000 in relation to the estimated VAT payable, which is no longer payable. The remaining utilised amount of
£55,000 relates to the HMRC four-year time limitation rules, reducing the relevant provision accordingly.
154
154
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
23. Provisions continued
a. Client compensation
Client compensation provisions relate to the potential liability arising from client complaints against the Group. Complaints are
assessed on a case-by-case basis and provisions for compensation are made where judged necessary. The amount recognised
within provisions for client compensation represents management’s best estimate of the potential liability. The timing of the
corresponding outflows is uncertain as these are made as and when claims arise.
b. Exceptional costs of resolving legacy matters
Following a review into legacy matters arising from the former Spearpoint business, which was acquired by the Group in 2012,
a provision was recognised for costs of resolving these, including associated expenses in the years ended 30 June 2017 and 30
June 2018. These matters related to a number of discretionary portfolios formerly managed by Spearpoint, now managed by
the Group and a Dublin-based fund, for which Spearpoint acted as investment manager. The Directors deem the legacy matters
to be resolved and therefore a provision is no longer required. The amount utilised during the year of £600,000 represents the
remaining offers paid to claimants and associated legal fees during the year ended 30 June 2022. There are a small number of
clients who have rejected the goodwill offers, and the Group has recognised a contingent liability as a result of these, see Note 33
for further details.
c. FSCS levy
e. Tax-related
Following confirmation by the FSCS in July 2022 of its final industry levy for the 2022/23 scheme year, the Group has made a
provision of £386,000 (FY21: £1,245,000) for its estimated share.
d. Leasehold dilapidations
Leasehold dilapidations relate to dilapidation provisions expected to arise on leasehold premises held by the Group, and monies
due under the contract with the assignee of leases on the Group’s leased properties.
During the year ended 30 June 2022, the Group recognised a provision in relation to an input VAT review, making a voluntary
disclosure to HM Revenue and Customs (“HMRC”), totalling £162,000.
At 1 July 2021, the Group reclassified other tax-related provisions from trade and other payables, totalling £1,217,000. These
amounts were previously voluntarily disclosed to HMRC, however HMRC had not responded on the disclosures and it was
therefore deemed more appropriate to reclassify the balance as a provision.
As discussed in Note 10, the Group received a refund from HMRC in relation to previously paid VAT on certain Group services.
As disclosed in the 2020 Annual Report and Accounts, the Group previously recognised an estimated VAT liability due to HMRC
in relation to certain Group services. Following HMRC’s confirmation that this VAT is no longer payable on these services, the
Group released £1,044,000 in relation to the estimated VAT payable, which is no longer payable. The remaining utilised amount of
£55,000 relates to the HMRC four-year time limitation rules, reducing the relevant provision accordingly.
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24. Deferred consideration
Deferred consideration payable is split between non-current liabilities and current liabilities to the extent that it is due for
payment within one year of the reporting date. It reflects the Directors’ best estimate of amounts payable in the future in respect
of certain client relationships and subsidiary undertakings that were acquired by the Group. Deferred consideration is measured
at its fair value based on discounted expected future cash flows. The movements in the total deferred consideration balance
during the year were as follows:
At 1 July
Additions
Finance cost of deferred consideration
Fair value adjustments
Payments made during the year
At 30 June
Analysed as:
Amounts falling due within one year
Amounts falling due after more than one year
Total deferred consideration
2022
£’000
6,237
–
90
–
(6,000)
327
327
–
327
2021
£’000
7,991
308
299
60
(2,421)
6,237
5,934
303
6,237
During the year ended 30 June 2021, the Group completed the Lloyds Channel Islands acquisition (Note 11) and part of the
consideration is to be deferred over a period of two years. The total cash deferred consideration of £334,000 was recognised at
its fair value of £308,000 on acquisition. The deferred consideration is payable in December 2022 based on the future revenue
generated by the discretionary business acquired. During the year ended 30 June 2022, the Group recognised a finance cost
of £12,000 on the Lloyds Channel Islands acquisition deferred consideration. The fair value of the Lloyds Channel Islands
acquisition deferred consideration at 30 June 2022 was £327,000.
During the year ended 30 June 2022, the final payment was made in relation to the acquisition of Cornelian Asset Managers
Group Limited totalling £6,000,000 (FY21: £2,000,000). Prior to the final payment, £78,000 was recognised as a finance cost of
deferred consideration within FY22. Full details of the Cornelian acquisition are disclosed in Note 11 of the 2020 Annual Report
and Accounts.
Deferred consideration is classified as Level 3 within the fair value hierarchy, as defined in Note 17.
25. Trade and other payables
Trade payables
Other taxes and social security
Other payables
Accruals and deferred income
Total trade and other payables
2022
£’000
4,668
2,389
326
16,478
23,861
2021
£’000
4,758
5,744
1,115
15,438
27,055
Included within accruals and deferred income is an accrual of £570,000 (FY21: £508,000) in respect of employer’s National
Insurance contributions arising from share option awards under the LTIS (Note 30b). The options have been valued using a
Black–Scholes model based on the market price of the Company’s shares at the grant date (Note 30).
154
154
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
155
155
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
26. Other non-current liabilities
At 1 July
Additional liability in respect of share option awards
Transfer to current liabilities
At 30 June
2022
£’000
548
299
(277)
570
2021
£’000
330
384
(166)
548
Other non-current liabilities include employer’s National Insurance contributions arising from share option awards under the
LTIS and LTIP schemes. During the year, an additional liability was recognised during the year of £299,000 (FY21: £384,000)
in respect of existing awards, granted in previous years, that are expected to vest in the future. During the year, an amount of
£277,000 (FY21: £166,000) was transferred to current liabilities, reflecting awards that are expected to vest within the next 12
months. At 30 June 2022, the non-current liability for employer’s National Insurance contributions arising from share option
awards under the LTIS and LTIP schemes was £570,000 (FY21: £548,000).
27. Reconciliation of operating profit to net cash inflow from operating activities
Operating profit
Adjustments for:
− Amortisation of intangible assets
− Depreciation of property, plant and equipment
− Depreciation of right-of-use assets
− Other gains/(losses) - net
− Increase in receivables
− (Decrease)/increase in payables
− Decrease in provisions
− Increase in other non-current liabilities
− Share-based payments charge
Net cash inflow from operating activities
2022
£’000
26,867
6,922
843
1,669
55
(2,024)
(3,194)
(1,113)
22
2,779
32,826
2021
£’000
20,756
7,682
1,045
1,614
1,438
(2,333)
3,765
(269)
218
2,991
36,907
156
156
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
26. Other non-current liabilities
At 1 July
Additional liability in respect of share option awards
Transfer to current liabilities
At 30 June
Other non-current liabilities include employer’s National Insurance contributions arising from share option awards under the
LTIS and LTIP schemes. During the year, an additional liability was recognised during the year of £299,000 (FY21: £384,000)
in respect of existing awards, granted in previous years, that are expected to vest in the future. During the year, an amount of
£277,000 (FY21: £166,000) was transferred to current liabilities, reflecting awards that are expected to vest within the next 12
months. At 30 June 2022, the non-current liability for employer’s National Insurance contributions arising from share option
awards under the LTIS and LTIP schemes was £570,000 (FY21: £548,000).
27. Reconciliation of operating profit to net cash inflow from operating activities
Operating profit
Adjustments for:
− Amortisation of intangible assets
− Depreciation of property, plant and equipment
− Depreciation of right-of-use assets
− Other gains/(losses) - net
− Increase in receivables
− (Decrease)/increase in payables
− Decrease in provisions
− Increase in other non-current liabilities
− Share-based payments charge
Net cash inflow from operating activities
2022
£’000
548
299
(277)
570
2021
£’000
330
384
(166)
548
2022
£’000
26,867
6,922
843
1,669
55
(2,024)
(3,194)
(1,113)
22
2,779
32,826
2021
£’000
20,756
7,682
1,045
1,614
1,438
(2,333)
3,765
(269)
218
2,991
36,907
Introduction
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Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
28. Share capital and share premium account
The movements in share capital and share premium during the year were as follows:
At 1 July 2020
Shares issued:
− on exercise of options
−
to Sharesave Scheme
At 30 June 2021
Shares issued:
− on exercise of options
−
to Sharesave Scheme
At 30 June 2022
Exercise
price
p
1,629.8 – 2,260.0
1,600.0 – 2,300.0
2,127.0 – 2,730.0
1,172.0 – 1,988.0
Number of
shares
16,127,102
7,976
46,060
16,181,138
6,886
17,518
16,205,542
Share
capital
£’000
161
–
–
161
–
1
162
Share
premium
account
£’000
77,982
65
656
78,703
120
318
79,141
Total
£’000
78,143
65
656
78,864
120
319
79,303
The total number of ordinary shares issued and fully paid at 30 June 2022 was 16,205,542 (FY21: 16,181,138) with a par value of 1p
per share.
There was £439,000 share capital issued on exercise of options and to Sharesave Scheme members in the year ended 30 June
2022 (FY21: £721,000).
Employee Benefit Trust
The Group established an Employee Benefit Trust (“EBT”) on 3 December 2010 to acquire ordinary shares in the Company to
satisfy awards under the Group’s Long-Term Incentive Scheme, see Note 30(c). At 30 June 2022, the EBT held 580,806 (FY21:
608,683) 1p ordinary shares in the Company, acquired for a total consideration of £14,100,000 (FY21: £11,000,000) with a market
value of £12,923,000 (FY21: £13,908,000). They are classified as treasury shares in the Consolidated statement of financial
position, their cost being deducted from retained earnings within shareholders’ equity.
156
156
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
157
157
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
29. Retained earnings and other reserves
The movements in retained earnings during the year were as follows:
At beginning of the year
Profit for the financial year
Transfer from share option reserve
Purchase of own shares by Employee Benefit Trust
Dividends paid
At end of the year
2022
£’000
46,672
23,411
2,494
(3,100)
(10,317)
59,160
2021
£’000
39,000
19,642
1,812
(5,210)
(8,572)
46,672
The movements in other reserves during the year were as follows. All movements relate to movement on the share option
reserve:
At beginning of the year
Share-based payments
Transfer to retained earnings
Tax credit on share-based payments
At end of the year
Other reserves comprise the following balances:
Share option reserve
Merger reserve
Total other reserves
2022
£’000
8,275
2,779
(2,494)
1,210
9,770
2022
£’000
9,770
192
9,962
2021
£’000
6,206
2,991
(1,812)
890
8,275
2021
£’000
8,275
192
8,467
Share option reserve
a.
The share option reserve represents the cumulative charge to the Consolidated statement of comprehensive income for the
Group’s equity-settled share-based payment schemes, as described in Note 30.
b. Merger reserve
The merger reserve arises when the consideration and nominal value of the shares issued during a merger and the fair value of
assets transferred during the business combination differ.
158
158
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
29. Retained earnings and other reserves
The movements in retained earnings during the year were as follows:
The movements in other reserves during the year were as follows. All movements relate to movement on the share option
At beginning of the year
Profit for the financial year
Transfer from share option reserve
Purchase of own shares by Employee Benefit Trust
Dividends paid
At end of the year
reserve:
At beginning of the year
Share-based payments
Transfer to retained earnings
Tax credit on share-based payments
At end of the year
Other reserves comprise the following balances:
Share option reserve
Merger reserve
Total other reserves
a.
Share option reserve
b. Merger reserve
2022
£’000
46,672
23,411
2,494
(3,100)
(10,317)
59,160
2022
£’000
8,275
2,779
(2,494)
1,210
9,770
2022
£’000
9,770
192
9,962
2021
£’000
39,000
19,642
1,812
(5,210)
(8,572)
46,672
2021
£’000
6,206
2,991
(1,812)
890
8,275
2021
£’000
8,275
192
8,467
The share option reserve represents the cumulative charge to the Consolidated statement of comprehensive income for the
Group’s equity-settled share-based payment schemes, as described in Note 30.
The merger reserve arises when the consideration and nominal value of the shares issued during a merger and the fair value of
assets transferred during the business combination differ.
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
30. Equity-settled share-based payments
All share options granted to employees under the Group’s equity-settled share-based payment schemes are valued using a
Black–Scholes model, based on the market price of the Company’s shares at the grant date and annualised volatility of up to
50%, covering the period to the end of the contractual life. Volatility has been estimated on the basis of the Company’s historical
share price subsequent to flotation. The risk-free annual rate of interest is deemed to be the yield on a gilt-edged security with
a maturity term between seven months and five years, ranging from 0.01% to 2.00%. No options outstanding at 30 June 2022
(FY21: none) carry any dividend or voting rights.
The share options in issue under the various equity-settled share-based payment schemes have been valued at prices ranging
from £7.11 to £24.67 per share. The charge to the Consolidated statement of comprehensive income for the year in respect of these
was £2,779,000 (FY21: £2,991,000). The weighted average remaining contractual life of all equity-settled share-based payment
schemes at 30 June 2022 was 1.04 years (FY21: 1.52 years). The weighted average share price of all options exercised during the
year was £14.97 (FY21: £16.59).
A summary of the inputs into the fair value calculations for options granted during the year is set out below.
Grant date
Share price at grant £
Vesting period
Volatility %
Annual dividend %
Risk-free rate %
Option value £
Long-Term
Incentive
Plan
Various
£25.30
9 – 48 months
35.84 – 40.72%
2.49%
0.18 – 0.44%
£21.05 – £23.39
Save As You
Earn (SAYE)
24/05/2022
£23.90
36 months
39.36%
2.64%
1.47%
£7.11
The exercise price and fair value of share options granted during the year were as follows:
Long-Term Incentive Plan
Employee Sharesave Scheme
Exercise price
£
–
19.88
Fair value
£
21.05-23.39
7.11
Number of
options
153,726
44,109
a. Long-Term Incentive Plan
The Long-Term Incentive Plan was approved by shareholders at the 2018 Annual General Meeting and encompasses annual
deferral of bonuses into a Deferred Bonus Plan (“DBP”), Long-Term Incentive Plan (“LTIP”) awards made to senior management
and Exceptional Share Option Awards (“ESOA”). Certain ESOA grants carry performance conditions. All awards are subject to
continued employment and are made at the discretion of the Remuneration Committee. No awards expired during the year
(FY21: none).
158
158
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
159
159
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
30. Equity-settled share-based payments continued
At 1 July
Awarded in the year
Exercised in the year
Forfeited in the year
At 30 June
2022
2021
Weighted
average
exercise price
£
–
–
–
–
–
Number of
options
806,057
153,726
(112,501)
(135,519)
711,763
Weighted
average
exercise price
£
–
–
–
–
–
Number of
options
658,468
240,965
(46,713)
(46,663)
806,057
Deferred Bonus Plan (“DBP”) Awards
i.
The number of share options outstanding at the reporting date was as follows:
Scheme year (grant date)
2018
2019
2020
2021
All years
Exercise
price
£ Vesting period
–
–
–
–
2019 – 2021
2020 – 2022
2021 – 2023
2022 – 2024
2022
Number of
options
2021
Number of
options
18,114
30,882
49,120
64,804
162,920
49,579
55,823
70,365
–
175,767
Long-Term Incentive Plan (“LTIP”) Awards
ii.
The number of share options outstanding at the reporting date was as follows:
Scheme year (grant date)
2018
2019
2020
2021
All years
Exercise
price
£ Vesting period
2022
Number of
options
2021
Number of
options
–
–
–
–
2021
2022
2023
2024
–
16,292
23,955
81,890
122,137
29,300
26,352
33,974
–
89,626
iii. Exceptional Share Option Awards (“ESOA”)
The number of share options outstanding at the reporting date was as follows:
Financial year of grant
2019
2020
2021
2022
All years
Exercise
price
£ Vesting period
–
–
–
–
2019 – 2024
2020 – 2024
2021 – 2024
2022 – 2025
2022
Number of
options
2021
Number of
options
185,361
102,524
131,789
7,032
426,706
246,802
160,283
133,579
–
540,664
160
160
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
30. Equity-settled share-based payments continued
b. Long-Term Incentive Scheme (“LTIS”)
The Group made no new awards under the LTIS during the year. The conditional awards, which vest three years after the grant
date, are subject to the satisfaction of specified performance criteria, measured over a three-year performance period. No awards
expired during the year (FY21: none). Off-cycle awards were made in 2017 and 2018 to senior executives to replace awards
forfeited from previous employers.
i.
Deferred Bonus Plan (“DBP”) Awards
The number of share options outstanding at the reporting date was as follows:
At 1 July
Exercised in the year
Forfeited in the year
At 30 June
Exercise
price
2022
2021
Number of
Number of
The number of share options outstanding at the reporting date was as follows:
Scheme year (grant date)
2012
2013
2014
2015
2016
2017 (off-cycle)
2018 (off-cycle)
All years
Exercise
price
£ Vesting period
–
–
–
–
–
–
–
2015
2016
2017
2018
2019
2020
2019 – 2020
2022
Number of
options
2021
Number of
options
43,340
(37,898)
–
5,442
123,846
(41,915)
(38,591)
43,340
2022
Number of
options
2021
Number of
options
–
–
–
1,077
1,416
2,949
–
5,442
552
1,230
4,037
6,737
8,680
6,001
16,103
43,340
At 30 June 2022, options for schemes up to and including the 2018 scheme have vested and are able to be exercised.
c. Employee Benefit Trust (“EBT”)
Brooks Macdonald Group plc established an Employee Benefit Trust on 3 December 2010 to acquire ordinary shares in the
Company to satisfy awards under the LTIS and LTIP. All finance costs and administration expenses connected with the EBT are
charged to the Consolidated statement of comprehensive income as they accrue. The EBT has waived its rights to dividends.
The following table shows the number of shares held by the EBT that have not yet vested unconditionally.
At 1 July
Acquired in the year
Exercised in the year
At 30 June
2022
Number of
shares
608,683
124,297
(152,174)
580,806
2021
Number of
shares
409,163
288,148
(88,628)
608,683
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
30. Equity-settled share-based payments continued
£
–
–
–
–
–
options
49,579
55,823
70,365
–
175,767
options
29,300
26,352
33,974
–
89,626
2022
2021
Weighted
average
Weighted
average
Number of
exercise price
Number of
exercise price
options
806,057
153,726
(112,501)
(135,519)
711,763
£
–
–
–
–
–
options
658,468
240,965
(46,713)
(46,663)
806,057
£ Vesting period
2019 – 2021
2020 – 2022
2021 – 2023
2022 – 2024
options
18,114
30,882
49,120
64,804
162,920
2021
2022
2023
2024
–
16,292
23,955
81,890
122,137
–
–
–
–
–
–
–
–
–
–
–
–
Exercise
price
2022
2021
Number of
Number of
£ Vesting period
2019 – 2024
2020 – 2024
2021 – 2024
2022 – 2025
options
185,361
102,524
131,789
7,032
options
246,802
160,283
133,579
–
426,706
540,664
ii.
Long-Term Incentive Plan (“LTIP”) Awards
The number of share options outstanding at the reporting date was as follows:
Scheme year (grant date)
Exercise
price
2022
2021
Number of
Number of
£ Vesting period
options
iii. Exceptional Share Option Awards (“ESOA”)
The number of share options outstanding at the reporting date was as follows:
Financial year of grant
At 1 July
Awarded in the year
Exercised in the year
Forfeited in the year
At 30 June
Scheme year (grant date)
2018
2019
2020
2021
All years
2018
2019
2020
2021
All years
2019
2020
2021
2022
All years
160
160
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
161
161
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
30. Equity-settled share-based payments continued
d. Company Share Option Plan (“CSOP”)
The Company has established a Company Share Option Plan, which was approved by HMRC in November 2013. The CSOP is a
discretionary scheme whereby employees or Directors are granted an option to purchase the Company’s shares in the future
at a price set on the date of the grant. The maximum award under the terms of the scheme is a total market value of £30,000
per recipient. The performance conditions attached to the scheme require an increase in the diluted earnings per share of the
Company of 2% more than the increase in the RPI over the three years starting with the financial year in which the option is
granted.
At 1 July
Exercised in the year
Forfeited in the year
At 30 June
2022
2021
Weighted
average
exercise
price
£
16.67
17.40
17.23
16.32
Number of
options
42,570
(9,115)
(5,024)
28,431
Weighted
average
exercise
price
£
16.92
16.00
18.99
16.67
Number of
options
28,431
(6,886)
(2,724)
18,821
The number of share options outstanding at the reporting date was as follows:
Scheme year (grant date)
2013
2014
2015
2016
2017 (off-cycle)
2017
All years
Exercise
price
£ Vesting period
2022
Number of
options
2021
Number of
options
14.52
13.81
17.19
17.25
20.11
19.66
2016
2017
2018
2019
2020
2020
2,067
3,262
9,596
3,896
–
–
18,821
2,067
4,349
13,377
6,868
279
1,491
28,431
At 30 June 2022, all options for the CSOP schemes have vested and are able to be exercised. 873 awards expired during the year
under the CSOP 2015 scheme and 1,851 awards expired during the year under the CSOP 2016 scheme (FY21: none).
162
162
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
30. Equity-settled share-based payments continued
d. Company Share Option Plan (“CSOP”)
The Company has established a Company Share Option Plan, which was approved by HMRC in November 2013. The CSOP is a
discretionary scheme whereby employees or Directors are granted an option to purchase the Company’s shares in the future
at a price set on the date of the grant. The maximum award under the terms of the scheme is a total market value of £30,000
per recipient. The performance conditions attached to the scheme require an increase in the diluted earnings per share of the
Company of 2% more than the increase in the RPI over the three years starting with the financial year in which the option is
granted.
The number of share options outstanding at the reporting date was as follows:
At 1 July
Exercised in the year
Forfeited in the year
At 30 June
Scheme year (grant date)
2013
2014
2015
2016
2017 (off-cycle)
2017
All years
2022
2021
Weighted
average
exercise
price
Number of
Number of
options
28,431
(6,886)
(2,724)
18,821
Exercise
price
14.52
13.81
17.19
17.25
20.11
19.66
£
16.67
17.40
17.23
16.32
2016
2017
2018
2019
2020
2020
Weighted
average
exercise
price
£
16.92
16.00
18.99
16.67
2,067
4,349
13,377
6,868
279
1,491
28,431
options
42,570
(9,115)
(5,024)
28,431
2,067
3,262
9,596
3,896
–
–
18,821
2022
2021
Number of
Number of
£ Vesting period
options
options
At 30 June 2022, all options for the CSOP schemes have vested and are able to be exercised. 873 awards expired during the year
under the CSOP 2015 scheme and 1,851 awards expired during the year under the CSOP 2016 scheme (FY21: none).
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
30. Equity-settled share-based payments continued
e. Employee Sharesave Scheme (“SAYE”)
Under the scheme, employees can contribute up to £500 a month over a three-year period to acquire shares in the Company.
At the end of the savings period, employees can elect to receive shares or receive their savings in cash.
At 1 July
Granted in the year
Exercised in the year
Forfeited in the year
At 30 June
2022
2021
Weighted
average
exercise
price
£
13.15
19.88
14.02
13.30
14.25
Number of
options
289,849
55,346
(44,921)
(51,884)
248,390
Weighted
average
exercise
price
£
12.73
17.04
14.60
13.71
13.15
Number of
options
248,390
44,109
(17,518)
(20,870)
254,111
The number of share options outstanding at the reporting date was as follows:
Scheme year (grant date)
2018
2019
2020
2021
2022
All years
Exercise price
£ Vesting period
2022
Number of
options
2021
Number of
options
14.94
14.00
11.72
17.04
19.88
2021
2022
2023
2024
2025
–
7,207
152,650
50,597
43,657
254,111
2,189
24,006
167,060
55,135
–
248,390
At 30 June 2022, options for the 2019 scheme have vested and are able to be exercised. 761 awards under the 2018 schemes
expired during the year (FY21: none).
162
162
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
163
163
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
31. Financial risk management
The Group has identified the financial risks arising from its activities and has established policies and procedures as part of a
formal structure for managing risk, including establishing risk lines, reporting lines, mandates and other control procedures.
The structure is reviewed regularly. The Group does not use derivative financial instruments for risk management purposes.
a. Liquidity risk
Liquidity risk is the risk that the Group is unable to meet its payment obligations associated with its financial liabilities when they
fall due.
The primary objective of the Group’s treasury policy is to manage short-term liquidity requirements and to ensure that the
Group maintains a surplus of immediately realisable assets over its liabilities, such that all known and potential cash obligations
can be met.
The table below shows the cash inflows and outflows from the Group under non-derivative financial assets and liabilities,
together with cash and bank balances available on demand.
At 30 June 2022
Cash flows from financial assets
Financial assets at fair value through
other comprehensive income
Financial assets at fair value through
profit or loss
Cash and balances at bank
Trade receivables
Other receivables
Cash flows from financial liabilities
Trade payables
Other financial liabilities
Not more
than 3
months
£’000
After 3
months but
not more
than 1 year
£’000
After 1
year but
not more
than 6 years
£’000
No fixed
payment
date
£’000
On demand
£’000
–
–
–
61,328
–
–
61,328
–
–
–
–
–
3,690
26,783
30,473
(4,668)
(19,809)
(24,477)
–
–
–
–
–
–
–
–
–
–
–
–
–
(2,482)
(2,482)
–
(4,971)
(4,971)
500
784
–
–
–
1,284
–
–
–
Total
£’000
500
784
61,328
3,690
26,783
93,085
(4,668)
(27,262)
(31,930)
Net liquidity gap
61,328
5,996
(2,482)
(4,971)
1,284
61,155
At 30 June 2021
Cash flows from financial assets
Financial assets at fair value through
other comprehensive income
Financial assets at fair value through
profit or loss
Cash and balances at bank
Trade receivables
Other receivables
Cash flows from financial liabilities
Trade payables
Other financial liabilities
–
–
–
54,899
–
–
54,899
–
–
–
–
–
1,820
26,629
28,449
(4,758)
(23,007)
(27,765)
–
–
–
–
–
–
–
–
–
–
–
–
–
(8,650)
(8,650)
–
(6,552)
(6,552)
500
624
–
–
–
1,124
–
–
–
500
624
54,899
1,820
26,629
84,472
(4,758)
(38,209)
(42,967)
Net liquidity gap
54,899
684
(8,650)
(6,552)
1,124
41,505
164
164
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
31. Financial risk management
The Group has identified the financial risks arising from its activities and has established policies and procedures as part of a
formal structure for managing risk, including establishing risk lines, reporting lines, mandates and other control procedures.
The structure is reviewed regularly. The Group does not use derivative financial instruments for risk management purposes.
a. Liquidity risk
fall due.
can be met.
Liquidity risk is the risk that the Group is unable to meet its payment obligations associated with its financial liabilities when they
The primary objective of the Group’s treasury policy is to manage short-term liquidity requirements and to ensure that the
Group maintains a surplus of immediately realisable assets over its liabilities, such that all known and potential cash obligations
The table below shows the cash inflows and outflows from the Group under non-derivative financial assets and liabilities,
together with cash and bank balances available on demand.
On demand
£’000
than 3
months
£’000
Not more
months but
After 3
not more
After 1
year but
not more
than 1 year
than 6 years
£’000
£’000
No fixed
payment
date
£’000
At 30 June 2022
Cash flows from financial assets
Financial assets at fair value through
other comprehensive income
Financial assets at fair value through
profit or loss
Cash and balances at bank
61,328
Trade receivables
Other receivables
61,328
Cash flows from financial liabilities
Trade payables
Other financial liabilities
At 30 June 2021
Cash flows from financial assets
Financial assets at fair value through
other comprehensive income
Financial assets at fair value through
profit or loss
Cash and balances at bank
54,899
Trade receivables
Other receivables
54,899
Cash flows from financial liabilities
Trade payables
Other financial liabilities
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3,690
26,783
30,473
(4,668)
(19,809)
(24,477)
1,820
26,629
28,449
(4,758)
(23,007)
(27,765)
Total
£’000
500
784
61,328
3,690
26,783
93,085
(4,668)
(27,262)
(31,930)
500
624
54,899
1,820
26,629
84,472
(4,758)
(38,209)
(42,967)
500
784
1,284
–
–
–
–
–
–
–
–
–
–
–
–
500
624
1,124
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2,482)
(2,482)
(4,971)
(4,971)
(8,650)
(8,650)
(6,552)
(6,552)
Net liquidity gap
61,328
5,996
(2,482)
(4,971)
1,284
61,155
Net liquidity gap
54,899
684
(8,650)
(6,552)
1,124
41,505
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
31. Financial risk management continued
b. Market risk
Interest rate risk
The Group may elect to invest surplus cash balances in short-term cash deposits with maturity dates not exceeding three
months. Consequently, the Group has a limited exposure to interest rate risk due to fluctuations in the prevailing level of market
interest rates.
A 1% fall in the average monthly interest rate receivable on the Group’s cash and cash equivalents would have the impact of
reducing interest receivable and therefore profit before taxation by £613,000 (FY21: £549,000). An increase of 1% would have an
equal and opposite effect.
Foreign exchange risk
The Group does not have any material exposure to transactional foreign currency risk and therefore no analysis of foreign
exchange risk is provided.
Price risk
Price risk is the risk that the fair value of the future cash flows from financial instruments will fluctuate due to changes in market
prices (other than those arising from interest rate risk or currency risk). The Group is exposed to price risk through its holdings of
equity securities and other financial assets, which are measured at fair value in the Consolidated statement of financial position
(Notes 17 and 18). A 1% fall in the value of these financial instruments would have the impact of reducing total comprehensive
income by £13,000 (FY21: £23,000). An increase of 1% would have an equal and opposite effect.
c. Credit risk
The Group may elect to invest surplus cash balances in highly liquid money market instruments with maturity dates not
exceeding three months. The difference between the fair value and the net book value of these instruments is not material. To
reduce the risk of a counterparty default, the Group deposits the rest of its funds in approved, high-quality banks. At 30 June 2022,
there was no significant concentration of credit risk in any particular counterparty (FY21: none).
Assets exposed to credit risk recognised on the Consolidated statement of financial position total £61,328,000 (FY21:
£54,899,000), being the Group’s total cash and cash equivalents.
Trade receivables with a carrying amount of £3,690,000 (FY21: £1,820,000) are neither past due nor impaired. Trade receivables
have no external credit rating as they relate to individual clients, although the value of investments held in each individual client’s
portfolio is always in excess of the total value of the receivable. All trade receivables fall due within one year (FY21: one year).
32. Capital management
Capital is defined as the total of share capital, share premium, retained earnings and other reserves of the Company. Total
capital at 30 June 2022 was £148,425,000 (FY21: £134,003,000). Regulatory capital is derived from the Group’s Internal Capital
Adequacy and Risk Assessment (“ICARA”), previously referred to as Internal Capital Adequacy Assessment (“ICAAP”), which is a
requirement of the Investment Firm Prudential Regime (‘IFPR’). The ICARA draws on the Group’s risk management process that is
embedded within the individual businesses, function heads and executive committees within the Group.
The Group’s objectives when managing capital are to comply with the capital requirements set by the Financial Conduct
Authority, to safeguard the Group’s ability to continue as a going concern so that it can continue to provide returns for
shareholders and benefits for other stakeholders and to maintain a strong capital base to support the development of the
business.
Capital adequacy and the use of regulatory capital are monitored daily by the Group’s management. The Group’s 2022 ICARA
will be approved in December 2022. There have been no capital requirement breaches during the year. Brooks Macdonald Group
plc’s IFPR public disclosure is presented on our website at www.brooksmacdonald.com.
164
164
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
165
165
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
33. Contingent liabilities and guarantees
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.
During the year ended 30 June 2020, a small number of clients rejected goodwill offers made by Brooks Macdonald Asset
Management (International) Limited in connection with the exceptional costs of resolving legacy matters. While some of these
clients have since accepted their offers, it is possible that one or more of these remaining clients might issue claims against Brooks
Macdonald Asset Management (International) Limited. At 30 June 2022, one claim has been issued to Brooks Macdonald Asset
Management (International) Limited; however, it is not possible to estimate with any certainty whether or not any outflow might
result, nor the quantum or timing of any potential outflow. As a result, it is not possible to estimate the quantum of any potential
liability with any certainty 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:
Brooks Macdonald Asset Management Limited
Brooks Macdonald Asset Management (International) Limited
Brooks Macdonald Financial Consulting Limited
All of the above amounts are interest-free and repayable on demand.
Amounts owed by
related parties
Amounts owed to
related parties
2022
£’000
238
–
–
2021
£’000
–
246
–
2022
£’000
–
89
34
2021
£’000
–
–
2,753
166
166
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Notes to the consolidated financial
statements continued
For the year ended 30 June 2022
33. Contingent liabilities and guarantees
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.
During the year ended 30 June 2020, a small number of clients rejected goodwill offers made by Brooks Macdonald Asset
Management (International) Limited in connection with the exceptional costs of resolving legacy matters. While some of these
clients have since accepted their offers, it is possible that one or more of these remaining clients might issue claims against Brooks
Macdonald Asset Management (International) Limited. At 30 June 2022, one claim has been issued to Brooks Macdonald Asset
Management (International) Limited; however, it is not possible to estimate with any certainty whether or not any outflow might
result, nor the quantum or timing of any potential outflow. As a result, it is not possible to estimate the quantum of any potential
liability with any certainty 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:
Brooks Macdonald Asset Management Limited
Brooks Macdonald Asset Management (International) Limited
Brooks Macdonald Financial Consulting Limited
All of the above amounts are interest-free and repayable on demand.
Amounts owed by
related parties
Amounts owed to
related parties
2022
£’000
238
–
–
2021
£’000
246
–
–
2022
£’000
–
89
34
2021
£’000
–
–
2,753
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
35. Interest in unconsolidated structured entities
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 28.
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 £2.544 billion (FY21: £2.076 billion). Included in revenue on the Consolidated statement of
comprehensive income is management fee income of £17,628,000 (FY21: £15,353,000) from unconsolidated structured entities
managed by the Group.
36. Events since the end of the year
No material events have occurred between the reporting date and the date of signing the financial statements.
166
166
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
167
167
Company
financial statements
Company statement of financial position
Company statement of changes in equity
Company statement of cash flows
Notes to the Company financial statements
170
171
172
173
168
168
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
Company
financial statements
Company statement of financial position
Company statement of changes in equity
Company statement of cash flows
Notes to the Company financial statements
170
171
172
173
168
168
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Company statement of financial position
As at 30 June 2022
Note
2022
£’000
Assets
Non-current assets
Intangible assets
Investment in subsidiaries
Financial assets at fair value through other comprehensive income
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Deferred consideration
Corporation tax payable
Total current liabilities
Net assets
Equity
Share capital
Share premium account
Share option reserve
Retained earnings
Total equity
41
42
43
44
46
45
48
48
2021
restated
£’000
441
99,249
500
100,190
270
7,996
8,266
–
102,011
500
102,511
259
11,540
11,799
114,310
108,456
(1,598)
–
(113)
(1,711)
(3,830)
(5,922)
–
(9,752)
112,599
98,704
162
79,141
7,947
25,349
112,599
161
78,703
7,679
12,161
98,704
The prior year Company statement of financial position has been restated to correct the investment in subsidiaries, share option
reserve and retained earnings. Share options in the Company shares are awarded to employees of the Company’s subsidiaries.
Although the cost of these options (and a corresponding equity reserve) is reflected in the subsidiaries’ financial statements, the
shares themselves are to be delivered by the Company, and therefore, the Company recognises an investment in subsidiary and
share option reserve for these share options. The prior year charge and associated exercises has been corrected to present a
correct opening position at 1 July 2021. At 1 July 2021, the reported investment in subsidiaries, share option reserve and retained
earnings were previously £96,258,000, £6,501,000 and £10,348,000 respectively. These balances have changed by £2,991,000,
£1,178,000 and £1,813,000 to restated balances of £99,249,000, £7,679,000 and £12,161,000 respectively.
As permitted by section 408 of the Companies Act 2006, the Company has elected not to present its own Statement of
comprehensive income for the year ended 30 June 2022. Brooks Macdonald Group plc reported profit after tax for the year
ended 30 June 2022 of £24,111,000 (FY21: £8,786,000).
The Company financial statements were approved by the Board of Directors and authorised for issue on 14 September 2022, and
signed on their behalf by:
Andrew Shepherd
CEO
Ben Thorpe
Chief Financial Officer
Company registration number: 4402058
The accompanying notes on pages 173 to 180 form an integral part of the Company financial statements.
170
170
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Company statement of financial position
As at 30 June 2022
Company statement of changes in equity
For the year ended 30 June 2022
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
Financial assets at fair value through other comprehensive income
Assets
Non-current assets
Intangible assets
Investment in subsidiaries
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Deferred consideration
Corporation tax payable
Total current liabilities
Net assets
Equity
Share capital
Share premium account
Share option reserve
Retained earnings
Total equity
Note
2022
£’000
2021
restated
£’000
441
99,249
500
100,190
270
7,996
8,266
–
102,011
500
102,511
259
11,540
11,799
114,310
108,456
(1,598)
–
(113)
(1,711)
(3,830)
(5,922)
–
(9,752)
112,599
98,704
162
79,141
7,947
25,349
112,599
161
78,703
7,679
12,161
98,704
41
42
43
44
46
45
48
48
The prior year Company statement of financial position has been restated to correct the investment in subsidiaries, share option
reserve and retained earnings. Share options in the Company shares are awarded to employees of the Company’s subsidiaries.
Although the cost of these options (and a corresponding equity reserve) is reflected in the subsidiaries’ financial statements, the
shares themselves are to be delivered by the Company, and therefore, the Company recognises an investment in subsidiary and
share option reserve for these share options. The prior year charge and associated exercises has been corrected to present a
correct opening position at 1 July 2021. At 1 July 2021, the reported investment in subsidiaries, share option reserve and retained
earnings were previously £96,258,000, £6,501,000 and £10,348,000 respectively. These balances have changed by £2,991,000,
£1,178,000 and £1,813,000 to restated balances of £99,249,000, £7,679,000 and £12,161,000 respectively.
As permitted by section 408 of the Companies Act 2006, the Company has elected not to present its own Statement of
comprehensive income for the year ended 30 June 2022. Brooks Macdonald Group plc reported profit after tax for the year
ended 30 June 2022 of £24,111,000 (FY21: £8,786,000).
The Company financial statements were approved by the Board of Directors and authorised for issue on 14 September 2022, and
signed on their behalf by:
Andrew Shepherd
CEO
Company registration number: 4402058
Ben Thorpe
Chief Financial Officer
The accompanying notes on pages 173 to 180 form an integral part of the Company financial statements.
Balance at 1 July 2020
Comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners
Issue of ordinary shares
Share-based payments
Share options exercised
Purchase of own shares by Employee
Benefit Trust
Dividends paid
Total transactions with owners
Balance at 30 June 2021 (restated)
Comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners
Issue of ordinary shares
Share-based payments
Share options exercised
Purchase of own shares by Employee
Benefit Trust
Dividends paid
Total transactions with owners
Share
capital
£’000
161
Share
premium
account
£’000
77,982
Share
option
reserve
£’000
6,501
Retained
earnings
£’000
15,344
Total
restated
£’000
99,988
–
–
–
–
–
–
–
–
–
–
–
–
721
–
–
–
–
721
–
–
–
–
2,991
(1,813)
–
–
1,178
8,786
–
8,786
–
–
1,813
8,786
–
8,786
721
2,991
–
(5,210)
(8,572)
(11,969)
(5,210)
(8,572)
(10,070)
161
78,703
7,679
12,161
98,704
–
–
–
1
–
–
–
–
1
–
–
–
438
–
–
–
–
438
–
–
–
–
2,762
(2,494)
–
–
268
24,111
–
24,111
–
–
2,494
24,111
–
24,111
439
2,762
–
(3,100)
(10,317)
(10,923)
(3,100)
(10,317)
(10,216)
Note
39
40
39
40
Balance at 30 June 2022
162
79,141
7,947
25,349
112,599
The prior year share-based payment charge and share options exercised transfer have been restated. Refer to the Company
statement of financial position for further details.
The accompanying notes on pages 173 to 180 form an integral part of the Company financial statements.
170
170
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
171
171
Company statement of cash flows
For the year ended 30 June 2022
Cash flow from operating activities
Cash generated from operations
Net cash generated from operating activities
Cash flows from investing activities
Finance income
Deferred consideration paid
Net cash used in investing activities
Cash flows from financing activities
Proceeds of issue of shares
Purchase of own shares by Employee Benefit Trust
Dividends paid to shareholders
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Note
47
45
48
40
2022
£’000
22,502
22,502
20
(6,000)
(5,980)
439
(3,100)
(10,317)
(12,978)
2021
£’000
9,820
9,820
30
(2,421)
(2,391)
721
(5,210)
(8,572)
(13,061)
3,544
(5,632)
7,996
11,540
13,628
7,996
The accompanying notes on pages 173 to 180 form an integral part of the Company financial statements.
172
172
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Company statement of cash flows
For the year ended 30 June 2022
Notes to the Company financial statements
For the year ended 30 June 2022
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
Cash flow from operating activities
Cash generated from operations
Net cash generated from operating activities
Cash flows from investing activities
Finance income
Deferred consideration paid
Net cash used in investing activities
Cash flows from financing activities
Proceeds of issue of shares
Purchase of own shares by Employee Benefit Trust
Dividends paid to shareholders
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Note
47
45
48
40
2022
£’000
22,502
22,502
20
(6,000)
(5,980)
439
(3,100)
(10,317)
(12,978)
2021
£’000
9,820
9,820
30
(2,421)
(2,391)
721
(5,210)
(8,572)
(13,061)
3,544
(5,632)
7,996
11,540
13,628
7,996
The accompanying notes on pages 173 to 180 form an integral part of the Company financial statements.
37. Principal accounting policies
General information
Brooks Macdonald Group plc (“the Company”) is the Parent Company of a group of companies. The Company is a public limited
company, incorporated and domiciled in the United Kingdom under the Companies Act 2006 and listed on AIM. The address of
its registered office is 21 Lombard Street, London, EC3V 9AH.
Statement of compliance
The individual Financial statements of the Company have been prepared in accordance with UK-adopted International
Accounting Standards and with the requirements of the Companies Act 200 as applicable to companies reporting under those
standards. These Financial statements have been prepared on a historical cost basis, except for the revaluation of financial assets
at fair value through other comprehensive income and deferred consideration such that they are measured at their fair value.
Developments in reporting standards and interpretations
The Company’s accounting policies that have been applied in preparing these Financial statements are consistent with those
disclosed in the Annual Report and Accounts for the year ended 30 June 2021, other than where new policies have been adopted.
Developments in reporting standards and interpretations are set out in Note 2(c) to the Consolidated financial statements.
The principal accounting policies adopted are set out below:
a. Basis of preparation
The Financial statements have been prepared on the historical cost basis, except for the revaluation of financial assets at fair
value through other comprehensive income and deferred consideration such that they are measured at their fair value.
At the time of approving the Financial statements, the Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern
basis in preparing the Financial statements.
Intangible assets
b.
Amortisation of intangible assets is charged to administrative expenses in the Statement of comprehensive income on a straight-
line basis over the estimated useful lives of the assets.
Computer software
Costs incurred on internally developed computer software are initially recognised at cost and when the software is available for
use, the costs are amortised on a straight-line basis over an estimated useful life of four years. Initial research costs and planning
prior to a decision to proceed with development of software are recognised in the Statement of comprehensive income when
incurred.
Investments in subsidiary companies
c.
Where the Company has investments in subsidiary companies whereby one entity (the “subsidiary”) is controlled by another
entity (the “parent”), the investments are stated at cost less, where appropriate, provision for impairment. The carrying values
of investments in subsidiary companies are reviewed annually to determine whether any indicator of impairment exists. Any
impairment is recognised immediately in the Statement of comprehensive income and is not subsequently reversed.
d. Subsidiary company guarantees and contingent liabilities
As required by section 479C of the Companies Act, the Company guarantees all outstanding liabilities to which its unaudited
subsidiary companies are subject at the end of the financial year. Where the outflow is not probable or cannot be reliably
measured, the potential obligation is disclosed as a contingent liability in the Financial statements.
e. Retirement benefit costs
Contributions in respect of the Group’s defined contribution pension scheme are recognised in the Statement of comprehensive
income as they fall due.
Employee Benefit Trust
f.
Where the Company holds its own equity shares through an Employee Benefit Trust these shares are shown as a reduction in
shareholders’ equity. Any consideration paid or received for the purchase or sale of these shares is shown as a reduction in the
reconciliation of movements in shareholders’ funds. No gain or loss is recognised in the Statement of comprehensive income on
the purchase, sale, issue or cancellation of these shares.
172
172
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
173
173
Notes to the Company financial
statements continued
For the year ended 30 June 2022
38. Critical accounting judgements and key sources of estimation and uncertainty
The preparation of financial information requires the use of assumptions, estimates and judgements about future conditions.
Use of currently available information and application of judgement are inherent in the formation of estimates. Actual results in
the future may differ from those reported. In this regard, the Directors believe that the accounting policies where judgement is
necessarily applied are those that relate to the measurement of investment in subsidiaries.
There have been no critical judgements required in applying the Company’s accounting policies in this period, apart from those
involving estimations, which are detailed separately below.
The underlying assumptions made are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
year in which the estimate is revised only if the revision affects both current and future periods.
Further information about key assumptions and sources of estimation uncertainty are set out below.
Investment in subsidiaries
The Company’s investment in subsidiaries is reviewed annually for impairment, or when a change in circumstances indicates
that it might be impaired. When required, the recoverable amounts of subsidiaries are determined by value-in-use calculations,
which require the use of estimates to derive the projected future cash flows attributable to each subsidiary. If the projected cash
flows cannot support the cost of investment, an impairment in the investment in subsidiary may be required. Details of the
investment in subsidiaries are given in Note 42.
39. Profit for the year
Brooks Macdonald Group plc reported profit after tax for the year ended 30 June 2022 of £24,111,000 (FY21: £8,786,000). Auditors’
remuneration is disclosed in Note 7 of the Consolidated financial statements. The average monthly number of employees during
the year was seven (FY21: eight). Directors’ emoluments are set out in Note 5(d) of the Consolidated financial statements.
40. Dividends
Details of the Company’s dividends paid and proposed, subject to approval at the Annual General Meeting, are set out in Note 13 of
the Consolidated financial statements.
174
174
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Notes to the Company financial
statements continued
For the year ended 30 June 2022
38. Critical accounting judgements and key sources of estimation and uncertainty
The preparation of financial information requires the use of assumptions, estimates and judgements about future conditions.
Use of currently available information and application of judgement are inherent in the formation of estimates. Actual results in
the future may differ from those reported. In this regard, the Directors believe that the accounting policies where judgement is
necessarily applied are those that relate to the measurement of investment in subsidiaries.
There have been no critical judgements required in applying the Company’s accounting policies in this period, apart from those
involving estimations, which are detailed separately below.
The underlying assumptions made are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
year in which the estimate is revised only if the revision affects both current and future periods.
Further information about key assumptions and sources of estimation uncertainty are set out below.
Investment in subsidiaries
The Company’s investment in subsidiaries is reviewed annually for impairment, or when a change in circumstances indicates
that it might be impaired. When required, the recoverable amounts of subsidiaries are determined by value-in-use calculations,
which require the use of estimates to derive the projected future cash flows attributable to each subsidiary. If the projected cash
flows cannot support the cost of investment, an impairment in the investment in subsidiary may be required. Details of the
investment in subsidiaries are given in Note 42.
39. Profit for the year
Brooks Macdonald Group plc reported profit after tax for the year ended 30 June 2022 of £24,111,000 (FY21: £8,786,000). Auditors’
remuneration is disclosed in Note 7 of the Consolidated financial statements. The average monthly number of employees during
the year was seven (FY21: eight). Directors’ emoluments are set out in Note 5(d) of the Consolidated financial statements.
40. Dividends
the Consolidated financial statements.
Details of the Company’s dividends paid and proposed, subject to approval at the Annual General Meeting, are set out in Note 13 of
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
41. Intangible assets
Cost
At 1 July 2020
Additions
At 30 June 2021
Additions
Disposals
At 30 June 2022
Accumulated amortisation
At 1 July 2020
Amortisation charge
At 30 June 2021
Amortisation charge
Amortisation charge on disposals
At 30 June 2022
Net book value
At 1 July 2020
At 30 June 2021
At 30 June 2022
Software
£’000
1,985
–
1,985
–
(1,985)
–
1,034
510
1,544
441
(1,985)
–
951
441
–
During the year ended 30 June 2022, the Company conducted a review of the computer software assets and retired assets from
the fixed asset register with a £nil net book value, and no longer used in the business. This resulted in disposals of computer
software, with cost and accumulated amortisation both totalling £1,985,000.
42. Investment in subsidiaries
Net book value
At 1 July 2020
Capital contribution relating to share-based payments
Impairment of subsidiary
At 30 June 2021 (restated)
Net capital contribution relating to share-based payments
At 30 June 2022
Group
undertakings
restated
£’000
119,047
2,991
(22,789)
99,249
2,762
102,011
The Company’s investment in subsidiaries has been restated in relation to the capital contribution relating to share-based
payments. Refer to the Company statement of financial position for further details.
174
174
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
175
175
Notes to the Company financial
statements continued
For the year ended 30 June 2022
42. Investment in subsidiaries continued
Details of the Company’s subsidiary undertakings at 30 June 2022, all of which were 100% owned and included in the
Consolidated financial statements, are provided below:
Company
Braemar Group Limited
Type of shares
and par value
Ordinary 1p
Country of
incorporation
UK
Ordinary £1
Brooks Macdonald Asset Management Limited
Brooks Macdonald Asset Management (International)
Ordinary £1
Limited
Ordinary 5p
Brooks Macdonald Financial Consulting Limited
Brooks Macdonald Funds Limited
Ordinary £1
Brooks Macdonald International Fund Managers Limited Ordinary £1
Brooks Macdonald International Nominees (Guernsey)
Limited
Brooks Macdonald Nominees Limited
Cornelian Asset Managers Group Limited
Cornelian Asset Managers Limited
Cornelian Asset Managers Nominees Limited
Levitas Investment Management Services Limited
Secure Nominees Limited
Ordinary £1
Ordinary £1
Ordinary 20p
Ordinary £1
Ordinary £1
Ordinary £1
Ordinary £1
Nature of business
Investment management
Investment management
and wealth management
Investment management
and wealth management
Financial consulting
Fund management
Fund management
UK
Channel Islands
UK
UK
Channel Islands
Channel Islands Non-trading
Non-trading
UK
Investment management
UK
Fund management
UK
Non-trading
UK
UK
Fund sponsor
Channel Islands Non-trading
The registered office for all subsidiaries is 21 Lombard Street, London, EC3V 9AH except for the following:
Company
Brooks Macdonald Asset Management (International) Limited
Brooks Macdonald International Fund Managers Limited
Brooks Macdonald International Nominees (Guernsey) Limited Ground Floor, Dorey Court, Admiral Park, St. Peter Port,
Registered office
5 Anley Street, St. Helier, Jersey, JE2 3QE
5 Anley Street, St. Helier, Jersey, JE2 3QE
Cornelian Asset Managers Group Limited
Cornelian Asset Managers Limited
Cornelian Asset Managers Nominees Limited
Secure Nominees Limited
Guernsey, GY1 2HT
Hobart House, 80 Hanover Street, Edinburgh, EH2 1EL
Hobart House, 80 Hanover Street, Edinburgh, EH2 1EL
Hobart House, 80 Hanover Street, Edinburgh, EH2 1EL
1st Floor Royal Chambers, St. Julian’s Avenue, St. Peter Port,
Guernsey, GY1 2HH
Brooks Macdonald Group plc has guaranteed the liabilities of the following subsidiaries in order that they qualify for the
exemption from audit under Section 479A of the Companies Act 2006 in respect of the year ended 30 June 2022:
• Braemar Group Limited
• Brooks Macdonald Nominees Limited
• Cornelian Asset Managers Group Limited
• Cornelian Asset Managers Nominees Limited
• Levitas Investment Management Services Limited
As a condition of the exemption, the Company has guaranteed the year-end liabilities of the relevant subsidiaries until they are
settled in full. The liabilities of the subsidiaries at 30 June 2022 were £61,000.
176
176
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Notes to the Company financial
statements continued
For the year ended 30 June 2022
42. Investment in subsidiaries continued
Details of the Company’s subsidiary undertakings at 30 June 2022, all of which were 100% owned and included in the
Consolidated financial statements, are provided below:
Company
Braemar Group Limited
Type of shares
and par value
Ordinary 1p
Country of
incorporation
Brooks Macdonald Asset Management Limited
Ordinary £1
Brooks Macdonald Asset Management (International)
Brooks Macdonald Financial Consulting Limited
Brooks Macdonald Funds Limited
Limited
Limited
Brooks Macdonald International Fund Managers Limited Ordinary £1
Channel Islands
Fund management
Brooks Macdonald International Nominees (Guernsey)
Channel Islands Non-trading
Channel Islands
and wealth management
Nature of business
Investment management
Investment management
and wealth management
Investment management
Financial consulting
Fund management
Non-trading
Investment management
Fund management
Non-trading
Fund sponsor
UK
UK
UK
UK
UK
UK
UK
UK
UK
Ordinary £1
Ordinary 5p
Ordinary £1
Ordinary £1
Ordinary £1
Ordinary 20p
Ordinary £1
Ordinary £1
Ordinary £1
Ordinary £1
Brooks Macdonald Nominees Limited
Cornelian Asset Managers Group Limited
Cornelian Asset Managers Limited
Cornelian Asset Managers Nominees Limited
Levitas Investment Management Services Limited
Secure Nominees Limited
Channel Islands Non-trading
The registered office for all subsidiaries is 21 Lombard Street, London, EC3V 9AH except for the following:
Company
Registered office
Brooks Macdonald Asset Management (International) Limited
5 Anley Street, St. Helier, Jersey, JE2 3QE
Brooks Macdonald International Fund Managers Limited
5 Anley Street, St. Helier, Jersey, JE2 3QE
Brooks Macdonald International Nominees (Guernsey) Limited Ground Floor, Dorey Court, Admiral Park, St. Peter Port,
Cornelian Asset Managers Group Limited
Cornelian Asset Managers Limited
Guernsey, GY1 2HT
Hobart House, 80 Hanover Street, Edinburgh, EH2 1EL
Hobart House, 80 Hanover Street, Edinburgh, EH2 1EL
Cornelian Asset Managers Nominees Limited
Hobart House, 80 Hanover Street, Edinburgh, EH2 1EL
Secure Nominees Limited
1st Floor Royal Chambers, St. Julian’s Avenue, St. Peter Port,
Guernsey, GY1 2HH
Brooks Macdonald Group plc has guaranteed the liabilities of the following subsidiaries in order that they qualify for the
exemption from audit under Section 479A of the Companies Act 2006 in respect of the year ended 30 June 2022:
• Braemar Group Limited
• Brooks Macdonald Nominees Limited
• Cornelian Asset Managers Group Limited
• Cornelian Asset Managers Nominees Limited
• Levitas Investment Management Services Limited
As a condition of the exemption, the Company has guaranteed the year-end liabilities of the relevant subsidiaries until they are
settled in full. The liabilities of the subsidiaries at 30 June 2022 were £61,000.
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
43. Financial assets at fair value through other comprehensive income
At beginning of year
Net changes in fair value
At end of year
2022
£’000
500
–
500
2021
£’000
500
–
500
At 30 June 2022, the Company held an investment of 500,000 redeemable £1 preference shares in an unlisted company
incorporated in the UK. The preference shares carry an entitlement to a fixed preferential dividend at a rate of 4% per annum.
Unlisted preference shares are classified as financial assets at fair value through other comprehensive income.
44. Trade and other receivables
Amounts owed by subsidiary undertakings
Prepayments and accrued income
Total trade and other receivables
2022
£’000
238
21
259
2021
£’000
246
24
270
Amounts owed by subsidiary companies are unsecured, interest-free and repayable on demand.
45. Deferred consideration
Deferred consideration reflects the Directors’ best estimate of amounts payable in the future in respect of certain client
relationships and subsidiary undertakings that were acquired by the Company. Deferred consideration is measured at its fair
value based on discounted expected future cash flows. The movements in the total deferred consideration balance during the
year were as follows:
At beginning of year
Finance cost of deferred consideration
Fair value adjustments
Payments made during the year
At end of year
Analysed as:
Amounts falling due within one year
Amounts falling due after more than one year
Total deferred consideration
2022
£’000
5,922
78
–
(6,000)
–
–
–
–
2021
£’000
7,991
292
60
(2,421)
5,922
5,922
–
5,922
During the year ended 30 June 2022, the final payment was made in relation to the acquisition of Cornelian Asset Managers
Group totalling £6,000,000 (FY21: £2,000,000). Full details of the Cornelian acquisition are disclosed in Note 11 of the 2020
Annual Report and Accounts.
176
176
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
177
177
Notes to the Company financial
statements continued
For the year ended 30 June 2022
46. Trade and other payables
Trade payables
Amounts owed to subsidiary undertakings
Accruals and deferred income
Total trade and other payables
2022
£’000
53
123
1,422
1,598
Amounts owed to subsidiary companies are unsecured, interest-free and repayable on demand.
47. Reconciliation of operating profit to net cash inflow from operating activities
Operating profit
Adjustments for:
− Decrease in payables
− Share-based payments
− Decrease/(increase) in receivables
− Changes in fair value of deferred consideration
− Impairment of subsidiary
Net cash inflow from operating activities
2022
£’000
24,282
(2,002)
211
11
–
–
22,502
2021
£’000
20
2,754
1,056
3,830
2021
£’000
9,108
(22,053)
111
(195)
60
22,789
9,820
178
178
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Notes to the Company financial
statements continued
For the year ended 30 June 2022
46. Trade and other payables
Trade payables
Amounts owed to subsidiary undertakings
Accruals and deferred income
Total trade and other payables
Operating profit
Adjustments for:
− Decrease in payables
− Share-based payments
− Decrease/(increase) in receivables
− Changes in fair value of deferred consideration
− Impairment of subsidiary
Net cash inflow from operating activities
Amounts owed to subsidiary companies are unsecured, interest-free and repayable on demand.
47. Reconciliation of operating profit to net cash inflow from operating activities
2022
£’000
53
123
1,422
1,598
2022
£’000
24,282
211
11
–
–
22,502
2021
£’000
20
2,754
1,056
3,830
2021
£’000
9,108
111
(195)
60
22,789
9,820
(2,002)
(22,053)
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
48. Share capital and share premium account
The movements in share capital and share premium during the year were as follows:
At 1 July 2020
Shares issued:
− on exercise of options
−
to Sharesave Scheme
At 30 June 2021
Shares issued:
− on exercise of options
−
to Sharesave Scheme
At 30 June 2022
Number of
shares
16,127,102
7,976
46,060
16,181,138
6,325
18,079
16,205,542
Share
capital
£’000
161
–
–
161
–
1
162
Share
premium
account
£’000
77,982
657
64
78,703
120
318
79,141
Total
£’000
78,143
657
64
78,864
120
319
79,303
The total number of ordinary shares, issued and fully paid at 30 June 2022, was 16,205,542 (FY21: 16,181,138) with a par value of 1p
per share. Excluding 580,806 (FY21: 608,683) treasury shares held by the Employee Benefit Trust (see below), the Company had
15,624,736 (FY21: 15,572,622) ordinary 1p shares in issue as at 30 June 2022. Details of the shares issued are given in Note 28 of the
Consolidated financial statements.
Employee Benefit Trust
The Company established an Employee Benefit Trust (“EBT”) on 3 December 2010 to acquire ordinary shares in the Company
to satisfy awards under the Group’s Long-Term Incentive Scheme, see Note 30(c) to the Consolidated financial statements. All
finance costs and administration expenses connected with the EBT are charged to the Statement of comprehensive income as
they accrue. The EBT has waived its rights to dividends.
During the year, the EBT received instructions to exercise 152,174 (FY21: 85,439) options. The cost of the shares released on exercise
of these options amounted to £2,687,000 (FY21: £1,617,000). At 30 June 2022, the number of shares held by the EBT was 580,806
(FY21: 608,683) with a market value of £12,923,000 (FY21: £13,908,000) acquired for a total consideration of £14,100,000 (FY21:
£11,000,000). These shares are presented as treasury shares in the Company financial statements and their cost is deducted from
retained earnings within shareholders’ equity.
The Company has made annual awards under the LTIP to Executive Directors and other senior executives. The conditional
awards, which vest three years after the grant date, are subject to the satisfaction of specified performance criteria, measured
over a three-year performance period. All such conditional awards are made at the discretion of the Remuneration Committee.
178
178
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
179
179
Notes to the Company financial
statements continued
For the year ended 30 June 2022
49. Related party transactions
The remuneration of key personnel of the Company, defined as the Company’s Directors, is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Total compensation
2022
£’000
2,895
73
1,045
4,012
Dividends totalling £46,000 (FY21: £14,000) were paid in the year in respect of ordinary shares held by key management
personnel and their close family members.
During the year, the Company entered into the following transactions with its subsidiaries:
Dividends received:
Brooks Macdonald Asset Management Limited
Brooks Macdonald Asset Management (International) Limited
Cornelian Asset Managers Group Limited
Levitas Investment Management Services Limited
Braemar Group Limited
Total transactions with subsidiaries
2022
£’000
22,000
3,500
2,500
–
–
28,000
2021
£’000
1,590
50
159
1,799
2021
£’000
17,500
–
16,289
800
190
34,779
The Company’s balances with fellow Group companies at 30 June 2022 are set out in Note 34 to the Consolidated financial
statements. All transactions with fellow Group companies are carried out at arm’s length and all outstanding balances are to be
settled in cash. None of the balances are secured and no provisions have been made for doubtful debts in respect of any of the
amounts due from fellow Group companies.
50. Financial risk management objectives and policies
The financial risk management objectives and policies applied by the Company are in line with those of the Group as disclosed in
Note 31 to the Consolidated financial statements.
180
180
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Notes to the Company financial
Non-IFRS financial information
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Financial statements
statements continued
For the year ended 30 June 2022
49. Related party transactions
Short-term employee benefits
Post-employment benefits
Share-based payments
Total compensation
The remuneration of key personnel of the Company, defined as the Company’s Directors, is set out below:
2022
£’000
2,895
73
1,045
4,012
2022
£’000
22,000
3,500
2,500
–
–
28,000
2021
£’000
1,590
50
159
1,799
2021
£’000
17,500
–
16,289
800
190
34,779
Dividends totalling £46,000 (FY21: £14,000) were paid in the year in respect of ordinary shares held by key management
personnel and their close family members.
During the year, the Company entered into the following transactions with its subsidiaries:
Dividends received:
Brooks Macdonald Asset Management Limited
Brooks Macdonald Asset Management (International) Limited
Cornelian Asset Managers Group Limited
Levitas Investment Management Services Limited
Braemar Group Limited
Total transactions with subsidiaries
The Company’s balances with fellow Group companies at 30 June 2022 are set out in Note 34 to the Consolidated financial
statements. All transactions with fellow Group companies are carried out at arm’s length and all outstanding balances are to be
settled in cash. None of the balances are secured and no provisions have been made for doubtful debts in respect of any of the
amounts due from fellow Group companies.
50. Financial risk management objectives and policies
The financial risk management objectives and policies applied by the Company are in line with those of the Group as disclosed in
Note 31 to the Consolidated financial statements.
Non-IFRS financial information or alternative performance measures (“APMs”) are used as supplemental measures in monitoring the
performance of the Group. The adjustments applied to IFRS measures to compute the Group’s APMs exclude income and expense
categories which are deemed of a non-recurring nature or a non-cash operating item. The Board considers the disclosed APMs to be an
appropriate reflection of the Group’s performance.
The Group follows a rigorous process in determining whether an adjustment should be made to present an alternative
performance measure compared to IFRS measures. For an adjustment to be excluded from underlying profit as an alternative
performance measure compared to statutory profit, it must initially meet at least one of the following criteria:
•
•
•
It is unusual in nature, e.g. outside the normal course of business and operations.
It is a significant item, which may be recognised in more than one accounting period.
It has been incurred as a result of either an acquisition, disposal or a company restructure process.
The Group uses the below APMs:
APM
Underlying profit
before tax
Equivalent IFRS measure
Statutory profit
before tax
Underlying tax charge
Statutory tax charge
Underlying earnings
/ Underlying profit
after tax
Underlying profit
margin before tax
Total comprehensive
income
Statutory profit margin
before tax
EBITDA/Underlying
EBITDA
N/A
Underlying basic
earnings per share
Statutory basic
earnings per share
Underlying diluted
earnings per share
Statutory diluted
earnings per share
Underlying costs
Statutory costs
Segmental underlying
profit before tax
Segmental statutory
profit before tax
Segmental underlying
profit before tax margin
Total capital ratio
Segmental statutory
profit before tax margin
N/A
Definition and purpose
Calculated as profit before tax excluding income and expense
categories which are deemed of a non-recurring nature or a non-cash
operating item. It is considered by the Board to be an appropriate
reflection of the Group’s performance and considered appropriate
for external analyst coverage and peer group benchmarking. See
page 35 and 36 for a reconciliation of underlying profit before tax and
statutory profit before tax and an explanation for each item excluded in
underlying profit before tax.
Calculated as the statutory tax charge, excluding the tax impact of the
adjustments excluded from underlying profit. See Note 9 Taxation.
Calculated as underlying profit before tax less the underlying tax charge.
See Note 12 for a reconciliation of underlying profit after tax and
statutory profit after tax.
Calculated as underlying profit before tax over revenue for the year.
This is another key metric assessed by the Board and appropriate for
external analyst coverage and peer group benchmarking.
Earnings before interest, tax, depreciation and amortisation (“EBITDA”).
Underlying EBITDA is EBITDA excluding income and expense
categories which are deemed of a non-recurring nature or a non-cash
operating item. See page 36 for reconciliation between EBITDA and
underlying EBITDA and profit measures.
Calculated as underlying profit after tax divided by the weighted
average number of shares in issue during the year. This is a key
management incentive metric and is a measure used within the Group’s
remuneration schemes. See Note 12 Earnings per share.
Calculated as underlying profit after tax divided by the weighted average
number of shares in issue during the year, including the dilutive impact
of future share awards. This is a key management incentive metric and is
a measure used within the Group’s remuneration schemes. See Note 12
Earnings per share.
Calculated as total administrative expenses, other net gains/(losses),
finance income and finance costs and excluding income and expense
categories which are deemed of a non-recurring nature or a non-cash
operating item, which are listed on page 35. This is a key measure used
in calculating underlying profit before tax. See page 32 for details on
underlying costs.
Calculated as profit before tax excluding income and expense
categories which are deemed of a non-recurring nature or a non-cash
operating item for each segment. See Note 3 Segmental information.
Calculated as segmental underlying profit before tax over segmental
revenue.
Calculated as the Group’s total regulatory resources relative to its Fixed
Overhead requirement.
180
180
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
181
181
Company information
Company Secretary
Company registration number
Phil Naylor
4402058
Registered office
Website
Financial calendar
Results announcement
21 Lombard Street, London, EC3V 9AH
www.brooksmacdonald.com
15 September 2022
Ex-dividend date for final dividend
22 September 2022
Record date for final dividend
23 September 2022
Annual General Meeting
Final dividend payment date
27 October 2022
4 November 2022
Officers and advisers
Independent auditors
PricewaterhouseCoopers LLP
7 More London Riverside
London
SE1 2RT
Principal bankers
The Royal Bank of Scotland plc
280 Bishopsgate
London
EC2M 4RB
Nominated adviser and broker
Public relations
Peel Hunt LLP
7th Floor
100 Liverpool Street
London
EC2M 2AT
FTI Consulting
200 Aldersgate
Aldersgate Street
London
EC1A 4HD
Registrars
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
182
182
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Company information
Glossary
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
Company Secretary
Company registration number
Phil Naylor
4402058
21 Lombard Street, London, EC3V 9AH
www.brooksmacdonald.com
Registered office
Website
Financial calendar
Results announcement
15 September 2022
Ex-dividend date for final dividend
22 September 2022
Record date for final dividend
23 September 2022
Annual General Meeting
Final dividend payment date
27 October 2022
4 November 2022
Officers and advisers
Independent auditors
Principal bankers
PricewaterhouseCoopers LLP
The Royal Bank of Scotland plc
7 More London Riverside
280 Bishopsgate
London
SE1 2RT
London
EC2M 4RB
Nominated adviser and broker
Public relations
Peel Hunt LLP
7th Floor
100 Liverpool Street
London
EC2M 2AT
FTI Consulting
200 Aldersgate
Aldersgate Street
London
EC1A 4HD
Registrars
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Abbreviation
AGM
AIM
ANLA
APM
APS
ARC
BMG, Company,
Parent Company
BMIS
BPR
BPS
BR
CAPM
CASS
CEO
CFA
CGU
CIP
CISI
COO
Cornelian
COVID-19
CREST
CRO
CSOP
DBP
DCF
DEI
DFM
EBITDA
EBT
EMEA
EPS
ESG
ESOA
EU
FCA
FIT
FRC
FSCS
FUM
GHG
GIA
Group
HMRC
IAS
Definition
Annual General Meeting
Alternative Investment Market
Adjusted Net Liquid Asset
Alternative performance measure
AIM Portfolio Service
Asset Risk Consultants
Brooks Macdonald Group plc
BM Investment Solutions
Business Property Relief
Bespoke Portfolio Service
Business Relief
Capital asset pricing model
Client Assets Sourcebook
Chief Executive Officer
Chartered Financial Analyst
Cash-generating unit
Centralised Investment Process
Chartered Institute for Securities &
Investment
Chief Operating Officer
Cornelian Asset Managers Group Limited
and its controlled entities
Coronavirus global pandemic
The settlement system used by the
London Stock Exchange for settling all its
transactions
Chief Risk Officer
Company Share Option Plan
Deferred Bonus Plan
Defensive Capital Fund
Diversity, equity and inclusion
Discretionary Fund Managers
Earnings before interest, tax, depreciation
and amortisation
Employee Benefit Trust
Europe, Middle East and Africa
Earnings per share
Environmental, social and governance
Exceptional Share Options Awards
European Union
UK Financial Conduct Authority
FIT Remuneration Consultants LLP
UK Financial Reporting Council
Financial Services Compensation Scheme
Funds under management
Greenhouse gas
Gross Internal Area
Brooks Macdonald Group plc and its
controlled entities
HM Revenue and Customs
International Accounting Standard
Abbreviation
IASB
ICAAP
ICARA
IFA
IFPRU
IFRS IC
IFRS
IHT
IoD
IWS, Integrity
LRMF
LTIP
LTIS
M&A
MAF
MiFID II
MPS
MRT
MTP
NOMAD
OEIC
ORAS
PBT
PIMFA
PMPS
PRI
PwC
RCC
RIS
RMF
RPI
SAYE
SECR
SMCR
SPA
T&E
TCFD
The Code
UKIM
ULEVs
UNPRI
WACC
WDP
Definition
International Accounting Standards Board
Internal Capital Adequacy Assessment
process
Internal Capital and Risk Assessment
Independent Financial Advisor
The FCA’s Prudential Sourcebook for
Investment Firms
International Financial Reporting
Standards Interpretations Committee
International Financial Reporting Standard
Inheritance Tax
Institute of Directors
Integrity Wealth Solutions Limited
Liquidity Risk Management Framework
Long-term incentive plan
Long-term incentive scheme
Mergers and acquisitions
Multi-Asset Fund
Markets in Financial Instruments Directive
II, which is legislation for the regulation of
investment services within the European
Economic Area
Managed Portfolio Service
Material Risk Takers
Medium-Term Plan
Nominated advisor
Open-Ended Investment Company
Overarching risk appetite statement
Profit before tax
Personal Investment Management and
Financial Advice Association
Platform Managed Portfolio Service
Principles for Responsible Investing
PricewaterhouseCoopers LLP
Risk and Compliance Committee
Responsible Investment Service
Risk management framework
Retail price index
Employee Sharesave Scheme
Streamlined Energy and Carbon Reporting
Senior Managers and Certification Regime
Sale and Purchase Agreement
Travel and entertaining
Task Force on Climate-related Financial
Disclosures
UK Corporate Governance Code
UK Investment Management
Ultra Low Emission Vehicles
United Nations Principles for Responsible
Investment
Weighted average cost of capital
Wind Down Plan
182
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Brooks Macdonald Group plc / Annual Report and Accounts 2022
Brooks Macdonald Group plc / Annual Report and Accounts 2022
183
183
Our offices
London –
Head Office
1 21 Lombard Street
London
EC3V 9AH
North
2 Manchester
24 Mount Street
Manchester
M2 3NX
3 Leeds
One Park Row
Leeds
LS1 5HN
Wales
and West
4 Birmingham
Somerset House
37 Temple Street
Birmingham
B2 5DP
South
East
8 Hampshire
Mountbatten House
1 Grosvenor Square
Southampton
SO15 2JU
Crown
Dependencies
12 Jersey
5 Anley Street
St. Helier
Jersey
JE2 3QE
5 Exeter
9 Tunbridge Wells
13 Guernsey
Broadwalk House
Southernhay West
Exeter
EX1 1TS
2 Mount Ephraim Road
Tunbridge Wells
Kent
TN1 1EE
6 Wales
10 East Anglia
1st Floor Royal Chambers
St. Julian’s Avenue
St. Peter Port
Guernsey
GY1 2HH
3 Ty Nant Court
Morganstown
Cardiff
CF15 8LW
7 Cheltenham
Festival House
Jessop Avenue
Cheltenham
GL50 3SH
Suite 2, Beacon House
4 Kempson Way
Bury St. Edmunds
Suffolk
IP32 7AR
14 Isle of Man
Exchange House
54-62 Athol Street
Douglas
IM1 1JD
Scotland
11 2nd Floor Suite
Hobart House
80 Hanover Street
Edinburgh
EH2 1EL
184
184
Brooks Macdonald Group plc / Annual Report and Accounts 2022
Our offices
1 21 Lombard Street
4 Birmingham
8 Hampshire
Wales
and West
South
East
Crown
Dependencies
12 Jersey
5 Anley Street
St. Helier
Jersey
JE2 3QE
Mountbatten House
1 Grosvenor Square
Southampton
SO15 2JU
Broadwalk House
Southernhay West
2 Mount Ephraim Road
1st Floor Royal Chambers
Tunbridge Wells
St. Julian’s Avenue
9 Tunbridge Wells
13 Guernsey
London –
Head Office
London
EC3V 9AH
North
2 Manchester
24 Mount Street
Manchester
M2 3NX
3 Leeds
One Park Row
Leeds
LS1 5HN
Suite 2, Beacon House
14 Isle of Man
St. Peter Port
Guernsey
GY1 2HH
Exchange House
54-62 Athol Street
Douglas
IM1 1JD
Kent
TN1 1EE
10 East Anglia
4 Kempson Way
Bury St. Edmunds
Suffolk
IP32 7AR
Scotland
11 2nd Floor Suite
Hobart House
80 Hanover Street
Edinburgh
EH2 1EL
Somerset House
37 Temple Street
Birmingham
B2 5DP
5 Exeter
Exeter
EX1 1TS
6 Wales
3 Ty Nant Court
Morganstown
Cardiff
CF15 8LW
7 Cheltenham
Festival House
Jessop Avenue
Cheltenham
GL50 3SH
Introduction
Strategic report
Strategic report
Corporate governance
Corporate governance
Financial statements
11
14
3
4
2
7
8
6
5
13
12
10
9
1
184
184
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Brooks Macdonald Group plc / Annual Report and Accounts 2022
185
185
21 Lombard Street
London
EC3V 9AH
www.brooksmacdonald.com
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