Interim Results

RNS Number : 5972I

Brooks Macdonald Group PLC

16 March 2010

 



BROOKS MACDONALD GROUP PLC

Interim results for the six months ended 31 December 2009

Brooks Macdonald Group plc (the "Group"), the AIM listed integrated wealth management group, today announces its interim results for the six months ended 31 December 2009.

Highlights

	Six months to  31.12.09	Six months to 31.12.08	% Change	Year ended 30.06.09
Revenue	£16.39m	£9.65m	Up 70%	£21.8m
Pre-tax profits	£2.47m	£1.26m	Up 96%	£3.18m
Earnings per share	18.85p	8.35p	Up 126%	22.56p
Interim Dividend	3p	N/A	N/A	5.5p

• Funds under management rose by 34% during the period to £1,852 million (30.6.09 £1,386 million)

• Payment of maiden interim dividend of 3p

• Successful opening of a fourth regional office and recruitment of an experienced team of fund managers in Edinburgh

Commenting on the results, Chris Macdonald, CEO, said:

"We are delighted to report another set of strong results. The payment of an interim dividend reflects our confidence in the Group's business model and continued ability to grow the business, creating value for shareholders."

"Our Edinburgh office has had an encouraging start, and our strategic alliances have again shown their worth to the Group's growth strategy.  We continue to look forward to the future with confidence."

Enquiries to:

Brooks Macdonald Group plc      [phone]

Chris Macdonald, Chief Executive

Simon Jackson, Finance Director

Collins Stewart Europe Limited    [phone]

Bruce Garrow

Bankside Consultants                [phone]

Oliver Winters

Chairman's Statement

Our results for the first half of our financial year show significant improvement over those of the corresponding period of last year. 

On a turnover of £16.4 million, an increase of 70% over the previous period, we have achieved a pre-tax profit of £2.47 million. This is nearly double the £1.26 million we reported for the first half of last year. Earnings per share have increased 126% from 8.35p to 18.85p.

These excellent results have led the board to decide to pay an interim dividend of 3p per share, payable to shareholders on 31 March 2010 with a record date of 26 March 2010. This is the first time that Brooks Macdonald has paid an interim dividend since its listing in 2005. It is the Group's intention to continue to pay dividends twice yearly, with an interim dividend in April and a larger final dividend in October.

As already announced, discretionary funds under management at 31 December 2009 were £1,852 million, compared with £1,386 million at 30 June 2009. This increase of 34% reflects improved markets - the APCIMS balanced index rose by 13% during the half year. It also reflects continued growth on a number of fronts: the Group completed the acquisition of Lawrence House Fund Managers in September 2009, with fund management now successfully transferred to our Tunbridge Wells office; we have enjoyed considerable success with our strategic alliance partners which now number five; and we continue to be supported by professional introducers, both long-standing and new relationships. 

With the opening of an office in Edinburgh in September we now have four offices outside London, all of which are performing well. Our Managed Portfolio service, which is designed for smaller portfolios, showed robust growth during the half year contributing strongly to the growth in the Group's turnover.

We attach paramount importance both to the Group's investment record and to our service proposition. We continue to invest in our people and systems to ensure that as we grow the performance of the Group and our service standards remain of the highest quality.

These results are a further demonstration of the growth of the business which we are confident will continue in the second half.

Christopher Knight

Chairman

15 March 2010     

Condensed consolidated statement of income and statement of comprehensive

income for the six months ended 31 December 2009

Income statement	Note	Six months ended 31 December 2009(unaudited)	Six months ended 31 December 2008(unaudited)	Year ended 30 June 2009(audited)
		£	£	£
Revenue		16,385,333	9,646,264	21,752,209
Administrative costs		(13,936,647)	(8,530,789)	(18,765,646)
Operating  profit		2,448,686	1,115,475	2,986,563
Finance income		35,921	144,004	198,860
Finance cost		(12,395)	-	-
Profit before taxation		2,472,212	1,259,479	3,185,423
Taxation	3	(576,483)	(425,703)	(930,858)
Profit for the period attributable to equity holders of the company		1,895,729	833,776	2,254,565
Earnings per share for the period attributable to equity holders of the company	4
Basic earnings per share		18.85p	8.35p	22.56p
Diluted earnings per share		18.14p	8.22p	22.26p
Consolidated statement of comprehensive income		Six months ended 31 December 2009(unaudited)	Six months ended 31 December 2008(unaudited)	Year ended 30 June 2009(audited)
Profit for the period		1,895,729	833,776	2,254,565
Other comprehensive income
Gain on acquisition of subsidiary	7	9,300	-	-
Fair value on gain of available-for-sale financial assets		-	66,582	-
Total comprehensive income for the period		1,905,029	900,358	2,254,565

Condensed consolidated interim balance sheet as at 31 December 2009

	Note	31 December 2009(unaudited)	31 December 2008(unaudited)	30 June 2009(audited)
		£	£	£
Assets
Non current assets
Property, plant and equipment		1,613,614	1,192,982	1,471,160
Intangible assets	6	1,890,769	517,401	406,849
Deferred tax assets		403,502	-	144,784
Total non current assets		3,907,885	1,710,383	2,022,793
Current assets
Trade and other receivables		2,827,754	2,435,492	3,507,191
Available-for-sale financial assets	8	-	804,975	-
Cash and cash equivalents		12,469,386	5,813,752	8,347,287
Total current assets		15,297,140	9,054,219	11,854,478
Total assets		19,205,025	10,764,602	13,877,271
Current liabilities
Trade and other payables		(6,912,915)	(3,679,835)	(4,828,172)
Current tax liabilities		(1,257,493)	(403,490)	(767,326)
Total current liabilities		(8,170,408)	(4,083,325)	(5,595,498)
Non current liabilities
Provisions	9	(1,070,823)	(189,930)	(188,710)
Other non current liabilities		(10,940)	(17,188)	(14,063)
Total non current liabilities		(1,081,763)	(207,118)	(202,773)
Net assets		9,952,854	6,474,159	8,079,000
Financed by:
Equity
Share capital		101,708	99,875	100,162
Share premium account		1,865,974	1,574,506	1,621,303
Other reserves		1,237,438	955,340	1,073,260
Retained earnings		6,747,734	3,844,438	5,284,275
Total equity		9,952,854	6,474,159	8,079,000

Condensed consolidated interim cash flow statement for the six months ended 31 December 2009

	Note	Six months ended 31 December 2009(unaudited)	Six months ended 31 December 2008(unaudited)	Year  ended 30 June 2009(audited)
		£	£	£
Cash inflow from operating activities
Cash generated from operations	10	6,514,533	1,632,909	3,918,440
Taxation paid		(164,833)	(330,079)	(509,035)
Net cash from operating activities		6,349,700	1,302,830	3,409,405
Cash flow from investing activities
Purchase of property, plant and equipment		(364,184)	(451,518)	(923,814)
Purchase of intangible assets		(1,594,662)	(20,906)	(20,907)
Purchase of gilt		-	(738,393)	(738,393)
Sale of gilt		-	-	797,317
Interest received		35,921	144,004	198,860
Net cash used in investing activities		(1,922,925)	(1,066,813)	(686,937)
Cash flows from financing activities
Proceeds of issue of shares		246,217	3,500	50,584
Dividends paid to shareholders		(550,893)	(349,477)	(349,477)
Net cash used in financing activities		(304,676)	(345,977)	(298,893)
Net increase/(decrease) in cash and cash equivalents		4,122,099	(109,960)	2,423,575
Cash and cash equivalents at start of period		8,347,287	5,923,712	5,923,712
Cash and cash equivalents at end of period		12,469,386	5,813,752	8,347,287

Condensed consolidated statement of changes in equity from 1 July 2008 to 31 December 2009

	Share capital	Share premium account	Share option  reserve	Merger reserve	Available for sale reserve	Retained  earnings	Total
	£	£	£	£	£	£	£
At 1 July 2008	99,850	1,571,031	622,362	191,541	-	3,360,139	5,844,923
Comprehensive income
Profit for the period	-	-	-	-	-	833,776	833,776
Other comprehensive income
Fair value gain on available for sale asset	-	-	-	-	66,582	-	66,582
Total comprehensive income	-	-	-	-	66,582	833,776	900,358
Transactions with owners
Issue of shares	25	3,475	-	-	-	-	3,500
Share options	-	-	93,222	-	-	-	93,222
Share options deferred taxation	-	-	(18,367)	-	-	-	(18,367)
Dividends paid	-	-	-	-	-	(349,477)	(349,477)
At 31 December 2008	99,875	1,574,506	697,217	191,541	66,582	3,844,438	6,474,159
Comprehensive income
Profit  for the period	-	-	-	-	-	1,420,789	1,420,789
Other comprehensive income
Fair value gain on available for sale asset transfer	-	-	-	-	(66,582)	-	(66,582)
Transfer	-	-	(19,048)	-	-	19,048	-
Total comprehensive income	-	-	(19,048)	-	(66,582)	1,439,837	1,354,207
Transactions with owners
Issue of shares for cash	287	46,797	-	-	-	-	47,084
Share options		-	96,400	-	-	-	96,400
Share options deferred taxation	-	-	107,150	-	-		107,150
At 30 June 2009	100,162	1,621,303	881,719	191,541	-	5,284,275	8,079,000

Condensed consolidated statement of changes in equity from 1 July 2008 to 31 December 2009 (continued)

	Share       capital	Share premium account	Share option  reserve	Merger reserve	Available for sale reserve	Retained  earnings	Total
	£	£	£	£	£	£	£££
At 30 June 2009	100,162	1,621,303	881,719	191,541	-	5,284,275	8,079,000
Comprehensive income
Profit for the period	-	-	-	-	-	1,895,729	1,895,729
Other comprehensive income
Gain on acquisition of subsidiary	-	-	-	-	-	9,300	9,300
Transfer	-	-	(109,323)	-	-	109,323	-
Total comprehensive income	-	-	(109,323)	-	-	2,014,352	1,905,029
Transactions with owners
Issue of shares	1,546	244,671					246,217
Share options	-	-	93,300	-	-	-	93,300
Share options deferred taxation	-	-	180,201	-	-	-	180,201
Dividends paid	-	-	-	-	-	(550,893)	(550,893)
At 31 December 2009	101,708	1,865,974	1,045,897	191,541	-	6,747,734	9,952,854

Brooks Macdonald Group plc

Notes to the condensed consolidated interim accounts

for the six months ended 31 December 2009

1    Basis of preparation

These interim accounts are presented in accordance with IAS 34 "Interim Financial Reporting". The interim accounts have been prepared on basis of the accounting policies, methods of computation and presentation set out in the Group's consolidated accounts for the year ended 30 June 2009 except as stated below. The interim accounts should be read in conjunction with the Group's audited accounts for the year ended 30 June 2009.

The adoption of IAS1(revised 2007) makes certain changes to the format and titles of the primary financial statement and to the presentation of some items within these statements. Some items that were recognised directly in equity are now recognised in other comprehensive income.IAS1 affects the presentation of other changes in equity and introduce a "Statement of Comprehensive Income"

There is an additional accounting policy in respect of goodwill. Goodwill on acquisition is initially measured at cost, being the excess of the cost of the business combination over the Group's interest in the net fair value of the separately identifiable assets, liabilities and contingent liabilities of a subsidiary or associate at date of acquisition. In accordance with IFRS 3 Business combinations, goodwill is not amortised but reviewed annually for impairment and as such, is stated at cost less any provision for impairment of value. Any impairment is recognised immediately in the income statement and 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 cash generating units for the purpose of impairment testing. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

The information in this announcement does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. The Group's accounts for the year ended 30 June 2009 have been reported on by the auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not draw attention to any matters by way of emphasis. They also did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

2          Segmental information

For management purposes the Group's activities are organised into two operating divisions, investment management and financial planning. The Group's other activity, offering nominee and custody services to clients, has been included in investment management. These divisions are the basis on which the Group reports its primary segmental information.

Revenues and expenses are allocated to the business segment that originated the transaction. Revenues and expenses that are not directly originated by a business segment are reported as unallocated. Centrally incurred expenses are allocated to business segments on an appropriate pro-rata basis. Segmental assets and liabilities comprise operating assets and liabilities, being the majority of the balance sheet.

Period  ended 31 December 2009 (unaudited)		Investment management	Financial planning	Total
		£	£	£
Total revenues		16,243,543	1,248,090	17,491,633
Inter company revenues		(807,106)	(299,194)	(1,106,300)
External revenues		15,436,437	948,896	16,385,333
Segmental result		4,405,832	47,241	4,453,073
Unallocated items				(1,980,861)
Profit before tax				2,472,212
Taxation				(576,483)
Profit for the period				1,895,729
At 31 December  2009
Segment assets		10,205,522	2,356,589	12,562,111
Unallocated assets				6,642,914
Total assets				19,205,025
Segment liabilities		5,732,688	1,558,601	7,291,289
Unallocated liabilities				1,960,882
Total liabilities				9,252,171
Capital expenditure		-	364,184	364,184
Depreciation		-	332,472	332,472
Movement in provision		120,000	24,000	144,000

Period ended 31 December  2008 (unaudited )		Investment management	Financial planning	Total
		£	£	£
Total revenues		8,591,624	1,300,903	9,892,527
Inter company revenues		(246,263)	-	(246,263)
External revenues		8,345,361	1,300,903	9,646,264
Segmental result		1,463,693	57,079	1,520,772
Unallocated items				(261,293)
Profit before tax				1,259,479
Taxation				(425,703)
Profit for the period				833,776
At 31 December 2008
Segment assets		8,893,783	1,870,395	10,764,178
Unallocated assets				424
Total assets				10,764,602
Segment liabilities		2,160,307	1,741,862	3,902,169
Unallocated liabilities				388,274
Total liabilities				4,290,443
Capital expenditure		-	451,518	451,518
Depreciation		-	244,250	244,250
Movement in provision		125,893	10,473	136,323

Year  ended 30 June 2009(audited)		Investment management	Financial planning	Total
		£	£	£
Total revenues		20,604,186	2,467,083	23,071,269
Inter company revenues		(1,006,094)	(312,966)	(1,319,060)
External revenues		19,598,092	2,154,117	21,752,209
Segmental result		4,499,210	75,182	4,574,392
Unallocated items				(1,388,969)
Profit before tax				3,185,423
Taxation				(930,858)
Profit for the year				2,254,565
At 30 June 2009
Segment assets		11,666,861	2,182,540	13,849,401
Unallocated assets				27,870
Total assets				13,877,271
Segment liabilities		3,569,073	1,414,935	4,984,008
Unallocated liabilities				814,263
Total liabilities				5,798,271
Capital expenditure		-	923,814	923,814
Depreciation		-	548,924	548,924
Movement  in provision		143,893	(8,790)	135,103

         Geographical segments

 The Group's operations are all located in the United Kingdom.

3.      Taxation

	Six months ended 31 December 2009 (unaudited)	Six months ended 31 December 2008 (unaudited)	Year ended 30 June 2009 (audited)
	£	£	£
United Kingdom taxation	655,000	373,263	961,120
Overprovision in prior years	-	-	(40,074)
Deferred taxation	(78,517)	52,440	9,812
	576,483	425,703	930,858

4.         Earnings per share

	Six months ended 31 December 2009 (unaudited)	Six months ended 31 December 2008 (unaudited)	Year ended 30 June 2009  (audited)
	£	£	£
Earnings  attributable to ordinary   shareholders	1,895,729	833,776	2,254,565
	No.(m)	No.(m)	No(m)
Weighted average  number of shares	9.99	9.98	9.98
Share issues	0.07	0.01	0.01
Basic earnings per share denominator	10.06	9.99	9.99
Issuable on exercise of options	0.39	0.15	0.26
Diluted earnings per share denominator	10.45	10.14	10.25
Basic earnings per share	18.85p	8.35p	22.56p
Diluted earnings per share	18.14p	8.22p	22.26p

5.         Dividends

	Six months ended 31 December 2009 (unaudited)	Six months ended 31 December 2008 (unaudited)	Year ended 30 June 2009                (audited)
	£	£	£
Paid final dividend on ordinary shares	550,893	349,477	349,477

An interim dividend of 3p per share was declared by the Board on 15 March 2010 and has not been included as a liability as at 31 December 2009. This interim dividend will be paid on 31 March 2010.

6.          Intangible assets

	£
Cost
Cost 1 July 2008	1,264,423
Additions	20,907
Disposals	-
Cost at 31 December 2008	1,285,330
Additions	-
Disposals	-
Cost at 30 June 2009	1,285,330
Additions	1,594,662
Disposals	-
Cost at 31 December 2009	2,879,992
Amortisation
At 1 July 2008	659,152
Charge for the period	108,777
At 31 December 2008	767,929
Charge for period	110,552
At 30 June 2009	878,481
Charge for period	110,742
At 31 December 2009	989,223
Net book value
At 31 December 2008	517,401
At 30 June 2009	406,849
At 31 December 2009	1,890,769

Intangible assets relate to payments to key fee earners on the adoption of an alternative commission structure, deferred payments in respect of the acquisition of new teams of fund managers and the acquisition of client relationships.

7          Business combinations

On 4 September 2009, the Group acquired the entire share capital of Brooks Macdonald Asset Management (Tunbridge Wells) Limited, formerly Lawrence House Fund Managers Limited, for    consideration of £1,798,684. The acquired business's net assets at the acquisition date were as             

follows:

	Book values	Fair value adjustments	Carrying amounts
	£	£	£
Intangible assets	-	1,594,662	1,594,662
Cash and cash equivalents	224,781	-	224,781
Other current assets	22,179	-	22,179
Current liabilities	(33,638)	-	(33,638)
Net identifiable assets acquired	213,322	1,594,662	1,807,984
Consideration - cash			(1,072,965)
Consideration - deferred			(725,719)
Negative goodwill on consolidation			9,300

8.         Available-for-sale financial assets

	Six months ended 31 December 2009 (unaudited)	Six months ended 31 December 2008 (unaudited)	Year ended 30 June 2009                (audited)
	£	£	£
At 1 July 2009	-	-	-
Additions - gilt	-	738,393	738,393
Disposals -gilt	-	-	(738,393)
Gains from changes in fair value	-	66,582	66,582
Gains from changes in fair value -released	-	-	(66,582)
At 31 December 2009	-	804,975	-

9          Non-current provisions

		Six months ended 31 December 2009 (unaudited)	Six months ended 31 December 2008 (unaudited)	Year ended 30 June 2009 (audited)
	Client compensation	£	£	£
	At 1 July 2009	188,710	53,607	53,607
	Movement during the period	144,000	136,323	135,103
	At 31 December 2009	332,710	189,930	188,710
	Deferred contingent consideration
	Recognised during the period	738,113	-	-
	At 31 December 2009	738,113	-	-
	At 31 December 2009	1,070,823	189,930	188,710

Provisions relate to the potential liability resulting from client complaints against the Group. The complaints are assessed on a case by case basis and provisions for compensation are made where judged necessary. Complaints are on average settled within eight months from the date of notification of the complaint.

Deferred contingent consideration relates to the funds acquired by Brooks Macdonald Asset Management Limited from Lawrence House Fund Managers Limited (now called Brooks Macdonald Asset Management (Tunbridge Wells) Limited). The final amount payable is dependent on the value of the funds acquired after 24 months from the date of acquisition, 4 September 2009. The deferred consideration has been fair valued based on discounted cash flows.

10         Reconciliation of operating profit and net cash inflow from operating activities

	31 December 2009 (unaudited)	31 December 2008 (unaudited)	30 June 2009 (audited)
	£	£	£
Operating profit	2,448,686	1,115,475	2,986,563
Depreciation	221,730	135,474	329,595
Amortisation of intangible assets	110,742	108,776	219,329
Profit on sale of gilt	-	-	(58,924)
(Increase)/decrease in debtors	679,437	404,778	(666,921)
Increase/(decrease) in creditors	2,084,743	(358,014)	784,073
Increase in provisions	878,990	133,198	135,103
Share based payments	93,300	93,222	189,622
Gain on acquisition of subsidiary	9,300	-	-
Finance cost	(12,395)	-	-
Net inflow	6,514,533	1,632,909	3,918,440

Brooks Macdonald Group plc

Interim results for the six months ended 31 December 2009

Independent Review Report to Brooks Macdonald Group Plc

Introduction

We have been instructed by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2009 set out on pages 2 to 11. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

Directors' responsibilities

The half-yearly financial report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The AIM Rules of the London Stock Exchange require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed.

 This half-yearly financial report has been prepared in accordance with the International Accounting Standard 34, "Interim Financial Reporting".

The maintenance and integrity of the company's website is the responsibility of the directors; the work we have carried out does not involve consideration of these matters and, accordingly, we accept no responsibility for any changes that may have occurred to the condensed set of financial statements presented on the website.

Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. 

 

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists principally of making enquiries of management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with International Standards on Auditing (UK and Ireland) and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. 

 

Review conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union. 

St Paul's House   
Warwick Lane                                                                            Moore Stephens LLP
LONDON EC4M 7BP                                                                 Registered Auditors
                                                                                                Chartered Accountants

 

END

 

 

IR EELFFBXFFBBF