Brewin Dolphin Holdings PLC
6 December 2000
BREWIN DOLPHIN HOLDINGS PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED
30 SEPTEMBER 2000
HIGHLIGHTS
- Total income £125.9 million - up 43%
- Profit before tax £25.1 million (Note 1) - up 43%
- Earnings per share 10p (Note 1) - up 43%
- Total funds under management in excess of £17 billion, of
which £4.4 billion is on a fully discretionary basis
- ISAs and PEPs now amount to £1.2 billion
- Recent acquisitions integrating well
(Note 1) before goodwill amortisation
Sir David said 'The past year has been one of significant
progress for Brewin Dolphin. We have seen strong growth in
funds under management, profit before tax and earnings per
share.
'The current financial year is only two months old.
Nevertheless, it has started well and with a full year
contribution from recent acquisitions I am confident that the
Group will have another successful year.'
Sir David Rowe-Ham
Chairman
Enquiries:
Brewin Dolphin Holdings PLC
John Hall
Managing Director Tel: 020 7248 4400
Bell Pottinger Financial
David Beck/Caroline Sturdy Tel: 020 7353 9203
CHAIRMAN'S STATEMENT
The past year has been one of significant progress for Brewin
Dolphin. We have seen strong growth in clients, funds under
management, profit before tax and earnings per share.
Total income for the year ended 30 September rose by just over
43% to £125.9 million. Profit before tax, increased by 43% to a
record £25.1 million and earnings per share also improved by
43% to 10p, both figures being prior to goodwill amortisation.
Total funds under management at the end of September were in
excess of £17 billion, of which £4.4 billion is on a fully
discretionary basis.
These excellent results could not have been achieved without
all my colleagues' continued hardwork and dedication to our
clients. On behalf of shareholders I thank them most warmly.
Strong organic growth within the Group continues with today
Brewin Dolphin operating from 32 offices across the United
Kingdom and having in excess of 80,000 portfolio clients.
Spending on our computer systems and information technology
continues at a high level.
I was delighted that, having retired from the board of Brewin
Dolphin, Sir Peter Thompson subsequently agreed to take on the
Chairmanship of Stocktrade in order to assist in building that
business as a separate entity. Our strategy is to continue to
develop Stocktrade in both its on-line and execution only
business with particular emphasis on the execution side in the
immediate period ahead.
The Directors were extremely pleased when Mr. Nicholas Hood
accepted their invitation to join the Board in May this year.
He was previously the Chairman of Wessex Water for some ten
years and led that company to privatisation in 1989.
The London Stock Exchange is a key element in the overall
success of the City of London and the financial contribution it
makes to the economy of this country. The merger terms with
Deutsche Bourse and the attempted takeover by O M Gruppen did
not, in our opinion, meet the long term needs of either the
users of the London market, or indeed its investors. However we
do believe that with the increased globalisation of markets
change is imperative. We trust that the London Stock Exchange
will now bring forward a strategic plan which will look to
cross border alliances, take account of the interests of all
parties and command full support.
The current financial year is only two months old.
Nevertheless, it has started well and with a full year
contribution from recent acquisitions I am confident that the
Group will have another successful year.
Sir David Rowe-Ham
6 December 2000
MANAGING DIRECTOR'S REPORT
It is a pleasure to report to shareholders with another good
set of figures. As already announced, the first half of the
year reflected a particularly active period. It is gratifying
that in the second half we have seen further good progress and
growth in the business.
In the year ended 30 September 2000, total income rose to
£125.9m, an increase of 43%. Profit before tax and excluding
goodwill amortisation, was £25.1m against £17.5m, an increase
of 43%. Earnings per share calculated on the same basis, were
10.0p against 7.0p, an increase of 43%. Goodwill amortisation
this year was £0.9m.
During the year we continued our practice of making two
dividend payments, in April and October, totalling 3.25p per
share against the equivalent of 2.6p the previous year. This
represented an increase of 25%, after taking into account the 5
for 1 split. We will continue to pay twice-yearly dividends in
April and October and intend to announce the proposed interim
payment for April 2001, at our AGM on 27 February 2001.
The most encouraging aspect of the past year has been the
strong organic growth throughout the business. In addition, we
also made a number of acquisitions. Hill Osborne & Co. was
completed on 11 August thus making a seven week contribution
to the results. This firm's integration has been particularly
successful and we are anticipating a positive contribution to
earnings this year. The acquisition brings additional branches
in Leicester, Lincoln, Norwich, Bradford, and Scarborough. They
fit in well with our present structure and we are confident
that they will make a significant contribution to the group.
The Broadbridge partnership joined us in May and their business
has been merged with our Leeds branch. This has now become one
of our largest branches and has the quantum to participate
fully in the thriving Leeds business community. Additionally,
we have opened new branches in Taunton and Dorchester but
these have only been operational since September. In London,
we benefited from nine months contribution from a strong team
that joined us in December last year with approximately £400m
funds under management.
Overall, our total funds under management now exceed £17bn, of
which £4.4bn is on a fully discretionary basis. This compares
with a total of £14bn last year and £3.2bn of discretionary
funds which we have accordingly grown by 37%.
As has been widely publicised, the London Stock Exchange has
demutualised and is now an independently quoted company. A
welcome by-product in these developments is the valuation being
placed on our Stock Exchange shareholdings and we have taken
the opportunity to re-value these at £6m, which after provision
for deferred taxation, has increased the shareholders funds by
£4m via our revaluation reserve.
ISA contributions have continued apace, as have PEP transfers
and in total, we now manage £1.2bn of funds in this category of
investment. I am pleased to report that in the six months
since April, 10,000 new accounts were opened with an average
subscription of over £6,000.
With effect from the 6 April 2001, the rules for Single Company
PEPs are due to change significantly, in that there will no
longer be a distinction between General and Single Company
PEPs. In addition, PEPs will, in future, mirror those of the
less restrictive range on offer for ISAs, greatly simplifying
the rules.
Our corporate finance and institutional division had an
excellent year, reflecting not only a high level of split
capital investment trust work but also strong growth in fund-
raising and advisory work for existing and new corporate
clients. Our national network of private client stockbroking
offices is an important source of new business for us. We are
a leading participant in the small market capitalisation
sector, and there remain significant opportunities for
continued growth in this sector.
As mentioned in the Chairman's statement, we are in the process
of incorporating Stocktrade as a subsidiary company.
Stocktrade is our execution only and on-line trading company.
It had a particularly active first half of the year but a
quieter second half. It saw turnover increase by 58% over the
year to £12.2m but after taking into account expenditure of
£2.2m on advertising and the costs of establishing new Internet
clients, profits before tax fell from £977,000 to £38,000.
Since the end of the financial year the contract with Royal
Bank of Scotland, which represented 16% of Stocktrade's income,
has been acquired by NatWest Stockbrokers. However, Stocktrade
has made positive strides with new contracts to service
Citibank and Nationwide Building Society. Citibank has an on-
line and telephone service and Nationwide has a telephone based
service.
As will be seen we have had an exceedingly active year and I
would like to thank our staff for all their hard work and our
clients for their continued support and goodwill.
John Hall
6 December 2000
Consolidated Profit and Loss Account
For the 53 weeks ended 30 September 2000
(1999: 52 weeks to 26 September)
Note 2000 1999
53 weeks 52 weeks
Continuing Continuing
Operations operations
Acquisi- Total
tions
£'000 £'000 £'000 £'000
Turnover 116,509 5,574 122,083 85,618
Other
operating
income 3,861 32 3,893 2,147
-------- ------- -------- --------
TOTAL INCOME 1 120,370 5,606 125,976 87,765
-------- ------- -------- --------
Staff costs 2 (53,028) (2,411) (55,439) (39,483)
Other
operating
costs (47,161) (2,448) (49,609) (33,873)
---------- ------- -------- -------
(100,189) (4,859) (105,048) (73,356)
---------- ------- -------- -------
OPERATING
PROFIT 20,181 747 20,928 14,409
====== ======
Profit on
disposal of
fixed assets - 536
Other interest
receivable
and similar
income 3,888 2,702
Interest
payable and
similar
charges
(607) (131)
-------- --------
PROFIT ON
ORDINARY
ACTIVITIES
BEFORE
TAXATION 1 24,209 17,516
Tax on profit
on ordinary
activities 3 (7,411) (5,707)
-------- --------
PROFIT ON
ORDINARY
ACTIVITIES
AFTER
TAXATION 16,798 11,809
Equity 4
dividends (5,573) (4,093)
-------- --------
RETAINED
PROFIT FOR
THE PERIOD 11,225 7,716
======== ========
EARNINGS PER
SHARE
Basic 5 10.0p 7.5p
Diluted 5 9.5p 7.2p
Excluding
goodwill
amortisation
and profit on
disposal of
fixed asset
Basic 5 10.6p 7.4p
Diluted 5 10.0p 7.0p
STATEMENT OF RECOGNISED GAINS AND LOSSES
For the 53 week period ended 30 September 2000
(1999: 52 week period 26 September)
£'000 £'000
Profit for the
period 11,225 7,716
Revaluation of
Stock Exchange
Shares 5,875 -
Deferred tax on
revaluation (1,763) -
------- -------
Total recognised
gains for the
period 15,337 7,716
======= =======
Consolidated Balance Sheet as at 30 September 2000
30 September 26 September
Note 2000 1999
£'000 £'000
FIXED ASSETS
Intangible assets 49,864 409
Tangible assets 11,335 8,764
Investments 6,145 240
---------- ----------
67,344 9,413
========== ==========
CURRENT ASSETS
Investments 645 403
Debtors 308,532 254,745
Cash at bank and in 52,345 40,888
hand
---------- ----------
361,522 296,036
---------- ----------
CREDITORS: amounts
falling due
within one year 334,677 276,775
---------- ----------
NET CURRENT ASSETS 26,845 19,261
---------- ----------
TOTAL ASSETS LESS
CURRENT LIABILITIES 94,189 28,674
CREDITORS: amounts
falling due after
more than one year (1,038) (1,439)
PROVISION FOR
LIABILITIES AND
CHARGES (2,628) -
---------- ----------
90,523 27,235
========== ==========
CAPITAL AND RESERVES
Called up share
capital 1,790 1,573
Shares to be issued
including premium 25,621 11,321
Share premium
account 67,826 33,158
Revaluation reserve 4,113 -
Profit and loss
account (8,827) (18,817)
---------- ----------
Equity shareholders'
funds 6 90,523 27,235
========== ==========
Consolidated Cash Flow Statement
For the 53 weeks ended 30 September 2000
(1999: 52 weeks to 26 September)
2000 1999
53 weeks 52 weeks
£'000 £'000
Cash flow from operating
activities (see below) 25,452 19,177
Return on investments and
servicing of finance 3,281 2,571
Taxation (6,295) (6,717)
Capital expenditure (5,902) (6,520)
Acquisitions and disposals net (2,959) 69
Equity and dividends paid (4,908) (3,610)
---------- ----------
CASH INFLOW BEFORE FINANCING 8,669 4,970
Financing (see below) (685) (443)
---------- ----------
INCREASE IN CASH IN THE PERIOD 7,984 4,527
========== ==========
NOTES TO THE CASH FLOW
STATEMENT
RECONCILIATION OF OPERATING
PROFIT TO OPERATING CASH FLOW
Operating profit 20,928 14,409
Depreciation 4,319 2,491
Profit share paid in shares to
be issued 500 -
Loss on sale of fixed assets
and lease finance 193 359
Increase in investments (242) (58)
Increase in debtors (13,929) (60,192)
Increase in creditors 890 58,701
Increase in other creditors 12,793 3,467
---------- ----------
Net cash inflow from
operating activities 25,452 19,177
========== ==========
FINANCING
Issue of shares 27 87
Repayment of finance leases (712) (530)
---------- ---------
(685) (443)
========== ==========
RECONCILIATION OF NET CASH
FLOW TO MOVEMENT IN
NET FUNDS
Increase in cash in the period 7,984 4,527
Cash movement from change in
lease financing 234 529
---------- ----------
Change in net funds resulting
from cash flows 8,218 5,056
Client cash arising as part
of acquisitions 2,499 -
Net funds at start of period 40,383 35,327
---------- ----------
Net funds at end of period 51,100 40,383
========== ==========
ANALYSIS OF NET 2000 Cash flow 1999
FUNDS
£'000 £'000 £'000
Cash 52,345 11,457 40,888
Overdraft (1,149) (974) (175)
Finance lease (96) 234 (330)
--------- ---------- ----------
51,100 10,717 40,383
========= ========== ==========
Notes to the Accounts
1. TOTAL INCOME AND PROFIT BEFORE TAX
2000 1999
53 weeks 52 weeks
Total Profit Total Profit
before before
income taxation income taxation
£'000 £'000 £'000 £'000
Discretionary
portfolio
management 35,216 9,218 31,761 6,515
Advisory portfolio
management and
other 61,425 9,856 41,231 7,590
Stocktrade 12,195 38 7,700 977
Corporate finance 17,140 5,097 7,073 1,898
-------- --------
24,209 16,980
Profit on disposal
of fixed assets - 536
-------- -------- -------- --------
125,976 24,209 87,765 17,516
======== ======== ======== ========
2. SALARIES
2000 1999
53 weeks 52 weeks
£'000 £'000
Include payments
under staff
bonus and profit
share schemes
of: 17,646 10,376
====== ======
3. TAX ON PROFIT ON ORDINARY ACTIVITIES
United Kingdom corporation tax based on
the taxable profit for the period at
30% (1999: 30.5%)
Current 6,486 5,583
Deferred 1,098 -
Prior year (162) (3)
Prior year deferred (233) -
Overseas tax 222 127
------ ------
7,411 5,707
====== ======
4. EQUITY DIVIDENDS
First interim dividend of 2p (1999: 1.6p)
paid 6 April 2000 3,335 2,520
Second interim dividend of 1.25p per
share paid 1 October 2000 (1999: 1p) 2,238 1,573
------ ------
5,573 4,093
====== ======
In accordance with the Group's stated dividend policy there
will be no final dividend.
5. EARNINGS PER SHARE
2000 1999
53 weeks 52 weeks
No. No.
Restated for
Earnings per share is calculated 1 for 5
in accordance with FRS 14, based split
on the following figures
Basic
Weighted average number of shares
in issue in the period 167,368,261 156,972,940
Diluted
Weighted average number of options
outstanding for the period 4,816,842 3,005,520
Estimated weighted average number
of shares earned under deferred
consideration arrangements
Wise Speke 3,207,064 3,305,265
Other acquisitions 1,762,952 1,369,775
-------------- ------------
Diluted weighted average number of
shares in issue in the period 177,155,119 164,653,500
============== ============
£'000 £'000
Basic profit for the period and 16,798 11,809
attributable earnings
Goodwill amortisation 928 8
Profit on sale of fixed assets - (536)
Taxation thereon - 269
----------- ------------
Adjusted basic profit for the
period and attributable earnings 17,726 11,550
=========== ============
Goodwill amortisation and profit on disposal of fixed assets
have been adjusted to show normalised profit growth prior to
the provisions of FRS 10 and exceptional items in line with
I.I.M.R. guidelines.
6. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
2000 1999
53 weeks 52 weeks
£'000 £'000
Group
At 26 September 1999 27,235 19,619
Issue of shares in period 31,968 87
New shares to be issued created in
period 16,000 -
Estimated movement in value of shares
to be issued 1,217 (355)
Prior period acquisitions (1,235) (165)
Disposals - 333
Revaluation 4,113 -
Profit for the period 16,798 11,809
Dividends (5,573) (4,093)
---------- ----------
At 30 September 2000 90,523 27,235
========== ==========
7. The financial information in this press release does not
constitute statutory accounts within the meaning of
section 240 of the Companies Act 1985, but is derived from
those accounts. Statutory accounts for 1999 have been
delivered to the Registrar of Companies, and those for
2000 will be delivered following the Company's Annual
General Meeting. The auditors have reported on those
accounts; their reports were unqualified and did not
contain statements under section 237 (2) or (3) of the
Companies Act 1985.
8. The Annual General Meeting will be held at 12 noon on 27
February 2001.
