Brewin Dolphin Hldgs

Preliminary Results

RNS Number : 7464S
Brewin Dolphin Holdings PLC
05 December 2012
 



                                                     

 

5 December 2012

Group Preliminary Results

For the 52 weeks ended 30 September 2012

Highlights

(from continuing operations)

 

Total managed funds £25.9 billion at 30 September 2012 (30 September 2011: £24.0 billion).

 

Discretionary funds £18.2 billion at 30 September 2012 (30 September 2011: £15.6 billion).

 

Total income £269.5 million (30 September 2011: £264.0 million) an increase of 2.1%.

 

Profit before tax £29.9 million (30 September 2011: £21.9 million) a 36.5% increase.



Adjusted* profit before tax £42.9 million (30 September 2011: £39.6 million) an 8.3% increase.

 

Earnings per share:


-

Basic earnings per share 9.1p (30 September 2011: 6.6p) an increase of 37.9%.


-

Diluted earnings per share 8.6p (30 September 2011: 6.3p) an increase of 36.5%.

 

Adjusted* earnings per share:


-

Basic earnings per share 13.2p (30 September 2011: 12.4p) an increase of 6.5%.


-

Diluted earnings per share 12.5p (30 September 2011: 11.7p) an increase of 6.8%.

 

* these figures have been adjusted to exclude redundancy costs, additional FSCS Levy, acquisition of subsidiary costs and amortisation of client relationships.

Declaration of Final Dividend

The Board is proposing a final dividend of 3.6p, to be approved at the 2013 AGM and payable on 8 April 2013 to shareholders on the register at close of business on 8 March 2013, with an ex-dividend date of 6 March 2013.

 

Jamie Matheson, Executive Chairman said:

 

"Equity markets remain remarkably resilient and there is some sign of improved trading volumes since the summer. Demand for our services remains firm and your Board is confident that our strategy will ensure a successful future for your Group."

 

For further information, please contact:

 

Brewin Dolphin Holdings PLC

Hudson Sandler

Jamie Matheson, Executive Chairman

Andrew Hayes / Wendy Baker

Tel: 020 7248 4400

Tel: 020 7796 4133

Business Review: Executive Chairman's Statement

 

I am pleased to report that your Group has been able to make further progress during yet another year which has presented many challenges both here in the UK and across the globe.  To make progress in this environment continues to reassure us that the services we provide remain relevant and valuable to our clients.

 

Total income for the year rose by 2.1% to £269.5m and profit before tax (excluding redundancy costs, additional FSCS levy, acquisition of subsidiary costs and amortisation of client relationships) by 8.3% to £42.9m.

 

Funds under management at the year end were £25.9bn up by 7.9% from a year ago. The most significant rise was the 16.7% growth of our discretionary funds to £18.2bn.  During the same period the FTSE 100 rose by 12.0% and the APCIMS Private Investor Series Balanced Portfolio rose by 10.2%. Recurring income as a percentage of total revenue improved from 61% to 68% and operating margin from 15% to 16%.

 

We have made good progress in implementing our strategic review and the FSA's Retail Distribution Review (RDR), which we believe gives significant competitive advantages to larger businesses such as ours.

 

2012 has been a remarkable year for our country with the successful London Olympics and the celebrations of Her Majesty The Queen's Diamond Jubilee. Brewin Dolphin marked its 250th anniversary in 2012.  This was celebrated in a number of ways, including our very successful garden, which won best in show at the Chelsea Flower Show.  This anniversary has been a special opportunity to raise the profile of Brewin Dolphin throughout its market.

 

Our Branches

Providing high levels of personal service to our clients has been and will remain core to our approach. We retain our belief in our model which provides a national presence and, while I think it is unlikely that the absolute number of our offices will expand significantly, we will continue to look for opportunities to add more depth to some of our branches.  We have continued over the year to recruit teams and financial planners and have rationalised in some geographic areas where appropriate.

 

A year ago I reported that we had acquired Tilman Brewin Dolphin Ltd (formerly Tilman Asset Management Ltd) in Dublin.  I am pleased to report that this business is fulfilling our expectations and I remain confident that it will continue to make a good contribution to your Group.

 

Dividend

The Board is proposing a final dividend of 3.6p per share, to be approved at the AGM in February 2013 and paid on 8 April 2013.  This will bring the total dividend for the period to 7.15p per share (2011: 7.1p).

 

We have been able to maintain the dividend over the last four years, a period of great uncertainty in financial markets, which has also coincided with a requirement for considerable investment in IT and regulation.  The Board, however, is very conscious of the need to return to a progressive dividend policy and has thus proposed a small increase in the dividend.

 

 



Regulation

Regulation continues to be a significant factor impacting us and all other businesses in the financial sector both in the UK and overseas.  This year in particular has seen much work being done to ensure that your Group is fully ready to meet the demands of RDR which comes into force on 1 January 2013.  We welcome the increased emphasis on professionalism and transparency that the RDR will require within our industry.  The advent of the Financial Conduct Authority in the spring will bring further change.

 

Strategy

Our strategic review in 2011 established the objectives of broadening the services that we offer our clients, improving our standards and upgrading our systems. Implementation of this strategy is now well under way.  The greater efficiencies that result from this programme will improve the return to our shareholders.

 

We have led the industry by being more transparent about charges. We believe strongly that transparency and competitive single pricing are important for the confidence of all private investors.

 

Board Changes

Robin Bayford is retiring as Group Finance Director on 31 December 2012. Robin has been with the Group for nearly a quarter of a century and has been Group Finance Director since the Group floated in 1994.  His contribution to the Group has been invaluable.  Robin has for many years been actively involved in our acquisition strategy, which has played such a significant part in the growth of Brewin Dolphin.  He has been a valued and steady source of advice and counsel to me and to all his colleagues.  We are truly grateful to him for his unique and considerable contribution to the fortunes of your Group.

 

I am delighted that we have recruited Andrew Westenberger who joined the Group in September and will be taking on the post of Group Finance Director on 1 January 2013. Andrew brings considerable and highly relevant experience to our business.

 

Since the year end Henry Algeo has assumed the role of Group Managing Director which will include responsibility for our Investment Management activities.  Henry continues to be Chief Operating Officer, and in order to make sure that he is fully supported a number of other appointments have been made below Board level.

 

During the course of the year the Board was very pleased to be able to welcome David Nicol as a Non-Executive Director.  David has broad and relevant experience including holding the position of Chief Operating Officer and Director of Morgan Stanley International PLC from 2004 to 2010.  He is a Chartered Accountant and will be taking over the Chair of the Audit Committee from 1 January 2013.  At that point Jock Worsley will relinquish that role, but I am happy to say that he has indicated a willingness to remain a Non-Executive Director until the AGM in 2014.

 

Since the year end David McCorkell (Head of Investment Management) has retired and resigned from his position as an Executive Director of the Group.  David joined the Board in 2006 having been a successful and active practitioner.  He had been with the Group and in particular Bell Lawrie since 1986.  He played a very active role as a member of the Board including being heavily involved in the development of the strategy which your Group is now pursuing.  May I, on your behalf, wish him every good fortune and thank him for all his hard work over the years.

 

Outlook

Many of the problems that caused concern in the financial services industry during the past year remain unresolved.  This particularly relates to the Euro and more generally to prolonged economic weakness throughout the developed world.  However, equity markets have remained remarkably resilient and there is some sign of improved trading volumes since the summer.  Demand for our services remains firm and your Board is confident that our strategy will ensure a successful future for your Group.

 

Jamie Matheson

4 December 2012



Business Review: Investment Management

Henry Algeo - Group Managing Director

 

Investment Management and Financial Planning have performed well in a year of volatile markets and against a background of significant regulatory change.

 


2012

2011



 £'000

 £'000


Total income

 269,531

 264,013

2.1%

Salaries

(98,643)

 (90,676)

8.8%

Other operating costs

(94,196)

 (98,409)

-4.3%

Profit before profit share

 76,692

74,928

2.4%

Profit share

(34,599)

 (35,780)

-3.3%

 42,093

39,148

7.5%





* these figures have been adjusted to exclude redundancy costs, additional FSCS Levy, acquisition of subsidiary costs and amortisation of client relationships.

 

Over the period, total income has grown by 2.1% to £269.5m from £264m.This result has to be seen in the context of a fall in commission income of 16%, a feature across the industry. The increase of higher quality fee income of £22m, equivalent to 20%, when overall funds under management increased by 7.9%, points to the underlying improvement of the quality of funds under management.

 

Income comprises:





2012

2011


£'000

£'000

Fee, interest and other recurring income

182,615

160,652

Commission

 86,916

 103,361

Total income

 269,531

 264,013




 

The split of income between Discretionary and Advisory portfolio management:







Total Income

Operating Profit*

Total Income

Operating Profit*


2012

2012

2011

2011


£ million

£ million

£ million

£ million

Discretionary Portfolio Management

 191.5

29.9

 180.5

 26.8

Advisory Portfolio Management

 78.0

12.1

83.5

 12.3


 269.5

42.0

 264.0

 39.1






* these figures have been adjusted to exclude redundancy costs, additional FSCS Levy, acquisition of subsidiary costs and amortisation of client relationships.

 

The move away from Advisory Managed Services towards the Discretionary Service has continued, as evidenced by an increase in Discretionary funds of £2.6bn (16.7%) compared to a fall in Advisory funds of £0.7bn (8.3%).

 



 

Funds under Management (FUM)





Advisory

funds

 

Discretionary funds

Total managed funds


£ billion

£ billion

£ billion

Value of funds at 30 September 2011

 8.4

15.6

24.0

Inflows

 0.1

1.4

1.5

Outflows

(0.6)

 (0.5)

(1.1)

Transfers

(0.6)

0.1

(0.50*)

Market movement

 0.4

1.6

2.0

Value of funds at 30 September 2012

 7.7

18.2

25.9

*£0.5m transferred to Execution Only service




% change in funds year on year

-8.3%

16.7%

7.9%

 

During the period, the FTSE 100 index increased by 12.0% while the FTSE APCIMS Private Investor Series Balanced Index increased by 10.2%.

 

The Business

We have had a number of new teams join around the Group in Birmingham, Jersey, Bristol, London, Newcastle and Dublin. We have opened a new branch in Ipswich. Our Cheltenham office has moved to bigger and more suitable premises. Our Elgin office has relocated to Inverness and the Dumfries office to Penrith. The Bradford office is moving to join colleagues in Leeds.

 

Currently there is a total of 599 FSA registered CF30 Client Executives, Investment Managers and Financial Planners within the Group. The business would not function without the effort and dedication that they and their support staff put in and I would like to thank them all for their hard work in what has been another challenging year.

 

Last year's report mentioned the Retail Distribution Review (RDR) and I am pleased to be able to say that our business has worked extremely hard to ensure that all client executives achieve the required professional qualifications by the end of 2012. As a business we continue to believe that the RDR will bring good opportunities to Brewin Dolphin.

 

The new national charging structure, bringing consistency in charging across the Group, has been successfully rolled out to the majority of our Discretionary and Advisory Managed clients and work continues in the remaining areas of the business.  As was mentioned in our report last year, work continues on the new systems project which will provide our Investment Managers with up to date technology to enable them to manage their clients' investments more efficiently.  It will also allow our business support areas to implement more efficient and streamlined processes.

 

Financial Planning has become an integral part of Brewin's business and over the last 12 months recruitment in this area has grown considerably. It remains one of our main focuses to have all offices within the Group providing financial planning to their clients. New IT systems which are in the course of being developed will aid the integration of Financial Planning and Investment Management. We expect the rollout of our new systems to get underway in mid 2013 and to begin closing down many legacy systems towards the end of next year.

 

Our Research team continues to provide an ever wider coverage to assist our Investment Managers in meeting the needs of our clients. Over the past year, the coverage of the team has expanded to include further blue chip UK and European companies, an additional suite of collective investment vehicles and a new financial planning research and due diligence service to meet the needs of our financial planning clients. Along with the Asset Allocation Committee, the Research team continues to perform a pivotal and high performance role within our overall service offering. 

 

Our Investment Managers and Financial Planners have continued to provide an excellent service to our clients during another year that has seen much strategic and regulatory change. We as a Group remain determined to continue to provide an outstanding bespoke Investment Management service for our clients.

 

Extracts from Business Review: Finance

 

Results for 2012 Financial Year

 






2012

2011

% Change





Average indices for the year




FTSE 100

5,649

5,764

-2.0%

FTSE APCIMS Private Investor Series Balanced Portfolio

2,941

2,930

0.4%






£'000

 £'000


Total income

269,531

 264,013

2.1%

Salaries

(98,643)

 (90,676)

8.8%

Other operating costs

(94,196)

 (98,409)

-4.3%

Adjusted profit before profit share¥

76,692

74,928

2.4%

Profit share

(34,599)

 (35,780)

-3.3%

Adjusted operating profit ¥

42,093

39,148

7.5%

Net finance income and other gains and losses

784

 494

58.7%

Adjusted profit before tax¥

42,877

39,642

8.2%

Redundancy costs

(570)

 (1,008)


Additional FSCS levy

(553)

 (6,058)


Acquisition of subsidiary costs

-

(228)


Amortisation of client relationships

(11,871)

 (10,486)


Profit before tax

29,883

21,862

36.7%

Taxation

(8,389)

 (6,884)


Profit after tax

21,494

14,978


Interim and proposed final dividend for the year

(17,074)

 (16,596)



4,420

 (1,618)






Earnings per share




 Basic earnings per share

9.1p

6.6p

37.9%

 Diluted earnings per share

8.6p

6.3p

36.5%





Earnings per share ¥




 Basic earnings per share

13.2p

12.4p

6.5%

 Diluted earnings per share

12.5p

11.7p

6.8%





¥ these figures have been adjusted to exclude redundancy costs, additional FSCS Levy, acquisition of subsidiary costs and amortisation of client relationships.

 

 

Pension Fund

The actuarial loss on the pension fund this year was £5.1m (2011: gain £2.8m). Under IAS19, large annual fluctuations can occur. The Group has agreed to make additional pension contributions of

£3 million per annum with the aim of paying the deficit off over the next 8 years.

 



Cash Flow and Capital Expenditure

2012 saw a net cash outflow of £13.4m (2011: outflow £1.8m). There was a £35m (2011: £32.9m) inflow of funds from operating activities. £6.9m (2011: £7.9m) of cash was spent on acquiring teams of Investment Managers and their client relationships, and £23.8m (2011: £8.3m) on computer software and other, mainly computer related, fixed assets. £16.8m of this spend relates to the two year project to replace the Group's main computer systems which it is anticipated will significantly increase the Group's margins.

 

While purchase of the Group's shares for both the Deferred Profit Share Scheme and Share Incentive Plan resulted in an outflow of cash of £1.9m (2011: £10.6m), against this the issue of shares in the year led to a cash inflow of £0.7m (2011: £2.4m).

 

Dividends paid in the period came to £16.9m (2011: £16.3m).

 

The project to replace the Group's computer system is anticipated to cost a further £17m in 2013. There is only one expected additional major expense to be incurred, resulting from the forthcoming office change in Edinburgh which will cost £4m. Against this, amortisation and depreciation is expected to be £23m enabling the Group to maintain its cash.

 

 

Capital Structure, Treasury Policy, Liquidity and Capital Requirement

At 30 September 2012 the Group had net assets of £162.7m (2011: £154.8m). Net assets excluding intangible assets and shares to be issued of £61m (2011: £68m) broadly represent the Group's capital for regulatory purposes. These net assets were largely represented by net cash and cash equivalents of £72m (2011: £85m), including £24m (2011: £21m) of client settlement money. The Group, has an agreed overdraft facility of £15m (2011: £15m). At the period end the Group had a surplus of net assets for regulatory capital adequacy purposes of £11.4m (2011: £24.1m).

 

Our policy is to hold 90% of our clients' and Groups' money only at major UK clearers. Our client money is segregated under client money rules.

 

Client stock is also ring fenced in our nominee companies. Stock is settled via the Crest System which is owned by Euroclear, a highly rated bank, and, in the case of foreign stock, the Bank of New York Mellon.

 

Robin Bayford

Finance Director

4 December 2012

 

 



Consolidated Income Statement

52 week period ended 30 September 2012

 



 52 weeks to

30 September

2012

53 weeks to

30 September

2011


Note

 £'000

£'000

Continuing operations




Revenue


253,112

 248,375

Other operating income


 16,419

 15,638

Total income

1 & 2

269,531

 264,013





Staff costs


 (133,242)

(126,456)

Redundancy costs


 (570)

(1,008)

Additional FSCS levy


 (553)

(6,058)

Acquisition of subsidiary costs


-

 (228)

Amortisation of intangible assets - client relationships


(11,871)

(10,486)

Other operating costs


(94,196)

(98,409)

Operating expenses


 (240,432)

(242,645)





Operating profit

2

 29,099

 21,368

Finance income

3

 1,661

 1,253

Other gains and losses

4

 (74)

(27)

Finance costs

3

 (803)

 (732)

Profit before tax

2

 29,883

 21,862

Tax

5

(8,389)

(6,884)

Profit for the period from continuing operations

 21,494

 14,978





Discontinued operations




Loss for the period from discontinued operations

9

(3,092)

 (877)

Profit for the period


 18,402

 14,101





Attributable to:




Equity shareholders of the parent


 18,402

 14,101



 18,402

 14,101





Earnings per share




From continuing operations




Basic

7

9.1p

6.6p

Diluted

7

8.6p

6.3p





From continuing and discontinued operations




Basic

7

7.8p

6.2p

Diluted

7

7.4p

5.9p



Consolidated Statement of Comprehensive Income

52 week period ended 30 September 2012

 



 52 weeks to

30 September 2012

53 weeks to

30 September 2011



 £'000

£'000

Profit for the period


18,402

14,101

Deferred tax credit on revaluation of available-for-sale investments


167

56

Exchange differences on translation of foreign operations


(196)

(83)

Actuarial (loss)/profit on defined benefit pension scheme


(5,063)

2,766

Deferred tax credit/(charge) on actuarial (loss)/profit on defined benefit pension scheme


1,164

(719)

Other comprehensive (expense)/income for the period

(3,928)

2,020

Total comprehensive income for the period

 14,474

16,121





Attributable to:




Equity shareholders of the parent


14,474

16,121



14,474

16,121









 

 

 



Consolidated Balance Sheet

As at 30 September 2012



 As at

30 September

 2012

As at

30 September

2011



 £'000

£'000

ASSETS




Non-current assets




Intangible assets


120,930

115,805

Property, plant and equipment


15,951

15,869

Available-for-sale investments


6,013

6,087

Other receivables


2,215

2,377

Deferred tax asset


860

559

Total non-current assets


145,969

140,697

Current assets




Trading investments


759

744

Trade and other receivables


227,671

242,492

Cash and cash equivalents


71,827

85,702

Total current assets


300,257

328,938

Total assets


446,226

469,635





LIABILITIES




Current liabilities




Bank overdrafts


243

672

Trade and other payables


248,555

267,819

Current tax liabilities


2,249

1,390

Provisions


1,887

5,931

Shares to be issued including premium


5,858

6,541

Total current liabilities


258,792

282,353

Net current assets


41,465

46,585





Non-current liabilities




Retirement benefit obligation


9,754

7,101

Deferred purchase consideration


1,525

2,556

Shares to be issued including premium


13,418

22,840

Total non-current liabilities


24,697

32,497

Total liabilities


283,489

314,850

Net assets


162,737

154,785





EQUITY




Called up share capital


2,469

2,405

Share premium account


124,271

116,028

Own shares


(12,569)

(10,686)

Revaluation reserve


4,285

4,118

Merger reserve


22,950

22,950

Profit and loss account


21,331

19,970

Equity attributable to equity holders of the parent


162,737

154,785

 



Consolidated Statement of Changes in Equity

52 week period ended 30 September 2012

 


 Attributable to the equity shareholders of the parent


 Called up share capital

 Share premium account

 Own shares

 Revaluation reserve

 Merger reserve

 Profit and loss account

 Total


 £'000

 £'000

 £'000

 £'000

 £'000

 £'000

 £'000









 Balance at 27 September 2010

2,270

 113,612

 (101)

4,062

4,562

 17,211

141,616

 Profit for the period

 -

-

-

 -

 -

 14,101

14,101

 Other comprehensive income for the period








    Deferred and current tax on other comprehensive income

 -

-

-

 56

 -

 (719)

 (663)

    Actuarial profit on defined benefit pension scheme

 -

-

-

 -

 -

 2,766

2,766

    Exchange differences on translation of foreign operations

 -

-

-

 -

 -

(83)

 (83)

 Total comprehensive income for the period

 -

-

-

 56

 -

 16,065

16,121

 Dividends

 -

-

-

 -

 -

(16,286)

 (16,286)

 Issue of shares

 135

 2,416

-

 -

18,388

-

20,939

 Own shares acquired in the period

 -

-

(10,585)

 -

 -

-

 (10,585)

 Share-based payments

 -

-

-

 -

 -

 3,029

3,029

 Current tax credit on share-based payments

 -

-

-

 -

 -

 (124)

 (124)

 Deferred tax charge on share-based payments

 -

-

-

 -

 -

 75

75

 Balance at 30 September 2011

2,405

 116,028

(10,686)

4,118

22,950

 19,970

154,785

 Profit for the period

 -

-

-

 -

 -

 18,402

18,402

 Other comprehensive income for the period








    Deferred and current tax on other comprehensive income

 -

-

-

 167

 -

 1,164

1,331

    Actuarial loss on defined benefit pension scheme

 -

-

-

 -

 -

(5,063)

 (5,063)

    Exchange differences on translation of foreign operations

 -

-

-

 -

 -

 (196)

 (196)

 Total comprehensive income for the period

 -

-

-

 167

 -

 14,307

14,474

 Dividends

 -

-

-

 -

 -

(16,887)

 (16,887)

 Issue of shares

64

 8,243

-

 -

 -

-

8,307

 Own shares acquired in the period

 -

-

(1,891)

 -

 -

-

 (1,891)

 Own shares disposed of on exercise of options

 -

-

 8

 -

 -

(8)

 -

 Share-based payments

 -

-

-

 -

 -

 3,852

3,852

 Current tax charge on share-based payments

 -

-

-

 -

 -

193

193

 Deferred tax credit on share-based payments

 -

-

-

 -

 -

(96)

 (96)

 Balance at 30 September 2012

2,469

 124,271

(12,569)

4,285

22,950

 21,331

162,737









 

 

 



Company Balance Sheet

As at 30 September 2012

 



As at

30 September

2012

As at

30 September

2011



£'000

£'000





ASSETS




Non-current assets




Investment in subsidiaries


186,194

168,953

Other receivables


420

130

Total non-current assets


186,614

169,083

Current assets




Trade and other receivables


226

19,171

Cash and cash equivalents


829

597

Total current assets


1,055

19,768

Total assets


187,669

188,851





LIABILITIES




Current liabilities




Trade and other payables


12,611

13,401

Shares to be issued including premium


5,858

6,541

Total current liabilities


18,469

19,942

Net current liabilities


(17,414)

(174)





Non-current liabilities




Shares to be issued including premium


13,418

22,840

Total non-current liabilities


13,418

22,840

Total liabilities


31,887

42,782

Net assets


155,782

146,069





EQUITY




Called up share capital


2,469

2,405

Share premium account


124,271

116,028

Own shares


(12,569)

(10,686)

Merger reserve


23,235

23,235

Profit and loss account


18,376

15,087

Equity attributable to equity holders


155,782

146,069





 

 

 

 



Company Statement of Changes in Equity

52 week period ended 30 September 2012

 










 Attributable to the equity shareholders of the company



 Called up share capital

 Share premium account

 Own shares

 Merger reserve

 Profit and loss account

 Total



 £'000

 £'000

 £'000

 £'000

 £'000

 £'000










 Balance at 27 September 2010

2,270

 113,612

 (101)

4,847

11,720

 132,348


 Profit for the period

 -

-

-

 -

16,624

 16,624


 Total comprehensive income for the period

 -

-

-

 -

16,624

 16,624


 Dividends

 -

-

-

 -

 (16,286)

(16,286)


 Issue of shares

 135

 2,416

-

18,388

 -

 20,939


 Own shares acquired in the period

 -

-

(10,585)

 -

 -

(10,585)


 Share-based payments

 -

-

-

 -

3,029

 3,029


 Balance at 30 September 2011

2,405

 116,028

(10,686)

23,235

15,087

 146,069


 Profit for the period

 -

-

-

 -

16,332

 16,332


 Total comprehensive income for the period

 -

-

-

 -

16,332

 16,332


 Dividends

 -

-

-

 -

 (16,887)

(16,887)


 Issue of shares

64

 8,243

-

 -

 -

 8,307


 Own shares acquired in the period

 -

-

(1,891)

 -

 -

(1,891)


 Own shares disposed of on exercise of options

 -

-

 8

 -

 (8)

-


 Share-based payments

 -

-

-

 -

3,852

 3,852


 Balance at 30 September 2012

2,469

 124,271

(12,569)

23,235

18,376

 155,782










 

 



Consolidated Cash Flow Statement

52 week period ended 30 September 2012

 



 52 weeks to 30 September 2012

53 weeks to 30 September 2011


Note

 £'000

 £'000

 Net cash inflow from operating activities

8

34,979

32,858





 Cash flows from investing activities




 Purchase of intangible assets - client relationships


(6,878)

(7,946)

 Purchase of intangible assets - software


(16,356)

(3,147)

 Purchases of property, plant and equipment


(7,412)

(5,171)

 Acquisition of subsidiary


-

5,802

 Dividend received from available-for-sale investments


278

194

 Net cash used in investing activities


(30,368)

(10,268)





 Cash flows from financing activities




 Dividends paid to equity shareholders


(16,887)

(16,286)

 Purchase of own shares


(1,891)

(10,585)

 Proceeds on issue of shares


721

2,436

 Net cash used in financing activities


(18,057)

(24,435)





 Net decrease in cash and cash equivalents


(13,446)

(1,845)





 Cash and cash equivalents at the start of period


85,030

86,875





 Cash and cash equivalents at the end of period


71,584

85,030









Firm's cash


48,003

64,469

Firm's overdraft


(243)

(672)

Firm's net cash


47,760

63,797

Client settlement cash


23,824

21,233

Net cash and cash equivalents


71,584

85,030





Cash and cash equivalents shown in current assets


71,827

85,702

Bank overdrafts


(243)

(672)

Net cash and cash equivalents


71,584

85,030









 

 

For the purposes of the cash flow statement, cash and cash equivalents include bank overdrafts.



Notes to the Financial Statements

1.

Revenue

 

 


2012

2011

 


£'000

£'000

 


52 weeks

53 weeks

 

Continuing operations



 

Investment management commission income

83,982

100,225

 

Financial planning and trail income

38,561

39,563

 

Investment management fees

130,569

108,587

 


253,112

248,375

 

Other operating income

16,419

15,638

 

Revenue from continuing operations

269,531

264,013

 

Discontinued operations



 

Corporate Advisory & Broking Division (see note 9)

1,235

10,346

 

Total revenue from continuing and discontinued operations

270,766

274,359

 




 



 

2.

Segmental information

For management purposes since the 2 February 2012, the Group has had one business stream: Investment Management. Prior to the 2 February 2012 it had two business streams: Investment Management and Corporate Advisory and Broking which has been discontinued (see note 9). These form the reportable segments of the Group for the period.

 

The Group's operations are carried out in the United Kingdom, Channel Islands and the Republic of Ireland. Income generated in the Republic of Ireland is reported as part of the Investment Management business stream. All segment income relates to external clients.

 

The accounting policies of the operating segments are the same as those of the Group.

 

 

52 week period ended 30 September 2012









 

Continuing operations

 Discontinued operations



Discretionary Portfolio Management

 Advisory Portfolio Management

 Total Investment Management

 Corporate Advisory & Broking

 Group


 £'000

 £'000

 £'000

 £'000

 £'000







 Operating profit before redundancy costs, additional FSCS levy, acquisition of subsidiary costs and amortisation of client relationships

29,901

12,192

42,093

(2,317)

39,776

 Additional FSCS levy



(553)

-

(553)

 Redundancy costs



(570)

(47)

(617)

 Amortisation of client relationships



(11,871)

-

(11,871)

 Operating profit/(loss)



29,099

(2,364)

26,735

 Finance income (net)



858

-

858

 Other gains and losses



(74)

-

(74)

 Costs of separation



-

(1,143)

(1,143)

 Profit/(loss) before tax



29,883

(3,507)

26,376







 Other Information






 Capital expenditure



23,768

-

23,768

 Depreciation



7,174

40

7,214

 Amortisation of intangible asset - software



3,563

-

3,563

 Share-based payments



3,852

-

3,852







 Segment assets excluding current tax assets



446,226

-

446,226







 Segment liabilities excluding current tax liabilities


256,543

-

 256,543



 

53 week period ended 30 September 2011









 

 Continuing operations

 Discontinued operations



Discretionary Portfolio Management

 Advisory Portfolio Management

 Total Investment Management

 Corporate Advisory & Broking

 Group


 £'000

 £'000

 £'000

 £'000

 £'000







 Total income

180,518

83,495

264,013

10,346

274,359







 Operating profit before redundancy costs, additional FSCS levy, acquisition of subsidiary costs and amortisation of client relationships

26,767

12,381

39,148

1,204

40,352

 Additional FSCS levy



(6,058)

-

(6,058)

 Redundancy costs



(1,008)

(12)

(1,020)

 Acquisition of subsidiary costs



(228)

-

(228)

 Amortisation of client relationships



(10,486)

-

(10,486)

 Operating profit



21,368

1,192

22,560

 Finance income (net)



521

-

521

 Other gains and losses



(27)

-

(27)

 Costs of separation



-

(2,393)

(2,393)

 Profit/(loss) before tax



21,862

(1,201)

20,661







 Other Information






 Capital expenditure



8,287

31

8,318

 Depreciation



8,704

131

8,835

 Amortisation of intangible asset - software



3,370

76

3,446

 Share-based payments



3,015

14

3,029







 Segment assets excluding current tax assets



458,417

11,218

469,635







 Segment liabilities excluding current tax liabilities


269,745

 11,218

 280,963







 

 

 

 

 

3.

Finance income and finance costs

 


2012

2011


52 weeks

53 weeks


 £'000

 £'000

Finance income



Dividends from available-for-sale investments

278

194

Interest on bank deposits

1,383

1,059


1,661

1,253




Finance costs



Finance cost of deferred consideration

192

317

Interest expense on defined pension obligation

581

369

Interest on bank overdrafts

30

46


803

732







 

 

4.

Other gains and losses

 

 


2012

2011

 


52 weeks

53 weeks

 


£'000

£'000

 




 

Impairment loss recognised on available-for-sale equity investments

74

27

 

  The impairment loss relates to the listed investment in PLUS Markets Group PLC

 

5.

Taxation

 


Continuing Operations

Discontinued Operations

Total


2012

2011

2012

2011

2012

2011


52 weeks

53 weeks

52 weeks

53 weeks

52 weeks

53 weeks


 £'000

 £'000

 £'000

 £'000

 £'000

 £'000

United Kingdom







Current tax

6,650

6,246

(617)

(122)

6,033

6,124

Prior year

554

422

-

-

554

422

Overseas tax





-

-

Current tax

261

181

-

-

261

181

Prior year

-

-

-

-

-

-


7,465

6,849

(617)

(122)

6,848

6,727

United Kingdom deferred tax







Current year

1,140

439

-

(202)

1,140

237

Prior year

(216)

(404)

202

-

(14)

(404)


8,389

6,884

(415)

(324)

7,974

6,560








United Kingdom corporation tax is calculated at 25% (2011: 27%) of the estimated assessable taxable profit for the period. The Finance Act 2012 received Royal Assent on 19 July 2011 and reduced the corporation tax rate to 24% (26%) from 1 April 2012.








Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.








 

The charge for the year for continuing operations can be reconciled to the profit per the income statement as follows:

 

 


2012

2011

 

 


52 weeks

53 weeks

 

 


 £'000

 £'000

 

 

Profit before tax on continuing operations

29,883

21,862

 

 

Tax at the UK corporation tax rate of 25% (2011: 27%)

7,471

5,903

 

 

Tax effect of:



 

 

Expenses that are not deductible in determining taxable profit

755

1,012

 

 

Prior year tax

141

18

 

 

Lower rates in subsidiaries

(105)

(35)

 

 

Exempt dividend income

(70)

(52)

 

 

Change in tax rate on deferred tax

197

38

 

 

Tax expense for the period

8,389

6,884

 

 

Effective tax rate for the year

28%

31%

 

 

In addition to the amount credited to the income statement, deferred tax relating to the revaluation of the Group's available-for-sale investments amounting to £167,000 (2011: £56,000) has been credited to other comprehensive income, this is attributable to the reduction in the Corporation Tax rate and deferred tax relating to the actuarial (loss)/gain in the defined benefit pension scheme amounting to £1,164,000 (2011: £719,000 debited) has been credited to other comprehensive income. Deferred tax on share-based payments of £96,000 (2011: £75,000 debited) has been credited to other comprehensive income.

 



 

6.

Dividends

 

 


2012

2011

 


52 weeks

53 weeks

 


£'000

£'000

 

Amounts recognised as distributions to equity shareholders in the period:


 




 

2010/2011 Final dividend paid 10 April 2012, 3.55p per share (2011: 3.55p per share)

8,412

7,989

 

2011/2012 Interim dividend paid 21 September 2012, 3.55p per share (2011: 3.55p per share)

8,475

8,297

 


16,887

16,286

 




 

Proposed final dividend for the 52 weeks ended 30 September 2012 of 3.6p (2011: 3.55p) per share based on shares in issue at 30 November 2012 (30 November 2011)

8,599

8,299

 




 

The proposed final dividend for the 52 week period ended 30 September 2012 of 3.6p per share is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

 




 

Under an arrangement dated 1 April 2011, EES Trustees International Limited (the "Trustee") who holds 8,117,309 number of ordinary shares representing 3.26% of the Company's called up share capital has agreed to waive all dividends due to the Trustee.

 



 

7.

Earnings per share

From continuing and discontinuing operations

 

The calculation of the basic and diluted earnings per share is based on the following data:


2012

2011

Number of shares




'000

'000

Basic



Weighted average number of shares in issue in the period

236,921

226,796

Diluted



Weighted average number of options outstanding for the period

9,764

4,275

Estimated weighted average number of shares earned under deferred consideration arrangements

4,606

9,464

Diluted weighted average number of options and shares for the period

251,291

240,535

 

Earnings attributable to ordinary shareholders




Continuing operations

2012

2011



£'000

£'000






Profit for the period from continuing operations

21,494

14,978


Redundancy costs

570

1,008


 less tax

(143)

(272)


Additional FSCS levy

553

6,058


 less tax

(138)

(1,636)


Acquisition of subsidiary

-

228


Amortisation of intangible assets - client relationships

11,871

10,486


 less tax

(2,968)

(2,831)


Adjusted basic profit for the period and attributable earnings excluding redundancy costs, additional FSCS levy, acquisition of subsidiary costs and amortisation of client relationships

31,239

28,019








 


2012

2011



£'000

 

£'000

 


Profit for the period from continuing operations

21,494

14,978


Finance costs of deferred consideration (Note a)

115

237


 less tax

(29)

(64)


Adjusted fully diluted profit for the period and attributable earnings

21,580

15,151


Redundancy costs

570

1,008


 less tax

(143)

(272)


Additional FSCS levy

553

6,058


 less tax

(138)

(1,636)


Acquisition of subsidiary

-

228


Amortisation of intangible assets - client relationships

11,871

10,486


 less tax

(2,968)

(2,831)


Adjusted fully diluted profit for the period and attributable earnings excluding redundancy costs, additional FSCS levy, acquisition of subsidiary costs and amortisation of client relationships

31,325

28,192






From continuing operations




Basic

9.1p

6.6p


Diluted

8.6p

6.3p






From continuing operations excluding redundancy costs, additional FSCS levy, acquisition of subsidiary costs and amortisation of client relationships


Basic

13.2p

12.4p


Diluted

12.5p

11.7p






a) Finance costs of deferred consideration are added back where the issue of shares is more dilutive than the interest cost saved.




 

Earnings attributable to ordinary shareholders

2012

2011


Continuing and discontinued operations





£'000

£'000


Profit for the period

18,402

14,101


Redundancy costs

617

1,020


 less tax

(154)

(275)


Additional FSCS levy

553

6,058


 less tax

(138)

(1,636)


Acquisition of subsidiary

-

228


Amortisation of intangible assets - client relationships

11,871

10,486


 less tax

(2,968)

(2,831)


Adjusted basic profit for the period and attributable earnings excluding redundancy costs, additional FSCS levy, acquisition of subsidiary costs and amortisation of client relationships

28,183

27,151






Profit for the period

18,402

14,101


Finance costs of deferred consideration (Note a above)

115

236


 less tax

(29)

(64)


Adjusted fully diluted profit for the period and attributable earnings

18,488

14,273


Redundancy costs

617

1,020


 less tax

(154)

(275)


Additional FSCS levy

553

6,058


 less tax

(138)

(1,636)


Acquisition of subsidiary

-

228


Amortisation of intangible assets - client relationships

11,871

10,486


 less tax

(2,968)

(2,831)


Adjusted fully diluted profit for the period and attributable earnings excluding redundancy costs, additional FSCS levy, acquisition of subsidiary costs and amortisation of client relationships

28,269

27,323


The denominators used are the same as those detailed above for both basic and diluted earnings from continuing operations






From continuing and discontinued operations




Basic

7.8p

6.2p


Diluted

7.4p

5.9p


From continuing and discontinued operations excluding redundancy costs, additional FSCS levy, acquisition of subsidiary costs and amortisation of client relationships


Basic

11.9p

12.0p


Diluted

11.2p

11.4p


From discontinued operations




 

The denominators used are the same as those detailed above for both basic and diluted earnings from continuing operations


 

 

Basic

(1.3p)

(0.4p)


 

Diluted

(1.2p)

(0.4p)


 

 

8.

Notes to the cash flow statement

 


52 weeks to

30 September 2012

53 weeks to

30 September 2011



£'000

£'000


Group




Operating profit from continuing operations

29,099

21,368


Loss for the period from discontinued operations (note 9)

(3,507)

(1,201)


Adjustments for:




 Depreciation of property, plant and equipment

7,214

8,835


 Amortisation of intangible assets - client relationships

11,871

10,486


 Amortisation of intangible assets - software

3,563

3,446


 Loss on disposal of property, plant and equipment

105

-


 Intangible asset impairment

-

207


 Retirement benefit obligation

(2,410)

(2,631)


 Share-based payment expense

3,852

3,029


 Own shares disposed of on exercise of options

(8)

-


 Translation adjustments

(196)

(83)


 Unwind of discount of shares to be issued and deferred purchase consideration

192

317


 Interest income

1,383

1,059


 Interest expense

(803)

(732)


Operating cash flows before movements in working capital

50,355

44,100


Decrease in payables and trading investments

(24,375)

(91,996)


Decrease in receivables and trading investments

14,910

90,465


Cash generated by operating activities

40,890

42,569


 Tax paid

(5,911)

(9,711)


Net cash inflow from operating activities

34,979

32,858










Cash and cash equivalents comprise cash at bank and bank overdrafts.



 

 



 

9.

Discontinued Operations

 

The Group's operating subsidiary, Brewin Dolphin Limited, signed an agreement on 11 May 2011 for the disposal of its Corporate Advisory and Broking Division to a new partnership called N+1 Brewin. The disposal was completed on 1 February 2012. At this date, the Group received a 14% preferred interest in N+1 Brewin LLP.

 

In July 2012, N+1 Brewin LLP merged with Singer Capital Markets Limited and as a result the Group's holding is now 5.6% of N+1 Singer Limited. This holding has been valued at £nil at the period end.

 

The Corporate Advisory and Broking Division represented a reportable segment of the Group and the effect of the discontinued operation on segment results is disclosed in note 2.

 

The results of the discontinued operations, which have been included in the consolidated income statement, were as follows:

 

 


2012

2011


52 weeks

53 weeks


 £'000

 £'000




Revenue

1,235

10,346

Expenses

(3,599)

(9,154)

Operating (loss)/profit

(2,364)

1,192

Costs of separation

(1,143)

(2,393)

Loss before tax

(3,507)

(1,201)

Attributable tax

415

324

Loss attributable to discontinued operations (attributable to the owners of the Company)

(3,092)

(877)




 

During the year the division contributed a net cash outflow of £3.5m (2011: £1.1m inflow) to the Group's net operating cash flows.



 

10.

Funds


 At 30 September 2012

 At 30 September 2011


 £ Billion

 £ Billion

In Group's nominee or sponsored member

17.9

15.3

Stock not held in Group's nominee

0.3

0.3

Discretionary funds under management

18.2

15.6




In Group's nominee or sponsored member

6.7

7.2

Other funds where valuations are carried out but where the stock is not under the Group's control

1.0

1.2

Advisory funds under management

7.7

8.4




Managed funds

25.9

24.0







In Group's nominee or sponsored member

5.2

4.1

Stock not held in Group's nominee

0.2

0.3

Execution only stock

5.4

4.4




Total funds

31.3

28.4




Stock



In Group's nominee or sponsored member

29.8

26.6

Stock not held in Group's nominee

1.5

1.8


31.3

28.4






 

11.

Additional Information

 

Brewin Dolphin Holdings PLC is a company incorporated in the United Kingdom under the Companies Act 2006 whose shares are publicly traded on the London Stock Exchange. The address of the registered office is 12 Smithfield Street, London, EC1A 9BD, United Kingdom.

 

The accounting policies used in arriving at the preliminary figures are those which will be published in the full financial statements. They are consistent with those policies which were set out in the Group's Annual Report and Accounts for 2011.

 

This preliminary announcement is presented in pounds sterling which is the currency of the primary economic environment in which the Group operates.

 

This preliminary announcement was approved by the Board on 4 December 2012.

 

The financial information in this press release does not constitute statutory accounts for the period ended 30 September 2012 or 30 September 2011. Statutory accounts for 2011 have been delivered to the Registrar of Companies and those for 2012 will be delivered following the Company's Annual General Meeting. The auditors have reported on the 2011 and 2012 accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

 

Whilst the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRSs in January 2013.

 

 

12.

Annual General Meeting

 

The Annual General Meeting will be held at 12 noon on 22 February 2013 at Merchant Taylors' Hall, 30 Threadneedle Street, London, EC2R 8JB.

 

13.

Going concern

 

The Directors believe that the Group is well placed to manage its business risks successfully. The Group's forecasts and projections, taking account of possible adverse changes in trading performance, show that the Group should be able to operate within the level of its current financing arrangements. Accordingly, the Directors continue to adopt the going concern basis for the preparation of the financial statements.

 

14.

Availability of Annual Report

 

The Annual Report will be posted to shareholders during January 2013.  Copies will be available from the registered office of the Company, 12 Smithfield Street, London, EC1A 9BD.  It will also be available as a download from the Company's website www.brewin.co.uk.  A further notification will be made to advise of posting and publishing on the website.

 

15.

Forward-looking statements

 

This announcement contains certain forward-looking statements with respect to the Brewin Dolphin's Group's financial condition, operations, and business opportunities. These forward-looking statements represent the Group's expectations or beliefs concerning future events, and involve known and unknown risks, and uncertainty, that could cause actual results, performance, or events to differ materially from those expressed or implied in such statements. Past performance cannot be relied on as a guide to future performance.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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