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Brewin Dolphin Hldgs (BRW)

  Print          Annual reports

Tuesday 29 May, 2012

Brewin Dolphin Hldgs

Interim Financial Report

RNS Number : 2690E
Brewin Dolphin Holdings PLC
29 May 2012
 



29 May 2012

 

 

Brewin Dolphin Holdings PLC

 

Interim Financial Report

 

For the Half Year Ended 31 March 2012

 

Highlights (from continuing operations)

 

Total managed funds £25.7 billion at 31 March 2012 (30 September 2011: £24.0 billion, 27 March 2011: £25.0 billion).

 

Discretionary funds £17.3 billion at 31 March 2012 (30 September 2011: £15.6 billion, 27 March 2011: £15.5 billion).

 

Total income £131.4 million (27 March 2011: £131.5 million).

 


Profit before tax £12.3 million (27 March 2011: £11.9 million) a 3.3% increase.

 

Adjusted* profit before tax £18.9 million (27 March 2011: £22.8 million) a 17.1% decrease.



Earnings per share:


-

Basic earnings per share 3.7p (27 March 2011: 3.7p).


-

Diluted earnings per share 3.5p (27 March 2011: 3.5p).

 

Adjusted* earnings per share:


-

Basic earnings per share 5.8p (27 March 2011: 7.2p) a decrease of 19.4%.


-

Diluted earnings per share 5.5p (27 March 2011: 6.9p) a decrease of 20.3%.

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

 

Declaration of Interim Dividend

The Board declares a maintained interim dividend of 3.55p per share. The interim dividend is payable on 21 September 2012 to shareholders on the register at the close of business on 24 August 2012 with an ex-dividend date of 22 August 2012.

 

Jamie Matheson, Executive Chairman said

"It is a year since we announced the outcome of the major strategic review of our operations and activities to reduce overheads, upgrade systems and enhance services to clients. I am pleased to report that much progress has been made during the last twelve months and implementation remains on plan and on budget….and will position us well for long term growth. "

                 

 

For further information

Jamie Matheson, Executive Chairman

Andrew Hayes / Wendy Baker

Brewin Dolphin Holdings PLC

Hudson Sandler

020 7248 4400

020 7796 4133



 



Executive Chairman's Statement

To the members of Brewin Dolphin Holdings PLC

 

Cautionary statement

This Executive Chairman's Statement which forms the Interim Management Report (IMR) for the 26 week period ended 31 March 2012 has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed.  The IMR should not be relied on by any other party or for any other purpose.

 

The IMR contains certain forward-looking statements. These statements are made by the directors in good faith based on the information available to them up to the time of their approval of this report but such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

 

Introduction

This statement forms the Interim Management Report for the 26 week period ended 31 March 2012.

 

Results and review of the past six months

During the first half your Company has made significant strides with its strategy to enhance services to our clients while maximising efficiency in running the business.  At the same time we have been operating in a business environment which I think can justifiably be described as challenging.

 

In the period under review total income from continuing operations was stable at just over £131m. This was achieved despite generally quieter markets with less activity in many clients' portfolios, reflecting their planned repositioning to a more defensive stance. Profits before tax from continuing operations rose by 3.3% to £12.3m.  It should be acknowledged that we have benefited significantly from the absence of the large FSCS levy incurred last year.

 

We are in the process of moving to a more fee-based business model that is appropriate to today's market trends. Although this will have some short term impact on revenue as we transition to this approach, it will improve significantly the quality of the business across both our Advisory and Discretionary services for the future.

 

The balance sheet position remains satisfactory with firm's cash of £42.4m (2011: £46.5m). 

 

Total funds under management rose by some 7.1% driven by a 10.9% lift in discretionary funds.  During the same period the average level of both the FTSE 100 Index and the APCIMS Private Investor Series Balanced Portfolio Index increased by 12.5% and 9.7% respectively.

 

Funds Under Management





 Advisory

Discretionary

 Total managed funds


 £ billion

 £ billion

 £ billion

Value of funds at 30 September 2011

 8.4

 15.6

 24.0

Inflows

 0.1

 0.7

 0.8

Outflows

(0.5)

(0.4)

(0.9)

Transfers

(0.2)

 0.2

 -

Market movement

 0.6

 1.2

 1.8

Value of funds at 31 March 2012

 8.4

 17.3

 25.7





% increase in funds since 30 September 2011

 

- %

10.9%

7.1%

  

Regulation

While it is obviously pleasing that the impact of this year's FSCS levy was considerably less than in the previous period, the cost of regulation continues to be material for your company.  We do not see the regulatory load diminishing. It is your Board's intention that the steps being taken as part of our strategic review will go some way to mitigate this financial burden.

 

Developments

Some time ago your Board expressed the view that our regional network was now of sufficient scale and that further changes were unlikely to increase the overall number of offices materially.  We have recently announced that we will be opening in Ipswich, following the recruitment of a team of six. We have recruited ten new executives for Birmingham and Bristol.  We have also decided that our operations in Dumfries will be merging with our Penrith office and in a similar vein the Elgin office will be consolidating with Inverness. 

 

As previously announced the sale of our Corporate Advisory & Broking business was successfully completed on 1 February 2012.

 

Strategy

It is a year since we announced the outcome of the major strategic review of our operations and activities to reduce overheads, upgrade systems and enhance services to clients. I am pleased to report that much progress has been made during the last twelve months and implementation remains on plan both as to time and cost. We expect to begin the migration to our new systems provider at the end of this calendar year, rolling it out progressively during 2013. This will enable us to make significant cost savings, with the benefits of these becoming more significant towards the latter stages of the process. This investment will lead to a materially enhanced service for clients in the coming years while at the same time allowing us to generate superior returns for our shareholders. We also believe that it will improve our ability to meet the demands of current and future regulation, including of course the Retail Distribution Review (RDR).

 

Board

Following the AGM, I was very pleased to be able to announce the appointment of David Nicol as a Non-Executive Director and he will of course stand for election at our next AGM. 

 

It is the intention of our long standing Finance Director, Robin Bayford, to retire at the end of this calendar year and the search for a suitable candidate to take up the position of Finance Director has been underway for some time.  At the time of writing I am able to tell you that such a candidate has been identified, but until the proposed appointment has FSA approval, no further announcement can be made.

 

Dividend

A maintained interim dividend of 3.55p per share will be paid on 21 September 2012 to shareholders on the register on 24 August 2012.

 

Related party transactions

Related party transactions are disclosed in Note 3 to the condensed set of financial statements.

 

Going concern

As stated in Note 2 to the condensed set of financial statements, the directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of time not less than 12 months from the date of this report.  Accordingly, the Directors continue to adopt a going concern basis in preparing the condensed financial statements.

 

Principal risks and uncertainties

Principal risks and uncertainties are covered in Note 4 to the condensed financial statements.

 

Outlook

While it would be easy to become distracted by the impact of the economic and political difficulties in Europe, there remains a growing demand for our services and an increasing appreciation of the place of equity within the savings industry.  While our ability to influence the short term outlook is clearly limited, a very significant amount of work is being undertaken to ensure that Brewin Dolphin is ready to meet efficiently future conditions and the requirements of our clients. We believe our scale and approach positions us well for longer term growth. We continue to view the future with cautious optimism.

 

 

Jamie Matheson

28 May 2012

 



Condensed Consolidated Income Statement

26 week period ended 31 March 2012

 



Unaudited

26 weeks to

31 March

2012

Unaudited

26 weeks to

27 March
2011

Audited

53 weeks to

30 September 2011


Note

£'000

£'000

£'000

Continuing operations





Revenue


 122,812

123,616

 248,375

Other operating income


 8,566

 7,849

 15,638

Total income

5

 131,378

131,465

 264,013






Staff costs


(63,513)

(61,433)

(126,456)

Redundancy costs


(87)

 (577)

(1,008)

Additional FSCS levy


 (553)

(6,058)

(6,058)

Acquisition of subsidiary costs


-

-

 (228)

Amortisation of intangible assets - client relationships

10

(5,954)

(4,226)

(10,486)

Other operating costs


(48,947)

(47,429)

(98,409)

Operating expenses


(119,054)

 (119,723)

(242,645)






Operating profit


 12,324

 11,742

 21,368

Finance income

6

554

505

 1,253

Other gains and losses


(13)

-

(27)

Finance costs

6

 (558)

 (349)

 (732)

Profit before tax

5

 12,307

 11,898

 21,862

Tax

7

(3,533)

(3,634)

(6,884)

Profit for the period from continuing operations

 8,774

8,264

14,978






Discontinued operations





(Loss)/profit for the period from discontinued operations

18

(3,172)

71

(877)

Profit for the period


 5,602

 8,335

 14,101






Attributable to:





Equity shareholders of the parent from continuing operations

 5,602

 8,335

 14,101



 5,602

 8,335

 14,101






Earnings per share










From continuing operations





Basic

8

3.7p

3.7p

6.6p

Diluted

8

3.5p

3.5p

6.3p






 

Condensed Consolidated Statement of Comprehensive Income

26 week period ended 31 March 2012



Unaudited 26 weeks to 31 March 2012

Unaudited 26 weeks to 27 March 2011

Audited 53 weeks to 30 September 2011



£'000

£'000

£'000






Profit for the period


5,602

8,335

14,101

Gain on revaluation of available-for-sale investments


-

13

-

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


112

51

56

Exchange differences on translation of foreign operations


(66)

-

(83)

Actuarial (loss)/profit on defined benefit pension scheme


(3,247)

3,501

2,766

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


779

(910)

(719)

Other comprehensive income for the period

(2,422)

2,655

2,020

Total comprehensive income for the period

3,180

10,990

16,121






Attributable to:





Equity shareholders of the parent


3,180

10,990

16,121



3,180

10,990

16,121






 



Condensed Consolidated Statement of Changes in Equity

26 week period ended 31 March 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

26 week period ended 31 March 2012








 Balance at 30 September 2011

2,405

116,028

 (10,686)

4,118

22,950

 19,970

154,785

 Profit for the period

 -

 -

 -

 -

 -

 5,602

5,602

 Other comprehensive income for the period








 Deferred and current tax on other comprehensive income

 -

 -

 -

 112

 -

779

891

 Actuarial loss on defined benefit pension scheme

 -

 -

 -

 -

 -

(3,247)

 (3,247)

 Exchange differences on translation of foreign operations

 -

 -

 -

 -

 -

(66)

 (66)

 Total comprehensive income for the period

 -

 -

 -

 112

 -

 3,068

3,180

 Dividends

 -

 -

 -

 -

 -

(8,412)

 (8,412)

 Issue of shares

45

5,752

 -

 -

 -

-

5,797

 Own shares acquired in the period

 -

 -

 (1,777)

 -

 -

-

 (1,777)

 Share-based payments

 -

 -

 -

 -

 -

 1,332

1,332

 Deferred tax credit on share-based payments

 -

 -

 -

 -

 -

138

138

 Balance at 31 March 2012

2,450

121,780

 (12,463)

4,230

22,950

 16,096

155,043









26 week period ended 27 March 2011








 Balance at 26 September 2010

2,270

113,612

 (101)

4,062

4,562

 17,211

141,616

 Profit for the period

 -

 -

 -

 -

 -

 8,335

8,335

Other comprehensive income for the period








 Deferred and current tax on other comprehensive income

 -

 -

 -

 51

 (910)

 (859)

 Actuarial profit on defined benefit pension scheme

 -

 -

 -

 -

 -

 3,501

3,501

Revaluation of available-for-sale investments

 -

 -

 -

 13

 -

-

13

 Total comprehensive income for the period

 -

 -

 -

 64

 -

 10,926

10,990

 Dividends

 -

 -

 -

 -

 -

(8,112)

 (8,112)

 Issue of shares

16

1,918

 -

 -

 -

-

1,934

 Own shares acquired in the period

 -

 -

 (5,462)

 -

 -

-

 (5,462)

 Share-based payments

 -

 -

 -

 -

 -

783

783

 Current tax charge on share-based payments

 -

 -

 -

 -

 -

(30)

 (30)

 Deferred tax credit on share-based payments

 -

 -

 -

 -

 -

 21

21

 Balance at 27 March 2011

2,286

115,530

 (5,563)

4,126

4,562

 20,799

141,740









53 week period ended 30 September 2011








 Balance at 26 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

 



Condensed Consolidated Balance Sheet

As at 31 March 2012



Unaudited as at

31 March 2012

Unaudited as at

27 March
 2011

Audited as

at

30 September 2011


Note

£'000

£'000

£'000

Assets





Non-current assets





Intangible assets

10

 111,306

 92,493

 115,805

Property, plant and equipment

11

 15,765

 17,651

 15,869

Available-for-sale investments

12

 6,074

 6,127

 6,087

Other receivables


 2,289

 2,455

 2,377

Deferred tax asset


 2,229

 1,241

559

Total non-current assets


 137,663

119,967

 140,697

Current assets





Trading investments

12

812

817

744

Trade and other receivables


 305,918

370,404

 242,492

Cash and cash equivalents


 64,663

 72,322

 85,702

Total current assets


 371,393

443,543

 328,938

Total assets


 509,056

563,510

 469,635






Liabilities





Current liabilities





Bank overdrafts


401

 1,926

672

Trade and other payables


 313,617

385,041

 267,819

Current tax liabilities


 2,341

 4,512

 1,390

Provisions

13

 4,895

 5,031

 5,931

Shares to be issued including premium

14

 6,675

 6,658

 6,541

Total current liabilities


 327,929

403,168

 282,353

Net current assets


 43,464

 40,375

 46,585






Non-current liabilities





Retirement benefit obligation

15

 9,224

 7,707

 7,101

Deferred purchase consideration


 1,611

 2,127

 2,556

Provisions

13

-

16

-

Shares to be issued including premium

14

 15,249

 8,752

 22,840

Total non-current liabilities


 26,084

 18,602

 32,497

Total liabilities


 354,013

421,770

 314,850

Net assets


 155,043

141,740

 154,785






EQUITY





Called up share capital

16

 2,450

 2,286

 2,405

Share premium account

16

 121,780

115,530

 116,028

Own shares


(12,463)

(5,563)

(10,686)

Revaluation reserve


 4,230

 4,126

 4,118

Merger reserve


 22,950

 4,562

 22,950

Profit and loss account


 16,096

 20,799

 19,970

Equity attributable to equity holders of the parent


 155,043

141,740

 154,785

 



Condensed Consolidated Cash Flow Statement

26 week period ended 31 March 2012

 



Unaudited 26 weeks to 31 March 2012

Unaudited 26 weeks to 27 March 2011

Audited 53 weeks to 30 September 2011


 Note

 £'000

 £'000

 £'000

 Net cash (outflow)/inflow from operating activities

17

(9,799)

(2,800)

 32,858






 Cash flows from investing activities





 Purchase of intangible assets - client relationships


(2,697)

(4,530)

(7,946)

 Purchase of intangible assets - software


(2,713)

(2,507)

(3,147)

 Purchases of property, plant and equipment

11

(4,154)

(3,114)

(5,171)

 Acquisition of subsidiary


-

-

 5,802

 Dividend received from available-for-sale investments


-

-

194

 Net cash used in investing activities


(9,564)

(10,151)

(10,268)






 Cash flows from financing activities





 Dividends paid to equity shareholders


-

-

(16,286)

 Purchase of own shares


(1,777)

(5,462)

(10,585)

 Proceeds on issue of shares


372

 1,934

 2,436

 Net cash used in financing activities


(1,405)

(3,528)

(24,435)






 Net decrease in cash and cash equivalents


(20,768)

(16,479)

(1,845)






 Cash and cash equivalents at the start of period


 85,030

 86,875

 86,875

 Cash and cash equivalents at the end of period


 64,262

 70,396

 85,030











Firm's cash


 42,775

48,480

64,469

Firm's overdraft


 (401)

(1,926)

 (672)

Firm's net cash


 42,374

46,554

63,797

Client settlement cash


 21,888

 23,842

 21,233

Net cash and cash equivalents


 64,262

70,396

 85,030






Cash and cash equivalents shown in current assets


 64,663

72,322

85,702

Bank overdrafts


 (401)

(1,926)

 (672)

Net cash and cash equivalents


 64,262

70,396

85,030






 

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



 

Notes to the Condensed Set of Financial Statements

 

1.

General information

Brewin Dolphin Holdings PLC (the "Company") is a public limited company incorporated in the United Kingdom. The shares of the Company are listed on the London Stock Exchange. The address of its registered office is 12 Smithfield Street, London EC1A 9BD. This Interim Financial Report was approved for issue on 28 May 2012.

 

A copy of this Interim Financial Report including Condensed Financial Statements for the 26 week period ended 31 March 2012 is available at the Company's registered office and a copy will be posted to all shareholders.

 

The information for the 53 week period ended 30 September 2011 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

 

2.

Accounting policies

Basis of preparation

The annual financial statements of Brewin Dolphin Holdings PLC are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

 

The condensed set of financial statements included in this Interim Financial Report for the 26 week period ended 31 March 2012 should be read in conjunction with the annual audited financial statements of Brewin Dolphin Holdings PLC for the 53 week period ended 30 September 2011.

 

The condensed set of financial statements included in this Interim Financial Report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting", as adopted by the European Union and the Interim Financial Report has been prepared in accordance with the Disclosure and Transparency Rules (DTR) of the Financial Services Authority.

 

Going concern

The Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly they continue to adopt the going concern basis in preparing the condensed financial statements.

 

Changes in accounting policy and disclosure

The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest annual audited financial statements for the 53 week period ended 30 September 2011.

 

3.

Related party transactions

There have been no changes to related party transactions that could have a material effect on the financial position or performance of the Group that were disclosed in the 2011 Annual Report and Accounts available via our website www.brewin.co.uk. Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed. There were no other transactions with related parties which were not part of the Group during the period, with the exception of remuneration paid to key management personnel.

 

4.

Principal risks and uncertainties

The Directors consider that the nature of the principal risks and uncertainties which may have a material effect on the Group's performance during the remainder of its financial year remain unchanged from those identified on page 14 of the 2011 Annual Report and Accounts available via our website www.brewin.co.uk.

 

The principal risk to the business remains adverse movements in the market in the short term.  The other major financial and non financial risks identified in the 2011 Annual Report and Accounts were:

 

Risk Type

Risk

Credit risk

Counterparty risk

Earnings risk

Loss of client facing staff

Interest rate risk

Interest rate risk

Liquidity risk

Bank default and other systemic risk; Capital adequacy

Legal and compliance risk

Data protection; Fast changing regulatory environment; New business and product lines; Poor advice/portfolio performance (including mis-selling)

Operational and IT risk

Business continuity; Data integrity; Electronic dealing errors; Supplier Capacity; Significant strategic change; Project control

Reputational risk

Poor investment performance; adverse publicity

Settlement risk

Settlement failure

Other risk

Acquisition of new teams; Financial crime

 

 

5.

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 businesses: Investment Management and Corporate Advisory & Broking which has been discontinued (see Note 18). 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.

26 week period ended 31 March 2012







Continuing operations

Continuing operations

 Continuing operations

 Dis-continued operations



 Discretionary Portfolio Management

 Advisory Portfolio Management

 Total Investment Management

 Corporate Advisory & Broking

 Group


 £'000

 £'000

 £'000

 £'000

 £'000







 Total income

 91,913

 39,465

 131,378

1,088

 132,466







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

 13,235

 5,683

 18,918

 (2,054)

 16,864

 Redundancy costs



(87)

(47)

(134)

 Additional FSCS levy



(553)

 -

(553)

 Amortisation of client relationships



(5,954)

 -

(5,954)

 Operating profit



 12,324

(2,101)

 10,223

 Finance income (net)



(4)

 -

(4)

 Other gains and losses



(13)

 -

(13)

 Cost of separation



 -

 (1,772)

(1,772)

 Profit/(loss) before tax



 12,307

(3,873)

 8,434







 Other Information






 Capital expenditure



 6,867

-

 6,867

 Depreciation



 4,120

 40

 4,160

 Amortisation of intangible asset - software



 1,684

-

 1,684

 Share-based payments



 1,332

-

 1,332







 Segment assets excluding current tax assets



509,056

-

 509,056

 Segment liabilities excluding current tax liabilities



351,672

-

 351,672

 

 

26 week period ended 27 March 2011







Continuing operations

Continuing operations

 Continuing operations

 Discontinued operations



 Discretionary Portfolio Management

 Advisory Portfolio Management

 Total Investment Management

 Corporate Advisory & Broking

 Group


 £'000

 £'000

 £'000

 £'000

 £'000







 Total income

 88,538

 42,927

 131,465

 4,564

 136,029







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

 15,222

 7,381

 22,603

 110

 22,713

 Redundancy costs



(577)

(12)

(589)

 Additional FSCS levy



(6,058)

-

(6,058)

 Amortisation of client relationships



(4,226)

-

(4,226)

 Operating profit



 11,742

 98

 11,840

 Finance income (net)



 156

-

 156

 Profit before tax



 11,898

 98

 11,996







 Other Information






 Capital expenditure



 5,596

 25

 5,621

 Depreciation



 4,780

 67

 4,847

 Amortisation of intangible asset - software



 1,594

 38

 1,632

 Share-based payments



 770

 13

 783







 Segment assets excluding current tax assets



547,059

 16,451

 563,510

 Segment liabilities excluding current tax liabilities



400,807

 16,451

 417,258

 

 

53 week period ended 30 September 2011






Continuing operations

 

Continuing operations

 

 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

 

 

6.

Finance income and costs

           





 


Unaudited 26 weeks to 31 March 2012

Unaudited

26 weeks to 27 March 2011

Audited

53 weeks to

30 September 2011

 


 £'000

 £'000

 £'000

 

Finance income




 

Dividends from available-for-sale investments

-

-

194

 

Interest on bank deposits

554

505

 1,059

 


554

505

 1,253

 





 

Finance costs




 

Finance cost of deferred consideration

164

121

317

 

Interest expense on defined pension obligation

373

202

369

 

Interest on bank overdrafts

21

26

46

 


558

349

732

 

 

7.

 

Taxation


United Kingdom

Overseas tax

United Kingdom deferred tax



Current tax

Prior period

Current tax

Prior period

Current year

Prior period

Total


 £'000

 £'000

 £'000

 £'000

 £'000

 £'000

 £'000

















Unaudited 26 weeks to 31 March 2012

Continuing operations

 3,498

556

122

-

63

 (706)

 3,533

Discontinued operations

 (701)

-

-

-


-

 (701)


 2,797

556

122

-

63

 (706)

 2,832









Unaudited 26 weeks to 27 March 2011

Continuing operations

 4,110

419

83

-

 (614)

 (364)

 3,634

Discontinued operations

27

-

-

-

-

-

27


 4,137

419

83

-

 (614)

 (364)

 3,661









Audited 53 weeks to 30 September 2011

Continuing operations

 6,246

422

181

-

439

 (404)

 6,884

Discontinued operations

 (122)

-

-

-

 (202)

-

 (324)


 6,124

422

181

-

237

 (404)

 6,560

















 

8.

Earnings per share

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


Unaudited

26 weeks to

31 March

2012

Unaudited

26 weeks to

27 March

2011

Audited

53 weeks to

30 September

2011





Number of shares





'000

'000

'000

Basic




Weighted average number of shares in issue in the period

235,712

 225,543

226,796

Diluted




Weighted average number of options outstanding for the period

 7,434

 3,821

 4,275

Estimated weighted average number of shares earned under deferred consideration arrangements

 6,328

 4,422

 9,464

Diluted weighted average number of options and shares for the period

249,474

 233,786

240,535





Earnings attributable to ordinary shareholders




Continuing operations





£'000

 £'000

£'000

Profit for the period from continuing operations

 8,774

 8,263

 14,978

Redundancy costs

87

577

 1,008

 less tax

 (22)

 (156)

 (272)

Additional FSCS levy

553

 6,058

 6,058

 less tax

 (138)

(1,636)

(1,636)

Acquisition of subsidiary

-

-

228

Amortisation of intangible assets - client relationships

 5,954

 4,226

 10,486

 less tax

(1,488)

(1,141)

(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

 13,720

 16,191

 28,019













Profit for the period from continuing operations

 8,774

 8,263

 14,978

Finance costs of deferred consideration (Note a)

95

50

237

 less tax

 (24)

 (14)

 (64)

Adjusted fully diluted profit for the period and attributable earnings

 8,845

 8,299

 15,151

Redundancy costs

87

577

 1,008

 less tax

 (22)

 (156)

 (272)

Additional FSCS levy

553

 6,058

 6,058

 less tax

 (138)

(1,636)

(1,636)

Acquisition of subsidiary

-


228

Amortisation of intangible assets - client relationships

 5,954

 4,226

 10,486

 less tax

(1,488)

(1,141)

(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

 13,791

 16,227

 28,192





 

From continuing operations








Basic

3.7p

3.7p

6.6p

Diluted

3.5p

3.5p

6.3p







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

Basic

5.8p

7.2p

12.4p

Diluted

5.5p

6.9p

11.7p





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


 

 


Unaudited

26 weeks to

31 March 2012

Unaudited

26 weeks to

27 March 2011

Audited

53 weeks to

30 September 2011

Earnings attributable to ordinary shareholders




Continuing and discontinued operations









£'000

£'000

£'000

Profit for the period from continuing and discontinued operations

 5,602

 8,335

 14,101

Redundancy costs

134

589

 1,020

 less tax

 (34)

 (159)

 (275)

Additional FSCS levy

553

 6,058

 6,058

 less tax

 (138)

(1,636)

(1,636)

Acquisition of subsidiary

-

-

228

Amortisation of intangible assets - client relationships

 5,954

 4,226

 10,486

 less tax

(1,488)

(1,141)

(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

 10,583

 16,272

 27,151













Profit for the period

 5,602

 8,335

 14,101

Finance costs of deferred consideration (Note a above)

95

50

236

 less tax

 (24)

 (14)

 (64)

Adjusted fully diluted profit for the period and attributable earnings

 5,673

 8,371

 14,273

Redundancy costs

134

589

 1,020

 less tax

 (34)

 (159)

 (275)

Additional FSCS levy

553

 6,058

 6,058

 less tax

 (138)

(1,636)

(1,636)

Acquisition of subsidiary

-

-

228

Amortisation of intangible assets - client relationships

 5,954

 4,226

 10,486

 less tax

(1,488)

(1,141)

(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

 10,654

 16,308

 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

2.4p

3.7p

6.2p

Diluted

2.3p

3.6p

5.9p





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

Basic

4.5p

7.2p

12.0p

Diluted

4.3p

7.0p

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)

0.0p

(0.4p)

Diluted

(1.2p)

0.1p

(0.4p)





 

 

9.

Dividends

           


Unaudited

26 weeks to

31 March 2012

Unaudited

26 weeks to

27 March 2011

Audited

53 weeks to

30 September 2011


£'000

£'000

£'000

Amounts recognised as distributions to equity shareholders in the period:








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

 8,412

 8,112

 7,989

Interim dividend paid 22 September 2011, 3.55p per share

-

-

 8,297


 8,412

 8,112

 16,286

* approved at Annual General Meeting on 24 February 2012



An interim dividend of 3.55p per share was declared by the Board on 28 May 2012 and has not been included as a liability as at 31 March 2012. This interim dividend will be paid on 21 September 2012 to shareholders on the register at the close of business on 24 August 2012 with an ex-dividend date of 22 August 2012.

 

 

10.

Intangible assets

 


 Goodwill

 Client relationships

 Software development costs

 Purchased software

 Total


 £'000

 £'000

 £'000

 £'000

 £'000







Cost






At 26 September 2010

 48,637

54,802

 866

 10,204

 114,509

Additions

 -

4,226

 214

 2,293

 6,733

Revaluation of shares to be issued and deferred purchase consideration in respect of acquisitions in prior periods

 -

 504

 -

-

504

At 27 March 2011

 48,637

59,532

1,080

 12,497

 121,746

Additions

 -

26,206

54

586

 26,846

Revaluation of shares to be issued and deferred purchase consideration in respect of acquisitions in prior periods

 -

4,747

 -

-

 4,747

At 30 September 2011

 48,637

90,485

1,134

 13,083

 153,339

Additions

 -

3,465

86

 2,627

 6,178

Revaluation of shares to be issued and deferred purchase consideration in respect of acquisitions in prior periods

 -

 (3,039)

 -

-

(3,039)

At 31 March 2012

 48,637

90,911

1,220

 15,710

 156,478



















Accumulated amortisation and impairment






At 26 September 2010

 -

20,913

 196

 2,286

 23,395

Amortisation charge for the period

 -

4,226

 125

 1,507

 5,858

Impairment losses for the period

 -

 -

 -

-

-

At 27 March 2011

 -

25,139

 321

 3,793

 29,253

Amortisation charge for the period

 -

6,260

 137

 1,677

 8,074

Impairment losses for the period

 -

 207

 -

-

207

At 30 September 2011

 -

31,606

 458

 5,470

 37,534

Amortisation charge for the period

 -

5,954

 149

 1,535

 7,638

Impairment losses for the period

 -

 -

 -

-

-

At 31 March 2012

 -

37,560

 607

 7,005

45,172













Net book value

At 26 September 2010

 48,637

33,889

 670

 7,918

 91,114

At 27 March 2011

 48,637

34,393

 759

 8,704

 92,493

At 30 September 2011

 48,637

58,879

 676

 7,613

 115,805

At 31 March 2012

 48,637

53,351

 613

 8,705

 111,306







 

11.

Property, plant and equipment

During the period the Group spent £1.2 million (26 weeks to 27 March 2011: £0.3 million, 53 weeks to 30 September 2011: £0.6 million) on leasehold improvements, £1.5 million (26 weeks to 27 March 2011: £1.3 million, 53 weeks to 30 September 2011: £2.3 million) on computer equipment and £1.4 million (26 weeks to 27 March 2011: £1.5 million, 53 weeks to 30 September 2011: £2.2 million) on office equipment.

 

12.

Investments

 

Available-for-sale investments





Listed investments

Unlisted investments

Total


£'000

£'000

£'000

Fair value








At 31 March 2012

74

 6,000

 6,074





At 27 March 2011

127

 6,000

 6,127





At 30 September 2011

87

 6,000

 6,087









The listed available-for-sale investment is in PLUS Markets Group PLC and was a strategic investment designed to reduce the then monopoly of the London Stock Exchange.

 

The unlisted available-for-sale investment in Euroclear plc is as a result of a £431,000 strategic investment in Crest, the London based settlement system. Crest was taken over by Euroclear plc and the resultant stake in Euroclear plc was 0.52% of its share capital or 19,899 ordinary shares. As at 30 September 2011 the Directors updated their valuation of the Group's holding in Euroclear plc; the valuation is £6 million (27 March 2011: £6 million, 30 September 2011: £6 million). This valuation takes into account dividend yield and the prices of similar quoted companies.

 

Trading investments





Listed investments

Unlisted investments

Total


£'000

£'000

£'000

Fair value








At 31 March 2012

812

-

812





At 27 March 2011

817

-

817





At 30 September 2011

744

-

744





Investments are measured at fair value which is determined directly by reference to published prices in an active market where available.

 

 

13.

Provisions

 


Unaudited 26 weeks to

31 March 2012

Unaudited 26 weeks to

31 March 2012

Unaudited 26 weeks to

31 March 2012

Unaudited 26 weeks to

27 March 2011

Audited 53 weeks to

30 September 2011


£'000

£'000

£'000

£'000

£'000


Sundry claims and associated costs

Vacant Property

Total

Total

 Total

At start of period

 5,875

56

 5,931

 5,464

 5,464

Additions

 1,004

-

 1,004

 1,181

 2,109

Utilisation of provision

 (597)

 (26)

 (623)

(1,411)

(1,273)

Unused amounts reversed during the period

(1,417)

-

(1,417)

(187)

 (369)

At end of period

 4,865

30

 4,895

 5,047

 5,931







Provisions






Included in current liabilities

 4,865

30

 4,895

 5,031

 5,931

Included in non-current liabilities

-

-

-

 16

-


 4,865

30

 4,895

 5,047

 5,931

 

 

Provisions relate to sundry claims against the Group and the future cost of vacant property. Where there are sundry claims against the Group the estimated liability has been included above with the related insurance debtor of £nil (27 March 2011: £399,000, 30 September 2011: £nil) included in trade and other receivables. The timing of settlements cannot be accurately forecast; settlement of £nil (27 March 2011: £nil, 30 September 2011: £nil) has been made since the balance sheet date.

 

 

14.

Shares to be issued including premium and other deferred purchase liabilities

The Group acquires investment businesses and teams of investment managers, bringing with them funds under management (the latter classified as the intangible asset client relationships) on deferred purchase terms based on the value of income introduced over, normally, a three year period. The payment is normally made in ordinary shares and these shares typically have to be held for a further three years. At the discretion of the Board these shares can be purchased in the market rather than issued. The estimated likely cost of these shares has been updated at the half year in light of actual results of previously acquired business teams and to include new acquisitions.

 
 

15.

Retirement benefit obligation

The main financial assumptions used in calculating the Group's retirement benefit obligation are as follows:


As at

31 March

2012

As at

 27 March

2011

As at

30 September

2011

Discount rate

4.70%

5.50%

5.10%

Rate of inflation (RPI)

4.70%

3.40%

3.40%

Rate of inflation (CPI)

2.35%

n/a

2.25%

Salary increases

3.10%

3.40%

3.00%

Rate of increase to pensions in payment

3.10%

3.40%

3.00%

Expected return on equities

7.00%

7.50%

7.00%

Expected return on bonds

4.00%

4.50%

4.00%

Expected return on other assets

0.50%

0.50%

0.50%






Average assumed life expectancies for members on retirement at age 65

Existing pensioners




 Males

87.5 years

87.5 years

87.5 years

 Females

89.0 years

88.9 years

88.9 years

Future pensioners




 Males

88.7 years

88.6 years

88.6 years

 Females

90.1 years

90.1 years

90.1 years

 

A full actuarial valuation was carried out as at 31 December 2008 and the results of this valuation have been updated to 31 March 2012 by a qualified independent actuary.

 

 

16.

Called up share capital

The following movements in share capital occurred during the period:

 

 


Date

No. of

Fully Paid Shares

No. of

Nil Paid Shares

Exercise/

Issue Price (pence)

Called up share capital

Share premium account

Total






£'000

£'000

£'000

At 30 September 2011


240,607,878

 2,712,702


 2,405

 116,028

 118,433

Settlement of deferred consideration

8 December 2011

 4,131,553

-

 131.3p

 42

 5,383

 5,425

Issue of options

Various

231,840

-

 37.5p - 148p

 2

 230

 232

Nil paid shares now paid up

Various

133,117

 (133,117)

 103.3p - 184.5p

 1

 148

 149

Cost of issue of shares


-

-


-

(9)

(9)

At 31 March 2012


245,104,388

 2,579,585


 2,450

 121,780

 124,230









 

 

17.

Note to the cash flow statement


Unaudited

26 weeks to

31 March

2012

Unaudited

26 weeks to

27 March 2011

Audited

53 weeks to

30 September 2011

 


£'000

£'000

£'000

 

Group




 

Operating profit from continuing operations

 12,324

 11,742

 21,368

 

(Loss)/profit for the period from discontinued operations (Note 18)

(3,873)

98

(1,201)

 

Adjustments for:




 

Depreciation of property, plant and equipment

 4,160

 4,847

 8,835

 

Amortisation of intangible assets - client relationships

 5,954

 4,226

 10,486

 

Amortisation of intangible assets - software

 1,684

 1,632

 3,446

 

Loss on disposal of property, plant and equipment

98

-

-

 

Intangible asset impairment

-

-

207

 

Retirement benefit obligation

(1,124)

(1,290)

(2,631)

 

Share-based payment cost

 1,334

783

 3,029

 

Translation adjustments

 (66)

-

 (83)

 

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

164

121

317

 

Interest income

554

505

 1,059

 

Interest expense

 (558)

 (349)

 (732)

 

Operating cash flows before movements in working capital

 20,651

 22,315

 44,100

 

Increase/(decrease) in payables and trading investments

 35,480

 18,794

(91,996)

 

(Increase)/decrease in receivables and trading investments

(63,375)

(39,316)

 90,465

 

Cash (used)/generated by operating activities

(7,244)

 1,793

 42,569

 

 Tax paid

(2,555)

(4,593)

(9,711)

 

Net cash (outflow)/inflow from operating activities

(9,799)

(2,800)

 32,858

 





 

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

 

 

 

18.

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.

 

The Group received a 14% preferred interest in N+1 Brewin which has been valued at £nil.

 

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 5.

 

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

 


Unaudited

26 weeks to

31 March 2012

Unaudited

26 weeks to

27 March
 2011

Audited

53 weeks to

30 September 2011


 £'000

 £'000

 £'000





Revenue

 1,088

 4,564

 10,346

Expenses

(3,189)

(4,466)

(9,154)

Operating profit

(2,101)

 98

 1,192

Costs of separation

(1,772)

-

(2,393)

Profit before tax

(3,873)

 98

(1,201)

Attributable tax

 701

(27)

 324

Net (loss)/profit attributable to discontinued operations (attributable to the owners of the Company)

(3,172)

 71

(877)





 

During the period the division contributed a net cash outflow of £3.6m (26 weeks to 27 March 2011: £0.1 million inflow, 53 weeks to 30 September 2011: £1.1 million outflow) to the Group's net operating cash flows.

 

 

Funds

(Unaudited)


 

 At

31 March

2012

 At

27 March

2011

 At

30 September 2011


 £ Billion

 £ Billion

 £ Billion

In Group's nominee or sponsored member

 17.0

 15.2

 15.3

Stock not held in Group's nominee

0.3

 0.3

 0.3

Discretionary funds under management

 17.3

 15.5

 15.6





In Group's nominee or sponsored member

7.3

 8.0

 7.2

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

1.1

 1.5

 1.2

Advisory funds under management

8.4

 9.5

 8.4





Managed funds

 25.7

 25.0

 24.0









In Group's nominee or sponsored member

5.0

 4.4

 4.1

Stock not held in Group's nominee

0.3

 0.4

 0.3

Execution only stock

5.3

 4.8

 4.4





Total funds

 31.0

 29.8

 28.4





Stock




In Group's nominee or sponsored member

 29.3

27.6

 26.6

Stock not held in Group's nominee

1.7

2.2

 1.8


 31.0

29.8

 28.4





 

Responsibility Statement

 

The Directors confirm that to the best of their knowledge:

 

a)

the condensed set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting";

 

b)

the interim management report* includes a fair view of the information required by Disclosure and Transparency Rules (DTR) 4.2.7 R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

 

c)

the interim management report* includes a fair view of the information required by DTR 4.2.8 R (disclosures of related parties' transactions and changes therein).

 

*encompassed within the Executive Chairman's Statement

 

By order of the Board

           

J Matheson   

R A Bayford

Executive Chairman            

28 May 2012

Finance Director

 

 

 

Independent Review Report

Independent Review Report to Brewin Dolphin Holdings PLC

 

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the 26 week period ended 31 March 2012 which the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity, the condensed consolidated balance sheet, the condensed consolidated cash flow statement and related notes 1 to 18. 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.

 

This report is made solely to the company 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. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

 

Directors' responsibilities

 

The half-yearly financial report is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

 

As disclosed in note 2, the annual financial statements of the company are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.

 

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 of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

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 26 week period ended 31 March 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

 

 

 

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

28 May 2012

 


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