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Brewin Dolphin Hldgs (BRW)

  Print          Annual reports

Thursday 19 May, 2016

Brewin Dolphin Hldgs

Interim Management Report For the Half Year

RNS Number : 6690Y
Brewin Dolphin Holdings PLC
19 May 2016
 

19 May 2016

Brewin Dolphin Holdings PLC

 

Interim Management Report

For the Half Year Ended 31 March 2016

Highlights1

Total funds £32.8bn, up 2.5% (FY 2015: £32.0bn).

Discretionary funds at £25.9bn, up 4.4% (FY 2015: £24.8bn). This compares to an increase of 1.9% in the FTSE 100 Index and a 3.9% increase in the FTSE WMA Private Investor Series Balanced Portfolio Index.

Total net discretionary funds inflows, excluding transfers, were £0.4bn representing an annualised growth rate of 3.2% (H1 2015: 4.2%).

Core income £126.1m (H1 2015: £125.0m), an increase of 0.9%, mostly due to net organic discretionary funds growth and higher financial planning income offset by lower average market levels compared to H1 2015.

Other income declined by 39.7% to £11.1m (H1 2015: £18.4m).

Adjusted2 profit before tax of £28.4m (H1 2015: £32.4m), 12.3% lower.

Profit before tax of £21.5m, 42.2% lower than H1 2015 (£37.2m) which included a one-off gain of £9.7m.

Adjusted2 earnings per share:


ú Basic earnings per share of 8.4p (H1 2015: 9.6p)


ú Diluted earnings per share3 of 7.9p (H1 2015: 9.0p)

Statutory earnings per share:


 ú Basic earnings per share of 6.3p (H1 2015: 11.0p)


 ú Diluted earnings per share of 6.1p (H1 2015: 10.5p)

Interim dividend of 3.85p per share (H1 2015: 3.75p per share)

 

 

1 Continuing operations.

2 These figures have been adjusted to exclude redundancy costs, FSCS levy rebate, onerous contracts, one-off

migration costs, disposal of available-for-sale investment and amortisation of client relationships.

3 See note 7.

 

BDeclaration of Interim Dividend

The Board declares an interim dividend of 3.85p per share. The interim dividend is payable on 17 June 2016 to shareholders on the register at the close of business on 27 May 2016 with an ex-dividend date of 26 May 2016.

 

David Nicol, Chief Executive, said:

 

"The first half saw further growth in our core business as well as continued progress towards achieving our long-term strategic goals. Despite challenging market conditions, we maintained recent growth rates in our discretionary business, while also moving firmly to execution stage on many of the growth initiatives we outlined in 2015.

 

In the current market context, and given the short-term outflows resulting from business restructuring, the first half reflects a creditable performance. The underlying ability of the business to sustain organic growth, despite the poor market environment, is a reminder of the sound footings on which we are building our growth ambitions. The Group is in hiring mode and focused on a balance of direct and intermediary-led growth to increase discretionary funds by a third over the next five years." 

 

For further information:

Brewin Dolphin Holdings PLC


David Nicol, Chief Executive

Tel: +44 (0)20 7248 4400

Andrew Westenberger, Finance Director

Tel: +44 (0)20 7248 4400

FTI Consulting


Paul Marriott

Tel: +44 (0)20 3727 1341

Edward Berry

Tel: +44 (0)20 3727 1046

Notes to Editors:

Brewin Dolphin is one of the UK's leading independent providers of discretionary wealth management. We offer award-winning personalised wealth management services that meet the varied needs of over 100,000 account holders, including individuals, charities, and pension funds.

 

Our focus on discretionary investment management has led to growth in client funds and we now manage £25.9 billion on a discretionary basis. In line with the premium we place on personal relationships, we have built a network of 28 offices across the UK, Channel Islands and the Republic of Ireland, staffed by qualified investment managers and financial planners. We are committed to the most exacting standards of client service, with long-term thinking and absolute focus on our clients' needs at the core.

 

Interim Management Report

To the members of Brewin Dolphin Holdings PLC

 

First half review

 

The first half saw further growth in our core business as well as continued progress towards achieving our long-term strategic goals. Despite challenging market conditions, we maintained recent growth rates in our discretionary business, while also moving firmly to execution stage on many of the growth initiatives we outlined at our capital markets day in 2015.

 

Organic discretionary funds growth remained robust in the period, despite the impact of volatile investment markets. Financial planning revenues rose as clients continued to seek our advice-led service.  Our intermediaries business continued to grow across both bespoke and model solutions, benefiting from the on-going trend of advice firms outsourcing their investment management needs.

 

In January, we announced five new appointments to the Executive Committee, increasing the direct participation of client-facing colleagues and redoubling our focus on growth. The new team has reviewed and revalidated our commercial priorities and progress has tangibly accelerated across a variety of growth initiatives.

 

We have developed and soft launched two new wealth management services; a service for family lawyers and their clients and a service for corporate advisors and their clients. Both will be formally launched in the second half. These professional services propositions will be supported by a dedicated specialist team and a promising pipeline of business is already evident.

 

Our recently launched 'entry level' non-advised investment service, 'Brewin Portfolio Service', is attracting new funds and is now available beyond the existing client base. Further enhancements to the service are on track to be delivered in the second half, including automated account opening and a fully developed web portal and app.

 

Our award-winning managed portfolio service is now available on 10 platforms and 94 new adviser firms have signed up to the service in the last six months, as reflected in growth in funds which now stand at £0.9bn. A passive version of the service is due to launch in the second half of the year, along with a direct access platform for this service to further expand accessibility for intermediaries.

 

Work has also continued on developing our marketing capability and brand awareness to support direct client growth. A structured programme for attracting new and growing existing clients has been implemented which centres on events and content that are specific to each target audience.

 

The development of our operating model to ensure scalability to support growth continued in the first half. Further restructuring has taken place creating larger client-facing teams and increasing efficiency in portfolio management. The refocusing of the business and run-off of non-core services allowed further rationalisation of our business support functions.

 

Having completed the rationalisation of our regional office network and established the right culture and organisational structure, we have begun to actively expand our client-facing resources by hiring investment managers and financial planners. In particular, our regional structure allows us to efficiently take advantage of growth opportunities and increase the appeal of the Group to new recruits.

 

We opened a new office in Cambridge in February, the first stage of growth plans for our South East region.

 

The volatile market conditions experienced in the second half of the year ended 30 September 2015 intensified in the first half of this financial year, with the FTSE touching multiyear lows in February 2016. This volatility, coupled with an absence of overall growth in equity markets since the peaks of April 2015, provided a challenging backdrop to both business growth and short-term financial performance.

 

In this context, and given the short-term outflows that result from the recent business restructuring, the results for the first half reflect a creditable performance. In particular, the underlying ability of the business to sustain organic funds inflows, despite the poor market environment, is a reminder of the sound footings on which we are building our growth ambitions.

 

The sale of Stocktrade completed on 29 April 2016, with disposal proceeds of £14m received. The sale commenced in 2015, aligning with our strategy of focusing on our core wealth management business.

 

Results and business performance

Adjusted profit before tax for the half year ended 31 March 2016 of £28.4m (H1 2015: £32.4m) was 12.3% lower year-on-year; with an adjusted PBT margin of 20.7% (H1 2015: 22.6%), the fall is primarily attributable to lower other income.

 

 

Continuing operations

Unaudited

as at

31 March
 2016

Unaudited

as at

31 March
 2015

Change

 £'m

 £'m

Core1 income

 126.1

 125.0

0.9%

Other income

11.1

18.4

-39.7%

Total income

 137.2

 143.4

-4.3%





Fixed staff costs

(53.1)

(52.6)

1.0%

Other operating costs

(33.2)

(33.3)

-0.3%

Total fixed operating costs

(86.3)

(85.9)

0.5%

 

 

 

 

 

 

 

 

Adjusted profit before variable staff costs2

50.9

57.5

-11.5%

Variable staff costs

(22.7)

(25.4)

-10.6%

Adjusted operating profit2

28.2

32.1

-12.1%

Net finance income and other gains and losses

0.2

0.3

 

 

Adjusted profit before tax2

28.4

32.4

-12.3%

Exceptional gain

-

9.7


Exceptional costs3

(3.6)

0.3


Amortisation of client relationships

(3.3)

(5.2)

 

 

Profit before tax

21.5

37.2

-42.2%

Taxation

(4.3)

(7.6)

 

 

Profit after tax

17.2

29.6

 

 





Earnings per share




Basic earnings per share

6.3p

11.0p


Diluted earnings per share

6.1p

10.5p


Adjusted4 earnings per share

 

 

 

 


Basic earnings per share

8.4p

9.6p

-12.5%

Diluted earnings per share

7.9p

9.0p

-12.2%

 

 

1 Core income is defined as income derived from discretionary investment management, financial planning and execution only.

2 These figures have been adjusted to exclude redundancy costs, FSCS levy rebate, onerous contracts, one-off migration costs, disposal of available-for-sale investment and amortisation of client relationships.

3 Exceptional costs include redundancy costs, FSCS levy rebate, onerous contracts and one-off migration costs.

4 See note 7.

 

Core income grew 0.9% to £126.1m (H1 2015: £125.0m), in a period of volatile market conditions. The average FTSE WMA Private Investor Series Balanced Portfolio Index was 3,520 on our quarterly billing dates in 2016, compared to 3,612 in 2015, a decrease of 2.5%.

 

The impact of lower average markets has been offset by organic discretionary funds growth and growth in financial planning. Financial planning income increased by 11.0% to £8.1m (H1 2015: £7.3m).

 

 

Income is analysed as follows:


Unaudited

as at

31 March
 2016

Unaudited

as at

31 March
 2015

Change

£m

£m





Discretionary investment management

 112.7

 112.7

0.0%

Financial planning

8.1

7.3

11.0%

Execution only

5.3

5.0

6.0%

Core income

 126.1

 125.0

0.9%





Advisory investment management

8.1

13.8

-41.3%

Trail income

1.8

2.5

-28.0%

Interest

1.2

2.1

-42.9%

Other income

11.1

18.4

-39.7%

 

 

 

 

 

 

 

 

Total income

 137.2

 143.4

-4.3%





 

Whilst core income grew, the blended discretionary revenue margin of 87bps has fallen slightly (H1 2015: 88bps) with a change in business mix with intermediaries business becoming a more significant growth area. Transaction volumes remain subdued due to challenging market conditions.

 

Other income is lower at £11.1m, down 39.7% from H1 2015 (£18.4m), impacted by outflows from our advisory business as the Group continues to focus on higher quality discretionary wealth management services. Trail income of £1.8m (H1 2015: £2.5m) is expected to be fully removed in the second half of the year.

 

Fixed operating costs remained broadly flat at £86.3m (H1 2015: £85.9m). Variable staff costs declined in line with business performance.

 

The reduction in adjusted operating profit of 12.1% to £28.2m (H1 2015: £32.1m) was predominantly as a result of lower non-core income.

 

Profit before tax for the period was £21.5m (H1 2015: £37.2m), a fall of 42.2% compared to H1 2015 which was elevated by a one-off gain of £9.7m.

 

Exceptional costs of £3.6m (H1 2015: £0.3m credit) included higher redundancy expenses and one-off migration costs.

 

Amortisation of intangible client relationships reduced by 36.5% to £3.3m (H1 2015: £5.2m).

 

The interim dividend has been increased to 3.85p per share (2015 interim: 3.75p per share) and will be paid on 17 June 2016.

 

 

Funds

 

The Group continues its strategy of focusing on discretionary wealth and investment management with discretionary funds growing to £25.9bn, up 4.4% in the period. This compares to an increase of 3.9% in the FTSE WMA Private Investor Series Balanced Portfolio Index.

 

 

Total funds by service category




 

 

Change

£bn

31 March

2015

30 September

2015

31 March

2016

Last

12 months

Last

6 months

 

 

 

 

 

 

Discretionary

26.2

24.8

25.9

-1.1%

4.4%

Execution only

3.8

3.7

3.6

-5.3%

-2.7%

Core funds

30.0

28.5

29.5

-1.7%

3.5%




 

 



Advisory

4.5

3.5

3.3

-26.7%

-5.7%

 

 



 

 



Total funds

34.5

32.0

32.8

-4.9%

2.5%




 

 









Indices

 

 

 

 

 

 

 

 

 

 

FTSE WMA Private Investor Series Balanced Portfolio

3,684

3,421

3,556

-3.5%

3.9%

FTSE 100

6,773

6,062

6,175

-8.8%

1.9%







 

 

Funds flow by service category

 



 

 

 

 

 

 





£bn

30 September

2015

Inflows

Outflows

Internal transfers

Net flows

Growth rate*

Investment performance

31 March

2016

Discretionary

24.8

 1.1

(0.7)

-

0.4

3.2%

 0.7

25.9

Execution only

3.7

 0.2

(0.3)

 0.3

0.2

10.8%

(0.3)

3.6

Core funds

28.5

 1.3

(1.0)

 0.3

0.6

4.2%

 0.4

29.5



 

 


 

 





Advisory

3.5

 -

(0.1)

 (0.3)

(0.4)

-22.9%

 0.2

3.3



 

 


 

 





Total funds

32.0

 1.3

(1.1)

-

0.2

1.3%

 0.6

32.8



 

 

 

 

 

 





* annualised


















Discretionary funds by channel




 

£bn

30 September

2015

31 March

2016

 

 

 

 

 

 

Direct

19.0

19.4

Agent - Bespoke

5.1

5.5

Agent - Managed Portfolio Service

0.6

0.9

Direct to Client - Brewin Portfolio Service

0.1

0.1

Total discretionary funds

24.8

25.9




 

 

Continued development of the agent business and model solutions combined with direct organic growth resulted in discretionary funds inflows, excluding transfers, of £1.1bn (H1 2015: £1.1bn). 45% (£0.5bn) of the discretionary inflows were from direct clients; 36% (£0.4bn) from bespoke agent clients and 19% (£0.2bn) from the managed portfolio service. Net discretionary inflows of £0.4bn represent an annualised 3.2% growth rate (H1 2015 4.2%).

 

Total outflows across all service categories are in line with prior periods; with £0.2bn of elevated outflows resulting from the office restructuring over the last eighteen months.

 

As anticipated, advisory funds continued to fall with a 22.9% annualised reduction. The rate of outflows is expected to decline over time.

 

Capital

The Group has a strong balance sheet with cash balances at period end of £117.4m. These underpin its regulatory capital resources which continue to be in significant surplus to requirements.

 

Dividend

The Group's dividend policy is to grow dividends in line with adjusted earnings, with a target payout ratio of 60% to 80% of annual adjusted diluted earnings per share. In accordance with our normal practice, it is intended that the final dividend will be used to reflect full year profitability.

 

An interim dividend of 3.85p per share is payable on 17 June 2016 to shareholders on the register at the close of business on 27 May 2016 with an ex-dividend date of 26 May 2016.

 

The variable final dividend will be based on the full year target dividend payout ratio of 60% to 80% adjusted earnings per share.

 

Going concern

As stated in note 1 to the condensed set of financial statements, 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 has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Directors continue to adopt a going concern basis for the preparation of the condensed financial statements. In forming their view, the Directors have considered the Group's prospects for a period exceeding 12 months from the date the condensed financial statements are approved.

 

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 pages 30 to 33 of the 2015 Annual Report and Accounts available via our website www.brewin.co.uk.

 

Board changes

Stephen Ford stepped down from the Board with effect from 8 January 2016 and the Board is grateful for his significant contribution to Brewin's success over the past 15 years. All of the Non-Executive Directors are considered by the Company to be independent and the Board is fully compliant with the UK Corporate Governance Code with respect to Board composition.

 

Outlook

 

While investment markets remain challenging into the second half of the financial year, we remain confident in continuing to attract clients to our advice-led core business while also progressing growth initiatives. The Group is in hiring mode and focused on a balance of direct and intermediary-led growth to increase discretionary funds by a third over the next five years.

 

David Nicol


Chief Executive


18 May 2016


Condensed Consolidated Income Statement

for the period ended 31 March 2016

 

 



Unaudited period to

31 March

2016

Unaudited

period to

31 March

2015

Audited

period to

30 September

2015

Continuing operations

Notes

£'000

£'000

£'000

Revenue


136,031

141,200

280,196

Other operating income

 

 

1,217

2,150

3,495

Total income

 

 

137,248

143,350

283,691






Staff costs


(75,789)

(78,029)

(152,982)

Redundancy costs


(1,885)

(970)

(2,432)

FSCS levy rebate


-

1,181

1,160

Onerous contracts


(315)

131

(433)

Amortisation of intangible assets - client relationships

9

(3,262)

(5,162)

(9,219)

One-off migration costs


(1,468)

-

-

Other operating costs

 

 

(33,157)

(33,264)

(68,975)

Operating expenses

 

 

(115,876)

(116,113)

(232,881)






Operating profit


21,372

27,237

50,810

Finance income

4

258

525

907

Other gains and losses

5

(3)

9,712

9,712

Finance costs

4

(110)

(224)

(429)

Profit before tax


21,517

37,250

61,000

Tax

6

(4,354)

(7,623)

(12,729)

Profit for the period from continuing operations

 

 

17,163

29,627

48,271






Discontinued operations





Profit/(loss) for the period from discontinued operations

17

36

519

(7,233)

Profit for the period

 

 

17,199

30,146

41,038






Attributable to:





Equity holders of the parent

 

 

17,199

30,146

41,038

 

 

 

 

17,199

30,146

41,038






Earnings per share





From continuing operations





Basic

7

6.3p

11.0p

17.7p

Diluted

7

6.1p

10.5p

17.1p

 

 





From continuing and discontinued operations





Basic

7

6.3p

11.2p

15.0p

Diluted

7

6.1p

10.7p

14.5p






Condensed Consolidated Statement of Comprehensive Income

for the period ended 31 March 2016

 


Unaudited period to

31 March

2016

Unaudited

period to

31 March

2015

Audited

period to

30 September

2015

 

 

£'000

£'000

£'000

Profit for the period

17,199

30,146

41,038

Items that will not be reclassified subsequently to profit and loss:




Actuarial gain on defined benefit scheme

2,336

1,328

2,110

Deferred tax charge on actuarial gain on defined benefit scheme

(420)

(266)

(422)

 

 

1,916

1,062

1,688

Items that may be reclassified subsequently to profit and loss:




Reversal of revaluation of available-for-sale investments

-

(9,565)

(9,565)

Reversal of deferred tax charge on revaluation of available-for-sale investments

-

1,913

1,913

Revaluation of available-for-sale investments

(1)

-

-

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

-

-

-

Exchange differences on translation of foreign operations

201

(311)

(266)

 

 

200

(7,963)

(7,918)

Other comprehensive income/(expense) for the period

 2,116

(6,901)

(6,230)

Total comprehensive income for the period

19,315

23,245

34,808





Attributable to:




Equity holders of the parent

19,315

23,245

34,808

 

 

19,315

23,245

34,808





 

Condensed Consolidated Statement of Changes in Equity

for the period ended 31 March 2016


Attributable to the equity shareholders of the parent


Called up share capital

 Share premium account

 Own shares

 Reval.n reserve

 Merger reserve

Profit and loss account

 Total

 

 

 £'000

 £'000

 £'000

 £'000

 £'000

 £'000

 £'000

Balance at 28 September 2014

2,745

139,420

(16,045)

7,652

61,380

16,118

211,270

Profit for the period

-

-

-

-

-

30,146

30,146

Other comprehensive income for the period







 

 

 Deferred and current tax on other comprehensive income

-

-

-

1,913

-

(266)

 1,647

 Actuarial gain on defined benefit scheme

-

-

-

-

-

1,328

 1,328

 Reclassification adjustment for gain included in profit

-

-

-

(9,565)

-

-

(9,565)

 Exchange differences on translation of foreign operations

-

-

-

-

-

(311)

 (311)

 Total comprehensive income for the period

-

-

-

(7,652)

-

30,897

23,245

 Dividends

-

-

-

-

-

(16,845)

 (16,845)

 Issue of shares

45

2,402

-

-

9,173

-

11,620

 Own shares acquired in the period

-

-

(13,048)

-

-

-

 (13,048)

 Own shares disposed of on exercise of options

-

-

7,234

-

-

(7,234)

-

 Share-based payments

-

-

-

-

-

4,617

 4,617

 Tax on share-based payments

-

-

-

-

-

411

411

 Balance at 31 March 2015

2,790

141,822

(21,859)

-

70,553

27,964

221,270

 Profit for the period

-

-

-

-

-

10,892

10,892

 Other comprehensive income for the period







 

 

 Deferred and current tax on other comprehensive income

-

-

-

-

-

(156)

 (156)

 Actuarial gain on defined benefit scheme

-

-

-

-

-

782

782

 Exchange differences on translation of foreign operations

-

-

-

-

-

45

45

 Total comprehensive income for the period

-

-

-

-

-

11,563

11,563

 Dividends

-

-

-

-

(10,118)

 (10,118)

 Issue of shares

3

313

-

-

-

-

316

 Own shares acquired in the period

-

-

(6,951)

-

-

-

(6,951)

 Own shares disposed of on exercise of options

-

-

657

-

-

(657)

-

 Share-based payments

-

-

-

-

-

4,321

 4,321

 Tax on share-based payments

-

-

-

-

-

(1,250)

(1,250)

 Balance at 30 September 2015

2,793

142,135

(28,153)

-

70,553

31,823

219,151

 Profit for the period

-

-

-

-

-

17,199

17,199

 Other comprehensive income for the period







 

 

 Deferred and current tax on other comprehensive income

-

-

-

-

-

(420)

 (420)

 Actuarial gain on defined benefit scheme

-

-

-

-

-

2,336

 2,336

 Revaluation of available-for-sale investments

-

-

-

(1)

-

-

 (1)

 Exchange differences on translation of foreign operations

-

-

-

-

-

201

201

 Total comprehensive income for the period

-

-

-

(1)

-

19,316

19,315

 Dividends

-

-

-

-

-

(22,374)

 (22,374)

 Issue of shares

37

9,644

-

-

-

-

 9,681

 Own shares acquired in the period

-

-

(7,141)

-

-

-

(7,141)

 Own shares disposed of on exercise of options

-

-

5,039

-

-

(5,039)

-

 Own shares disposed of

-

-

226

-

-

84

310

 Share-based payments

-

-

-

-

-

3,996

 3,996

 Tax on share-based payments

-

-

-

-

-

(598)

 (598)

 Balance at 31 March 2016

2,830

151,779

(30,029)

(1)

70,553

27,208

222,340

Condensed Consolidated Balance Sheet

as at 31 March 2016



Unaudited

as at

31 March

2016

Unaudited

as at

31 March

2015

Audited

as at

30 September

2015

 

 

Notes

£'000

£'000

£'000

ASSETS





Non-current assets





Intangible assets

9

84,003

90,245

86,989

Property, plant and equipment

10

5,972

9,139

8,188

Other receivables


395

834

442

Defined benefit scheme

13

927

-

-

Deferred tax asset


10,420

9,684

10,605

Total non-current assets

 

 

101,717

109,902

106,224

Current assets





Available-for-sale investments

11

820

-

140

Trading investments

11

978

977

945

Trade and other receivables


225,789

279,457

254,041

Cash and cash equivalents


117,856

114,816

149,839

Total current assets

 

 

345,443

395,250

404,965

Total assets

 

 

447,160

505,152

511,189






LIABILITIES





Current liabilities





Bank overdrafts


479

50

16

Trade and other payables


203,907

258,829

255,524

Current tax liabilities


5,195

4,421

2,786

Provisions

12

9,063

2,657

7,267

Shares to be issued including premium


-

9,361

9,304

Total current liabilities

 

 

218,644

275,318

274,897

Net current assets

 

 

126,799

119,932

130,068






Non-current liabilities





Defined benefit scheme

13

-

5,042

2,869

Provisions

12

6,176

3,522

14,272

Total non-current liabilities

 

 

6,176

8,564

17,141

Total liabilities

 

 

224,820

283,882

292,038

Net assets

 

 

222,340

221,270

219,151






EQUITY





Called up share capital

14

2,830

2,790

2,793

Share premium account

14

151,779

141,822

142,135

Own shares


(30,029)

(21,859)

(28,153)

Revaluation reserve


(1)

-

-

Merger reserve


70,553

70,553

70,553

Profit and loss account


27,208

27,964

31,823

Equity attributable to equity holders of the parent

 

 

222,340

221,270

219,151











Condensed Consolidated Cash Flow Statement

for the period ended 31 March 2016

 



Unaudited period to

31 March

2016

Unaudited

period to

31 March

2015

Audited

period to

30 September

2015


Notes

 £'000

 £'000

 £'000

Net cash (outflow)/inflow from operating activities

16

(456)

 1,471

 57,478






Cash flows from investing activities





Purchase of intangible assets - client relationships


-

(3)

(3)

Purchase of intangible assets - software


 (2,501)

 (2,530)

 (5,146)

Purchases of property, plant and equipment


(211)

(737)

 (2,271)

Purchase of available-for-sale investments


(722)

-

(140)

Proceeds on disposal of available-for-sale investments


38

 10,147

 10,147

Net cash from investing activities

 

 

 (3,396)

 6,877

 2,587






Cash flows from financing activities





Dividends paid to equity shareholders

8

 (22,374)

 (16,845)

 (26,963)

Purchase of own shares


 (7,141)

 (13,048)

 (19,999)

Disposal of own shares


310

-

-

Proceeds on issue of shares


376

 1,597

 1,913

Net cash used in financing activities

 

 

 (28,829)

 (28,296)

 (45,049)






Net (decrease)/increase in cash and cash equivalents

 (32,681)

 (19,948)

 15,016






Cash and cash equivalents at the start of period


 149,823

 135,113

 135,113

Effect of foreign exchange rates


235

(399)

(306)

Cash and cash equivalents at the end of period

 

 

 117,377

 114,766

 149,823






Cash and cash equivalents shown in current assets


 117,856

 114,816

 149,839

Bank overdrafts


(479)

(50)

(16)

Net cash and cash equivalents

 

 

 117,377

 114,766

 149,823

 

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

 

Notes to the Condensed Set of Financial Statements

 

1.

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 has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' ('IAS 34'), 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 Conduct Authority.

 

The condensed set of financial statements included in this Interim Financial Report for the period ended 31 March 2016 should be read in conjunction with the annual audited financial statements of Brewin Dolphin Holdings PLC for the period ended 30 September 2015.

 

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.

 

Significant accounting policies and use of estimates and judgements

The preparation of interim consolidated financial statements in compliance with IAS 34 requires the use of certain critical accounting judgements and key sources of estimation uncertainty. It also requires the exercise of judgement in applying the Group's accounting policies. There have been no material revisions to the nature and the amounts of changes in estimates of amounts reported in the annual audited financial statements of Brewin Dolphin Holdings PLC for the period ended 30 September 2015.

 

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 period ended 30 September 2015.

 

Several other new standards and amendments apply for the first time during the period, they do not impact the annual consolidated financial statements of the Group or the interim condensed consolidated financial statements of the Group.

 

2.

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 18 May 2016.

 

A copy of this Interim Financial Report including Condensed Financial Statements for the period ended 31 March 2016 is available at the Company's registered office and on the Company's investor relations website (www.brewin.co.uk).

 

The information for the period ended 30 September 2015 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that period has been delivered to the Registrar of Companies. The auditor 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.

 

3.

Segmental information

 

For management reporting purposes the Group currently has a single operating segment. This forms the reportable segment of the Group for the period. Please refer to the Condensed Consolidated Income Statement and the Condensed Consolidated Balance Sheet, for numerical information.

 

The Group's operations are carried out in the United Kingdom, Channel Islands and the Republic of Ireland. All segmental income related to external clients.

 

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

 

4.     Finance  income and costs

 


Unaudited period to

31 March

2016

Unaudited

period to

31 March

2015

Audited

period to

30 September

2015

 

Continuing operations

 £'000

 £'000

 £'000

 

Finance income

 

 

 

 

 

 

 

Interest on bank deposits

258

525

907

 

 

 

258

525

907

 


 

 

 

 

 

 

 

Finance costs

 

 

 

 

 

 

 

Finance cost of deferred consideration

 -

49

98

 

Interest expense on defined benefit scheme

40

135

244

 

Unwind of discounts on provisions

39

20

46

 

Interest on bank overdrafts

31

20

41

 

 

 

110

224

429

 





 

Discontinued operations

 

 

 

 

 

 

 

Finance costs

 

 

 

 

 

 

 

Unwind of discounts on provisions

72

 -

 -

 

 

 

72

 -

 -

 





 

Continuing and discontinued operations

 

 

 

 

 

 

 

Finance income

 

 

 

 

 

 

 

Interest on bank deposits

258

525

907

 

 

 

258

525

907

 


 

 

 

 

 

 

 

Finance costs

 

 

 

 

 

 

 

Finance cost of deferred consideration

 -

49

98

 

Interest expense on defined benefit scheme

40

135

244

 

Unwind of discounts on provisions

111

20

46

 

Interest on bank overdrafts

31

20

41

 

 

 

182

224

429

 

 

5.     Other gains and losses

 


Unaudited period to

31 March

2016

Unaudited

period to

31 March

2015

Audited

period to

30 September

2015

 

 

 

 £'000

 £'000

 £'000

 

(Loss)/profit on disposal of available-for-sale investments

(3)

9,712

9,712

 

 

In December 2014, the Group disposed of its holding of 19,899 shares in Euroclear Plc for a cash consideration of £10,147,000 and recognised a gain on disposal of £9,712,000. £9,565,000 of the gain, gross of deferred tax (£1,913,000), was recycled from the revaluation reserve.

 

6.     Taxation

 


Unaudited period to

31 March

2016

Unaudited

period to

31 March

2015

Audited

period to

30 September

2015

 

Continuing operations

 £'000

 £'000

 £'000

 

United Kingdom




 

Current tax

4,915

5,673

11,463

 

Adjustments in respect of prior years

318

309

257

 

Overseas tax




 

Current tax

(79)

129

149

 

Adjustments in respect of prior years

33

1

1

 

 

 

5,187

6,112

11,870

 

United Kingdom deferred tax




 

Current year

441

1,851

1,398

 

Adjustments in respect of prior years

(1,274)

(340)

(539)

 

Total continuing operations

4,354

7,623

12,729

 

 

 




 

Discontinued operations




 

United Kingdom




 

Current tax

194

155

(1,478)

 

Adjustments in respect of prior years

-

-

-

 

Overseas tax




 

Current tax

-

-

-

 

Adjustments in respect of prior years

-

-

-

 

 

 

194

155

(1,478)

 

United Kingdom deferred tax




 

Current year

-

-

(138)

 

Adjustments in respect of prior years

-

-

(1,537)

 

Total discontinued operations

194

155

(3,153)

 

 

 




 

Continuing and discontinued operations




 

United Kingdom




 

Current tax

5,109

5,828

9,985

 

Adjustments in respect of prior years

318

309

257

 

Overseas tax




 

Current tax

(79)

129

149

 

Adjustments in respect of prior years

33

1

1

 

 

 

5,381

6,267

10,392

 

United Kingdom deferred tax




 

Current year

441

1,851

1,260

 

Adjustments in respect of prior years

(1,274)

(340)

(2,076)

 

Total continuing and discontinued operations

4,548

7,778

9,576

 





 

The Group calculates the period income tax expense using the tax rate that would be applicable to the expected total annual earnings.

 

7.

Earnings per share

 

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

 


Unaudited

period to

31 March

2016

Unaudited

 period to

31 March

2015

Audited

period to

30 September

2015

 

 

'000

'000

'000

Number of shares




Basic




Weighted average number of shares in issue in the period

270,929

269,126

272,987

Diluted




Effect of weighted average number of options outstanding for the period

9,345

9,989

10,040

Effect of estimated weighted average number of shares earned under deferred consideration arrangements

-

2,655

-

Diluted weighted average number of options and shares for the period

280,274

281,770

283,027

Adjusted1 diluted




Effect of full dilution of employee share options which are contingently issuable or have future attributable service costs

6,279

5,148

4,727

Adjusted diluted weighted average number of options and shares for the period

286,553

286,918

287,754





a) Continuing operations





Unaudited

period to

31 March

2016

Unaudited

period to

31 March

2015

Audited

period to

30 September

2015


£'000

£'000

£'000

Basic earnings attributable to ordinary shareholders




Profit for the period

17,163

29,627

48,271

Disposal of available-for-sale investment

3

(9,712)

(9,712)

Redundancy costs

1,885

970

2,432

FSCS levy rebate

-

(1,181)

(1,160)

Onerous contracts

315

(131)

433

Amortisation of intangible assets - client relationships

3,262

5,162

9,219

One-off migration costs

1,468

-

-

 less tax effect of above

(1,387)

1,003

(248)

Adjusted2 basic profit for the period and attributable earnings

22,709

25,738

49,235

 

 




Diluted earnings attributable to ordinary shareholders




Profit for the period

17,163

29,627

48,271

Finance costs of deferred consideration3

-

49

-

 less tax

-

(10)

-

Adjusted fully diluted profit for the period and attributable earnings

17,163

29,666

48,271

Disposal of available-for-sale investment

3

(9,712)

(9,712)

Redundancy costs

1,885

970

2,432

FSCS levy rebate

-

(1,181)

(1,160)

Onerous contracts

315

(131)

433

Amortisation of intangible assets - client relationships

3,262

5,162

9,219

One-off migration costs

1,468

-

-

 less tax effect of above

(1,387)

1,003

(248)

Adjusted2 diluted profit for the period and attributable earnings

22,709

25,777

49,235





Earnings per share




Basic

6.3p

11.0p

17.7p

Diluted

6.1p

10.5p

17.1p





Adjusted2 earnings per share




Basic

8.4p

9.6p

18.0p

Adjusted1 diluted

7.9p

9.0p

17.1p

 





b) Continuing and discontinued operations





Unaudited

Period to

31 March

2016

Unaudited

Period to

31 March

2015

Audited

period to

30 September

2015


£'000

£'000

£'000

Basic earnings attributable to ordinary shareholders




Profit for the period

17,199

30,146

41,038

Disposal of available-for-sale investment

3

(9,712)

(9,712)

Redundancy costs

1,885

970

2,432

FSCS levy rebate

-

(1,181)

(1,160)

Onerous contracts

315

(131)

433

Amortisation of intangible assets - client relationships

3,262

5,162

9,219

One-off migration costs

1,468

-

-

 less tax effect of above

(1,387)

1,003

(248)

Adjusted2 basic profit for the period and attributable earnings

22,745

26,257

42,002





Diluted earnings attributable to ordinary shareholders




Profit for the period

17,199

30,146

41,038

Finance costs of deferred consideration3

-

49

-

 less tax

-

(10)

-

Adjusted fully diluted profit for the period and attributable earnings

17,199

30,185

41,038

Disposal of available-for-sale investment

3

(9,712)

(9,712)

Redundancy costs

1,885

970

2,432

FSCS levy rebate

-

(1,181)

(1,160)

Onerous contracts

315

(131)

433

Amortisation of intangible assets - client relationships

3,262

5,162

9,219

One-off migration costs

1,468

-

-

 less tax effect of above

(1,387)

1,003

(248)

Adjusted2 diluted profit for the period and attributable earnings

22,745

26,296

42,002





Earnings per share




Basic

6.3p

11.2p

15.0p

Diluted

6.1p

10.7p

14.5p





Adjusted2 earnings per share




Basic

8.4p

9.8p

15.4p

Adjusted1 diluted

7.9p

9.2p

14.6p





c) Discontinued operations








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


Unaudited period to

31 March

2016

Unaudited period to

31 March

2015

Audited

period to

30 September

2015

Earnings per share




Basic

0.0p

0.2p

(2.7p)

Diluted

0.0p

0.2p

(2.6p)





Adjusted2 earnings per share




Basic

0.0p

0.2p

(2.6p)

Adjusted1 diluted

0.0p

0.2p

(2.5p)





1 The dilutive shares used for this measure differ from that used for statutory dilutive earnings per share; the future value of service costs attributable to employee share options is ignored and contingently issuable shares for Long-term Incentive Plan ('LTIP') options are assumed to fully vest. The Directors have selected this measure as it represents the underlying effective dilution by offsetting the impact to the calculation of basic shares of the purchase of shares by the Employee Share Ownership Trust ('ESOT') to satisfy options.

2 Excluding disposal of available-for-sale investment, redundancy costs, FSCS levy rebate, onerous contracts, amortisation of client relationships and one-off migration costs.

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

 

8.     Dividends

 


Unaudited period to

31 March

2016

Unaudited

period to

31 March

2015

Audited

period to

30 September

2015

 

 

 

£'000

£'000

£'000

 

Amounts recognised as distributions to equity shareholders in the period:




 

Final dividend paid 11 March 2016, 8.25p per share (2015: 6.25p per share)

22,374

16,845

16,845

 

Interim dividend paid 26 June 2015, 3.75p per share

-

-

10,118

 

 

 

22,374

16,845

26,963

 





 

 

 

An interim dividend of 3.85p per share was declared by the Board on 18 May 2016 and has not been included as a liability as at 31 March 2016. This interim dividend will be paid on 17 June 2016 to shareholders on the register at the close of business on 27 May 2016 with an ex-dividend date of 26 May 2016.

 

 

9.     Intangible assets


 Goodwill

 Client relationships

 Software

 Total

 Cost

 £'000

 £'000

 £'000

 £'000

 At 28 September 2014

48,637

108,046

53,655

210,338

 Additions

-

83

2,482

2,565

 Disposals

-

-

-

-

 Exchange differences

-

(12)

-

(12)

 Remeasurement of deferred purchase consideration in respect of acquisitions in prior periods

-

121

-

121

 At 31 March 2015

48,637

108,238

56,137

213,012

 Additions

-

(186)

2,392

2,206

 Disposals

-

-

(2,704)

(2,704)

 Exchange differences

-

4

-

4

 Remeasurement of deferred purchase consideration in respect of acquisitions in prior periods

-

(115)

-

(115)

 At 30 September 2015

48,637

107,941

55,825

212,403

 Additions

-

(21)

2,737

2,716

 Disposals

-

-

-

-

 Exchange differences

-

11

-

11

 At 31 March 2016

48,637

107,931

58,562

215,130

 

 










 Accumulated amortisation and impairment





 At 28 September 2014

-

69,589

46,438

116,027

 Amortisation charge for the period

-

5,162

1,578

6,740

 Eliminated on disposal

-

-

-

-

 Exchange differences

-

-

-

-

 Impairment losses for the period

-

-

-

-

 At 31 March 2015

-

74,751

48,016

122,767

 Amortisation charge for the period

-

4,057

1,137

5,194

 Eliminated on disposal

-

-

(2,688)

(2,688)

 Exchange differences

-

(3)

-

(3)

 Impairment losses for the period (see note 17)

-

-

144

144

 At 30 September 2015

-

78,805

46,609

125,414

 Amortisation charge for the period

-

3,262

2,101

5,363

 Eliminated on disposal

-

-

-

-

 Exchange differences

-

5

-

5

 Impairment losses for the period (see note 17)

-

-

345

345

 At 31 March 2016

-

82,072

49,055

131,127











Net book value





 At 28 September 2014

48,637

38,457

7,217

94,311

 At 31 March 2015

48,637

33,487

8,121

90,245

 At 30 September 2015

48,637

29,136

9,216

86,989

 At 31 March 2016

48,637

25,859

9,507

84,003

 

10.     Property, plant and equipment 

Cost

£'000

£'000

£'000

£'000

£'000

At 28 September 2014

11,803

13,255

32

79,192

104,282

Additions

500

162

-

80

742

Exchange differences

(14)

(39)

(2)

-

(55)

Disposals

(81)

(60)

-

(41)

(182)

At 31 March 2015

12,208

13,318

30

79,231

104,787

Additions

1,048

174

-

318

1,540

Exchange differences

4

9

-

-

13

Disposals

-

(62)

-

(32,397)

(32,459)

At 30 September 2015

13,260

13,439

30

47,152

73,881

Additions

66

54

-

105

225

Exchange differences

13

40

2

-

55

Disposals

-

-

(32)

-

(32)

At 31 March 2016

13,339

13,533

-

47,257

74,129

 

 






Accumulated depreciation






At 28 September 2014

7,431

11,372

21

74,382

93,206

Charge for the period

649

627

4

1,375

2,655

Exchange differences

(13)

(33)

(2)

-

(48)

Eliminated on disposal

(71)

(53)

-

(41)

(165)

At 31 March 2015

7,996

11,913

23

75,716

95,648

Charge for the period

991

490

3

863

2,347

Exchange differences

3

8

1

-

12

Impairment of assets (see note 17)

-

-

-

136

136

Eliminated on disposal

(8)

(45)

-

(32,397)

(32,450)

At 30 September 2015

8,982

12,366

27

44,318

65,693

Charge for the period

684

366

-

1,059

2,109

Exchange differences

13

34

2

-

49

Impairment of assets (see note 17)

-

-

-

335

335

Eliminated on disposal

-

-

(29)

-

(29)

At 31 March 2016

9,679

12,766

-

45,712

68,157

 

 






Net book value






At 28 September 2014

4,372

1,883

11

4,810

11,076

At 31 March 2015

4,212

1,405

7

3,515

9,139

At 30 September 2015

4,278

1,073

3

2,834

8,188

At 31 March 2016

3,660

767

-

1,545

5,972

 

11.

Investments

 

Available-for-sale

 

 

Unaudited

as at

31 March

2016

Unaudited

as at

31 March

2015

Audited

as at

30 September

2015


£'000

£'000

£'000

At start of period

140

10,000

10,000

Additions

722

-

140

Net loss from changes in fair value

recognised in equity

(1)

-

-

Disposals

(41)

(10,000)

(10,000)

At end of period

820

-

140

 

 




Current assets




Available-for-sale investments




 - Equity

106

-

46

 - Asset-backed security

714

-

94

 

 

820

-

140

 

 




Total investments

820

-

140

 

The Group holds the following:

 

i) An open-ended investment protected cell company incorporated and registered in Guernsey. The valuation of the investment is based on the value of traded life policies held by that company.

 

ii) A USD fixed rate note, due to mature on 23 September 2019.The valuation of the investment is based on the value of traded life policies held by the issuing company.

 

The Group has increased its investments in both holdings during the period.

 

During the period ended 30 September 2015, the Group sold its unlisted available-for-sale investment of 19,899 ordinary shares of Euroclear plc's share capital (refer to note 5).

 

Trading investments

 


Listed investments


£'000

Fair value

 

 

At 31 March 2015

977

At 30 September 2015

945

At 31 March 2016

978

 

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

 

12.     Provisions

 

 


Sundry claims and associated costs

Onerous contracts

Social security contributions on share options

Leasehold dilapidations

Unaudited period to

31 March

2016

Unaudited period to

31 March

2015*

Audited

period to

30 September

2015






Total

Total

Total

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

At start of period

2,426

14,357

2,501

2,255

21,539

13,390

13,390

Additions

430

746

361

79

1,616

2,269

16,339

Utilisation of provision

(1,340)

(4,240)

(810)

(462)

(6,852)

(4,718)

(5,738)

Unwinding of discount

-

93

-

18

111

20

46

Unused amounts reversed during the period

(308)

(867)

-

-

(1,175)

(1,345)

(2,498)

At end of period

1,208

10,089

2,052

1,890

15,239

9,616

21,539









Provisions








Included in current liabilities

1,208

6,344

1,132

379

9,063

5,058

7,267

Included in non-current liabilities

-

3,745

920

1,511

6,176

4,558

14,272

 

 

1,208

10,089

2,052

1,890

15,239

9,616

21,539

* In the prior period the provisions for leasehold dilapidations and social security contributions on share options were included in trade and other payables. During the period ended 30 September 2015, after the publication of the interim financial statements, they were reclassified to provisions to better reflect the nature of these balances, the comparatives for the period to 31 March 2015 have been adjusted accordingly.

 

The Group recognises a provision for settlements of sundry claims and associated costs. The timing of the settlements is unknown, but it is expected that they will be resolved within 12 months.

 

The onerous contracts provision is in respect of both surplus office space and contracts associated with discontinued operations. The valuation of an onerous contract is based on the best estimate of the likely costs discounted to present value. Where the provision is in relation to premises and it is more likely than not that the premises will be sublet, an allowance for sublease income has been included in the valuation.

 

Provision of £4.1 million (30 September 2015: £4.1 million) has been made for surplus office space, which the Group may not be able to sublet in the short-term. The maximum exposure is the current estimated amount that the Group would have to pay to meet the future obligations under these lease contracts which is approximately £11.3 million as at 31 March 2016 (30 September 2015: £6.9 million), if the assumption regarding sublets is removed and the time value of money is ignored. The longest lease term covered by the provision has 17.5 years remaining and accounts for £3.6 million of the provision.

 

Provision of £6.0 million (30 September 2015: £10.3 million) has been made in relation to onerous contracts resulting from discontinued operations (see note 17). These costs arise over the term of the contract. The contracts covered by the provision have a maximum remaining term of one year, the maximum exposure is £6.0 million, if the time value of money is ignored. During the period settlement has been made in relation to certain contracts.

 

The Group recognises a provision of £1.9 million for leasehold dilapidations. These costs are expected to arise at the end of the lease. The leases covered by the provision have a maximum remaining term of 17.5 years.

 

13.

Defined benefit scheme

 

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

 


As at

As at

As at


31 March

2016

31 March

2015

30 September

2015

Discount rate

3.60%

3.30%

3.80%

RPI Inflation assumption

3.10%

2.90%

3.20%

CPI Inflation assumption

2.10%

1.90%

2.20%

Rate of increase in salaries

3.10%

2.90%

3.20%

LPI Pension Increases

3.00%

2.85%

3.10%





Average assumed life expectancies for members on retirement at age 65.



Retiring today




Males

88.6 years

88.9 years

88.6 years

Females

89.9 years

90.2 years

89.9 years

Retiring in 20 years' time




Males

89.9 years

90.3 years

89.9 years

Females

91.4 years

91.7 years

91.4 years

 

 

A full actuarial valuation was carried out as at 31 December 2014 and the results of this valuation have been updated to 31 March 2016 by a qualified independent actuary.

 

14.

Called up share capital

 

The following movements in share capital occurred during the period:

 

 

 

 

 

 

 

 

 

 

 

£'000

£'000

£'000

At 30 September 2015


279,262,045

36,832


2,793

142,135

144,928

Settlement of deferred consideration

3 December 2015

3,458,926

-

269p

35

9,270

9,305

Issue of options

Various

233,053

-

103.5p -175.25p

2

342

 344

Nil paid shares now paid up

Various

36,832

(36,832)

108.6p

-

40

 40

Cost of issue of shares


-

-


-

(8)

(8)

At 31 March 2016

 

 

282,990,856

-


2,830

151,779

154,609

 

15.

Share-based payments

 

In December 2015, 1,355,565 share options were granted to senior executives and the Directors under the Long-term Incentive Plan ('LTIP'). The options vest on the third anniversary of the date of grant provided certain performance conditions and targets, set prior to the grant, have been met. If the performance conditions are not met the options lapse. The fair value at grant date is estimated using a Black-Scholes model, taking into account the terms and conditions upon which the options were granted. There is no cash settlement of the options. The fair value of options granted during the period ended 31 March 2016 was estimated on the date of grant using the following assumptions:

 

 

 

 

 

Weighted average share price

269p

Weighted average exercise price

-

Expected volatility

26%

Expected life (yrs)

3

Risk free rate

1.1%

Expected dividend yield

5.6%

 

The weighted average fair value of the options granted during the period was 227.20p (period ended 30 September 2015: 246.25p).

 

The Group recognised total expenses in the period of £3,996,000 (31 March 2015: £4,617,000, 30 September 2015: £8,938,000) related to equity-settled share-based payment transactions.

 

16.     Note to the cash flow statement


Unaudited period to

31 March

2016

Unaudited

period to

31 March

2015

Audited

period to

30 September

2015

 

 

 

£'000

£'000

£'000

 

Operating profit from continuing operations

21,372

27,237

50,810

 

Profit/(loss) from discontinued operations

230

674

(10,387)

 

Adjustments for:




 

Depreciation of property, plant and equipment

2,109

2,655

5,002

 

Amortisation of intangible assets - client relationships

3,262

5,162

9,219

 

Amortisation of intangible assets - software

2,101

1,578

2,715

 

Impairment of intangible assets and tangible assets

680

-

280

 

Loss on disposal of property, plant and equipment

3

16

26

 

Defined benefit scheme

(1,500)

(1,500)

(3,000)

 

Share-based payment expense

3,996

4,617

8,938

 

Translation adjustments

(34)

88

41

 

Interest income

258

525

907

 

Interest expense

(31)

(20)

(41)

 

Operating cash flows before movements in working capital

32,446

41,032

64,510

 

Decrease in payables and provisions

(58,204)

(56,793)

(44,349)

 

Increase in receivables and trading investments

28,266

22,961

48,802

 

Cash generated by operating activities

2,508

7,200

68,963

 

 Tax paid

(2,964)

(5,729)

(11,485)

 

Net cash (outflow)/inflow from operating activities

(456)

1,471

57,478

 





 

 

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

 

17.

Discontinued operations

 

On 14 May 2015, the Group announced the decision to dispose of its Stocktrade business for £14 million in cash, payable in full upon completion. As at 31 March 2016, the consideration for the disposal has not been recognised (see note 4a(i) in the 2015 Annual Report and Accounts). The disposal completed 29 April 2016 with disposal proceeds of £14m received.

 

The results of the discontinued operation, included in the Consolidated Income Statement, were as follows:

 


Unaudited period to

31 March

2016

Unaudited

period to

31 March

2015

Audited

period to

30 September

2015


£'000

£'000

£'000

Revenue

3,234

5,040

9,687

Expenses

(2,691)

(4,286)

(8,413)

Operating profit

543

754

1,274

Costs of separation

(313)

(80)

(11,660)

Profit/(loss) before tax

230

674

(10,386)

Attributable tax (expense)/credit

(194)

(155)

3,153

Net profit/(loss) attributable to discontinued operations (attributable to the equity holders of the parent)

36

519

(7,233)





 

Costs of separation consist of the following items:

 


Unaudited period to

31 March

2016

Unaudited

period to

31 March

2015

Audited

period to

30 September

2015


£'000

£'000

£'000

Impairment

 

 

 

 

 

 

 - Intangible - see note 9

(345)

-

(144)

 - Tangible - see note 10

(335)

-

(136)

Onerous contract release/(charge) - see note 12

448

-

(10,288)

Other

(81)

(80)

(1,092)

Total costs of separation

(313)

(80)

(11,660)

 

 

Stocktrade contributed the following cash flows included within the Consolidated Cash Flow Statement:

 


Unaudited period to

31 March

2016

Unaudited

period to

31 March

2015

Audited

period to

30 September

2015


£'000

£'000

£'000

Net cash (outflows)/inflows from operating activities

(2,490)

1,200

1,732

Net cash flows from investing activities

-

-

-

Net cash flows from financing activities

-

-

-

Net (decrease)/increase in cash and cash equivalents

(2,490)

1,200

1,732

 

 

 

18.

Related party transactions

 

There have been no related party transactions that have taken place in the period that have materially affected the financial position or the performance of the Group during the period and no changes to related party transactions from those disclosed in the 2015 Annual Report and Accounts available via our website www.brewin.co.uk that could have a material effect on the financial position or the performance of the Group. 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.

 

Cautionary statement

 

The Interim Management Report (the 'IMR') for the period ended 31 March 2016 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.

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 period ended 31 March 2016 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).

 

By order of the Board

 

David Nicol

Andrew Westenberger

Chief Executive

 

 

18 May 2016

Finance Director

 

 

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 period ended 31 March 2016 which comprises the condensed consolidated income statement, 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 Conduct Authority.

 

As disclosed in note 1, 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 period ended 31 March 2016 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 Conduct Authority.

 

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

18 May 2016

 


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