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Brewin Dolphin Hldgs (BRW)

  Print          Annual reports

Wednesday 26 May, 2010

Brewin Dolphin Hldgs

Interim Results

RNS Number : 5326M
Brewin Dolphin Holdings PLC
26 May 2010
 



                                               

 

26 May 2010

Brewin Dolphin Holdings PLC

 

Interim Financial Report

 

For the Half Year Ending 28 March 2010

 

Highlights

 

Total managed funds £23.0 billion at 28 March 2010 (27 September 2009: £20.5 billion, 29 March 2009: £16.3 billion).

 

Discretionary funds £13.6 billion at 28 March 2010 (27 September 2009: £11.8 billion, 29 March 2009: £9.3 billion).

 

Total income £120.9 million (29 March 2009: £104.7 million) an increase of 15%.

 

Profit before tax £15.2 million (29 March 2009: £11.1 million) a 37% increase.

 

Profit before tax before redundancy costs, contract renewal payments and amortisation of client relationships £20.3 million (29 March 2009: £16.8 million) a 21% increase.

 

Earnings per share:


-

Basic earnings per share 4.7p (29 March 2009: 3.6p) an increase of 31%.


-

Diluted earnings per share 4.6p (29 March 2009: 3.5p) an increase of 31%.

 

Earnings per share before redundancy costs, contract renewal payments and amortisation of client relationships:


-

Basic earnings per share 6.4p (29 March 2009: 5.6p) an increase of 14%.


-

Diluted earnings per share 6.3p (29 March 2009: 5.4p) an increase of 17%.

 

Declaration of Interim Dividend

The Board declares a maintained interim dividend of 3.55p per share. The interim dividend is payable on 22 September 2010 to shareholders on the register as at 27 August 2010, with an ex dividend date of 25 August 2010.

 

Jamie Matheson, Executive Chairman said

 

"At this stage there is every indication that the performance of our business will continue to be resilient."

 

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 28 March 2010 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 ending 28 March 2010.

 

Results and review of the past six months

While the global financial situation is not without its problems the market conditions under which Brewin Dolphin operates were relatively benign.  Reflecting our position as one of the UK's largest investment managers for private investors, total income during the period rose by 15% from £104.7m in the first half of last year to £120.9m.  It is encouraging that investment management fee income has increased by £12.8m (41%) in the period.

 

During the period your Group generated pre-tax profits of £15.2m (2009: £11.1m), an increase of 37%.  Prior to redundancy costs, contract renewal payments and amortisation of client relationships, profits were £20.3m (2009: £16.8m), an increase of 21%.

 

These results were achieved after higher salary costs, partly due to increased profit share and partly to a £2.2 million payment which has been made in the form of a contract renewal incentive.  As part of a ten year cycle the Group reissued new contracts to all of its employees to comply with current regulations and to incorporate the deferred profit share scheme approved at its recent Annual General Meeting, where part of profit share will be payable in Brewin Dolphin shares, to be held for three years.

 

Other operating costs have increased by £5.6 million.  This is due largely to external regulatory pressures and the Financial Services Compensation Scheme Levy.

 

The Board remains aware of the need to control costs. It is equally important to ensure that appropriate investment is made in order to help the business look after its clients properly and thus thrive and prosper. 

 

Fully diluted earnings per share rose by 31% from 3.5p to 4.6p and a similar increase was seen in basic earnings per share from 3.6p to 4.7p.  Excluding redundancy costs, contract renewal payments and amortisation of client relationships, diluted earnings per share rose by 17% from 5.4p to 6.3p. 

 

Our Investment Management operations generated operating profits before redundancy costs, contract renewal payments and amortisation of client relationships of £19.1m, an increase of 15% over the comparable period last year (2009: £16.6m). This was despite a £7.2m fall in other operating income due entirely to lower interest rates. Total income for the division was 14% ahead at £115.1m. 

 

Funds under management increased by 12.2% to £23 billion, and within that, discretionary funds increased to £13.6 billion, a rise of 15.3% which compares to 12.2% increase in the FTSE100 Share Index and an increase of 8.6% in the FTSE APCIMS Private Investor Balanced Portfolio Index.


 


 At

28 March

2010

 At

27 September 2009

 % Change

Indices




FTSE APCIMS Private Investor Series Balanced Portfolio

2,868

2,640

8.6%

FTSE 100

5,703

5,082

12.2%





Funds





 £ billion

 £ billion


Discretionary funds under management

13.6

11.8

15.3%

Advisory funds under management

9.4

8.7

8.0%

Total managed funds

23.0

20.5

12.2%

 

We also launched our first national Brewin Dolphin advertising campaign which was well received both helping to build our brand and attract new business.

 

The recovery in performance experienced by our Corporate Advisory and Broking division (formerly Investment Banking) seen towards the end of last year has continued and I am pleased to report that operating profit before redundancy costs, contract renewal payments and amortisation of client relationships, of £962,000, was generated compared with a loss in the equivalent period of £825,000.  Total income of the division rose from £3.5m to £5.9m.

 

It is a tribute to our business model and to our people and clients that Brewin Dolphin continues to progress.  Many lessons are to be learnt from the last three years but in particular the benefits of sound, judicious, and careful long term investment emerge quite clearly.

 

We continue to add new teams and personnel within our network of existing offices. We opened a new office this week in Shrewsbury.

 

Regulation

The Group has recently changed its FSA permission from a Full Scope Firm to a Limited Licence Firm; this has had minimal impact on our business model.  

 

Dividend

A maintained interim dividend of 3.55p per share will be paid on 22 September 2010.

 

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 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 set of financial statements.

 

Outlook

The United Kingdom has this month seen a change of Government and at the time of writing it would appear that economic stability is a major priority which should be good news for our clients and the Company.  While adverse market movements remain a risk and cannot be ruled out, work continues to restore financial stability both domestically and internationally and all these efforts should be welcomed.

 

At this stage there is every indication that the performance of our business will continue to be resilient. Your Board remains confident in the long term prospects for the Group.

 

Jamie Matheson

25 May 2010


Condensed Consolidated Income Statement

26 week period ended 28 March 2010



Unaudited 26 weeks to 28 March 2010

(Restated) Unaudited 26 weeks to 29 March 2009

Audited

52 weeks to

27 September 2009


Note

£'000

£'000

£'000

Continuing operations





Revenue


112,999

89,617

187,241

Other operating income


 7,947

15,101

 25,071

Total income

5

120,946

104,718

212,312






Staff costs


(59,129)

(50,570)

(102,763)

Redundancy costs


-

(3,192)

(3,638)

Amortisation of intangible assets - client relationships

10

(2,935)

(2,519)

(6,566)

Other operating costs


(43,960)

(38,383)

(78,873)

Operating expenses


(106,024)

(94,664)

(191,840)






Operating profit


14,922

10,054

 20,472

Finance income

6

558

 1,600

 2,435

Finance costs

6

 (256)

 (526)

 (968)

Profit before tax

5

15,224

11,128

 21,939

Tax

7

(4,895)

(3,563)

(6,404)

Profit for the period


10,329

 7,565

 15,535





Attributable to:





Equity shareholders of the parent from continuing operations

10,329

 7,565

 15,535



10,329

 7,565

 15,535





Earnings per share









From continuing operations





Basic

8

4.7p

3.6p

7.4p






Diluted

8

4.6p

3.5p

7.2p








Condensed Consolidated Statement of Comprehensive Income

26 week period ended 28 March 2010

 



Unaudited

26 weeks to

28 March

2010

(Restated) Unaudited 26 weeks to 29 March 2009

Audited

52 weeks to 27 September 2009



£'000

£'000

£'000






Profit for the period


10,329

7,565

15,535

Loss on revaluation of available-for-sale investments


(430)

(309)

(17)

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


120

87

4

Actuarial loss on defined benefit pension scheme


(960)

(1,047)

(9,556)

Deferred tax credit on actuarial loss on defined benefit pension scheme


269

293

2,676

Other comprehensive income for the period

(1,001)

(976)

(6,893)

Total comprehensive income for the period

9,328

6,589

8,642






Attributable to:





Equity shareholders of the parent


9,328

6,589

8,642



9,328

6,589

8,642






 



Condensed Consolidated Statement of Changes in Equity

26 week period ended 28 March 2010


 Attributable to the equity shareholders of the parent

 


 Called up share capital

 Share premium account

 Revaluation reserve

 Merger reserve

 Profit and loss account

 Total

 


 £'000

 £'000

 £'000

 £'000

 £'000

 £'000

 








 

26 week period ended 28 March 2010

 

 

Balance at 27 September 2009

2,122

94,140

6,885

4,562

 10,510

118,219

 

Profit for the period

 -

 -

 -

 -

 10,329

10,329

 

Other comprehensive income for the period







 

 Deferred and current tax on other  comprehensive income

 -

 -

 120

 -

269

 389

 

 Actuarial loss on defined benefit pension scheme

 -

 -

 -

 -

(960)

 (960)

 

Revaluation of available-for-sale investments

 -

 -

(430)

 -

-

 (430)

 

Total comprehensive income for the period

 -

 -

(310)

 -

 9,638

9,328

 

Dividends 

 -

 -

 -

 -

(7,975)

(7,975)

 

Issue of shares

 145

19,115

 -

 -

-

19,260

 

Share-based payments

 -

 -

 -

 -

329

 329

 

Current tax charge on share-based payments

 -

 -

 -

 -

 4

4

 

Deferred tax charge on share-based payments

 -

 -

 -

 -

(113)

 (113)

 

Balance at 28 March 2010

2,267

113,255

6,575

4,562

 12,393

139,052

 








 

26 week period ended 29 March 2009

 








 

Balance at 28 September 2008

2,080

90,145

6,898

4,562

 16,208

119,893

 

Profit for the period previously reported

 -

 -

 -

 -

 9,379

9,379

 

Prior year adjustment (note 2)

 -

 -

 -

 -

(1,814)

(1,814)

 

Other comprehensive income for the period







 

 Deferred and current tax on other comprehensive income

 -

 -

 87

 -

293

 380

 

 Actuarial loss on defined benefit pension scheme

 -

 -

 -

 -

(1,047)

(1,047)

 

 Revaluation of available-for-sale investments

 -

 -

(309)

 -

-

 (309)

 

Total comprehensive income for the period

 -

 -

(222)

 -

 6,811

6,589

 

Dividends 

 -

 -

 -

 -

(7,504)

(7,504)

 

Issue of shares

 34

3,237

 -

 -

-

3,271

 

Share-based payments

 -

 -

 -

 -

347

 347

 

Current tax credit on share-based payments

 -

 -

 -

 -

17

17

 

Deferred tax charge on share-based payments

 -

 -

 -

 -

(46)

 (46)

 

Balance at 29 March 2009 (Restated) 

2,114

93,382

6,676

4,562

 15,833

122,567

 








 

52 week period ended 27 September 2009

 








 

Balance at 28 September 2008

2,080

90,145

6,898

4,562

 16,208

119,893

 

Profit for the period

 -

 -

 -

 -

 15,535

15,535

 

Other comprehensive income for the period







 

 Deferred and current tax on other comprehensive income

 -

 -

 4

 -

 2,676

2,680

 

 Actuarial loss on defined benefit pension scheme

 -

 -

 -

 -

(9,556)

(9,556)

 

 Revaluation of available-for-sale investments

 -

 -

 (17)

 -

-

 (17)

 

Total comprehensive income for the period

 -

 -

 (13)

 -

 8,655

8,642

 

Dividends 

 -

 -

 -

 -

(15,027)

 (15,027)

 

Issue of share capital

 42

3,995

 -

 -

-

4,037

 

Share-based payments

 -

 -

 -

 -

686

 686

 

Current tax credit on share-based payments

 -

 -

 -

 -

63

63

 

Deferred tax charge on share-based payments

 -

 -

 -

 -

(75)

 (75)

 

Balance at 27 September 2009

2,122

94,140

6,885

4,562

 10,510

118,219

 










Condensed Consolidated Balance Sheet

As at 28 March 2010



Unaudited

as at

28 March 2010

(Restated) Unaudited

as at

29 March

 2009

Audited

as at

27 September 2009



£'000

£'000

£'000


Note




ASSETS





Non-current assets





Intangible assets

10

88,651

82,825

 89,605

Property, plant and equipment

11

19,973

28,392

 22,260

Available-for-sale investments

12

10,180

10,317

 10,609

Other receivables


 2,235

 2,444

 2,269

Deferred tax asset


167

-

852

Total non-current assets


121,206

123,978

125,595

Current assets





Trading investments

12

650

596

644

Trade and other receivables


380,412

263,112

441,290

Cash and cash equivalents


98,102

50,313

 69,271

Total current assets


479,164

314,021

511,205

Total assets


600,370

437,999

636,800






LIABILITIES





Current liabilities





Bank overdrafts


 4,854

 1,094

 4,289

Trade and other payables


420,234

280,256

468,619

Current tax liabilities


 4,421

 1,762

 1,715

Provisions

13

 3,365

 1,958

 1,871

Shares to be issued including premium

14

357

 5,197

 5,056

Total current liabilities


433,231

290,267

481,550

Net current assets


45,933

23,754

 29,655






Non-current liabilities





Retirement benefit obligation

15

12,907

 8,169

 16,253

Deferred tax liabilities


-

 1,750

-

Deferred purchase consideration


 2,735

 2,644

 3,221

Provisions

13

101

-

172

Shares to be issued including premium

14

12,344

12,602

 17,385

Total non-current liabilities


28,087

25,165

 37,031

Total liabilities


461,318

315,432

518,581

Net assets


139,052

122,567

118,219






EQUITY





Called up share capital

16

 2,267

 2,114

 2,122

Share premium account

16

113,255

93,382

 94,140

Revaluation reserve


 6,575

 6,676

 6,885

Merger reserve


 4,562

 4,562

 4,562

Profit and loss account


12,393

15,833

 10,510

Equity attributable to equity holders of the parent


139,052

122,567

118,219



Condensed Consolidated Cash Flow Statement

26 week period ended 28 March 2010



Unaudited

26 weeks to

28 March 2010

(Restated) Unaudited

26 weeks to 29 March 2009

Audited

52 weeks to

27 September 2009


 Note

 £'000

 £'000

 £'000

 Net cash inflow from operating activities

17

25,757

 3,102

 37,389






 Cash flows from investing activities





 Purchase of intangible assets - goodwill


 (269)

 (987)

 (987)

 Purchase of intangible assets - client relationships


(6,866)

(4,300)

(5,360)

 Purchase of intangible assets - software

10

(1,739)

-

(5,088)

 Purchases of property, plant and equipment

11

(2,955)

(5,976)

(4,443)

 Dividend received from available-for-sale investments


-

-

352

 Net cash used in investing activities


(11,829)

(11,263)

(15,526)






 Cash flows from financing activities





 Dividends paid to equity shareholders


-

-

(15,027)

 Proceeds on issue of shares


14,338

551

 1,317

 Net cash from/(used in) financing activities


14,338

551

(13,710)






 Net increase/(decrease) in cash and cash equivalents


28,266

(7,610)

 8,153

 Cash and cash equivalents at the start of period


64,982

56,829

 56,829

 Cash and cash equivalents at the end of period


93,248

49,219

 64,982






Firm's cash


56,330

32,046

43,118

Firm's overdraft


(4,854)

(1,094)

(4,289)

Firm's net cash


51,476

30,952

38,829

Client settlement cash


41,772

18,267

26,153

Net cash and cash equivalents


93,248

49,219

64,982






Cash and cash equivalents shown in current assets


98,102

50,313

69,271

Bank overdrafts


(4,854)

(1,094)

(4,289)

Net cash and cash equivalents


93,248

49,219

64,982

 

 

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



Notes to the Condensed Set of Financial Statements

26 week period ended 28 March 2010

 

1.

General information

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 condensed consolidated interim financial information was approved for issue on 25 May 2010.

 

A copy of this Interim Financial Report including Condensed Financial Statements for the 26 week period ended 28 March 2010 is available at the Company's registered office and a copy will be posted to all shareholders.

 

The information for the 52 week period ended 27 September 2009 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 28 March 2010 should be read in conjunction with the annual financial statements of Brewin Dolphin Holdings PLC for the 52 week period ended 27 September 2009.

 

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 of the Financial Services Authority.

 

2009 change in accounting policy

As set out in Note 4 to the 2009 Annual Report and Accounts of Brewin Dolphin Holdings PLC for the 52 week period ended 27 September 2009, there was a change in accounting policy in that year. Consequently, the results for the 26 week period ended 29 March 2009 have been restated. The change in accounting policy resulted in an amortisation charge in respect of client relationships in the 26 weeks to 29 March 2009 of £2.5m and a reduction to retained earnings of £1.8m after deferred taxation for the period.

 

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 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 audited Annual Report and Accounts for the 52 week period ended 27 September 2009, except as described below.

 

In the current financial year, the Group has adopted:

a.   International Accounting Standards 1 (revised 2007) "Presentation of Financial Statements".

The standard requires the presentation of a statement of changes in equity as a primary statement separate from the income statement and statement of comprehensive income. As a result a condensed consolidated statement of changes in equity has been included in the primary statements. Comparative information has been re-presented on a consistent basis with that for the 26 week period to 28 March 2010.

 

b.   International Financial Reporting Standard 3 "Business Combinations" (revised 2008) and International Accounting Standard 27 "Consolidated and Separate Financial Statements" (revised 2008).

These standards require that acquisition costs which would have previously been included in Goodwill be included in operating expenses as they are incurred. Any changes in the cost of an acquisition, including contingent consideration, resulting from events after the date of acquisition are recognised in profit or loss; previously such changes resulted in an adjustment to Goodwill. Any adjustments to contingent consideration for acquisitions made prior to 28 September 2009 which result in an adjustment to Goodwill continue to be accounted for under IFRS (2004) and IAS 27 (2005) for which accounting policies can be found in the Group's 2009 Annual Report and Accounts. These changes in accounting policy have had no impact in the current period as there have not been any business combinations in the period.

 

c.   International Financial Reporting Standard 8 "Operating Segments".

The standard requires operating segments to be identified on the basis of internal reports about components of the Group that are used by the chief operating decision maker to allocate resources to the segments and to assess their performance. The format of segmental disclosure set out in note 5 remains unchanged from previous disclosures as it is based on the financial information reported to the board of Brewin Dolphin Holdings PLC, the chief operating decision maker.

 

d.   Revision to International Financial Reporting Standard 2 "Share-based payments - vesting conditions and cancellations".

The amendments clarify the definition of vesting conditions, introduce the concept of 'non-vesting' conditions and clarify the accounting treatment for cancellations. This has had no impact in the current period.

 

3.

Related party transactions

Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed. The parent company has received no dividends from Group companies in the period (26 weeks to March 2009: £nil; 52 weeks to September 2009: £10,000,000). There were no other related party transactions during the 26 week period ended 28 March 2010 save that the Company subscribed for £4,651,958 of shares in Brewin Dolphin Limited. The amount owed by Brewin Dolphin Limited to the parent company is £18,102,000 (March 2009: £8,137,000; September 2009: £3,719,000). 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 2009 Annual Report and Accounts available via our website www.brewin.co.uk, with the exception of the amount owed by Brewin Dolphin Limited, as described above.

 

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 in the 2009 Annual Report and Accounts available via our website www.brewin.co.uk.  In summary the major financial and non financial risks identified were:

 

 

Risk Type

Risk

Credit risk

Counterparty risk; Trading exposure

Earnings risk

Loss of front office staff

Interest rate risk

Interest rate risk

Liquidity risk

Bank default and other systemic; Capital adequacy

Legal and compliance risk

Data protection; Fast changing regulatory environment; New business and product lines

Operational and IT risk

Business continuity; Data integrity; Electronic dealing errors; Internet failure; Project control

Pension obligation risk

Capital adequacy risk from swings in defined benefit scheme liability

Reputational risk

Poor investment performance

Settlement risk

Settlement failure

Other risk

Acquisition of new teams; Financial crime

 

5

Segmental information

For management purposes, the Group is divided into two business streams: Investment Management and Corporate Advisory & Broking (formerly Investment Banking). These form the reportable segments of the Group.

 

All operations are carried out in the United Kingdom and the Channel Islands.

 

26 week period ended 28 March 2010







 Discretionary Portfolio Management

 

Advisory Portfolio Management

 

Total Investment Management

 Corporate Advisory & Broking

 

Group


 £'000

 £'000

 £'000

 £'000

 £'000







Total income

 75,289

 39,772

 115,061

5,885

 120,946







Operating profit before redundancy costs, contract renewal payments and amortisation of client relationships

 12,476

 6,590

 19,066

 962

 20,028

Contract renewal payments (see note 8)



(2,081)

(90)

(2,171)

Amortisation of client relationships



(2,935)

 -

(2,935)

Operating profit





 14,922

Finance income (net)





302

Profit before tax





 15,224







Other Information






Capital expenditure



 2,777

178

 2,955

Depreciation



 5,166

76

 5,242

Amortisation of intangible asset - software



720

-

720

Share-based payments



312

17

329







Segment assets excluding current tax assets



574,577

 25,793

 600,370







Segment liabilities excluding current tax liabilities


431,104

 25,793

 456,897

 



 

26 week period ended 29 March 2009 (restated)

 






Discretionary Portfolio Management

Advisory Portfolio Management

Total Investment Management

Corporate Advisory & Broking

Group


£'000

£'000

£'000

£'000

£'000







Total income

63,199

38,005

101,204

3,514

104,718







Operating profit before redundancy costs and amortisation of client relationships

10,360

6,230

16,590

(825)

15,765

Redundancy costs



(2,846)

(346)

(3,192)

 Amortisation of client relationships



(2,519)

 -

(2,519)






 10,054

Other finance income (net)





1,074

Profit before tax





11,128







Other Information






Capital expenditure



5,962

14

5,976

Depreciation



5,455

103

5,558

Share-based payments



326

21

347







Segment assets excluding current tax assets



425,116

12,883

437,999







Segment liabilities excluding current tax liabilities


300,787

12,883

313,670

 

52 week period ended 27 September 2009







 Discretionary Portfolio Management

 

Advisory Portfolio Management

 

Total Investment Management

 Corporate Advisory & Broking

 

Group


 £'000

 £'000

 £'000

 £'000

 £'000







Total income

 128,790

 75,225

 204,015

8,297

 212,312







Operating profit before redundancy costs and amortisation of client relationships

 19,428

 11,173

 30,601

 75

 30,676

Redundancy costs



(3,393)

(245)

(3,638)

Amortisation of client relationships



(6,566)

 -

(6,566)

Operating profit





 20,472

Finance income (net)





 1,467

Profit before tax





 21,939







Other Information






Capital expenditure



 4,404

39

 4,443

Depreciation



 9,982

171

 10,153

Amortisation of intangible asset - software



674

-

674

Share-based payments



652

34

686







Segment assets excluding current tax assets



 567,683

 69,117

 636,800

Segment liabilities excluding current tax liabilities


 447,749

 69,117

 516,866







 

6

Finance income and costs

 






Unaudited

26 weeks to

28 March

2010

Unaudited

26 weeks to

29 March 2009

Audited

52 weeks to

27 September 2009


 £'000

 £'000

 £'000

Finance income




Dividends from available-for-sale investments

 -

 -

 352

Interest on bank deposits

 558

1,600

2,083


 558

1,600

2,435





Finance costs




Finance cost of deferred consideration

 29

 213

 509

Interest expense on defined pension obligation

 194

 289

 412

Interest on bank overdrafts

 33

 24

 47


 256

 526

 968

 

7

Taxation

 


Unaudited

26 weeks to

28 March

2010

(Restated) Unaudited

26 weeks to

29 March 2009

Audited

52 weeks to

27 September 2009


 £'000

£'000

 £'000

United Kingdom




  Current tax

4,284

3,023

5,931

  Prior period

(420)

 225

 667

Overseas tax




  Current tax

 71

 155

 174

Prior period

 -

 -


3,935

3,403

6,526

United Kingdom deferred tax




  Current year

 540

 385

 531

  Prior period

 420

(225)

(653)


4,895

3,563

6,404





 



 

8

Earnings per share

 

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

 


Unaudited

26 weeks to

28 March 2010

(Restated) Unaudited
26 weeks to

29 March 2009

Audited
  52 weeks to
27 September 2009





Number of shares

'000

'000

'000

Basic




Weighted average number of shares in issue in the period

219,450

210,196

210,940

Diluted




Weighted average number of options outstanding for the period

1,825

790

1,271

Estimated weighted average number of shares earned under deferred consideration arrangements

3,903

7,019

6,555

Diluted weighted average number of options and shares for the period

225,178

218,005

218,766





Earnings attributable to ordinary shareholders

£'000

£'000

£'000

Profit attributable to equity shareholders of the parent from continuing operations

10,329

7,565

15,535

Redundancy costs

-

3,192

3,638

 less tax

-

(894)

(1,019)

Contract renewal payment (Note b)

2,171

-

-

 less tax

(608)

-

-

Amortisation of intangible assets - client relationships

2,935

2,519

6,566

 less tax

(822)

(705)

(1,838)

Adjusted basic profit for the period and attributable earnings excluding redundancy costs, contract renewal payments and amortisation of client relationships

14,005

11,677

22,882





Profit attributable to equity shareholders of the parent from continuing operations

10,329

7,565

15,535

Finance costs of deferred consideration (Note a)

96

176

277

 less tax

(27)

(49)

Adjusted fully diluted profit for the period and attributable earnings

10,398

7,692

15,734

Redundancy costs

-

3,192

3,638

 less tax

-

(894)

(1,019)

Contract renewal payment (Note b)

2,171

-

-

 less tax

(608)

-

-

Amortisation of intangible assets - client relationships

2,935

2,519

6,566

 less tax

(822)

(705)

(1,838)

Adjusted fully diluted profit for the period and attributable earnings excluding redundancy costs, contract renewal payments and amortisation of client relationships

14,074

11,804

23,081





From continuing operations








Basic

4.7p

3.6p

7.4p





Diluted

4.6p

3.5p

7.2p









From continuing operations excluding redundancy costs, contract renewal payments and amortisation of client relationships





Basic

6.4p

5.6p

10.8p





Diluted

6.3p

5.4p

10.6p





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

b) Once every ten years, the Group reissues its contracts to all personnel; the cost of this is shown within staff costs.


 

9

Dividends

 

 
Unaudited
26 weeks to
28 March 2010
Unaudited
26 weeks to
29 March 2009
Audited
52 weeks to
27 September 2009
 
£'000
£'000
£'000
Amounts recognised as distributions to
equity shareholders in the period:
 
 
 
 
 
 
Final dividend paid 1 April 2010*, 3.55p per share (2009: 3.55p per share)
7,975
7,504
7,504
Interim dividend paid 24 September 2009, 3.55p per share
 -
 -
7,523
 
7,975
7,504
15,027
* approved at Annual General Meeting on 26 February 2010
 
 
 
 
An interim dividend of 3.55p per share was declared by the Board on 25 May 2010 and has not been included as a liability as at 28 March 2010. This interim dividend will be paid on 22 September 2010 to shareholders on the register at the close of business on 27 August 2010 with an ex-dividend date of 25 August 2010.

 

 

10

Intangible assets

 


 Goodwill

 Client relationships

 Software development

costs

 Purchased software

 Total


 £'000

 £'000

 £'000

 £'000

 £'000

Cost






As previously reported at 28 September 2008

 93,453

 -

 -

-

 93,453

Prior period adjustment (note 2)

 (45,077)

45,077


-

-

As restated at 28 September 2008

 48,376

45,077

 -

-

 93,453

Additions

 10

1,895

 -

-

 1,905

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

-

 (2,246)

 -

-

(2,246)

At 29 March 2009

 48,386

44,726

 -

-

 93,112

Additions

 52

3,768

 391

 4,697

 8,908

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

-

2,823

 -

-

 2,823

At 27 September 2009

 48,438

51,317

 391

 4,697

104,843

Additions

 199

1,194

 177

 1,562

 3,132

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

-

 (431)

 -

-

 (431)

At 28 March 2010

 48,637

52,080

 568

 6,259

107,544







Accumulated amortisation and impairment

As previously reported at 28 September 2008

-

 430

 -

-

430

Prior period adjustment (note 2)

-

7,338

 -

-

 7,338

As restated at 28 September 2008

-

7,768

 -

-

 7,768

Amortisation charge for the period

-

2,519

 -

-

 2,519

Impairment losses for the period

-

 -

 -

-

-

At 29 March 2009

-

10,287

 -

-

 10,287

Amortisation charge for the period

-

4,047

 49

625

 4,721

Impairment losses for the period

-

 230

 -

-

230

At 27 September 2009

-

14,564

 49

625

 15,238

Amortisation charge for the period

-

2,935

 62

658

 3,655

Impairment losses for the period

-

 -

 -

-

-

At 28 March 2010

-

17,499

 111

 1,283

 18,893

Net book value

As restated at 28 September 2008

 48,376

37,309

 -

-

 85,685

At 29 March 2009

 48,386

34,439

 -

-

 82,825

At 27 September 2009

 48,438

36,753

 342

 4,072

 89,605

At 28 March 2010

 48,637

34,581

 457

 4,976

 88,651

 

 

As set out in the annual financial statements of Brewin Dolphin Holdings PLC for the 52 week period ended 27 September 2009 in Note 4, there was a change in accounting policy. Consequently, the 29 March 2009 results have been restated, the change in accounting policy resulted in an amortisation charge in respect of client relationships of £2.5m for the 26 week period ended 29 March 2009 (previously nil).

 

11

Property, plant and equipment

 

During the period the Group spent £1.1 million (26 weeks to 29 March 2009: £0.7 million, 52 weeks to 27 September 2009: £0.9 million) on leasehold improvements, £1.5 million (26 weeks to 29 March 2009: £4.9 million, 52 weeks to 27 September 2009: £3.1 million) on computer equipment and £0.4 million (26 weeks to 29 March 2009: £0.4 million, 52 weeks to 27 September 2009: £0.5 million) on office equipment.

 

12

Investments

 

Available-for-sale investments





Listed investments

Unlisted investments

Total


£'000

£'000

£'000

Fair value








At 28 March 2010

 180

10,000

10,180





At 29 March 2009

 317

10,000

10,317





At 27 September 2009

 609

10,000

10,609

Unlisted available-for-sale investments represent the Group's holding of 19,899 ordinary shares in Euroclear plc. This holding represents 0.52% of Euroclear plc's shares. As at 27 September 2009 the Directors updated their valuation of the Group's holding in Euroclear plc; the valuation has remained unchanged at £10 million. This valuation took into account the Group's share of net assets, dividend yield and the prices of similar quoted companies discounted for marketability.

 

Trading investments





Listed investments

Unlisted investments

Total


£'000

£'000

£'000

Fair value








At 28 March 2010

 650

 -

 650





At 29 March 2009

 596

 -

 596





At 27 September 2009

 644

 -

 644

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

28 March 2010

Unaudited

26 weeks to 28 March 2010

Unaudited

26 weeks to

28 March 2010

Unaudited

26 weeks to 29 March 2009

Audited

52 weeks to

27 September 2009


£'000

£'000

£'000

£'000

£'000


Sundry claims and associated costs

Vacant Property

Total

Total

 Total

At start of period

1,734

 309

2,043

2,068

 2,068

Additions

2,669

 -

2,669

 358

 1,493

Utilisation of provision

(433)

(107)

(540)

(284)

(1,243)

Unused amounts reversed during the period

(706)

 -

(706)

(184)

 (275)

At end of period

3,264

 202

3,466

1,958

 2,043

Provisions






Included in current liabilities

3,264

 101

3,365

1,958

 1,871

Included in non-current liabilities

 -

 101

 101

 -

172


3,264

 202

3,466

1,958

 2,043

 

 

Provisions relate to sundry claims against the Group and the future cost of vacant property. Where there are legal actions against the Group the estimated liability has been included above with the related insurance debtor of £512,500 (29 March 2009: £1,762,000, 27 September 2009: £326,000) included in other debtors. The timing of settlements cannot be accurately forecast; settlement of £nil has been made since the balance sheet date.

 

14

Shares to be issued including premium and other deferred purchase liabilities

 

The Group acquires businesses 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 have to be held typically 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 to include new teams who have arrived and the progress of the businesses acquired.

 

15

Retirement benefit obligation

 

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


As at 28 March

2010

As at 29 March

2009

As at 27 September

2009

Discount rate

5.70%

7.20%

5.60%

Rate of inflation

3.50%

3.10%

3.00%

Salary increases

3.50%

3.10%

3.00%

Expected return on equities

8.10%

7.80%

7.60%

Expected return on bonds

5.10%

4.80%

4.60%

Expected return on other assets

0.50%

0.50%

0.50%

Rate of increase to pensions in payment

3.50%

3.10%

3.00%


Average assumed life expectancies for members on retirement at age 65

Existing pensioners




Males

87.4 years

87.0 years

87.4 years

Females

88.9 years

89.8 years

88.9 years

Future pensioners




Males

88.6 years

88.1 years

88.6 years

Females

90.0 years

90.9 years

90.0 years

 

A full actuarial valuation was carried out as at 31 December 2008 and the results of this valuation have been updated to 28 March 2010 by a qualified independent actuary and reflected in the accounts. 

 

The Group has agreed to make additional pension contributions of £3 million per annum with the aim of paying the deficit off over 8.5 years.

 

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 27 September 2009


212,293,167

3,478,056


 2,122

94,140

96,262

Issue of options

Various

 380,353

 -

 37.5p - 145.0p

4

 359

 363

Nil paid shares now paid up

Various

 144,593

 (144,593)

 103.3p - 217.5p

1

 161

 162

Settlement of deferred consideration

3 Dec 2009

1,264,720

 -

 132.6p

13

2,083

2,096

Placing of shares

15 Dec 2009

10,590,764

 -

 135.0p

106

14,191

14,297

Settlement of deferred consideration

16 Mar 2010

2,132,505

 -

 165.7p

21

2,806

2,827

Cost of issue of shares

Various

 -

 -

 -


(485)

(485)

At 28 March 2010


226,806,102

3,333,463


 2,267

 113,255

 115,522









 

The equity placing on 15 December 2009 used existing shareholder authorities. The purpose was to ensure that the Group continued to carry sufficient capital to cover anticipated future regulatory capital requirements.  

 

17

Note to the cash flow statement

 


Unaudited

26 weeks to 28 March 2010

(Restated) Unaudited

26 weeks to

29 March

2009

Audited

52 weeks to

27 September 2009


£'000

£'000

£'000

Group




Operating profit as previously reported


12,573

24,716

Prior period adjustment (note 2)


 (2,519)

(4,244)

Operating profit

14,922

10,054

20,472

Adjustments for:




 Depreciation of property, plant and equipment

5,242

5,558

10,153

 Amortisation of intangible assets - client relationships

2,935

2,519

6,566

 Amortisation of intangible assets - software

 720

 -

 674

 Loss on disposal of property, plant and equipment

 -

 -

 5

 Intangible asset impairment

 -

 -

 230

 Retirement benefit obligation

 (4,306)

(842)

(1,267)

 Share-based payment cost

 329

347

686

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

 29

 289

 509

 Interest income

 558

1,600

2,083

 Interest expense

(256)

(526)

(968)

Operating cash flows before movements in working capital

20,173

18,999

39,143

 Decrease in receivables and trading investments

 (53,851)

20,091

161,518

 Decrease in payables

60,659

(33,863)

(157,976)

Cash generated by operating activities

26,981

5,227

42,685

 Tax paid

 (2,200)

(2,125)

(5,296)

 Tax receipt following overpayment in prior years

 976

 -

 -

Net cash inflow from operating activities

25,757

3,102

37,389





Funds

 

 


 At

28 March

2010

 At

29 March

2009

 At

27 September 2009


 £ Billion

 £ Billion

 £ Billion

In Group's nominee or sponsored member

13.3

9.2

11.6

Stock not held in Group's nominee

0.3

0.1

0.2

Discretionary funds under management

13.6

9.3

11.8





In Group's nominee or sponsored member

7.8

5.7

7.2

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

1.6

1.3

1.5

Advisory funds under management

9.4

7.0

8.7





Managed funds

23.0

16.3

20.5









In Group's nominee or sponsored member

4.0

3.0

3.7

Stock not held in Group's nominee

0.3

0.2

0.4

Execution only stock

4.3

3.2

4.1





Total funds

27.3

19.5

24.6





Stock




In Group's nominee or sponsored member

25.1

17.9

22.5

Stock not held in Group's nominee

2.2

1.6

2.1


27.3

19.5

24.6







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 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  

Finance Director

25 May 2010




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 28 March 2010 which comprises 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 17. 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 them 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 group 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 28 March 2010 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 Auditors

London, United Kingdom

25 May 2010

 


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