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Brewin Dolphin Hldgs (BRW)

  Print          Annual reports

Wednesday 01 December, 2010

Brewin Dolphin Hldgs

Preliminary Results

RNS Number : 1236X
Brewin Dolphin Holdings PLC
01 December 2010
 



1 December 2010

 

Brewin Dolphin Holdings PLC

 

Group Preliminary Results

 

For the 52 weeks ended 26 September 2010

Highlights

 

Total managed funds £23.2 billion at 26 September 2010 (27 September 2009: £20.5 billion).

 

Discretionary funds £14.0 billion at 26 September 2010 (27 September 2009: £11.8 billion).

 

Total income £250.9 million (27 September 2009: £212.3 million) an increase of 18%.

 

Profit before tax £31.4 million (27 September 2009: £21.9 million) a 43% increase.

 

Profit before tax excluding redundancy costs, contract renewal payments and amortisation of client relationships £40.2 million (27 September 2009: £32.1 million) a 25% increase.

 

Earnings per share:


-

Basic earnings per share 9.7p (27 September 2009: 7.4p) an increase of 31%.


-

Diluted earnings per share 9.5p (27 September 2009: 7.2p) an increase of 32%.

 

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


-

Basic earnings per share 12.5p (27 September 2009: 10.8p) an increase of 16%.


-

Diluted earnings per share 12.3p (27 September 2009: 10.6p) an increase of 16%.

 

The total dividend for the period is 7.1p per ordinary share (2009: 7.1p).

Proposed final dividend 3.55p per share (2009: 3.55p).

Declaration of Final Dividend

 

The Board is proposing a final dividend of 3.55p, to be approved at the 2011 AGM and payable on 5 April 2011 to shareholders on the register at close of business on 11 March 2011, with an ex-dividend date of 9 March 2011.

 

Jamie Matheson, Executive Chairman said:

 

"Our growth plans continue to be built around an unstinting focus on high levels of service and the ability to attract new clients that this reputation provides.……  it would appear that there is a growing realisation that prudent financial management and the merits of equity over debt finance are a fundamental key to economic growth.  In particular we believe that this view is strongly held in the UK and this leads us to look to the future with optimism."

 

For further information, please contact:

 

Brewin Dolphin Holdings PLC

Hudson Sandler

Jamie Matheson, Executive Chairman

Andrew Hayes / Wendy Baker

Tel: 020 7248 4400

Tel: 020 7796 4133





Business Review: Executive Chairman's Statement

By comparison with recent years financial markets proved relatively stable over the year to 26th September 2010.  In this environment Brewin Dolphin continued to make steady progress. 

 

Total income for the year was £250.9 million, up 18% on last year.  Pre tax profit excluding redundancy costs, contract renewal payments and the amortisation of client relationships was £40.2 million, up 25% on last year.  Pre tax profit was up 43% at £31.4 million.  This improved performance was achieved despite a material rise in the costs of regulation.  We do not at this stage expect a rise of such magnitude in the current year.  In the meantime, it is your Board's intention to seek out means whereby some of these cost rises may be mitigated. 

 

Investment Management

It was another year of useful progress for our Investment Management business which represented 96% of Group turnover. The Division proved resilient in the turbulent market conditions seen in the 2009 financial year and has made material progress in more recent steadier times.  While we do not take this for granted, we are conscious that this gives our clients added confidence in our approach.  We continue to believe strongly in the merits of long term equity investment with proper recognition of the value of dividends. 

 

The Division's income rose by 18% during the period and profits excluding redundancy costs, contract renewal payments and the amortisation of client relationships by 25%.  Total Funds under Management increased from £20.5 billion to £23.2 billion, a 13% increase largely reflecting a rise of 19% in discretionary funds.  During the same period the FTSE 100 index rose by 10% and the FTSE APCIMS Private Investor Series Balanced Portfolio by 8%.  While the dramatic influx in new Investment Managers and Financial Planners of three years ago was exceptional we continue to enjoy a steady flow of newcomers to the firm.

 

As I have said before, our network of offices is now of a size to give us comprehensive coverage of most of the UK, and is therefore unlikely to be expanded significantly.  We opened one new branch during the year in Shrewsbury and we were joined by new Investment Managers in other offices, in line with your Board's declared policy of further strengthening our existing network.

 

It remains a Board priority to continue to develop improved operational systems and to deepen our services to clients.  By way of example we have in recent weeks successfully launched a new on-line valuation and reporting service, as promised in our Interim Report in May.

 

Corporate Advisory & Broking

After achieving a profit last year against a quite torrid background, our Corporate Advisory & Broking division was able to return an operating profit of £1.5m this year. This is all the more satisfactory given that the level of corporate activity throughout the year was consistently lower than had been expected. 

 

Dividend

The Board is proposing a final dividend of 3.55p per share to be approved at the AGM in February 2011 and paid on 5 April 2011. This will bring the total dividend for the period to 7.1p in line with the dividend paid last year.

 

Regulation

Your Board believes that the impact of regulation upon the business is unlikely to reduce in the foreseeable future.  It is our view that we have a duty to participate fully in any forums that can influence the shape of future regulation.  In particular we remain concerned about the "one size fits all" approach which is more appropriate to businesses that merely sell financial products rather than businesses like ours whose principal activity is providing advice and service to our clients.

 

Board Changes

There has been one change to the composition of the Board during the year with the appointment of Henry Algeo in July. He is the Regional Managing Director for Scotland and the North West and brings to the Board a wealth of experience both in practice and operations.  Our Deputy Chairman and Senior Independent Non Executive Director, Nick Hood has indicated his intention to retire from the Board at our AGM in February 2012.

 



Strategy

It remains your Board's strategy to continue to grow the business for the benefit of our shareholders by maintaining the quality and increasing the depth of our service to our clients.  I do not anticipate any material changes to the structure of our UK network but we will pursue all suitable opportunities to strengthen it further.  This will be done in conjunction with the promotion of our single Brewin Dolphin brand, which was adopted Group wide in March 2009.  A number of new initiatives were undertaken during the year, and in particular I would like to highlight our sponsorship of the Motor Neurone Disease garden at this year's Chelsea Flower Show.  We were delighted that the garden enjoyed a visit from Her Majesty The Queen.

 

 

Outlook

This year's results reflect the hard work of our people and the very significant support of our clients.  Our growth plans continue to be built around an unstinting focus on high levels of service and the ability to attract new clients that this reputation provides.  It would be foolhardy to rule out further unforeseen market events, but it would appear that there is a growing realisation that prudent financial management and the merits of equity over debt finance are a fundamental key to economic growth.  In particular we believe that this view is strongly held in the UK and this leads us to look to the future with optimism.

 

 

 

Jamie Matheson

30 November 2010

 



Business Review: Investment Management

David McCorkell - Executive Director - Head of Investment Management

 

It is very encouraging to report another record year for the Investment Management Division in what has been a good year for global stock markets.

 

Investment Management has seen its total income grow by 18% to £240m in 2010 and operating profits excluding redundancy costs, contract renewal expense and amortisation of client relationships rose by 25% to £38.3m.

 

This is analysed as follows:

 


2010

2009




 £'000

 £'000



Total income

240,012

 204,015



Salaries

(80,786)

(71,562)



Other operating costs

(87,921)

(74,712)



Profit before profit share

 71,305

 57,741



Profit share

(33,031)

(27,140)



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

 38,274

 30,601








Income comprises:











2010

2009




£'000

£'000



Fees, interest and other recurring income

138,087

111,049



Commission

101,925

 92,966



Total Income

240,012

 204,015








Split of income between discretionary and advisory portfolio management:









Total Income

Operating Profit

Total Income

Operating Profit


2010

2010

2009

2009


£ million

£ million

£ million

£ million

Discretionary Portfolio Management

 157.2

 25.1

 128.8

 19.4

Advisory Portfolio Management

 82.8

 13.2

 75.2

 11.2


 240.0

 38.3

 204.0

 30.6






 

 

Fees, interest and other recurring income have increased by 24% (2009: 4%) to 57% of total revenue (2009: 54%) whilst commission increased by 10% (2009: 7%). The trend towards Discretionary Management persists and the level of recurring income continues to grow.

 



Funds under Management ("FUM")


 

Advisory funds

 

Discretionary funds

 

Total managed funds

% increase in funds year on year

5.7%

18.6%

13.2%






£ billion

£ billion

£ billion

Value of funds at 27 September 2009

8.7

11.8

20.5

Inflows

0.7

1.6

2.3

Outflows

(0.4)

(0.3)

(0.7)

Transfers

(0.1)

 0.1

-

Market movement

0.3

 0.8

   1.1

Value of funds at 26 September 2010

9.2

14.0

23.2

 

Total funds under our Discretionary Management were £14.0 billion at the year end against £11.8 billion last year, a rise of 18.6%. Funds under Advisory Management were £9.2 billion, a rise of 5.7% over the year, giving total funds under management of £23.2 billion, an overall increase of 13.2%. I am very pleased to report an inflow of new FUM of £2.3 billion of which 70% was under discretionary mandates.

 

During the period the FTSE 100 Share Index and the FTSE APCIMS Private Investor Series Balanced Portfolio Index increased by 10.2% and 7.7% respectively.

 

The Business

During the year we have added four new Investment Management teams to the Group. The largest team consists of eleven Divisional Directors and staff who joined us in Shrewsbury, where we have opened a new branch. Our offices in Guernsey, Reigate, Stoke and Taunton have all relocated to new larger premises.

 

We currently have a total of 657 FSA Approved Persons of which 628 are FSA Registered CF30 Client Executives and Investment Managers around the country. We thank them all and their support staff for their dedication to their clients and their considerable contributions to the business over the last year.

 

The Retail Distribution Review ("RDR"), expected to be implemented at the end of 2012, will require all investment advisors throughout the industry to achieve minimum professional qualifications and this is a measure we support. The majority of our investment managers are already qualified well above these minimum levels and we have implemented a training programme to ensure that all our client executives surpass these minimum requirements by 2012.

 

Other aspects of the RDR are still to be confirmed and we remain in discussion with Regulators and Parliamentarians about particular details. There is little doubt that the measure as a whole will again change the way we do business and add to our cost burden.

 

We have seen considerable successes flowing from our Business Development department's efforts.  The team which introduces Brewin Dolphin services to Independent Financial Advisors ("IFAs") and other professional intermediaries around the UK, is now well established and has introduced over £380 million of new business in the year, a 55% increase on last year.  We are also delighted to report that we have won Citywire's Advisers Choice Award for the best Large Wealth Management Firm, as voted for by professional intermediaries.

 

During the year, we embarked on our first national advertising campaign to raise our brand awareness following our move to one name in March 2009. The analysis of the campaign shows that it was successful. It also brought in new business leads.

 

A new website was launched, in 2010 each branch having its own micro site giving details and biographies of the Investment Managers and other news and events in each area.  We have also just launched a new and improved on line valuation and reporting service and it is our intention to increase further electronic contact and functionality for our clients in the coming year. 

                                                 

Our team of research analysts has grown during the period and their services for our Investment Managers and other professional advisers have developed considerably. We were delighted that this team won the Investment Week Award for Best Discretionary Research in 2010.

 



Recognising the increasing requirements of Trustees of charitable funds, we have strengthened our specialist team of charity advisers and now have 18 investment managers throughout the U.K. We manage over £1.7 billion of charitable funds and were included in the UK Top Ten charity fund managers in Charity Finance's 2010 Annual Survey.

 

Our business model, where qualified investment managers give personal advice and bespoke portfolio management to private investors and trustees, face to face and wherever they are, continues to be successful and is attracting record amounts of new business to the Group. We are determined not to be thwarted by increasing amounts of regulation and to be able to continue to provide these levels of service to our clients.

 

 

Business Review: Corporate Advisory & Broking

Graeme Summers - Director of Brewin Dolphin Limited - Head of Corporate Advisory & Broking

 

 

The last financial year for the Division has continued to be characterised by difficult trading conditions in capital markets. Despite this, we are pleased to report that the Division's contribution to the Group improved from the low base of the previous year. This maintains our track record of unbroken profits.  

 

Total income and operating profits excluding redundancy costs and contract renewal payments increased by 31% and 20 times respectively.

 

This is analysed as follows:

 





2010

2009


 £'000

 £'000

Total income

 10,877

 8,297

Salaries

(4,401)

(3,990)

Other operating costs

(4,173)

(4,161)

Profit before profit share

 2,303

146

Profit share

 (758)

(71)

Operating profit excluding redundancy costs, contract renewal payments

 1,545

75




 

Our Sales, Trading and Research teams performed well in a very competitive market place, due to their continued commitment to identifying and transacting value-added investment ideas for our institutional fund manager clients.

 

Despite low levels of equity fundraising activity, the Corporate Advisory and Broking team delivered a similarly robust performance during the period,  The team adapted well to the difficult conditions and delivered over 70% of corporate income from Merger and Acquisition activity and other services such as Debt Advisory.

 

We currently have 91 corporate clients. This number is unchanged from the previous year, reflecting 33 new mandates, despite a number of clients having been taken over or delisting in the period.

 

Of these clients, 48 are quoted on the Official List with an average market capitalisation of £241m and 37 on AIM with an average market capitalisation of £44m. The balance comprises a small number of private companies.

 

Encouragingly, there appears to have been a general recovery in confidence in capital markets over the last month or so. Whilst it is still early days, we are as a team cautiously optimistic that this may provide a platform for a sustained recovery and a return to more favourable conditions.



Extracts from Business Review: Finance

 

 

Results for 2010 Financial Year

 

The performance in the period is set out below:

 


2010

2009

% Change





Average indices for the year




FTSE 100

 5,319

 4,506

18.0%

FTSE APCIMS Private Investor Series Balanced Portfolio

 2,739

 2,434

12.5%






 £'000

 £'000


Total income

250,889

 212,312

18.2%

Salaries

(85,187)

(75,552)

12.8%

Other operating costs

(92,094)

(78,873)

16.8%

Profit before profit share¥

 73,608

 57,887

27.2%

Profit share

(33,789)

(27,211)

24.2%

Operating profit ¥

 39,819

 30,676

29.8%

Net finance income and other gains and losses

345

 1,467

-76.5%

Profit before tax¥

 40,164

 32,143

25.0%

Redundancy costs

 (253)

(3,638)


Contract renewal payments (see below)

(2,191)

-


Amortisation of client relationships

(6,349)

(6,566)


Profit before tax

 31,371

 21,939

43.0%

Taxation

(9,818)

(6,404)


Profit after tax

 21,553

 15,535


Interim and proposed final dividend for the year

(16,239)

(15,060)



 5,314

475






Earnings per share




             Basic earning per share

9.7p

7.4p

31.1%

             Diluted earnings per share

9.5p

7.2p

31.9%





Earnings per share ¥




             Basic earning per share

12.5p

10.8p

15.7%

             Diluted earnings per share

12.3p

10.6p

16.0%





¥ excluding redundancy costs, contract renewal payments and amortisation of client relationships





 

 

We have outperformed the market movement as shown above with operating profit (excluding redundancy costs, contract renewal payments and amortisation of client relationships) up 30%. Diluted earnings per share, after taking into account the December 2009 placing, on a similar basis, are up 16%.

 

Profit before tax shows a 43% increase and standard diluted earnings per share are up 32%

 



Contract Renewal Payments and Deferred Profit Share Plan

Once every ten years, the Group updates its employment contracts to take account of changes in employment law and remuneration practices. All staff received new contracts in December 2009 and these have been signed and returned by 99.8% of staff.

 

In addition, this year contracts include a new provision for business facing staff that 1/3 of profit share above £50,000 has to be paid in deferred shares under the new deferred profit share plan. These shares have to be held for a minimum of three years and will be forfeited if an employee moves to a competitor in the three year period.

 

This scheme is designed to strengthen share ownership by the Group. The Directors believe that these new contracts combined with greater share ownership will strengthen the Group in the interest of shareholders.

 

Available for Sale Investments

This year the Group found it necessary to write down such investments.

 

Our investment in PLUS Markets Group PLC has been written down to its fair value of £114,000, with a resulting charge to profit in the year of £495,000. The original investment in PLUS Markets Group PLC was strategic and designed to reduce the then monopoly of the London Stock Exchange. In this it was a success but now there is intense competition in this market and the value of PLUS Markets Group PLC itself has fallen.

 

The investment in Euroclear plc came to us via a £431,000 strategic investment in Crest, the London based settlement system. Crest was taken over by Euroclear and our resultant stake in Euroclear is 0.52% of its share capital. In 2005, with the introduction of IFRS, we valued Euroclear, based largely on our share of its net assets, at £8.5m and over the years, on this basis tempered by dividend yield, our valuation was increased to £10m. At the time of Euroclear's last accounts in December 2009 our share of net assets was £14m. However, Euroclear recorded a loss in 2009 and cut its dividend from €20.49 per share to €11.46.  After taking internal professional advice, it was felt appropriate to value Euroclear on a dividend yield basis and therefore the investment has been valued at £6m representing a £4m reduction in fair value which has been taken through the revaluation reserve.

 

Pension Fund

The actuarial loss on the pension fund this year was £1.9 million (2009: £9.5million). Under IAS19, large annual fluctuations will occur. If long term interest rates increase this loss should reverse. This year, the Group has agreed to make additional pension contributions of £3 million per annum with the aim of paying the deficit off over the next 8 years.

 

Cash Flow and Capital Expenditure

2010 saw a net cash inflow of £21.9m (2009: £8.2m net cash outflow). There was a £45.1m (2009: £37.4m) inflow of funds from operating activities.  £8.3m (2009: £6.3m) of cash was spent on acquiring teams of Investment Managers and their client relationships, and £13.6m (2009: £9.5m) on computer software and other, mainly computer related, fixed assets. Dividends paid in the period came to £16.0m (2009: £15.0m).

 

In December 2009 £14.3m was raised by a placing of 10,590,764 of the Company's ordinary shares.

 

In March 2010 £4m was paid into the staff pension fund as part of an agreed deficit reduction plan. 

 



Capital Structure, Treasury Policy, Liquidity and Capital Requirement

At 26 September 2010 the Group had net assets of £141.6m (2009: £118.2m). Net assets excluding intangible assets and shares to be issued of £65m (2009: £51m) broadly represent the Group's capital for regulatory purposes.  These net assets were largely represented by net cash and cash equivalents of £87m (2009: £65m), including £25m (2009: £26m) of client settlement money. The Group, has an agreed overdraft facility of £15m (2009: £15m). At the period end the Group had a surplus of net assets for regulatory capital adequacy purposes of £24.3m (2009: £11m). This will reduce by £5m when shares are purchased under the Deferred Profit Share Plan in December.

 

Our policy is to hold our clients' and Group's money only at major UK clearers. Our client money is ring fenced under the FSA's client money rules.

 

Client stock is also ring fenced in our nominee companies. Stock is settled via the Crest System which is owned by Euroclear, not withstanding our comments above, a highly rated bank, and, in the case of foreign stock, the Bank of New York. 

 

 

 

 

 

Robin Bayford

Finance Director

30 November 2010



Consolidated Income Statement

52 week period ended 26 September 2010

 

 



 52 weeks to

26 September 2010

52 weeks to

27 September 2009


Note

 £'000

£'000

Continuing operations




Revenue

1

234,890

187,241

Other operating income


15,999

 25,071

Total income

2

250,889

212,312





Staff costs


(121,167)

(102,763)

Redundancy costs


 (253)

(3,638)

Amortisation of intangible assets - client relationships


(6,349)

(6,566)

Other operating costs


(92,094)

(78,873)

Operating expenses


(219,863)

(191,840)





Operating profit


31,026

 20,472

Finance income

3

 1,293

 2,435

Other gains and losses

4

 (495)

-

Finance costs

3

 (453)

 (968)

Profit before tax


31,371

 21,939

Tax

5

(9,818)

(6,404)

Profit for the period


21,553

 15,535





Attributable to:




Equity shareholders of the parent from continuing operations

21,553

 15,535



21,553

 15,535





Earnings per share








From continuing operations




Basic

7

9.7p

7.4p





Diluted

7

9.5p

7.2p





 



Consolidated Statement of Comprehensive Income

52 week period ended 26 September 2010

 



 52 weeks to

26 September 2010

52 weeks to

27 September 2009



 £'000

£'000

Profit for the period


21,553

15,535

Loss on revaluation of available-for-sale investments


(4,000)

(17)

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


 1,177

4

Actuarial loss on defined benefit pension scheme


(1,878)

(9,556)

Deferred tax credit on actuarial loss on defined benefit pension scheme


507

2,676

Other comprehensive expense for the period

          (4,194)

(6,893)

Total comprehensive income for the period

          17,359

8,642





Attributable to:




Equity shareholders of the parent


17,359

8,642



17,359

8,642





 



Consolidated Balance Sheet

As at 26 September 2010



 As at

26 September 2010

As at

27 September

2009



 £'000

£'000





ASSETS




Non-current assets




Intangible assets


91,114

89,605

Property, plant and equipment


19,384

22,260

Available-for-sale investments


 6,114

10,609

Other receivables


 2,306

2,269

Deferred tax asset


 1,097

852

Total non-current assets


120,015

125,595

Current assets




Trading investments


632

644

Trade and other receivables


331,423

441,290

Cash and cash equivalents


87,921

69,271

Total currents assets


419,976

511,205

Total assets


539,991

636,800





LIABILITIES




Current liabilities




Bank overdrafts


 1,046

4,289

Trade and other payables


359,086

468,619

Current tax liabilities


 4,433

1,715

Provisions


 5,420

1,871

Shares to be issued including premium


438

5,056

Total current liabilities


370,423

481,550

Net current assets


49,553

29,655





Non-current liabilities




Retirement benefit obligation


12,498

16,253

Deferred purchase consideration


 1,749

3,221

Provisions


44

172

Shares to be issued including premium


13,661

17,385

Total non-current liabilities


27,952

37,031

Total liabilities


398,375

518,581

Net assets


141,616

118,219





EQUITY




Called up share capital


 2,270

2,122

Share premium account


113,612

94,140

Own shares


 (101)

-

Revaluation reserve


 4,062

6,885

Merger reserve


 4,562

4,562

Profit and loss account


17,211

10,510

Equity attributable to equity holders of the parent


141,616

118,219

 

Consolidated Statement of Changes in Equity

52 week period ended 26 September 2010

 


























 Attributable to the equity shareholders of the parent 


 Called up share capital

 Share premium account

 Own shares

 Revaluation reserve

 Merger reserve

 Profit and loss account

 Total


 £'000

 £'000

 £'000

 £'000

 £'000

 £'000

 £'000









 Balance at 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

 Profit for the period

 -

-

 -

 -

 -

 21,553

21,553

 Other comprehensive income for the period








Deferred and current tax on other comprehensive income

 -

-

 -

1,177

 -

507

1,684

Actuarial loss on defined benefit pension scheme

 -

-

 -

 -

 -

(1,878)

(1,878)

Revaluation of available-for-sale investments

 -

-

 -

 (4,000)

 -

-

(4,000)

 Total comprehensive income for the period

 -

-

 -

 (2,823)

 -

 20,182

17,359

 Dividends 

 -

-

 -

 -

 -

(16,038)

 (16,038)

 Issue of shares

 148

 19,472

 -

 -

 -

-

19,620

 Own shares acquired in the period

 -

-

(101)

 -

 -

-

 (101)

 Share-based payments

 -

-

 -

 -

 -

 2,679

2,679

 Current tax credit on share-based payments

 -

-

 -

 -

 -

23

23

 Deferred tax charge on share-based payments

 -

-

 -

 -

 -

(145)

 (145)

 Balance at 26 September 2010

2,270

 113,612

(101)

4,062

4,562

 17,211

141,616









 



Company Balance Sheet

As at 26 September 2010

 



 As at

26 September 2010

As at

27 September 2009



 £'000

£'000





ASSETS




Non-current assets




Investment in subsidiaries


140,702

141,719

Other receivables


329

329

Total non-current assets


141,031

142,048

Current assets




Trade and other receivables


12,242

 3,739

Cash and cash equivalents


621

291

Total currents assets


12,863

 4,030

Total assets


153,894

146,078





LIABILITIES




Current liabilities




Trade and other payables


 7,447

 7,352

Shares to be issued including premium


438

 5,056

Total current liabilities


 7,885

 12,408

Net current assets/(liabilities)


 4,978

(8,378)





Non-current liabilities




Shares to be issued including premium


13,661

 17,385

Total non-current liabilities


13,661

 17,385

Total liabilities


21,546

 29,793

Net assets


132,348

116,285





EQUITY




Called up share capital


 2,270

 2,122

Share premium account


113,612

 94,140

Own shares


 (101)

-

Merger reserve


 4,847

 4,847

Profit and loss account


11,720

 15,176

Equity attributable to equity holders


132,348

116,285

 

 



Company Statement of Changes in Equity

52 week period ended 26 September 2010

 


 Attributable to the equity shareholders of the parent 


 Called up share capital

 Share premium account

 Own shares

 Merger reserve

 Profit and loss account

 Total


 £'000

 £'000

 £'000

 £'000

 £'000

 £'000








 Balance at 28 September 2008

2,080

 90,145

 -

4,847

19,639

 116,711

 Profit for the period

 -

-

 -

 -

9,878

 9,878

 Total comprehensive income for the period

 -

-

 -

 -

9,878

 9,878

 Dividends 

 -

-

 -

 -

 (15,027)

(15,027)

 Issue of share capital

 42

 3,995

 -

 -

 -

 4,037

 Share-based payments

 -

-

 -

 -

 686

686

 Balance at 27 September 2009

2,122

 94,140

 -

4,847

15,176

 116,285

 Profit for the period

 -

-

 -

 -

9,903

 9,903

 Total comprehensive income for the period

 -

-

 -

 -

9,903

 9,903

 Dividends 

 -

-

 -

 -

 (16,038)

(16,038)

 Issue of shares

 148

 19,472

 -

 -

 -

 19,620

 Own shares acquired in the period

 -

-

(101)

 -

 -

(101)

 Share-based payments

 -

-

 -

 -

2,679

 2,679

 Balance at 26 September 2010

2,270

 113,612

(101)

4,847

11,720

 132,348








 



Consolidated Cash Flow Statement

52 week period ended 26 September 2010

 

 


 52 weeks to

26 September 2010

52 weeks to

27 September 2009


 £'000

 £'000

 Net cash inflow from operating activities

45,114

 37,389




 Cash flows from investing activities



 Purchase of intangible assets - goodwill

 (268)

 (987)

 Purchase of intangible assets - client relationships

(8,048)

(5,360)

 Purchase of intangible assets - software

(5,982)

(5,088)

 Purchases of property, plant and equipment

(7,669)

(4,443)

 Dividend received from available-for-sale investments

188

352

 Net cash used in investing activities


(21,779)

(15,526)




 Cash flows from financing activities



 Dividends paid to equity shareholders

(16,038)

(15,027)

 Purchase of own shares

 (101)

-

 Proceeds on issue of shares

14,697

 1,317

 Net cash used in financing activities


(1,442)

(13,710)




 Net increase in cash and cash equivalents 


21,893

 8,153

 Cash and cash equivalents at the start of period


64,982

 56,829

 Cash and cash equivalents at the end of period


86,875

 64,982









Firm's cash


62,886

43,118

Firm's overdraft


(1,046)

(4,289)

Firm's net cash


61,840

38,829

Client settlement cash


25,035

26,153

Net cash and cash equivalents


86,875

64,982





Cash and cash equivalents shown in current assets


87,921

69,271

Bank overdrafts


(1,046)

(4,289)

Net cash and cash equivalents


86,875

64,982









 



Notes to the Financial Statements

1.

Revenue

 


2010

2009


£'000

£'000


52 weeks

52 weeks




Commission income

98,566

90,650

Financial planning and trail income

34,960

20,225

Corporate Advisory & Broking fees and retainers

10,877

8,297

Investment management fees

90,487

68,069


 234,890

 187,241

 

 

2.

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. All segment income relates to external clients.

52 week period ended 26 September 2010







Discretionary Portfolio Management

 Advisory Portfolio Management

 Total Investment Management

 Corporate Advisory & Broking

 Group


 £'000

 £'000

 £'000

 £'000

 £'000

 Total income

 157,233

 82,779

 240,012

 10,877

 250,889







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

 25,073

 13,201

 38,274

1,545

 39,819

 Contract renewal payments



(2,090)

(101)

(2,191)

 Redundancy costs



(135)

(118)

(253)

 Amortisation of client relationships



(6,349)

 -

(6,349)

 Operating profit





 31,026

 Finance income (net)





840

 Other gains and losses





(495)

 Profit before tax





 31,371







 Other Information






 Capital expenditure



 13,558

93

 13,651

 Depreciation



 10,358

123

 10,481

 Amortisation of intangible asset - software



 1,797

11

 1,808

 Share-based payments



 2,647

32

 2,679







 Segment assets excluding current tax assets



506,578

 33,413

 539,991







 Segment liabilities excluding current tax liabilities



332,577

 33,413

 365,990









 

 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 excluding 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







 

 

3.

Finance income and finance costs

 


2010

2009


52 Weeks

52 Weeks


 £'000

 £'000

Finance income



Dividends from available-for-sale investments

 188

 352

Interest on bank deposits

1,105

2,083


1,293

2,435

Finance costs



Finance cost of deferred consideration

 24

 509

Interest expense on defined pension obligation

 366

 412

Interest on bank overdrafts

 63

 47


 453

 968

 



 

4.

Other gains and losses

 


2010

2009


52 Weeks

52 Weeks


£'000

£'000




Impairment loss recognised on available for sale equity investments

 495

 -

 

 

5.

Taxation

 


2010

2009


52 Weeks

52 Weeks


 £'000

 £'000

United Kingdom



  Current tax

8,711

5,931

  Prior year

(363)

 667

Overseas tax



  Current tax

 153

 174

  Prior year

 -

(246)


8,501

6,526

United Kingdom deferred tax



  Current year

1,142

 531

  Prior year

 175

(653)


9,818

6,404




United Kingdom corporation tax is calculated at 28% (2009: 28%) of the estimated assessable taxable profit for the period.




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





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





Profit before tax

31,371

21,939

Tax at the UK corporation tax rate of 28% (2009: 28%)

8,784

6,143

Tax effect of expenses that are not deductible in determining taxable profit

 474

 493

Tax effect of prior year tax

(363)

 532

Tax effect of prior year deferred tax

 175

(653)

Tax effect of share-based payments

 342

(196)

Tax effect of deferred tax timing differences

 95

 (83)

Tax effect of leasehold property depreciation

 320

 279

Tax effect of prior year leasehold property allowances

 -

(111)

Tax effect of change in tax rate on deferred tax

 (9)

 -

Tax expense

9,818

6,404

Effective tax rate for the year

31%

29%




In addition to the amount charged to the income statement, deferred tax relating to the revaluation of the Group's available-for-sale investments amounting to £1,177,000 (2009: £4,000) has been credited directly to equity and deferred tax relating to the actuarial loss in the defined benefit pension scheme amounting to £507,000 (2009: £2,676,000) has been credited directly to equity. Deferred tax on share-based payments of £145,000 (2009: £75,000) has been credited directly to equity.













 

 

6.

Dividends

 


2010

2009


52 Weeks

52 Weeks


£'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

Interim dividend paid 22 September 2010, 3.55p per share (2009: 3.55p per share)

8,063

7,523


16,038

15,027




Proposed final dividend for the 52 weeks ended 26 September 2010 of 3.55p (2009: 3.55p) per share based on shares in issue at 8 November 2010 (10 November 2009)

8,176

7,537




The proposed final dividend for the 52 week period ended 26 September 2010 of 3.55p per share is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.




 



 

7.

Earnings per share

 

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


2010

2009

Number of shares




'000

'000

Basic



Weighted average number of shares in issue in the period

 223,193

 210,940

Diluted



Weighted average number of options outstanding for the period

1,486

1,271

Estimated weighted average number of shares earned under deferred consideration arrangements

3,628

6,555

Diluted weighted average number of options and shares for the period

 228,307

 218,766




Earnings attributable to ordinary shareholders




£'000

£'000

Profit for the period

21,553

15,535

Redundancy costs

 253

3,638

 less tax

 (71)

 (1,019)

Contract renewal payment (Note b)

2,191

 -

 less tax

(613)

 -

Amortisation of intangible assets - client relationships

6,349

6,566

 less tax

 (1,778)

 (1,838)

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

27,884

22,882




Profit for the period

21,553

15,535

Finance costs of deferred consideration (Note a)

 203

 277

 less tax

 (57)

 (78)

Adjusted fully diluted profit for the period and attributable earnings

21,699

15,734

Redundancy costs

 253

3,638

 less tax

 (71)

 (1,019)

Contract renewal payment (Note b)

2,191

 -

 less tax

(613)

 -

Amortisation of intangible assets - client relationships

6,349

6,566

 less tax

 (1,778)

 (1,838)

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

28,030

23,081




From continuing operations



Basic

9.7p

7.4p




Diluted

9.5p

7.2p







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

Basic

12.5p

10.8p




Diluted

12.3p

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.

 

8.

Notes to the cash flow statement

 


52 weeks to

26 September 2010

52 weeks to

27 September 2009


£'000

£'000

Group



Operating profit

31,026

20,472

Adjustments for:



 Depreciation of property, plant and equipment

10,481

10,153

 Amortisation of intangible assets - client relationships

6,349

6,566

 Amortisation of intangible assets - software

1,808

 674

 Loss on disposal of property, plant and equipment

64

 5

 Intangible asset impairment

 -

 230

 Retirement benefit obligation

(5,633)

(1,267)

 Share-based payment cost

2,679

686

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

24

 509

 Interest income

1,105

2,083

 Interest expense

(453)

(968)

Operating cash flows before movements in working capital

47,450

39,143

 (Increase)/Decrease in receivables and trading investments

(106,395)

161,518

Increase/(Decrease) in payables

109,775

(157,976)

Cash generated by operating activities

50,830

42,685

 Tax paid

(5,716)

(5,296)

Net cash inflow from operating activities

45,114

37,389




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



 

 

9.

Funds

 


 At

26 September 2010

 At

27 September 2009


 £ Billion

 £ Billion

In Group's nominee or sponsored member

 13.8

 11.6

Stock not held in Group's nominee

 0.2

 0.2

Discretionary funds under management

 14.0

 11.8




In Group's nominee or sponsored member

 7.7

 7.2

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

 1.5

 1.5

Advisory funds under management

 9.2

 8.7




Managed funds

 23.2

 20.5







In Group's nominee or sponsored member

 4.0

 3.7

Stock not held in Group's nominee

 0.3

 0.4

Execution only stock

 4.3

 4.1




Total funds

 27.5

 24.6




Stock



In Group's nominee or sponsored member

 25.5

 22.5

Stock not held in Group's nominee

 2.0

 2.1


 27.5

 24.6

 

 

10.

Additional Information

 

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

 

The accounting policies used in arriving at the preliminary figures are consistent with those which will be published in the full financial statements. They are also consistent with those policies which were set out in the Group's Annual Report and Accounts for 2009.

 

 

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

 

This preliminary announcement was approved by the Board on 30 November 2010.

 

The financial information in this press release does not constitute statutory accounts for the period ended 26 September 2010 or 27 September 2009. Statutory accounts for 2009 have been delivered to the Registrar of Companies and those for 2010 will be delivered following the Company's Annual General Meeting. The auditors have reported on the 2009 and 2010 accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

 

Whilst the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRSs in January 2011.

 

 

11.

Annual General Meeting

 

The Annual General Meeting will be held at 12 noon on 25 February 2011 at Merchant Taylors' Hall, 30 Threadneedle Street, London, EC2R 8JB.

 

12.

Going concern

 

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

 

13.

Availability of Annual Report

 

The Annual Report will be posted to shareholders during January 2011.  Copies will be available from the registered office of the Company, 12 Smithfield Street, London, EC1A 9BD.  It will also be available as a download from the Company's website www.brewin.co.uk.  A further notification will be made to advise of posting and publishing on the website.

 

14.

Forward-looking statements

 

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

 


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