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Interim Financial Report

29th May 2013 07:00

RNS Number : 7406F

Brewin Dolphin Holdings PLC

29 May 2013

Brewin Dolphin Holdings PLC

Interim Financial Report

For the Half Year Ended 31 March 2013

Highlights

●	Total managed funds £28.1 billion at 31 March 2013 (30 September 2012: £25.9 billion, 31 March 2012: £25.7 billion).
●	Strong growth in discretionary funds £20.4 billion at 31 March 2013 (30 September 2012: £18.2 billion, 31 March 2012: £17.3 billion).
●	Total adjusted income £139.0 million (31 March 20121: £127.0 million), an increase of 9.4%.
●	Adjusted2 profit before tax £23.8 million (31 March 2012: £18.9 million), an increase of 25.9%.

●	Adjusted2 earnings per share:
	-	Basic earnings per share 7.5p (31 March 2012: 5.8p) an increase of 29.3%.
	-	Diluted earnings per share 7.1p (31 March 2012: 5.5p) an increase of 29.1%.
●	Total income £139.0 million (31 March 2012: £131.4 million) an increase of 5.8%.
●	Profit before tax £6.9 million (31 March 2012: £12.3 million).
●	Earnings per share:
	-	Basic earnings per share 2.2p (31 March 2012: 3.7p).
	-	Diluted earnings per share 2.1p (31 March 2012: 3.5p).

1 the March 2012 income figure has been adjusted to exclude shared revenue which prior to the Retail Distribution Review ("RDR") was recorded as income for Brewin Dolphin with a corresponding operating expense apportioning the income to external parties.

2 these figures have been adjusted to exclude redundancy costs, additional FSCS levy, onerous lease provision and amortisation of client relationships.

Declaration of Interim Dividend

The Board declares a maintained interim dividend of 3.55p per share. The interim dividend is payable on 28 June 2013 to shareholders on the register at the close of business on 14 June 2013 with an ex-dividend date of 12 June 2013.

David Nicol, Chief Executive said

"We are now two years into the transformation and growth strategy announced in 2011. We have made good progress against our stated objectives including delivering strong growth in funds under management. Our strategy has two main objectives: continued strong growth and increased efficiency. These objectives are underpinned by a series of initiatives to transform the business which will improve efficiency, ensure it is best placed to meet regulatory demands, and at the same time continue to enhance client service and improve shareholder returns.

In a separate announcement today, we have announced the intention to raise up to circa £40 million via a placing. The new capital will provide us with additional investment capacity, enabling us to accelerate the implementation of our on-going strategy, capitalise on our competitive position and drive future growth in earnings and shareholder returns."

For further information

David Nicol, Chief Executive

Brewin Dolphin Holdings PLC

020 7248 4400

Andrew Westenberger, Finance Director

Brewin Dolphin Holdings PLC

020 7248 4400

Andrew Hayes/Wendy Baker

Hudson Sandler

020 7796 4133Interim Management Report

To the members of Brewin Dolphin Holdings PLC

Results and review of the past six months

Overall the Group has made significant progress against our stated objectives. Underlying profit before tax (excluding redundancy costs, additional FSCS levy, onerous lease provision and amortisation of client relationships) grew strongly by 26% to £23.8 million (H1 2012: £18.9 million). The strong underlying profit growth was driven by increased income, 9% higher than the same period last year, together with improved efficiency as reflected in the increase in adjusted profit before tax margin to 17% from 15% in the previous period.

Profit before tax for the first half of 2013 was £6.9 million (H1 2012: £12.3 million), 44% lower than the same period last year. This decline resulted from both significant restructuring costs and material provisions for onerous leases which are explained below.

	Unaudited 26 weeks to 31 March 2013	Unaudited 26 weeks to 31 March 2012	% Change
	£'000	£'000
Total income1	138,983	127,014	9%
Salaries	(53,436)	(47,050)	14%
Other operating costs2	(42,087)	(44,583)	-6%
Adjusted profit before profit share3	43,460	35,381	23%
Profit share	(20,091)	(16,463)	22%
Adjusted operating profit3	23,369	18,918	24%
Net finance income and other gains and losses	414	(17)
Adjusted profit before tax3	23,783	18,901	26%
Redundancy costs	(3,378)	(87)
Additional FSCS levy	(1,107)	(553)
Onerous lease provision	(5,882)	-
Amortisation of client relationships	(6,494)	(5,954)
Profit before tax	6,922	12,307	-44%
Taxation	(1,656)	(3,533)
Profit after tax	5,266	8,774

Earnings per share
Basic earnings per share	2.2p	3.7p	-41%
Diluted earnings per share	2.1p	3.5p	-40%

Adjusted earnings per share 3
Basic earnings per share	7.5p	5.8p	29%
Diluted earnings per share	7.1p	5.5p	29%


1 March 2012 income figure has been adjusted to exclude shared revenue which prior to RDR was recorded as income for Brewin Dolphin with a corresponding operating expense apportioning the income to external parties.
2 March 2012 operating expenses have been amended in line with note 1 above.
3 these figures have been adjusted to exclude redundancy costs, additional FSCS levy, onerous lease provision and amortisation of client relationships.

Total managed funds were up 8.5% to £28.1 billion and discretionary funds up 12.1% to £20.4 billion at 31 March 2013.

Funds under management
	Advisory	Discretionary	Total managed funds
	£ billion	£ billion	£ billion
Value of funds at 30 September 2012	7.7	18.2	25.9
Inflows	0.2	1.1	1.3
Outflows	(0.4)	(0.5)	(0.9)
Transfers	(0.3)	-	(0.3*)
Market movement	0.5	1.6	2.1
Value of funds at 31 March 2013	7.7	20.4	28.1
% increase in funds since 30 September 2012	nil	12.1%	8.5%
*£0.2m transferred to Execution Only service

Whilst average market levels were 4% higher than the same period last year, overall income growth exceeded that rise due primarily to the continued strong net inflow in funds under management as well as the on-going transitioning to a new national rate card.

This was offset by the reduction in net interest earned of £1.8 million as a result of declining margins on cash deposits and £6.0 million decline in trail income, following the planned move away from trail paying unit trusts as part of our RDR readiness.

A significant restructuring exercise of the head office functions was conducted towards the end of the period resulting in a £3 million redundancy cost which, together with redundancies earlier in the period, has resulted in an overall redundancy charge of £3.4 million. This is offset by an on-going staff cost saving of £6 million per annum.

An onerous lease provision of £5.9 million has been made in respect of surplus office space which the Group may not be able to sub-let in the short term.

Strategy

The Group is now two years into the transformation and growth strategy announced in 2011. The strategy has two main objectives: continued strong growth and increased efficiency. These objectives are underpinned by a series of initiatives to transform the business which will improve efficiency, ensure it is best placed to meet regulatory demands, and at the same time continue to enhance client service and improve shareholder returns.

Overall the business has made significant progress against the objectives set. Growth in funds under management and income has continued, reflecting the success in focusing on discretionary management services. The transfer to a new pricing structure is largely completed.

Efforts to improve efficiency have been focused on strengthening general cost discipline and implementing a new core software system to enable the rebasing of operational support and technology costs.

Work to design the new systems architecture has continued in the period and is now mostly complete. Although some delays have been encountered, the focus has been on ensuring that the design of the new systems is optimal. Implementation is due to commence in the final quarter of this financial year and to complete by the end of 2014. Although this is some nine months later than initially planned, the benefits of enhanced client service and greater efficiency through lower operating support costs will be greater than originally anticipated and will provide a solid base on which to build the business for continued growth. Benefits will begin to be materially achieved in the second half of 2014.

The target to increase margin to 20% is on track to be reached, with the full benefits coming through into the 2015 financial year.

Board

Andrew Westenberger was appointed as Finance Director on 1 January 2013, following the retirement of Robin Bayford. On 21 March 2013 Simon Miller was appointed Chairman, David Nicol Chief Executive and Stephen Ford an Executive Director, responsible for Investment Management. At the same time, Jamie Matheson, Barry Howard, Henry Algeo, Ben Speke and Sarah Soar stepped down from the Board.

Dividend

A maintained interim dividend of 3.55p per share will be paid on 28 June 2013 to shareholders on the register on 14 June 2013.

Related party transactions

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

Going concern

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

Principal risks and uncertainties

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

Outlook

Improved equity market sentiment and early signs of a return in broader economic confidence are resulting in increasingly positive trading conditions. The Group's strategy of continued growth in its client base, whilst focusing also on further improving efficiency and client service through disciplined investment, means that it is well placed to take advantage of this environment.

David Nicol

Chief Executive

28 May 2013

Condensed Consolidated Income Statement

for the 26 week period ended 31 March 2013

		Unaudited 26 weeks to 31 March 2013	Unaudited 26 weeks to 31 March 2012	Audited 52 weeks to 30 September 2012
	Note	£'000	£'000	£'000
Continuing operations
Revenue		132,193	122,812	253,112
Other operating income		6,790	8,566	16,419
Total income	5	138,983	131,378	269,531

Staff costs		(73,527)	(63,513)	(133,242)
Redundancy costs		(3,378)	(87)	(570)
Additional FSCS levy		(1,107)	(553)	(553)
Onerous lease provision		(5,882)	-	-
Amortisation of intangible assets - client relationships	10	(6,494)	(5,954)	(11,871)
Other operating costs		(42,087)	(48,947)	(94,196)
Operating expenses		(132,475)	(119,054)	(240,432)

Operating profit		6,508	12,324	29,099
Finance income	6	612	554	1,661
Other gains and losses		(13)	(13)	(74)
Finance costs	6	(185)	(558)	(803)
Profit before tax	5	6,922	12,307	29,883
Tax	7	(1,656)	(3,533)	(8,389)
Profit for the period from continuing operations		5,266	8,774	21,494

Discontinued operations
Loss for the period from discontinued operations	18	-	(3,172)	(3,092)
Profit for the period		5,266	5,602	18,402

Attributable to:
Equity shareholders of the parent from continuing operations		5,266	5,602	18,402
		5,266	5,602	18,402

Earnings per share

From continuing operations
Basic	8	2.2p	3.7p	9.1p
Diluted	8	2.1p	3.5p	8.6p

Condensed Consolidated Statement of Comprehensive Income

for the 26 week period ended 31 March 2013

	Unaudited 26 weeks to 31 March 2013	Unaudited 26 weeks to 31 March 2012	Audited 52 weeks to 30 September 2012
	£'000	£'000	£'000
Profit for the period	5,266	5,602	18,402
Items that will not be reclassified subsequently to profit and loss:
Actuarial loss on defined benefit pension scheme	(1,126)	(3,247)	(5,063)
Deferred tax credit on actuarial loss on defined benefit pension scheme	259	779	1,164
	(867)	(2,468)	(3,899)
Items that may be reclassified subsequently to profit and loss:
Gain on revaluation of available-for-sale investments	875	-	-
Deferred tax (charge)/credit on revaluation of available-for-sale investments	(201)	112	167
Exchange differences on translation of foreign operations	163	(66)	(196)
	837	46	(29)
Other comprehensive income for the period	(30)	(2,422)	(3,928)
Total comprehensive income for the period	5,236	3,180	14,474

Attributable to:
Equity shareholders of the parent	5,236	3,180	14,474
	5,236	3,180	14,474

Condensed Consolidated Statement of Changes in Equity

for the 26 week period ended 31 March 2013

	Attributable to the equity shareholders of the parent
	Called up share capital	Share premium account	Own shares	Revaluation reserve	Merger reserve	Profit and loss account	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000

26 week period ended 31 March 2013
Balance at 30 September 2012	2,469	124,271	(12,569)	4,285	22,950	21,331	162,737
Profit for the period	-	-	-	-	-	5,266	5,266
Other comprehensive income for the period
Gain on revaluation of available-for-sale investments	-	-	-	875	-	-	875
Deferred and current tax on other comprehensive income	-	-	-	(201)	-	259	58
Actuarial loss on defined benefit pension scheme	-	-	-	-	-	(1,126)	(1,126)
Exchange differences on translation of foreign operations	-	-	-	-	-	163	163
Total comprehensive income for the period	-	-	-	674	-	4,562	5,236
Dividends	-	-	-	-	-	(8,755)	(8,755)
Issue of shares	44	7,872	-	-	-	-	7,916
Own shares acquired in the period	-	-	(102)	-	-	-	(102)
Share-based payments	-	-	-	-	-	2,729	2,729
Current tax charge on share-based payments	-	-	-	-	-	1	1
Deferred tax charge on share-based payments	-	-	-	-	-	50	50
Balance at 31 March 2013	2,513	132,143	(12,671)	4,959	22,950	19,918	169,812

26 week period ended 31 March 2012
Balance at 30 September 2011	2,405	116,028	(10,686)	4,118	22,950	19,970	154,785
Profit for the period	-	-	-	-	-	5,602	5,602
Other comprehensive income for the period
Deferred and current tax on other comprehensive income	-	-	-	112	-	779	891
Actuarial loss on defined benefit pension scheme	-	-	-	-	-	(3,247)	(3,247)
Exchange differences on translation of foreign operations	-	-	-	-	-	(66)	(66)
Total comprehensive income for the period	-	-	-	112	-	3,068	3,180
Dividends	-	-	-	-	-	(8,412)	(8,412)
Issue of shares	45	5,752	-	-	-	-	5,797
Own shares acquired in the period	-	-	(1,777)	-	-	-	(1,777)
Share-based payments	-	-	-	-	-	1,332	1,332
Deferred tax credit on share-based payments	-	-	-	-	-	138	138
Balance at 31 March 2012	2,450	121,780	(12,463)	4,230	22,950	16,096	155,043

52 week period ended 30 September 2012
Balance at 30 September 2011	2,405	116,028	(10,686)	4,118	22,950	19,970	154,785
Profit for the period	-	-	-	-	-	18,402	18,402
Other comprehensive income for the period
Deferred and current tax on other comprehensive income	-	-	-	167	-	1,164	1,331
Actuarial loss on defined benefit pension scheme	-	-	-	-	-	(5,063)	(5,063)
Exchange differences on translation of foreign operations	-	-	-	-	-	(196)	(196)
Total comprehensive income for the period	-	-	-	167	-	14,307	14,474
Dividends	-	-	-	-	-	(16,887)	(16,887)
Issue of shares	64	8,243	-	-	-	-	8,307
Own shares acquired in the period	-	-	(1,891)	-	-	-	(1,891)
Own shares disposed of on exercise of options	-	-	8	-	-	(8)	-
Share-based payments	-	-	-	-	-	3,852	3,852
Current tax charge on share-based payments	-	-	-	-	-	193	193
Deferred tax credit on share-based payments	-	-	-	-	-	(96)	(96)
Balance at 30 September 2012	2,469	124,271	(12,569)	4,285	22,950	21,331	162,737

Condensed Consolidated Balance Sheet

as at 31 March 2013

		Unaudited as at 31 March 2013	Unaudited as at 31 March 2012	Audited as at 30 September 2012
	Note	£'000	£'000	£'000
ASSETS
Non-current assets
Intangible assets	10	128,741	111,306	120,930
Property, plant and equipment	11	14,758	15,765	15,951
Available-for-sale investments	12	6,875	6,074	6,013
Other receivables		2,248	2,289	2,215
Deferred tax asset		1,254	2,229	860
Total non-current assets		153,876	137,663	145,969
Current assets
Trading investments	12	863	812	759
Trade and other receivables		277,625	305,918	227,671
Cash and cash equivalents		73,697	64,663	71,827
Total current assets		352,185	371,393	300,257
Total assets		506,061	509,056	446,226

LIABILITIES
Current liabilities
Bank overdrafts		584	401	243
Trade and other payables		298,347	313,617	248,555
Current tax liabilities		1,868	2,341	2,249
Provisions	13	3,535	4,895	1,887
Shares to be issued including premium	14	2,636	6,675	5,858
Total current liabilities		306,970	327,929	258,792
Net current assets		45,215	43,464	41,465

Non-current liabilities
Retirement benefit obligation	15	9,496	9,224	9,754
Deferred purchase consideration		1,579	1,611	1,525
Provisions	13	4,364	-	-
Shares to be issued including premium	14	13,840	15,249	13,418
Total non-current liabilities		29,279	26,084	24,697
Total liabilities		336,249	354,013	283,489
Net assets		169,812	155,043	162,737

EQUITY
Called up share capital	16	2,513	2,450	2,469
Share premium account	16	132,143	121,780	124,271
Own shares		(12,671)	(12,463)	(12,569)
Revaluation reserve		4,959	4,230	4,285
Merger reserve		22,950	22,950	22,950
Profit and loss account		19,918	16,096	21,331
Equity attributable to equity holders of the parent		169,812	155,043	162,737

Condensed Consolidated Cash Flow Statement

for the 26 week period ended 31 March 2013

		Unaudited 26 weeks to 31 March 2013	Unaudited 26 weeks to 31 March 2012	Audited 52 weeks to 30 September 2012
	Note	£'000	£'000	£'000
Net cash inflow/(outflow) from operating activities	17	13,467	(9,799)	34,979

Cash flows from investing activities
Purchase of intangible assets - client relationships		(3,079)	(2,697)	(6,878)
Purchase of intangible assets - software		(9,098)	(2,713)	(16,356)
Purchases of property, plant and equipment	11	(1,708)	(4,154)	(7,412)
Dividend received from available-for-sale investments		-	-	278
Net cash used in investing activities		(13,885)	(9,564)	(30,368)

Cash flows from financing activities
Dividends paid to equity shareholders		-	-	(16,887)
Purchase of own shares		(102)	(1,777)	(1,891)
Proceeds on issue of shares		2,049	372	721
Net cash generated by/(used in) financing activities		1,947	(1,405)	(18,057)

Net increase/(decrease) in cash and cash equivalents		1,529	(20,768)	(13,446)
Cash and cash equivalents at the start of period		71,584	85,030	85,030
Cash and cash equivalents at the end of period		73,113	64,262	71,584


Firm's cash		45,739	42,775	48,003
Firm's overdraft		(584)	(401)	(243)
Firm's net cash		45,155	42,374	47,760
Client settlement cash		27,958	21,888	23,824
Net cash and cash equivalents		73,113	64,262	71,584

Cash and cash equivalents shown in current assets		73,697	64,663	71,827
Bank overdrafts		(584)	(401)	(243)
Net cash and cash equivalents		73,113	64,262	71,584

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

Notes to the Condensed Set of Financial Statements

1.	General information

Brewin Dolphin Holdings PLC (the "Company") is a public limited company incorporated in the United Kingdom. The shares of the Company are listed on the London Stock Exchange. The address of its registered office is 12 Smithfield Street, London EC1A 9BD. This Interim Financial Report was approved for issue on 28 May 2013.

A copy of this Interim Financial Report including Condensed Financial Statements for the 26 week period ended 31 March 2013 is available at the Company's registered office and a copy will be posted to shareholders.

The information for the 52 week period ended 30 September 2012 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 auditor reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

2.	Accounting policies

Basis of preparation

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

The condensed set of financial statements included in this Interim Financial Report for the 26 week period ended 31 March 2013 should be read in conjunction with the annual audited financial statements of Brewin Dolphin Holdings PLC for the 52 week period ended 30 September 2012.

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

Going concern

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

Changes in accounting policy and disclosure

The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest annual audited financial statements for the 52 week period ended 30 September 2012.

3.	Related party transactions

There have been no related party transactions that have taken place in the period that have materially affected the financial position or the performance of the Group during the period and no changes to related party transactions from those disclosed in the 2012 Annual Report and Accounts available via our website www.brewin.co.uk that could have a material effect on the financial position or the performance of the Group. Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed. There were no other transactions with related parties which were not part of the Group during the period, with the exception of remuneration paid to key management personnel.

4.	Principal risks and uncertainties

The Directors consider that the nature of the principal risks and uncertainties which may have a material effect on the Group's performance during the remainder of its financial year remain unchanged from those identified on pages 26 and 27 of the 2012 Annual Report and Accounts available via our website www.brewin.co.uk.

The inherent risk to our business which has a direct impact on revenue, remains adverse movements in the market in the short term. The other major financial and non-financial risks identified in the 2012 Annual Report and Accounts were:

Risk Type	Risk
Earnings Risk	Loss of client facing staff
Legal and Regulatory Risk	Changing regulatory environment and regulatory breaches; poor advice/portfolio performance (including mis-selling)
Operational and IT risk	Business continuity; electronic dealing errors (e.g. fat fingers); project control; significant strategic change

5.	Segmental information

For management purposes the Group has one business stream: Investment Management. This forms the reportable segment of the Group for the period.

During the 52 week period ended 30 September 2012, the Group had one business stream from 2 February 2012: Investment Management. Prior to 2 February 2012, it had two business streams: Investment Management and Corporate Advisory and Broking which was discontinued (see Note 18).

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

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

26 week period ended 31 March 2013

	Discretionary Portfolio Management	Advisory Portfolio Management	Total Investment Management
	£'000	£'000	£'000

Total income	101,231	37,752	138,983

Operating profit before redundancy costs, additional FSCS levy, onerous lease provision and amortisation of client relationships	17,021	6,348	23,369
Redundancy costs			(3,378)
Additional FSCS levy			(1,107)
Onerous lease provision			(5,882)
Amortisation of client relationships			(6,494)
Operating profit			6,508
Finance income (net)			427
Other gains and losses			(13)
Profit before tax			6,922

Other Information:
Capital expenditure			10,806
Depreciation			2,895
Amortisation of intangible asset - software			1,768
Share-based payments			2,729

Segment assets excluding current tax assets			506,061
Segment liabilities excluding current tax liabilities			334,381

26 week period ended 31 March 2012
			Continuing operations	Discontinued operations
	Discretionary Portfolio Management	Advisory Portfolio Management	Total Investment Management	Corporate Advisory and Broking	Group
	£'000	£'000	£'000	£'000	£'000

Total income	91,913	39,465	131,378	1,088	132,466

Operating profit before redundancy costs, additional FSCS levy, onerous lease provision and amortisation of client relationships	13,235	5,683	18,918	(2,054)	16,864
Redundancy costs			(87)	(47)	(134)
Additional FSCS levy			(553)	-	(553)
Amortisation of client relationships			(5,954)	-	(5,954)
Operating profit			12,324	(2,101)	10,223
Finance income (net)			(4)	-	(4)
Other gains and losses			(13)	-	(13)
Cost of separation			-	(1,772)	(1,772)
Profit/(loss) before tax			12,307	(3,873)	8,434

Other Information:
Capital expenditure			6,867	-	6,867
Depreciation			4,120	40	4,160
Amortisation of intangible asset - software			1,684	-	1,684
Share-based payments			1,332	-	1,332

Segment assets excluding current tax assets			509,056	-	509,056
Segment liabilities excluding current tax liabilities			351,672	-	351,672

52 week period ended 30 September 2012
			Continuing operations	Discontinued operations
	Discretionary Portfolio Management	Advisory Portfolio Management	Total Investment Management	Corporate Advisory and Broking	Group
	£'000	£'000	£'000	£'000	£'000

Total income	191,460	78,071	269,531	1,235	270,766

Operating profit before redundancy costs, additional FSCS levy, onerous lease provision and amortisation of client relationships	29,901	12,192	42,093	(2,317)	39,776
Additional FSCS levy			(553)	-	(553)
Redundancy costs			(570)	(47)	(617)
Amortisation of client relationships			(11,871)	-	(11,871)
Operating profit/(loss)			29,099	(2,364)	26,735
Finance income (net)			858	-	858
Other gains and losses			(74)	-	(74)
Costs of separation			-	(1,143)	(1,143)
Profit/(loss) before tax			29,883	(3,507)	26,376

Other Information
Capital expenditure			23,768	-	23,768
Depreciation			7,174	40	7,214
Amortisation of intangible asset - software			3,563	-	3,563
Share-based payments			3,852	-	3,852

Segment assets excluding current tax assets			446,226	-	446,226
Segment liabilities excluding current tax liabilities			256,543	-	256,543

6.	Finance income and costs


	Unaudited 26 weeks to 31 March 2013	Unaudited 26 weeks to 31 March 2012	Audited 52 weeks to 30 September 2012
	£'000	£'000	£'000
Finance income
Dividends from available-for-sale investments	-	-	278
Interest on bank deposits	612	554	1,383
	612	554	1,661

Finance costs
Finance cost of deferred consideration	62	164	192
Interest expense on defined pension obligation	116	373	581
Interest on bank overdrafts	7	21	30
	185	558	803

Taxation

	U.K.		Overseas tax		U.K. deferred tax
	Current tax	Prior period	Current tax	Prior period	Current year	Prior period	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Unaudited 26 weeks to 31 March 2013
Continuing operations	1,498	328	113	-	(11)	(272)	1,656
Discontinued operations	-	-	-	-		-	-
	1,498	328	113	-	(11)	(272)	1,656

Unaudited 26 weeks to 31 March 2012
Continuing operations	3,498	556	122	-	63	(706)	3,533
Discontinued operations	(701)	-	-	-		-	(701)
	2,797	556	122	-	63	(706)	2,832

Audited 52 weeks to 30 September 2012
Continuing operations	6,650	554	261	-	1,140	(216)	8,389
Discontinued operations	(617)	-	-	-		202	(415)
	6,033	554	261	-	1,140	(14)	7,974

8.	Earnings per share

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

	Unaudited 26 weeks to 31 March 2013	Unaudited 26 weeks to 31 March 2012	Audited 52 weeks to 30 September 2012

Number of shares
Basic
Weighted average number of shares in issue in the period	241,421	235,712	236,921
Diluted
Weighted average number of options outstanding for the period	11,570	7,434	7,996
Estimated weighted average number of shares earned under deferred consideration arrangements	1,796	6,328	6,374
Diluted weighted average number of options and shares for the period	254,787	249,474	251,291


Earnings attributable to ordinary shareholders
Continuing operations
	£'000	£'000	£'000
Profit for the period from continuing operations	5,266	8,774	21,494
Redundancy costs	3,378	87	570
less tax	(794)	(22)	(143)
Additional FSCS levy	1,107	553	553
less tax	(260)	(138)	(138)
Onerous lease provision	5,882	-	-
less tax	(1,382)	-	-
Amortisation of intangible assets - client relationships	6,494	5,954	11,871
less tax	(1,526)	(1,488)	(2,968)
Adjusted basic profit for the period and attributable earnings excluding redundancy costs, additional FSCS levy, onerous lease provision and amortisation of client relationships	18,165	13,720	31,239


Profit for the period from continuing operations	5,266	8,774	21,494
Finance costs of deferred consideration (Note a)	19	95	115
less tax	(4)	(24)	(29)
Adjusted fully diluted profit for the period and attributable earnings	5,281	8,845	21,580
Redundancy costs	3,378	87	570
less tax	(794)	(22)	(143)
Additional FSCS levy	1,107	553	553
less tax	(260)	(138)	(138)
Onerous lease provision	5,882	-	-
less tax	(1,382)	-	-
Amortisation of intangible assets - client relationships	6,494	5,954	11,871
less tax	(1,526)	(1,488)	(2,968)
Adjusted basic profit for the period and attributable earnings excluding redundancy costs, additional FSCS levy, onerous lease provision and amortisation of client relationships	18,180	13,791	31,325

From continuing operations

Basic	2.2p	3.7p	9.1p
Diluted	2.1p	3.5p	8.6p


From continuing operations excluding redundancy costs, additional FSCS levy, onerous lease provision and amortisation of client relationships
Basic	7.5p	5.8p	13.2p
Diluted	7.1p	5.5p	12.5p

a) Finance costs of deferred consideration are added back where the issue of shares is more dilutive than the interest cost saved.
	Unaudited 26 weeks to 31 March 2013	Unaudited 26 weeks to 31 March 2012	Audited 52 weeks to 30 September 2012
Earnings attributable to ordinary shareholders
Continuing and discontinued operations
	£'000	£'000	£'000
Profit for the period from continuing and discontinued operations	5,266	5,602	18,402
Redundancy costs	3,378	134	617
less tax	(794)	(34)	(154)
Additional FSCS levy	1,107	553	553
less tax	(260)	(138)	(138)
Onerous lease provision	5,882	-	-
less tax	(1,382)	-	-
Amortisation of intangible assets - client relationships	6,494	5,954	11,871
less tax	(1,526)	(1,488)	(2,968)
Adjusted basic profit for the period and attributable earnings excluding redundancy costs, additional FSCS levy, onerous lease provision and amortisation of client relationships	18,165	10,583	28,183


Profit for the period	5,266	5,602	18,402
Finance costs of deferred consideration (Note a above)	19	95	115
less tax	(4)	(24)	(29)
Adjusted fully diluted profit for the period and attributable earnings	5,281	5,673	18,488
Redundancy costs	3,378	134	617
less tax	(794)	(34)	(154)
Additional FSCS levy	1,107	553	553
less tax	(260)	(138)	(138)
Onerous lease provision	5,882	-	-
less tax	(1,382)	-	-
Amortisation of intangible assets - client relationships	6,494	5,954	11,871
less tax	(1,526)	(1,488)	(2,968)
Adjusted basic profit for the period and attributable earnings excluding redundancy costs, additional FSCS levy, onerous lease provision and amortisation of client relationships	18,180	10,654	28,269

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

From continuing and discontinued operations
Basic	2.2p	2.4p	7.8p
Diluted	2.1p	2.3p	7.4p


From continuing and discontinued operations excluding redundancy costs, additional FSCS levy, onerous lease provision and amortisation of client relationships
Basic	7.5p	4.5p	11.9p
Diluted	7.1p	4.3p	11.2p

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

From discontinued operations
Basic	nil	(1.3p)	(1.3p)
Diluted	nil	(1.2p)	(1.2p)

Dividends

	Unaudited 26 weeks to 31 March 2013	Unaudited 26 weeks to 31 March 2012	Audited 52 weeks to 30 September 2012
	£'000	£'000	£'000
Amounts recognised as distributions to equity shareholders in the period:

Final dividend paid 8 April 2013*, 3.6p per share (2012: 3.55p per share)	8,755	8,412	8,412
Interim dividend paid 21 September 2012, 3.55p per share	-	-	8,475
	8,755	8,412	16,887
* approved at Annual General Meeting on 22 February 2013

An interim dividend of 3.55p per share was declared by the Board on 28 May 2013 and has not been included as a liability as at 31 March 2013. This interim dividend will be paid on 28 June 2013 to shareholders on the register at the close of business on 14 June 2013 with an ex-dividend date of 12 June 2013.

10.	Intangible assets

	Goodwill	Client relationships	Software development costs	Purchased software	Total
	£'000	£'000	£'000	£'000	£'000
Cost
At 30 September 2011	48,637	90,485	1,134	13,083	153,339
Additions	-	3,465	86	2,627	6,178
Revaluation of shares to be issued and deferred purchase consideration in respect of acquisitions in prior periods	-	(3,039)	-	-	(3,039)
At 31 March 2012	48,637	90,911	1,220	15,710	156,478
Additions	-	4,200	388	13,255	17,843
Disposals	-	-	-	(90)	(90)
Revaluation of shares to be issued and deferred purchase consideration in respect of acquisitions in prior periods	-	(421)	-	-	(421)
At 30 September 2012	48,637	94,690	1,608	28,875	173,810
Additions	-	4,330	517	8,581^	13,428
Exchange differences	-	9	-	-	9
Revaluation of shares to be issued and deferred purchase consideration in respect of acquisitions in prior periods	-	2,636	-	-	2,636
At 31 March 2013	48,637	101,665	2,125	37,456	189,883
^ £8.5m relates to purchased software acquired in the period which is under development and not yet in use; in total there is £23.5m which is not yet in use.


Accumulated amortisation and impairment
At 30 September 2011	-	31,606	458	5,470	37,534
Amortisation charge for the period	-	5,954	149	1,535	7,638
Impairment losses for the period	-	-	-	-	-
At 31 March 2012	-	37,560	607	7,005	45,172
Amortisation charge for the period	-	5,917	155	1,724	7,796
Eliminated on disposal	-	-	-	(88)	(88)
Impairment losses for the period	-	-	-	-	-
At 30 September 2012	-	43,477	762	8,641	52,880
Amortisation charge for the period	-	6,414	156	1,612	8,182
Impairment losses for the period	-	80	-	-	80
At 31 March 2013	-	49,971	918	10,253	61,142


Net book value
At 30 September 2011	48,637	58,879	676	7,613	115,805
At 31 March 2012	48,637	53,351	613	8,705	111,306
At 30 September 2012	48,637	51,213	846	20,234	120,930
At 31 March 2013	48,637	51,694	1,207	27,203	128,741

11.	Property, plant and equipment

During the period the Group spent £0.6 million (26 weeks to 30 March 2012: £1.2 million, 52 weeks to 30 September 2012: £1.6 million) on leasehold improvements, £0.8 million (26 weeks to 30 March 2012: £1.5 million, 52 weeks to 30 September 2012: £3.8 million) on computer equipment and £0.3 million (26 weeks to 30 March 2012: £1.4 million, 52 weeks to 30 September 2012: £2.0 million) on office equipment. The depreciation charge for the period was £2.9m (30 March 2012: £4.1m, 30 September 2012: £7.2m).

12.	Investments

Available-for-sale investments
	Listed investments	Unlisted investments	Total
	£'000	£'000	£'000
Fair value

At 31 March 2013	-	6,875	6,875
At 31 March 2012	74	6,000	6,074
At 30 September 2012	13	6,000	6,013

The unlisted available-for-sale investments are in Euroclear plc and N+1 Singer Limited (see note 18).

The holding in Euroclear plc is as a result of a £431,000 strategic investment in Crest, the London based settlement system. Crest was taken over by Euroclear plc and the resultant stake in Euroclear plc was 0.52% of its share capital or 19,899 ordinary shares. As at 30 September 2012 the Directors updated their valuation of the Group's holding in Euroclear plc; the valuation is £6 million (30 March 2012: £6 million, 30 September 2012: £6 million). This valuation takes into account a number of different valuation methods including dividend yield.

The N+1 Singer Limited is valued by the Directors at £875,000 (30 March 2012: n/a, 30 September 2012: £nil). This valuation takes into account a number of different valuation methods.

Trading investments
	Listed investments	Unlisted investments	Total
	£'000	£'000	£'000
Fair value

At 31 March 2013	863	-	863
At 31 March 2012	812	-	812
At 30 September 2012	759	-	759

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

13.	Provisions

			Unaudited as at 31 March 2013	Unaudited as at 31 March 2012	Audited as at 30 September 2012
	Sundry claims and associated costs	Onerous leases	Total	Total	Total
	£'000	£'000	£'000	£'000	£'000
At start of period	1,887	-	1,887	5,931	5,931
Additions	888	5,882	6,770	1,004	1,199
Utilisation of provision	(292)	-	(292)	(623)	(3,848)
Unused amounts reversed during the period	(466)	-	(466)	(1,417)	(1,395)
At end of period	2,017	5,882	7,899	4,895	1,887

Provisions
Included in current liabilities	2,017	1,518	3,535	4,895	1,887
Included in non-current liabilities	-	4,364	4,364	-	-
	2,017	5,882	7,899	4,895	1,887

The timing of settlements in relation to sundry claims and associated costs cannot be accurately forecast; settlement of £0.3m (27 March 2012: £nil, 30 September 2012: £nil) has been made since the balance sheet date. The onerous lease provision of £5.9m is in respect of surplus office space which the Group may not be able to sublet in the short term.

14.	Shares to be issued including premium and other deferred purchase liabilities

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

15.	Retirement benefit obligation

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

	As at 31 March 2013	As at 31 March 2012	As at 30 September 2012
Discount rate	4.40%	4.70%	4.50%
Rate of inflation (RPI)	3.40%	4.70%	2.90%
Rate of inflation (CPI)	2.40%	2.35%	1.90%
Salary increases	3.40%	3.10%	2.90%
Rate of increase to pensions in payment	3.30%	3.10%	2.90%
Expected return on equities	6.50%	7.00%	6.40%
Expected return on bonds	3.50%	4.00%	3.40%
Expected return on other assets	0.50%	0.50%	0.50%


Average assumed life expectancies for members on retirement at age 65
Existing pensioners
Males	88.8 years	87.5 years	88.7 years
Females	90.0 years	89.0 years	89.9 years
Future pensioners
Males	90.1 years	88.7 years	90.0 years
Females	91.5 years	90.1 years	91.4 years

A full actuarial valuation was carried out as at 1 January 2012 and the results of this valuation have been updated to 31 March 2013 by a qualified independent actuary.

16.	Called up share capital

The following movements in share capital occurred during the period:

	Date	No. of Fully Paid Shares	No. of Nil Paid Shares	Exercise/ Issue Price (pence)	Called up share capital	Share premium account	Total
					£'000	£'000	£'000
At 30 September 2012		246,962,243	2,396,098		2,469	124,271	126,740
Settlement of deferred consideration	6 December 2012	3,079,997		190.5p	31	5,837	5,868
Issue of options	Various	895,291	-	37.5p-175.25p	9	1,382	1,391
Nil paid shares now paid up	Various	436,643	(436,643)	103.3p-217.5p	4	665	669
Cost of issue of shares		-	-			(12)	(12)
At 31 March 2013		251,374,174	1,959,455		2,513	132,143	134,656

17.	Note to the cash flow statement

	Unaudited 26 weeks to 31 March 2013	Unaudited 26 weeks to 31 March 2012	Audited 52 weeks to 30 September 2012
	£'000	£'000	£'000
Operating profit from continuing operations	6,508	12,324	29,099
Loss for the period from discontinued operations (note 18)	-	(3,873)	(3,507)
Adjustments for:
Depreciation of property, plant and equipment	2,895	4,160	7,214
Amortisation of intangible assets - client relationships	6,414	5,954	11,871
Amortisation of intangible assets - software	1,768	1,684	3,563
Loss on disposal of property, plant and equipment	6	98	105
Intangible asset impairment	80	-	-
Retirement benefit obligation	(1,384)	(1,124)	(2,410)
Share-based payment cost	2,729	1,334	3,852
Translation adjustments	163	(66)	(196)
Own shares disposed of on exercise of options	-	-	(8)
Unwind of discount of shares to be issued and deferred purchase consideration	62	164	192
Interest income	612	554	1,383
Interest expense	(185)	(558)	(803)
Operating cash flows before movements in working capital	19,668	20,651	50,355
Increase/(decrease) in payables and trading investments	46,212	35,480	(24,375)
(Increase)/decrease in receivables and trading investments	(50,091)	(63,375)	14,910
Cash generated/(used) by operating activities	15,789	(7,244)	40,890
Tax paid	(2,322)	(2,555)	(5,911)
Net cash inflow/(outflow) from operating activities	13,467	(9,799)	34,979

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

18.	Discontinued Operations

The disposal of the Corporate Advisory and Broking division was completed on 1 February 2012. At this date, the Group received a 14% preferred interest in N+1 Brewin LLP. In July 2012, N+1 Brewin LLP merged with Singer Capital Markets Limited, the Group's holding is currently 5.6%.

This holding has been valued at £875,000, on a fair value basis (30 September 2012 £nil) (see note 12).

The Corporate Advisory and Broking Division represented a reportable segment of the Group until its disposal and the effect of the discontinued operation on segment results is disclosed in note 5.

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

	Unaudited 26 weeks to 31 March 2013	Unaudited 26 weeks to 31 March 2012	Audited 52 weeks to 30 September 2012
	£'000	£'000	£'000
Revenue	-	1,088	1,235
Expenses	-	(3,189)	(3,599)
Operating loss	-	(2,101)	(2,364)
Costs of separation	-	(1,772)	(1,143)
Loss before tax	-	(3,873)	(3,507)
Attributable tax	-	701	415
Net loss attributable to discontinued operations (attributable to the owners of the Company)	-	(3,172)	(3,092)

The division before its disposal contributed the following to the Group's net operating cash flows 26 weeks to 31 March 2012: £3.6 million outflow and 52 weeks to 30 September 2012: £3.5 million outflow to the Group's net operating cash flows.

Funds under management

(Unaudited)

	At31 March2013	At31 March2012	At30 September 2012
	£ billion	£ billion	£ billion
In Group's nominee or sponsored member	20.0	17.0	17.9
Stock not held in Group's nominee	0.4	0.3	0.3
Discretionary funds under management	20.4	17.3	18.2

In Group's nominee or sponsored member	6.8	7.3	6.7
Other funds where valuations are carried out but where the stock is not under the Group's control	0.9	1.1	1.0
Advisory funds under management	7.7	8.4	7.7

Managed funds	28.1	25.7	25.9


In Group's nominee or sponsored member	5.9	5.0	5.2
Stock not held in Group's nominee	0.2	0.3	0.2
Execution only stock	6.1	5.3	5.4

Total funds	34.2	31.0	31.3

Stock
In Group's nominee or sponsored member	32.7	29.3	29.8
Stock not held in Group's nominee	1.5	1.7	1.5
	34.2	31.0	31.3

Cautionary statement

The Interim Management Report (the "IMR") for the 26 week period ended 31 March 2013 has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose.

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

Responsibility Statement

The Directors confirm that to the best of their knowledge:

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

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

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

By order of the Board

D Nicol

A Westenberger

Chief Executive

28 May 2013

Finance Director

Independent Review Report

Independent Review Report to Brewin Dolphin Holdings PLC

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the 26 week period ended 31 March 2013 which comprise the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity, the condensed consolidated balance sheet, the condensed consolidated cash flow statement and related notes 1 to 18. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

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

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

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the 26 week period ended 31 March 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

28 May 2013

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR LFFSIEVITFIV

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