25th May 2011 07:00
25 May 2011
Brewin Dolphin Holdings PLC
Interim Financial Report
For the Half Year Ending 27 March 2011
Highlights
● | Total managed funds £25.0 billion at 27 March 2011 (26 September 2010: £23.2 billion, 28 March 2010: £23.0 billion) an increase of 7.8% compared to a 4.7% increase in the FTSE APCIMS Private Investor Series Balanced Portfolio.
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● | Discretionary funds £15.5 billion at 27 March 2011 (26 September 2010: £14.0 billion, 28 March 2010: £13.6 billion) a 10.7% increase.
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● | Total income £136.0 million (28 March 2010: £120.9 million) an increase of 12.5%.
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● | Total income from Investment Management £131.5 million (28 March 2010: £115.1 million) an increase of 14.2%.
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● | Profit before tax £12.0 million (28 March 2010: £15.2 million) a 21% decrease.
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● | Adjusted* profit before tax £22.9 million (28 March 2010: £20.9 million) a 9.6% increase.
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● | Adjusted* Investment Management profit before tax £22.8 million (28 March 2010: £20.0 million) a 14% increase.
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● | Earnings per share: | |
- | Basic earnings per share 3.7p (28 March 2010: 4.7p) a decrease of 21.3%. | |
- | Diluted earnings per share 3.6p (28 March 2010: 4.6p) a decrease of 21.7%.
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● | Adjusted* earnings per share: | |
- | Basic earnings per share 7.2p (28 March 2010: 6.6p) an increase of 9.1%. | |
- | Diluted earnings per share 7.0p (28 March 2010: 6.4p) an increase of 9.4%.
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● | Adjusted* Investment Management earnings per share: | |
- | Basic earnings per share 7.2p (28 March 2010: 6.2p) an increase of 16.1%. | |
- | Diluted earnings per share 6.9p (28 March 2010: 6.1p) an increase of 13.1%. | |
* these figures have been adjusted to exclude redundancy costs, additional FSCS Levy, contract renewal payments 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 22 September 2011 to shareholders on the register at the close of business on 26 August 2011 with an ex-dividend date of 24 August 2011.
Jamie Matheson, Executive Chairman said
"While it would be hazardous to make assumptions about stability on a global scale, I am confident of your Group's abilities to continue to grow and prosper."
For further information
Jamie Matheson, Executive Chairman | Andrew Hayes / Wendy Baker |
Brewin Dolphin Holdings PLC | Hudson Sandler |
020 7248 4400 | 020 7796 4133 |
Executive Chairman's Statement
To the members of Brewin Dolphin Holdings PLC
Cautionary statement
This Executive Chairman's Statement which forms the Interim Management Report (IMR) for the 26 week period ended 27 March 2011 has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose.
The IMR contains certain forward-looking statements. These statements are made by the directors in good faith based on the information available to them up to the time of their approval of this report but such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.
Introduction
This statement forms the Interim Management Report for the 26 week period ending 27 March 2011.
Results and review of the past six months
Brewin Dolphin has continued to make good progress over the first half. The global financial and political situation remains uncertain. However, the markets in which Brewin Dolphin operates have continued to be fairly robust and our focus on the interest of our clients remains firmly at the heart of our business approach. Total income during the period rose by 12.5% to £136.0m from £120.9m and total income from the core Investment Management activity by just over 14% to £131.5m. Profits before tax, redundancy costs, an additional FSCS levy (see below) and amortisation of client relationships rose by 9.6% to £22.9m.
Our Investment Management business generated profit before tax, redundancy costs, the additional FSCS levy and amortisation of client relationships of £22.8m, an increase of 14% over the comparable period last year.
The FSCS levy has resulted in fully diluted earnings per share emerging some 21.7% lower at 3.6p per share. Fully diluted earnings per share, before redundancy costs, the additional FSCS levy and amortisation of client relationships rose by 9.4% to 7.0p per share. The fully diluted earnings per share for the Investment Management business alone increased by 13.1% to 6.9p.
The balance sheet remains strong with cash of £46.5m (2010: £51.5m) and net assets have increased by £2.7m despite the purchase of shares of £5.5m into the Group's Employee Benefit Trust. The Group's retirement benefit obligation has fallen by £5.2m.
Funds under Management have increased by 7.8% to £25.0bn over the period and I am pleased to report a £1.1bn inflow of new funds of which £0.9bn were discretionary. Discretionary funds increased by 10.7% and advisory funds by 3.3%. During the same period the FTSE 100 index rose by 5.4% and the FTSE APCIMS Private Investor Series Balanced Portfolio by 4.7%.
Funds Under Management | |||
Advisory funds | Discretionary funds | Total managed funds | |
£ billion | £ billion | £ billion | |
Value of funds at 26 September 2010 | 9.2 | 14.0 | 23.2 |
Inflows | 0.2 | 0.9 | 1.1 |
Outflows | (0.1) | (0.1) | (0.2) |
Market movement | 0.2 | 0.7 | 0.9 |
Value of funds at 27 March 2011 | 9.5 | 15.5 | 25.0 |
% increase in funds since Sept 2010 | 3.3% | 10.7% | 7.8% |
Regulation
The cost of regulation has a material bearing on the fortunes of your Company. Over and above what might seem to be the "normal" rise in regulatory costs, Brewin Dolphin has paid a levy of some £6.1m to the Financial Services Compensation Scheme (FSCS). This charge relates largely to the failure of Keydata and is a much larger amount than we have ever been required to contribute towards industry compensation in the past. While there is little benefit from dwelling on matters in the past that were outside our control, we are pursuing an active role with the Regulator and HM Treasury regarding the need to put in place proper mechanisms to avoid in the future such substantial levies on your Company and our peers.
Developments
Our regional network is crucial to our business model. It has been a long held objective of your Board that Brewin Dolphin should be represented in the Bristol area and I am pleased to announce that we will be opening an office in Bristol in the new financial year.
The flow of new business continues, helped by a record year for ISA subscriptions, new charity business and discretionary funds to manage on behalf of IFAs.
In February we announced that we had signed a Memorandum of Understanding with the Spanish group N+1 and the management of our Corporate Advisory & Broking business for the sale of this division. An Agreement has now been signed which should, subject to regulatory approval, result in the division ceasing to be part of the Group by the year end. Brewin Dolphin will retain a 14% stake in the business.
Review
I have mentioned before our focus on cost control to achieve efficiencies wherever possible. At the same time, it is essential to the success of this business that looking after our clients and improving our services should remain key objectives. With these in mind we have initiated a major review of our operations and activities to ensure we continue to offer the highest standards of client service and efficiency. This review affects all parts of the Group - client facing as well as administration and support. A project of this nature cannot be undertaken lightly and will take a period of two to three years to achieve maximum benefits for shareholders, but I will be disappointed if some benefit is not evident in the near future.
Board
I am pleased to announce some changes of responsibility within your Board. Henry Algeo has been appointed Chief Operating Officer and will have responsibility for Business Support; Information, Communication and Technology; Facilities and Change Management. Henry Algeo brings much knowledge and experience to this role in both the operational and client facing sides of our industry and the Board believes he will achieve significant improvements in this critical area. With the equal confidence of the Board, Ben Speke takes responsibility for Human Resources in addition to his existing responsibilities for Training & Competence and Health & Safety.
Dividend
A maintained interim dividend of 3.55p per share will be paid on 22 September 2011.
Related party transactions
Related party transactions are disclosed in note 3 to the condensed set of financial statements.
Going concern
As stated in note 2 to the condensed set of financial statements, the directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, the Directors continue to adopt a going concern basis in preparing the condensed financial statements.
Principal risks and uncertainties
Principal risks and uncertainties are covered in note 4 to the condensed financial statements.
Outlook
While the future for Regulation remains an issue of significant concern for our industry and private investors, we view the Government's restructuring of the regulatory framework as an opportunity not a threat and we are seriously engaged in their consultations.
I have mentioned the major review that is being undertaken; its clear objective is to ensure the future prosperity of your Group and to facilitate the highest standards of service for our clients. It is my belief that this will add considerable momentum to the growth of your business.
It is pleasing to note the ever increasing in-flow of funds under our management. While it would be hazardous to make assumptions about stability on a global scale, I am confident of your Group's abilities to continue to grow and prosper.
Jamie Matheson
24 May 2011
Condensed Consolidated Income Statement
26 week period ended 27 March 2011
Unaudited 26 weeks to 27 March 2011 | Unaudited 26 weeks to 28 March 2010 | Audited 52 weeks to 26 September 2010 | ||
Note | £'000 | £'000 | £'000 | |
Continuing operations | ||||
Revenue | 128,180 | 112,999 | 234,890 | |
Other operating income | 7,849 | 7,947 | 15,999 | |
Total income | 5 | 136,029 | 120,946 | 250,889 |
Staff costs | (63,754) | (59,129) | (121,167) | |
Redundancy costs | (589) | - | (253) | |
Additional FSCS Levy | (6,058) | (595) | (595) | |
Amortisation of intangible assets - client relationships | 10 | (4,226) | (2,935) | (6,349) |
Other operating costs | (49,562) | (43,365) | (91,499) | |
Operating expenses | (124,189) | (106,024) | (219,863) | |
Operating profit | 11,840 | 14,922 | 31,026 | |
Finance income | 6 | 505 | 558 | 1,293 |
Other gains and losses | - | - | (495) | |
Finance costs | 6 | (349) | (256) | (453) |
Profit before tax | 5 | 11,996 | 15,224 | 31,371 |
Tax | 7 | (3,661) | (4,895) | (9,818) |
Profit for the period | 8,335 | 10,329 | 21,553 | |
Attributable to: | ||||
Equity shareholders of the parent from continuing operations | 8,335 | 10,329 | 21,553 | |
8,335 | 10,329 | 21,553 | ||
Earnings per share | ||||
From continuing operations | ||||
Basic | 8 | 3.7p | 4.7p | 9.7p |
Diluted | 8 | 3.6p | 4.6p | 9.5p |
Condensed Consolidated Statement of Comprehensive Income
26 week period ended 27 March 2011
Unaudited 26 weeks to 27 March 2011 | Unaudited 26 weeks to 28 March 2010 | Audited 52 weeks to 26 September 2010 | ||
£'000 | £'000 | £'000 | ||
Profit for the period | 8,335 | 10,329 | 21,553 | |
Gain/(Loss) on revaluation of available-for-sale investments | 13 | (430) | (4,000) | |
Deferred tax credit on revaluation of available-for-sale investments | 51 | 120 | 1,177 | |
Actuarial gain/(loss) on defined benefit pension scheme | 3,501 | (960) | (1,878) | |
Deferred tax (charge)/credit on actuarial (gain)/loss on defined benefit pension scheme | (910) | 269 | 507 | |
Other comprehensive income for the period | 2,655 | (1,001) | (4,194) | |
Total comprehensive income for the period | 10,990 | 9,328 | 17,359 | |
Attributable to: | ||||
Equity shareholders of the parent | 10,990 | 9,328 | 17,359 | |
10,990 | 9,328 | 17,359 | ||
Condensed Consolidated Statement of Changes in Equity
26 week period ended 27 March 2011
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 | ||
26 week period ended 27 March 2011 | |||||||
Balance at 26 September 2010 | 2,270 | 113,612 | (101) | 4,062 | 4,562 | 17,211 | 141,616 |
Profit for the period | - | - | - | - | - | 8,335 | 8,335 |
Other comprehensive income for the period | |||||||
Deferred and current tax on other comprehensive income | - | - | - | 51 | - | (910) | (859) |
Actuarial gain on defined benefit pension scheme | - | - | - | - | - | 3,501 | 3,501 |
Revaluation of available-for-sale investments | - | - | - | 13 | - | - | 13 |
Total comprehensive income for the period | - | - | - | 64 | - | 10,926 | 10,990 |
Dividends | - | - | - | - | - | (8,112) | (8,112) |
Issue of shares | 16 | 1,918 | - | - | - | - | 1,934 |
Own shares acquired in the period | - | - | (5,462) | - | - | - | (5,462) |
Share-based payments | - | - | - | - | - | 783 | 783 |
Current tax charge on share-based payments | - | - | - | - | - | (30) | (30) |
Deferred tax credit on share-based payments | - | - | - | - | - | 21 | 21 |
Balance at 27 March 2011 | 2,286 | 115,530 | (5,563) | 4,126 | 4,562 | 20,799 | 141,740 |
26 week period ended 28 March 2010 | |||||||
Balance at 27 September 2009 | 2,122 | 94,140 | - | 6,885 | 4,562 | 10,510 | 118,219 |
Profit for the period | - | - | - | - | - | 10,329 | 10,329 |
Other comprehensive income for the period | |||||||
Deferred and current tax on other comprehensive income | - | - | - | 120 | - | 269 | 389 |
Actuarial loss on defined benefit pension scheme | - | - | - | - | - | (960) | (960) |
Revaluation of available-for-sale investments | - | - | - | (430) | - | - | (430) |
Total comprehensive income for the period | - | - | - | (310) | - | 9,638 | 9,328 |
Dividends | - | - | - | - | - | (7,975) | (7,975) |
Issue of shares | 145 | 19,115 | - | - | - | - | 19,260 |
Share-based payments | - | - | - | - | - | 329 | 329 |
Current tax credit on share-based payments | - | - | - | - | - | 4 | 4 |
Deferred tax charge on share-based payments | - | - | - | - | - | (113) | (113) |
Balance at 28 March 2010 | 2,267 | 113,255 | - | 6,575 | 4,562 | 12,393 | 139,052 |
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 | ||
52 week period ended 26 September 2010 | |||||||
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 |
Condensed Consolidated Balance Sheet
As at 27 March 2011
Unaudited as at 27 March 2011 | Unaudited as at 28 March 2010 | Audited as at 26 September 2010 | ||
£'000 | £'000 | £'000 | ||
Note | ||||
Assets | ||||
Non-current assets | ||||
Intangible assets | 10 | 92,493 | 88,651 | 91,114 |
Property, plant and equipment | 11 | 17,651 | 19,973 | 19,384 |
Available-for-sale investments | 12 | 6,127 | 10,180 | 6,114 |
Other receivables | 2,455 | 2,235 | 2,306 | |
Deferred tax asset | 1,241 | 167 | 1,097 | |
Total non-current assets | 119,967 | 121,206 | 120,015 | |
Current assets | ||||
Trading investments | 12 | 817 | 650 | 632 |
Trade and other receivables | 370,404 | 380,412 | 331,423 | |
Cash and cash equivalents | 72,322 | 98,102 | 87,921 | |
Total current assets | 443,543 | 479,164 | 419,976 | |
Total assets | 563,510 | 600,370 | 539,991 | |
Liabilities | ||||
Current liabilities | ||||
Bank overdrafts | 1,926 | 4,854 | 1,046 | |
Trade and other payables | 385,041 | 420,234 | 359,086 | |
Current tax liabilities | 4,512 | 4,421 | 4,433 | |
Provisions | 13 | 5,031 | 3,365 | 5,420 |
Shares to be issued including premium | 14 | 6,658 | 357 | 438 |
Total current liabilities | 403,168 | 433,231 | 370,423 | |
Net current assets | 40,375 | 45,933 | 49,553 | |
Non-current liabilities | ||||
Retirement benefit obligation | 15 | 7,707 | 12,907 | 12,498 |
Deferred purchase consideration | 2,127 | 2,735 | 1,749 | |
Provisions | 13 | 16 | 101 | 44 |
Shares to be issued including premium | 14 | 8,752 | 12,344 | 13,661 |
Total non-current liabilities | 18,602 | 28,087 | 27,952 | |
Total liabilities | 421,770 | 461,318 | 398,375 | |
Net assets | 141,740 | 139,052 | 141,616 | |
EQUITY | ||||
Called up share capital | 16 | 2,286 | 2,267 | 2,270 |
Share premium account | 16 | 115,530 | 113,255 | 113,612 |
Own shares | (5,563) | - | (101) | |
Revaluation reserve | 4,126 | 6,575 | 4,062 | |
Merger reserve | 4,562 | 4,562 | 4,562 | |
Profit and loss account | 20,799 | 12,393 | 17,211 | |
Equity attributable to equity holders of the parent | 141,740 | 139,052 | 141,616 | |
Condensed Consolidated Cash Flow Statement
26 week period ended 27 March 2011
| Unaudited 26 weeks to 27 March 2011 | Unaudited 26 weeks to 28 March 2010 | Audited 52 weeks to 26 September 2010 | |
Note | £'000 | £'000 | £'000 | |
Net cash (outflow)/inflow from operating activities | 17 | (2,800) | 25,757 | 45,114 |
Cash flows from investing activities | ||||
Purchase of intangible assets - goodwill | - | (269) | (268) | |
Purchase of intangible assets - client relationships | (4,530) | (6,866) | (8,048) | |
Purchase of intangible assets - software | (2,507) | (1,739) | (5,982) | |
Purchases of property, plant and equipment | 11 | (3,114) | (2,955) | (7,669) |
Dividend received from available-for-sale investments | - | - | 188 | |
Net cash used in investing activities | (10,151) | (11,829) | (21,779) | |
Cash flows from financing activities | ||||
Dividends paid to equity shareholders | - | - | (16,038) | |
Purchase of own shares | (5,462) | - | (101) | |
Proceeds on issue of shares | 1,934 | 14,338 | 14,697 | |
Net cash (used in)/from financing activities | (3,528) | 14,338 | (1,442) | |
Net (decrease)/increase in cash and cash equivalents | (16,479) | 28,266 | 21,893 | |
Cash and cash equivalents at the start of period | 86,875 | 64,982 | 64,982 | |
Cash and cash equivalents at the end of period | 70,396 | 93,248 | 86,875 | |
Firm's cash | 48,480 | 56,330 | 62,886 | |
Firm's overdraft | (1,926) | (4,854) | (1,046) | |
Firm's net cash | 46,554 | 51,476 | 61,840 | |
Client settlement cash | 23,842 | 41,772 | 25,035 | |
Net cash and cash equivalents | 70,396 | 93,248 | 86,875 | |
Cash and cash equivalents shown in current assets | 72,322 | 98,102 | 87,921 | |
Bank overdrafts | (1,926) | (4,854) | (1,046) | |
Net cash and cash equivalents | 70,396 | 93,248 | 86,875 | |
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 24 May 2011.
A copy of this Interim Financial Report including Condensed Financial Statements for the 26 week period ended 27 March 2011 is available at the Company's registered office and a copy will be posted to all shareholders.
The information for the 52 week period ended 26 September 2010 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
2. Accounting policies |
Basis of preparation
The annual financial statements of Brewin Dolphin Holdings PLC are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.
The condensed set of financial statements included in this Interim Financial Report for the 26 week period ended 27 March 2011 should be read in conjunction with the annual audited financial statements of Brewin Dolphin Holdings PLC for the 52 week period ended 26 September 2010.
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 26 September 2010.
3. Related party transactions |
There have been no changes to related party transactions that could have a material effect on the financial position or performance of the Group that were disclosed in the 2010 Annual Report and Accounts available via our website www.brewin.co.uk. Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed. There were no other transaction with related party transactions which were not part of the Group during the period, with the exception of remuneration paid to key management personnel.
4. Principal risks and uncertainties |
The Directors consider that the nature of the principal risks and uncertainties which may have a material effect on the Group's performance during the remainder of its financial year remain unchanged from those identified on page 15 of the 2010 Annual Report and Accounts available via our website www.brewin.co.uk. In summary the major financial and non financial risks identified were:
Risk Type | Risk |
Credit risk | Counterparty risk |
Earnings risk | Loss of client facing staff |
Interest rate risk | Interest rate risk |
Liquidity risk | Bank default and other systemic; Capital adequacy |
Legal and compliance risk | Data protection; Fast changing regulatory environment; New business and product lines |
Operational and IT risk | Business continuity; Data integrity; Electronic dealing errors; Supplier Capacity; Project control |
Reputational risk | Poor investment performance; adverse publicity |
Settlement risk | Settlement failure |
Other risk | Acquisition of new teams; Financial crime |
5. Segmental information |
For management purposes, the Group is divided into two business streams: Investment Management and Corporate Advisory & Broking (see note 18). These form the reportable segments of the Group.
All operations are carried out in the United Kingdom and the Channel Islands.
26 week period ended 27 March 2011 | |||||
Discretionary Portfolio Management | Advisory Portfolio Management | Total Investment Management | Corporate Advisory & Broking | Group | |
£'000 | £'000 | £'000 | £'000 | £'000 | |
Total income | 88,538 | 42,927 | 131,465 | 4,564 | 136,029 |
Operating profit before redundancy costs, additional FSCS Levy, contract renewal payments and amortisation of client relationships | 15,222 | 7,381 | 22,603 | 110 | 22,713 |
Redundancy costs | (577) | (12) | (589) | ||
Additional FSCS Levy | (6,058) | - | (6,058) | ||
Amortisation of client relationships | (4,226) | - | (4,226) | ||
11,840 | |||||
Finance income (net) | 156 | ||||
Profit before tax | 11,996 | ||||
| |||||
Other Information | |||||
Capital expenditure | 5,596 | 25 | 5,621 | ||
Depreciation | 4,780 | 67 | 4,847 | ||
Amortisation of intangible asset - software | 1,594 | 38 | 1,632 | ||
Share-based payments | 770 | 13 | 783 | ||
| |||||
Segment assets excluding current tax assets | 547,059 | 16,451 | 563,510 | ||
| |||||
Segment liabilities excluding current tax liabilities | 400,807 | 16,451 | 417,258 | ||
26 week period ended 28 March 2010 | |||||
Discretionary Portfolio Management | Advisory Portfolio Management | Total Investment Management | Corporate Advisory & Broking | Group | |
£'000 | £'000 | £'000 | £'000 | £'000 | |
|
| ||||
Total income | 75,289 | 39,772 | 115,061 | 5,885 | 120,946 |
| |||||
Operating profit before redundancy costs, additional FSCS Levy, contract renewal payments and amortisation of client relationships | 12,865 | 6,796 | 19,661 | 962 | 20,623 |
Contract renewal payments (see note 8) |
|
| (2,081) | (90) | (2,171) |
Additional FSCS Levy |
|
| (595) | - | (595) |
Amortisation of client relationships |
|
| (2,935) | - | (2,935) |
|
|
| 14,922 | ||
Finance income (net) |
|
| 302 | ||
Profit before tax |
|
| 15,224 | ||
|
|
| |||
Other Information | |||||
Capital expenditure | 2,777 | 178 | 2,955 | ||
Depreciation | 5,166 | 76 | 5,242 | ||
Amortisation of intangible asset - software | 720 | - | 720 | ||
Share-based payments | 312 | 17 | 329 | ||
| |||||
Segment assets excluding current tax assets | 574,577 | 25,793 | 600,370 | ||
| |||||
Segment liabilities excluding current tax liabilities | 431,104 | 25,793 | 456,897 | ||
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 before redundancy costs, additional FSCS Levy, contract renewal payments and amortisation of client relationships | 25,463 | 13,406 | 38,869 | 1,545 | 40,414 |
Contract renewal payments (see note 8) | (2,090) | (101) | (2,191) | ||
Additional FSCS Levy | (595) | - | (595) | ||
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 | |
6. Finance income and costs |
Unaudited 26 weeks to 27 March 2011 | Unaudited 26 weeks to 28 March 2010 | Audited 52 weeks to 26 September 2010 | |
£'000 | £'000 | £'000 | |
Finance income | |||
Dividends from available-for-sale investments | - | - | 188 |
Interest on bank deposits | 505 | 558 | 1,105 |
505 | 558 | 1,293 | |
Finance costs | |||
Finance cost of deferred consideration | 121 | 29 | 24 |
Interest expense on defined pension obligation | 202 | 194 | 366 |
Interest on bank overdrafts | 26 | 33 | 63 |
349 | 256 | 453 |
7. Taxation |
Unaudited 26 weeks to 27 March 2011 | Unaudited 26 weeks to 28 March 2010 | Audited 52 weeks to 26 September 2010 | |
£'000 | £'000 | £'000 | |
United Kingdom | |||
Current tax | 4,137 | 4,284 | 8,711 |
Prior period | 419 | (420) | (363) |
Overseas tax | |||
Current tax | 83 | 71 | 153 |
Prior period | - | - | - |
4,639 | 3,935 | 8,501 | |
United Kingdom deferred tax | |||
Current year | (614) | 540 | 1,142 |
Prior period | (364) | 420 | 175 |
3,661 | 4,895 | 9,818 | |
8. Earnings per share |
The calculation of the basic and diluted earnings per share is based on the following data:
Unaudited 26 weeks to 27 March 2011 | Unaudited 26 weeks to 28 March 2010 | Audited 52 weeks to 26 September 2010 | |
Number of shares | '000 | '000 | '000 |
Basic | |||
Weighted average number of shares in issue in the period | 222,543 | 219,450 | 223,193 |
Diluted | |||
Weighted average number of options outstanding for the period | 3,821 | 1,825 | 1,486 |
Estimated weighted average number of shares earned under deferred consideration arrangements | 4,422 | 3,903 | 3,628 |
Diluted weighted average number of options and shares for the period | 233,786 | 225,178 | 228,307 |
Earnings attributable to ordinary shareholders | £'000 | £'000 | £'000 |
Profit for the period | 8,335 | 10,329 | 21,553 |
Redundancy costs | 589 | - | 253 |
less tax | (159) | - | (71) |
Additional FSCS Levy | 6,058 | 595 | 595 |
less tax | (1,636) | (167) | (167) |
Contract renewal payment (Note b) | - | 2,171 | 2,191 |
less tax | - | (608) | (613) |
Amortisation of intangible assets - client relationships | 4,226 | 2,935 | 6,349 |
less tax | (1,141) | (822) | (1,778) |
Adjusted basic profit for the period and attributable earnings excluding redundancy costs, additional FSCS Levy, contract renewal payments and amortisation of client relationships | 16,272 | 14,433 | 28,312 |
Profit for the period | 8,335 | 10,329 | 21,553 |
Finance costs of deferred consideration (Note a) | 50 | 96 | 203 |
less tax | (14) | (27) | (57) |
Adjusted fully diluted profit for the period and attributable earnings | 8,371 | 10,398 | 21,699 |
Redundancy costs | 589 | - | 253 |
less tax | (159) | - | (71) |
Additional FSCS Levy | 6,058 | 595 | 595 |
less tax | (1,636) | (167) | (167) |
Contract renewal payment (Note b) | - | 2,171 | 2,191 |
less tax | - | (608) | (613) |
Amortisation of intangible assets - client relationships | 4,226 | 2,935 | 6,349 |
less tax | (1,141) | (822) | (1,778) |
Adjusted fully diluted profit for the period and attributable earnings excluding redundancy costs, additional FSCS Levy, contract renewal payments and amortisation of client relationships | 16,308 | 14,502 | 28,458 |
From continuing operations | |||
Basic | 3.7p | 4.7p | 9.7p |
Diluted | 3.6p | 4.6p | 9.5p |
From continuing operations excluding redundancy costs, additional FSCS Levy, contract renewal payments and amortisation of client relationships | |||
Basic | 7.2p | 6.6p | 12.7p |
Diluted | 7.0p | 6.4p | 12.5p |
a) Finance costs of deferred consideration are added back where the issue of shares is more dilutive than the interest cost saved. | |||
b) Once every ten years, the Group reissues its contracts to all personnel; the cost of this is shown within staff costs. | |||
9. Dividends |
Unaudited 26 weeks to 27 March 2011 | Unaudited 26 weeks to 28 March 2010 | Audited 52 weeks to 26 September 2010 | |||
£'000 | £'000 | £'000 | |||
Amounts recognised as distributions to equity shareholders in the period: | |||||
Final dividend paid 5 April 2011*, 3.55p per share (2010: 3.55p per share) | 8,112 | 7,975 | 7,975 | ||
Interim dividend paid 22 September 2010, 3.55p per share | - | - | 8,063 | ||
8,112 | 7,975 | 16,038 | |||
* approved at Annual General Meeting on 25 February 2011 | |||||
An interim dividend of 3.55p per share was declared by the Board on 24 May 2011 and has not been included as a liability as at 27 March 2011. This interim dividend will be paid on 22 September 2011 to shareholders on the register at the close of business on 26 August 2011 with an ex-dividend date of 24 August 2011. | |||||
10. Intangible assets | ||||||
Goodwill | Client relationships | Software development costs | Purchased software | Total |
| |
£'000 | £'000 | £'000 | £'000 | £'000 |
| |
| ||||||
Cost |
| |||||
At 27 September 2009 | 48,438 | 51,317 | 391 | 4,697 | 104,843 |
|
Additions | 199 | 1,194 | 177 | 1,562 | 3,132 |
|
Revaluation of shares to be issued and deferred purchase consideration in respect of acquisitions in prior periods | - | (431) | - | - | (431) |
|
At 28 March 2010 | 48,637 | 52,080 | 568 | 6,259 | 107,544 |
|
Additions | - | 1,372 | 298 | 3,945 | 5,615 |
|
Revaluation of shares to be issued and deferred purchase consideration in respect of acquisitions in prior periods | - | 1,350 | - | - | 1,350 |
|
At 26 September 2010 | 48,637 | 54,802 | 866 | 10,204 | 114,509 |
|
Additions | - | 4,226 | 214 | 2,293 | 6,733 |
|
Revaluation of shares to be issued and deferred purchase consideration in respect of acquisitions in prior periods | - | 504 | - | - | 504 |
|
At 27 March 2011 | 48,637 | 59,532 | 1,080 | 12,497 | 121,746 |
|
| ||||||
| ||||||
| ||||||
Accumulated amortisation and impairment |
| |||||
At 27 September 2009 | - | 14,564 | 49 | 625 | 15,238 |
|
Amortisation charge for the period | - | 2,935 | 62 | 658 | 3,655 |
|
Impairment losses for the period | - | - | - | - | - |
|
At 28 March 2010 | - | 17,499 | 111 | 1,283 | 18,893 |
|
Amortisation charge for the period | - | 3,414 | 85 | 1,003 | 4,502 |
|
Impairment losses for the period | - | - | - | - | - |
|
At 26 September 2010 | - | 20,913 | 196 | 2,286 | 23,395 |
|
Amortisation charge for the period | - | 4,226 | 125 | 1,507 | 5,858 |
|
Impairment losses for the period | - | - | - | - | - |
|
At 27 March 2011 | - | 25,139 | 321 | 3,793 | 29,253 |
|
| ||||||
| ||||||
Net book value |
| |||||
At 27 September 2009 | 48,438 | 36,753 | 342 | 4,072 | 89,605 |
|
At 28 March 2010 | 48,637 | 34,581 | 457 | 4,976 | 88,651 |
|
At 26 September 2010 | 48,637 | 33,889 | 670 | 7,918 | 91,114 |
|
At 27 March 2011 | 48,637 | 34,393 | 759 | 8,704 | 92,493 |
|
| ||||||
11. Property, plant and equipment |
During the period the Group spent £0.3 million (26 weeks to 28 March 2010: £1.1 million, 52 weeks to 26 September 2010: £2.8 million) on leasehold improvements, £1.3 million (26 weeks to 28 March 2010: £1.5 million, 52 weeks to 26 September 2010: £3.6 million) on computer equipment and £1.5 million (26 weeks to 28 March 2010: £0.4 million, 52 weeks to 26 September 2010: £1.3 million) on office equipment.
12. Investments |
| ||||
Available-for-sale investments |
| ||||
Listed investments | Unlisted investments | Total |
| ||
£'000 | £'000 | £'000 |
| ||
Fair value |
| ||||
| |||||
At 27 March 2011 | 127 | 6,000 | 6,127 |
| |
| |||||
At 28 March 2010 | 180 | 10,000 | 10,180 |
| |
| |||||
At 26 September 2010 | 114 | 6,000 | 6,114 |
| |
| |||||
Unlisted available-for-sale investments represent the Group's holding of 19,899 ordinary shares in Euroclear plc. This holding represents 0.52% of Euroclear plc's shares. As at 26 September 2010 the Directors updated their valuation of the Group's holding in Euroclear plc; the valuation is £6 million (28 March 2010: £10m, 26 September 2010: £6m). This valuation took into account dividend yield and the prices of similar quoted companies. |
| ||||
| |||||
Trading investments | |||
Listed investments | Unlisted investments | Total | |
£'000 | £'000 | £'000 | |
Fair value | |||
At 27 March 2011 | 817 | - | 817 |
At 28 March 2010 | 650 | - | 650 |
At 26 September 2010 | 632 | - | 632 |
Investments are measured at fair value which is determined directly by reference to published prices in an active market where available. | |||
13. Provisions |
| |||||
Unaudited 26 weeks to 27 March 2011 | Unaudited 26 weeks to 27 March 2011 | Unaudited 26 weeks to 27 March 2011 | Unaudited 26 weeks to 28 March 2010 | Audited 52 weeks to 26 September 2010 | ||
£'000 | £'000 | £'000 | £'000 | £'000 | ||
Sundry claims and associated costs | Vacant Property | Total | Total | Total | ||
At start of period | 5,303 | 161 | 5,464 | 2,043 | 2,043 | |
Additions | 1,181 | - | 1,181 | 2,669 | 7,927 | |
Utilisation of provision | (1,380) | (31) | (1,411) | (540) | (3,675) | |
Unused amounts reversed during the period | (187) | - | (187) | (706) | (831) | |
At end of period | 4,917 | 130 | 5,047 | 3,466 | 5,464 | |
Provisions | ||||||
Included in current liabilities | 4,917 | 114 | 5,031 | 3,365 | 5,420 | |
Included in non-current liabilities | - | 16 | 16 | 101 | 44 | |
4,917 | 130 | 5,047 | 3,466 | 5,464 | ||
Provisions relate to sundry claims against the Group and the future cost of vacant property. Where there are sundry claims against the Group the estimated liability has been included above with the related insurance debtor of £399,000 (28 March 2010: £512,500, 26 September 2010: £399,000) included in other debtors. The timing of settlements cannot be accurately forecast; settlement of £nil (28 March 2010: £nil, 26 September 2010: £nil) has been made since the balance sheet date.
14. Shares to be issued including premium and other deferred purchase liabilities |
The Group acquires investment businesses and teams of investment managers, bringing with them funds under management (the latter classified as the intangible asset client relationships) on deferred purchase terms based on the value of income introduced over, normally, a three year period. The payment is normally made in ordinary shares and these shares typically have to be held for a further three years. At the discretion of the Board these shares can be purchased in the market rather than issued. The estimated likely cost of these shares has been updated at the half year in light of actual results of previously acquired business teams and to include new acquisitions.
15. Retirement benefit obligation |
The main financial assumptions used in calculating the Group's retirement benefit obligation are as follows:
As at 27 March 2011 | As at 28 March 2010 | As at 26 September 2010 | |
Discount rate | 5.50% | 5.70% | 5.10% |
Rate of inflation | 3.40% | 3.50% | 3.10% |
Salary increases | 3.40% | 3.50% | 3.10% |
Rate of increase to pensions in payment | 3.40% | 3.50% | 3.10% |
Expected return on equities | 7.50% | 8.10% | 7.50% |
Expected return on bonds | 4.50% | 5.10% | 4.50% |
Expected return on other assets | 0.50% | 0.50% | 0.50% |
Average assumed life expectancies for members on retirement at age 65 | |||
Existing pensioners | |||
Males | 87.5 years | 87.4 years | 87.4 years |
Females | 88.9 years | 88.9 years | 88.9 years |
Future pensioners | |||
Males | 88.6 years | 88.6 years | 88.6 years |
Females | 90.1 years | 90.0 years | 90.0 years |
A full actuarial valuation was carried out as at 31 December 2008 and the results of this valuation have been updated to 27 March 2011 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 26 September 2010 | 227,130,752 | 3,176,098 | 2,270 | 113,612 | 115,882 | ||
Issue of options | Various | 1,194,238 | - | 37.5p - 168p | 12 | 1,384 | 1,396 |
Nil paid shares now paid up | Various | 345,997 | (345,997) | 104p - 217.5p | 4 | 535 | 539 |
Cost of issue of shares | Various | - | - | - | (1) | (1) | |
At 27 March 2011 | 228,670,987 | 2,830,101 | 2,286 | 115,530 | 117,816 |
17. Note to the cash flow statement |
| |||
Unaudited 26 weeks to 27 March 2011 | Unaudited 26 weeks to 28 March 2010 | Audited 52 weeks to 26 September 2010 | ||
£'000 | £'000 | £'000 | ||
Group | ||||
Operating profit | 11,840 | 14,922 | 31,026 | |
Adjustments for: | ||||
Depreciation of property, plant and equipment | 4,847 | 5,242 | 10,481 | |
Amortisation of intangible assets - client relationships | 4,226 | 2,935 | 6,349 | |
Amortisation of intangible assets - software | 1,632 | 720 | 1,808 | |
Loss on disposal of property, plant and equipment | - | - | 64 | |
Retirement benefit obligation | (1,290) | (4,306) | (5,633) | |
Share-based payment cost | 783 | 329 | 2,679 | |
Unwind of discount of shares to be issued and deferred purchase consideration | 121 | 29 | 24 | |
Interest income | 505 | 558 | 1,105 | |
Interest expense | (349) | (256) | (453) | |
Operating cash flows before movements in working capital | 22,315 | 20,173 | 47,450 | |
Increase/(decrease) in payables and trading investments | 18,794 | (53,851) | (106,395) | |
(Increase)/decrease in receivables and trading investments | (39,316) | 60,659 | 109,775 | |
Cash generated by operating activities | 1,793 | 26,981 | 50,830 | |
Tax paid | (4,593) | (1,224) | (5,716) | |
Net cash (outflow)/inflow from operating activities | (2,800) | 25,757 | 45,114 | |
18. Post Balance Sheet Events |
The Group's operating subsidiary, Brewin Dolphin Limited, signed an agreement on 11 May 2011 for the disposal of its Corporate Advisory and Broking Division to a new partnership called N+1 Brewin. Completion of the disposal is subject, inter alia, to receipt of certain regulatory authorisations for the new entity.
The Group will receive nominal goodwill consideration of £4m for the disposal by way of a 14% preferred interest in N+1 Brewin. The gross assets as at 27 March 2011 were £16.5m and the value of net assets were £nil. The Corporate Advisory and Broking Division represents a reportable segment of the Group and details of income and profit are provided in note 5.
Funds
(Unaudited)
At 27 March 2011 | At 28 March2010 | At 26 September2010 | |
£ Billion | £ Billion | £ Billion | |
In Group's nominee or sponsored member | 15.2 | 13.3 | 13.8 |
Stock not held in Group's nominee | 0.3 | 0.3 | 0.2 |
Discretionary funds under management | 15.5 | 13.6 | 14.0 |
In Group's nominee or sponsored member | 8.0 | 7.8 | 7.7 |
Other funds where valuations are carried out but where the stock is not under the Group's control | 1.5 | 1.6 | 1.5 |
Advisory funds under management | 9.5 | 9.4 | 9.2 |
Managed funds | 25.0 | 23.0 | 23.2 |
In Group's nominee or sponsored member | 4.4 | 4.0 | 4.0 |
Stock not held in Group's nominee | 0.4 | 0.3 | 0.3 |
Execution only stock | 4.8 | 4.3 | 4.3 |
Total funds | 29.8 | 27.3 | 27.5 |
Stock | |||
In Group's nominee or sponsored member | 27.6 | 25.1 | 25.5 |
Stock not held in Group's nominee | 2.2 | 2.2 | 2.0 |
29.8 | 27.3 | 27.5 | |
Responsibility Statement
The Directors confirm that to the best of their knowledge:
a) | the condensed set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting";
|
b) | the interim management report* includes a fair view of the information required by Disclosure and Transparency Rules (DTR) 4.2.7 R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
|
c) | the interim management report* includes a fair view of the information required by DTR 4.2.8 R (disclosures of related parties' transactions and changes therein). |
*encompassed within the Executive Chairman's Statement
By order of the Board
J Matheson R A Bayford
Executive Chairman Finance Director
24 May 2011
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 27 March 2011 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity, the condensed consolidated balance sheet, the condensed consolidated cash flow statement and related notes 1 to 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 them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the 26 week period ended 27 March 2011 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
24 May 2011
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