24th May 2007 07:01
Brewin Dolphin Holdings PLC24 May 2007 Brewin Dolphin Holdings PLC Interim Financial Report: For the Half Year Ending 31 March 2007 Highlights • Discretionary funds £10.1 billion at 31 March 2007 (30 September 2006: £8.8 billion, 31 March 2006: £8.5 billion) an annual increase of 19%. • Total income £98 million (2006: £88 million) an increase of 12%. • Profit before tax £20.8 million (2006: £17.3 million) a 20% increase. • Earnings per share - Basic earnings per share 7.2p (2006: 6.0p) an increase of 20%. - Diluted earnings per share 6.8p (2006: 5.8p) an increase of 17%. Jamie MathesonExecutive Chairman said: "An important milestone was reached during the six months ended 31 March 2007when discretionary funds under management crossed the £10 billion mark. ... once again we have been able to attract both teams and individuals to thefirm. Since the year end a total of 57 investment managers have joined, or willshortly be joining, the Group and we have opened offices in Oxford, Hereford andYork and have announced that we will shortly be opening in Plymouth and Swansea." 23rd May 2007 Media Enquiries: Brewin DolphinJamie Matheson / John HallCharlotte Black020 7248 4400www.brewindolphin.co.uk Citigate Dewe RogersonGeorge Cazenove020 7638 9571 Chairman's Statement Once again it is my pleasure to report to Shareholders that the first half ofthe current year has been a period of satisfactory progress for your Group.Total income during the period under review rose by some 12% to £98 million.Profits on ordinary activities before tax rose by some 20% to £20.8 million.Diluted earnings per share were 6.8p, up 17% on the comparable period last yearwhile basic earnings per share show a rise of 20% to 7.2p per share. The main thrust of the improved performance in the first half came from theGroup's Private Client Investment Management operations. An important milestonewas reached during the six months ended 31 March 2007 when discretionary fundsunder management crossed the £10 billion mark. Total client funds amounted toslightly over £24 billion (September 2006 - £22 billion) of which just over £21billion (September 2006 - £19 billion) is managed. Discretionary incomeadvanced by some 33% to £51.3 million giving rise to a corresponding 49%increase in profit before tax. As has been the case for some time now market conditions have provided agenerally favourable background. During the six months under review the FTSE100 Index rose by some 5.8% (4.9% in the twelve months since March 2006). Onceagain this illustrates that a material element of the Group's progress arisesfrom strong organic growth, as well as the contribution made by new teamsjoining your Group. Indeed the arrival of new people has been a significantfeature of the first half when once again we have been able to attract bothteams and individuals to the firm. Since the year end a total of 57 investmentmanagers have joined, or will shortly be joining, the Group and we have openedoffices in Oxford, Hereford and York and have announced that we will shortly beopening in Plymouth and Swansea. Profits and income generated from our Investment Banking Division (formerlyknown as the Corporate Broking Division) have seen some slowdown in the firsthalf. This reflects, in part, the reduced level of activity on the AIM market.However we expect the second half of the year to produce a more encouragingoutcome, particularly given the success of the division in pursuing larger andfully listed mandates. As ever we continue to invest significant resources in the infrastructure of thebusiness in order to maintain our pursuit of high levels of client service. Inparticular the eXimius Investment Management system is now up and running and weare currently embarking upon further strengthening of our business continuity,both in terms of relocating our principal computer facility as well as upgradingthe hardware. We are also expending significant time and effort in order to befully prepared for the implementation of MIFID (Markets in Financial InstrumentsDirective) later on this year. At the AGM in February a dividend of 2.875p per share (2.5p per share in 2006)was declared and subsequently paid on the 10th April. At the same time Iannounced to Shareholders that the Board proposed to declare a second interimdividend in September 2007, payable as before in October 2007. We proposed todeclare a final dividend in late November 2007 at the same time as ourpreliminary results announcement, payable in April 2008. Since my last opportunity to address Shareholders the Board has been verypleased to be able to announce that it has been joined by Sir Stephen Lamport.Sir Stephen has, since October 2002, been Group Director for Public Policy andGovernment Affairs for The Royal Bank of Scotland. I am confident that theBoard and your Company will benefit significantly from Sir Stephen'scontribution. As I have also said before your Company continues to pursue its policy ofproviding bespoke services to our clients with a strong emphasis on localpresence. This can only be achieved with the hard work and dedication of allour people and I have great pleasure in acknowledging their contribution to theCompany's objectives. Similarly I have also said in the past that I believe itfoolhardy to become embroiled in detailed forecasts about the short termoutlook. However I think it is reasonable to say that the second half of theyear has got off to an encouraging start. Jamie MathesonExecutive Chairman23 May 2007 Independent Review ReportIndependent Review Report to Brewin Dolphin Holdings PLC Introduction We have been instructed by the company to review the financial information forthe 26 week period ended 31 March 2007 which comprises the Consolidated IncomeStatement, the Consolidated Statement of Recognised Income and Expense, theConsolidated Balance Sheet, Consolidated Cash Flow Statement and the relatednotes 1 to 9. We have read the other information contained in the interimreport and considered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the 26 week periodended 31 March 2007. Deloitte & Touche LLPChartered AccountantsLondon 23 May 2007 Consolidated Income Statement26 week period ended 31 March 2007 Unaudited Unaudited Audited 26 weeks to 26 weeks to 52 weeks to 31 March 31 March 30 September 2007 2006 2006 Note £'000s £'000s £'000sContinuing operationsRevenue 92,838 83,517 164,594Other operating income 5,186 4,100 9,044 Total income 3 98,024 87,617 173,638 Staff costs (51,953) (45,141) (91,621)Other operating costs (28,086) (27,557) (55,166) (80,039) (72,698) (146,787) Operating profit 17,985 14,919 26,851Other gains and losses 58 - -Finance income 2,786 2,355 5,235Finance costs (53) (3) (36) Profit before tax 3 20,776 17,271 32,050Tax (6,452) (5,357) (10,045) Profit attributable to equity shareholders of the parent from continuingoperations 14,324 11,914 22,005 Earnings per share From continuing operations Basic 4 7.2p 6.0p 11.1p Diluted 4 6.8p 5.8p 10.6p Consolidated Statement of Recognised Income and Expense26 week period ended 31 March 2007 Unaudited Unaudited Audited 26 weeks to 26 weeks to 52 weeks to 31 March 31 March 30 September 2007 2006 2006 £'000s £'000s £'000s Gain on revaluation of available-for-sale investments 299 1,161 1,509Tax on revaluation of available-for-sale investments (90) (348) (453)Actuarial gain /(loss) on defined benefit pension scheme 1,133 (530) (3,251)Tax on actuarial (gain)/loss on defined benefit pensionscheme (340) 159 975Deferred tax on share based payments 388 795 720 Net income recognised directly in equity 1,390 1,237 (500) TransfersTransfer to profit or loss on sale of available-for-sale (36) - -investments 1,354 1,237 (500)Profit for period 14,324 11,914 22,005 Total recognised income and expense for the periodattributable to equity shareholders of the parent 15,678 13,151 21,505 Consolidated Balance SheetAs at 31 March 2007 Unaudited as at Unaudited as at Audited as at 31 March 31 March 30 September 2007 2006 2006 £'000s £'000s £'000s NoteASSETSNon-current assetsGoodwill 73,037 44,440 66,846Property, plant and equipment 19,231 10,450 16,920Available-for-sale investments 11,009 10,115 10,463Other receivables 1,896 1,938 1,988Deferred tax asset 1,531 3,358 2,473 106,704 70,301 98,690Current assetsTrading investments 1,337 811 2,470Trade and other receivables 356,435 261,024 251,437Cash and cash equivalents 54,274 54,203 61,576 412,046 316,038 315,483 Total assets 518,750 386,339 414,173 LIABILITIESCurrent liabilitiesBank overdrafts 1,618 291 3,197Trade and other payables 370,418 275,426 279,148Current tax liabilities 5,549 5,318 3,256Shares to be issued including premium 1,000 1,000 1,000 378,585 282,035 286,601 Net current assets 33,461 34,003 28,882 Non-current liabilitiesRetirement benefit obligation 7 13,993 13,121 15,422Deferred purchase consideration 3,529 - 3,444Shares to be issued including premium 18,080 3,072 16,500 35,602 16,193 35,366 Total liabilities 414,187 298,228 321,967 Net assets 104,563 88,111 92,206 EQUITYCalled up share capital 8 2,015 1,989 1,995Share premium account 8 84,885 81,812 82,755Revaluation reserve 8 6,978 6,562 6,805Merger reserve 8 4,562 4,562 4,562Profit and loss account 8 6,123 (6,814) (3,911) Equity attributable to equity holders of the 8 104,563 88,111 92,206parent Consolidated Cash Flow Statement26 week period ended 31 March 2007 Unaudited Unaudited Audited 26 weeks to 26 weeks to 52 weeks to 31 March 31 March 30 September 2007 2006 2006 Note £'000s £'000s £'000s Net cash flow from operating activities 6 7,389 12,285 34,442 Cash flows from investing activities Purchase of goodwill (3,532) (758) (6,289) Purchases of property, plant and equipment (5,007) (3,491) (11,523) Proceeds from sale of available-for-sale investments 159 - - Purchases of available-for-sale investments (400) - - Dividend received from available-for-sale investments - - 249 Net cash used in investing activities (8,780) (4,249) (17,563) Cash flows from financing activities Dividends paid to equity shareholders (5,488) (4,914) (9,884) Proceeds on issue of shares 1,156 562 1,156 Net cash used in financing activities (4,332) (4,352) (8,728) Net (decrease) / increase in cash and cash equivalents (5,723) 3,684 8,151 Cash and cash equivalents at the start of period 58,379 50,228 50,228 Cash and cash equivalents at the end of period 52,656 53,912 58,379 Firm's cash 37,369 35,417 47,832Firm's overdraft (1,618) (291) (3,197) Firm's net cash 35,751 35,126 44,635Client settlement cash 16,905 18,786 13,744 Net cash and cash equivalents 52,656 53,912 58,379 Cash and cash equivalents shown in current assets 54,274 54,203 61,576Bank overdrafts (1,618) (291) (3,197) Net cash and cash equivalents 52,656 53,912 58,379 Notes to the Interim Financial Report 1. Basis of preparation The interim financial information for the 26 week period to 31 March 2007 hasbeen prepared in accordance with the recognition and measurement criteria ofInternational Financial Reporting Standards, the disclosure requirements of theListing Rules and the accounting policies set out in the Group's latest AnnualReport and Accounts for the year ended 30 September 2006. 2. Section 240 statement The financial information set out in this document in respect of the year ended30 September 2006 does not constitute the Group's statutory accounts for theyear ended 30 September 2006 within the meaning of section 240 of the CompaniesAct 1985. Those accounts were prepared under International Financial ReportingStandards and have been reported on by the Company's auditors and delivered tothe Registrar of Companies. The auditors report was unqualified and did notcontain a statement under section 237 (2) or (3) of the Companies Act 1985. Acopy of this statement is available at the Company's registered office at 12Smithfield Street, London EC1A 9BD and a copy will be posted to allshareholders. 3. Segmental information For management purposes, the Group is divided into two business streams: privateclient investment management and investment banking (formerly corporatebroking). These form the basis for the primary segment information reportedbelow. All operations are carried out in the United Kingdom and the ChannelIslands. Unaudited Unaudited Audited 26 weeks to 26 weeks to 52 weeks to 31 March 31 March 30 September 2006 2007 2006 £'000s £'000s £'000sTotal incomePrivate client investment management Discretionary portfolio management 51,382 38,652 84,878 Advisory portfolio management 35,263 35,185 66,613 86,645 73,837 151,491Investment banking 11,379 13,780 22,147 98,024 87,617 173,638 Profit before taxPrivate client investment management Discretionary portfolio management 8,996 6,029 12,381 Advisory portfolio management 6,458 5,227 9,216 15,454 11,256 21,597Investment banking 2,531 3,663 5,254 Operating profit 17,985 14,919 26,851Net finance income and other gains and losses 2,791 2,352 5,199 20,776 17,271 32,050 4. Earnings per share The calculation of the basic and diluted earnings per share is based on thefollowing data: Unaudited Unaudited Audited 26 weeks to 26 weeks to 52 weeks to 30 31 March 31 March September 2007 2006 2006Number of shares '000 '000 '000 BasicWeighted average number of shares in issue in the period 200,138 197,041 198,025 DilutedWeighted average number of options outstanding for theperiod 5,623 5,935 4,985Estimated weighted average number of shares earned underdeferred consideration arrangements 4,719 3,628 4,106 Diluted weighted average number of options and shares forthe period 210,480 206,604 207,116 Earnings attributable to ordinary shareholders £'000s £'000s £'000s Basic profit for the period and attributable earnings 14,324 11,914 22,005 Earnings per share From continuing operations Basic 7.2p 6.0p 11.1p Diluted 6.8p 5.8p 10.6p 5. Dividends Unaudited Unaudited Audited 26 weeks to 26 weeks to 52 weeks to 31 March 31 March 30 September 2006 2007 2006 £'000s £'000s £'000sAmounts recognised as distributions to equity holders inthe period:First interim dividend paid 10 April 2007, 2.875p per share 5,793 4,970 4,970(2006: 2.5p)Second interim dividend paid 25 October 2006, 2.75p per - - 5,488share 5,793 4,970 10,458 6. Note to the cash flow statement Unaudited Unaudited Audited 26 weeks to 26 weeks to 52 weeks to 30 31 March 2007 31 March 2006 September 2006 £'000s £'000s £'000sGroupOperating profit 17,985 14,919 26,851Adjustments for: Depreciation of property, plant and equipment 2,696 2,209 3,771 Retirement benefit obligation (296) (346) (766) Share based payment cost 322 333 613 Interest income 2,786 2,355 4,987 Interest expense (53) (3) (36) Operating cash flows before movements in working capital 23,440 19,467 35,420 Increase in receivables and trading investments (103,773) (28,891) (21,014) Increase in payables 90,965 23,850 27,407 Cash generated by operating activities 10,632 14,426 41,813 Tax paid (3,243) (2,141) (7,371) Net cash flow from operating activities 7,389 12,285 34,442 Cash and cash equivalents comprise cash at bank and bank overdrafts. 7. Retirement benefit obligation The main financial assumptions used in calculating the Group's retirementbenefit obligation are as follows: 31 March 31 March 30 September 2006 2007 2006 Discount rate 5.3% 5.0% 5.1%Inflation 3.1% 2.9% 2.9%Salary increases 3.1% 2.9% 2.9%Expected return on equities 7.6% 7.7% 7.6%Expected return on bonds 4.6% 4.7% 4.6%Expected return on other assets 4.75% 4.5% 4.8% A full actuarial valuation was carried out as at 31 December 2005 and theresults of this valuation have been updated to 31 March 2007 by a qualifiedindependent actuary and reflected in the accounts. 8. Reconciliation of changes in equity Called up Share Revaluation Merger Profit Total share premium reserve reserve and loss capital account account £'000s £'000s £'000s £'000s £'000s £'000sGroup30 September 2005 1,965 79,287 5,749 4,562 (14,515) 77,048Profit for the period - - - - 22,005 22,005Dividends - - - - (10,458) (10,458)Issue of shares 30 3,468 - - - 3,498Revaluation - - 1,509 - - 1,509Deferred tax on items taken directly to equity - - (453) - 1,695 1,242Share based payments - - - - 613 613Actuarial loss on defined benefit pension - - - - (3,251) (3,251)scheme 30 September 2006 1,995 82,755 6,805 4,562 (3,911) 92,206Profit for the period - - - - 14,324 14,324Dividends - - - - (5,793) (5,793)Issue of shares 20 2,130 - - - 2,150Revaluation - - 299 - - 299Deferred tax on items taken directly to equity - - (90) - 48 (42)Released on sale of available-for-sale - - (36) - - (36)investmentsShare based payments - - - - 322 322Actuarial gain on defined benefit pension - - - - 1,133 1,133scheme 31 March 2007 2,015 84,885 6,978 4,562 6,123 104,563 9. Provisions Discussions with the Group's insurers in respect of claims for amounts alreadyincurred and expensed in relation to legal actions have largely been concludedand recoveries made, realising the debtor included at 30 September 2006. Aprovision has been made in respect of estimated outstanding matters and includedwithin trade and other payables. This amount is not disclosed separately, as thedirectors consider that the disclosure of any further information wouldseriously prejudice the ongoing position of the Group. The net effect of theabove matters on the current period's income statement is not material. Client Funds At 31 March At 31 March At 30 September 2007 2006 2006 £ Billion £ Billion £ Billion In Group's nominee or sponsored member 9.9 8.0 8.6Stock not held in Group's nominee 0.2 0.5 0.2 Discretionary funds under management 10.1 8.5 8.8 In Group's nominee or sponsored member 8.2 7.6 7.2Other funds where valuations are carried out but where the 2.9 3.3 2.9stock is not under the Group's control Advisory funds under management 11.1 10.9 10.1 Managed funds 21.2 19.4 18.9 In Group's nominee or sponsored member 2.6 2.3 2.4Stock not held in Group's nominee 0.4 0.4 0.3 Execution only stock 3.0 2.7 2.7 Total funds 24.2 22.1 21.6 StockIn Group's nominee or sponsored member 20.7 17.9 18.2Stock not held in Group's nominee 3.5 4.2 3.4 24.2 22.1 21.6 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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