27th May 2015 07:00
27 May 2015
Brewin Dolphin Holdings PLC
Interim Management Report
For the Half Year Ended 31 March 2015
Highlights
● | Total Discretionary Funds under Management £26.2bn (FY 2014: £24.0bn, H1 2014: £22.7bn)
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● | Total income of £148.4m (H1 2014: £146.3m)
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● | Adjusted1 profit before tax £33.0m (H1 20142: £30.4m)
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● | Adjusted1 profit before tax margin 22.3% (H1 20142: 20.8%)
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● | Profit before tax £37.9m (H1 20142: £22.0m)
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● | Adjusted1 earnings per share: |
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- | Basic earnings per share of 9.8p (H1 20142: 9.3p) |
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- | Diluted earnings per share3 of 9.2p (H1 20142: 8.8p) |
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● | Statutory earnings per share: |
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- | Basic earnings per share of 11.2p (H1 20142: 6.9p) |
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- | Diluted earnings per share of 10.7p (H1 20142: 6.5p)
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● | Interim dividend of 3.75p per share (H1 2014: 3.65p per share)
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● | Announced sale of Stocktrade on 14 May 2015
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1 These figures have been adjusted to exclude redundancy costs, FSCS levy rebate, onerous contracts provision, disposal of available-for-sale investment and amortisation of client relationships. 2 Restated see notes 2 and 18. 3 See note 7.
0B0B0BDeclaration of Interim Dividend The Board declares an interim dividend of 3.75p per share. The interim dividend is payable on 26 June 2015 to shareholders on the register at the close of business on 5 June 2015 with an ex-dividend date of 4 June 2015.
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David Nicol, Chief Executive, said:
"Against the backdrop of the ongoing transformation of the Group, financial performance in the first half was good. The growth in Funds under Management has been strong, helped by the overall upward trend in investment markets over the half year, although periods of volatility did impact transaction volumes and, therefore, impeded income growth. Nonetheless, the benefits of the more focused and efficient business emerging from the business transformation helped maintain profit growth, with the adjusted PBT margin increasing further to 22.3%.
The focus of the transformation programme remains to achieve a stronger business model which can create further value through long term sustainable growth with manageable risks. Increased efficiencies have delivered short term benefits in terms of enhanced shareholder returns. More importantly as we move out of the initial restructuring and simplification phase, these efficiencies enable re-investment in the business which is critical to sustaining organic growth."
For further information:
David Nicol, Chief Executive
Andrew Westenberger, Finance Director
Andrew Monkhouse, Head of Investor Relations
Brewin Dolphin Holdings PLC
020 7248 4400
Andrew Hayes / Wendy Baker
Hudson Sandler
020 7796 4133
Notes to Editors:
About Brewin Dolphin
The Brewin Dolphin Group ("the Group") has 28 offices throughout the UK and the Channel Islands.
Established in 1762, the Group is one of the UK's largest independently-owned private client wealth managers and provides a wide-ranging investment management and financial planning service for private investors, charities and pension funds.
Brewin Dolphin Limited is the principal operating company of Brewin Dolphin Holdings PLC. Brewin Dolphin Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.
Please see the Media Centre section on our website: http://www.brewindolphinmedia.co.uk/media.aspx for more details.
Interim Management Report
To the members of Brewin Dolphin Holdings PLC
Financial highlights
Adjusted profit before tax for the half year ended 31 March 2015 increased by 9% to £33.0m (H1 2014: £30.4m), reflecting the growth in Discretionary Funds under Management to £26.2bn (28 September 2014: £24.0bn) and the benefits of ongoing control over operating costs. The adjusted profit before tax margin was 22.3% (H1 2014: 20.8%). Adjusted diluted earnings per share grew by 5% to 9.2p (H1 2014: 8.8p).
Profit before tax for the period was £37.9m (H1 2014: £22.0m) and includes a gain of £9.7m from the sale of the Group's holding in Euroclear plc. Statutory diluted earnings per share of 10.7p were 65% higher than the prior year (H1 2014: 6.5p).
The interim dividend has been increased by 0.10p to 3.75p per share (2014 interim: 3.65p per share) and will be paid on 26 June 2015.
First half review
The half year ended 31 March 2015 contained a period of relative stock market volatility, with the FTSE 100 index fluctuating in a range of over 850 points. Over the period as a whole, the FTSE 100 index increased by 1.9%, while the WMA Private Investor Series Balanced Portfolio index grew by 6.4%. The volatility of the market negatively impacted transaction volumes, whilst the overall market provided support to Funds under Management growth.
The business transformation, initiated in 2012, continues with further progress made implementing enhanced client advice processes together with ongoing development of our investment management processes. These processes are being underpinned by new technology, which together with organisational improvements such as larger investment teams, continues to improve client service, risk management and efficiency.
The quality of the business continues to improve with an increasing proportion of Funds under Management ('FUM') and income from the core Discretionary business. Discretionary FUM continues to grow, increasing by 15% over the last twelve months; from £22.7bn to £26.2bn, and growing by 68% over the last three and a half years. 83% of core income is generated from the Discretionary service. Discretionary FUM growth has benefitted from positive investment returns. Organic growth has been maintained, increasingly from intermediary sources, including Managed Funds Services.
Sale of Stocktrade
On 14 May 2015, the Group announced the sale of Stocktrade, its Execution Only division to Alliance Trust Savings ("ATS") for £14m in cash, payable in full upon completion.
At 31 March 2015, Stocktrade had Assets under Administration of £4.6bn. For the year ended 28 September 2014, Stocktrade had income of £9.6m and contributed approximately £1.3m of pre-tax profit.
After accounting for all related costs, the transaction is expected to result in a net gain of approximately £1.0m, subject to final separation costs. The net sale proceeds will be used for general corporate purposes. The sale will enable additional operational efficiencies that, over time, are anticipated to largely offset Stocktrade's contribution to the Group.
The sale is consistent with our strategy of streamlining and simplifying the Group's operations and will help further enhance shareholder value by allowing us to continue to focus on growing our core Discretionary wealth management business.
Results and business performance
The underlying results for the half year ended 31 March 2015 reflect the continued progress that the Group has made to date on delivering against its strategic objectives. Adjusted profit before tax grew by 9% to £33.0m (H1 2014: £30.4m) and adjusted diluted EPS grew by 5% to 9.2p from 8.8p in the same period last year.
The adjusted profit before tax growth was driven by a 1% rise in income, together with improving efficiency, and control over operating costs, delivering an increased profit margin of 22.3% (H1 2014: 20.8%).
Unauditedas at31 March2015 | Unauditedas at30 March20141 |
% change | |
£m | £m | ||
Income | |||
Core2 | 136.0 | 134.4 | 1% |
Other | 12.4 | 11.9 | 4% |
Total income | 148.4 | 146.3 | 1% |
Fixed staff costs | (53.4) | (51.3) | 4% |
Other operating costs | (36.6) | (39.8) | -8% |
Total fixed operating costs | (90.0) | (91.1) | -1% |
Adjusted3 profit before variable staff costs | 58.4 | 55.2 | 6% |
Variable staff costs | (25.7) | (25.1) | 2% |
Adjusted3 operating profit | 32.7 | 30.1 | 9% |
Net finance income and other gains and losses | 0.3 | 0.3 | 0% |
Adjusted3 profit before tax | 33.0 | 30.4 | 9% |
Exceptional gains/(costs) | 10.1 | (2.0) | n/a |
Amortisation of client relationships | (5.2) | (6.4) | -19% |
Profit before tax | 37.9 | 22.0 | 72% |
Taxation | (7.8) | (3.9) | 100% |
Profit after tax | 30.1 | 18.1 | 66% |
Earnings per share | |||
Basic earnings per share | 11.2p | 6.9p | 62% |
Diluted earnings per share | 10.7p | 6.5p | 65% |
Adjusted3 earnings per share | |||
Basic earnings per share | 9.8p | 9.3p | 5% |
Diluted earnings per share4 | 9.2p | 8.8p | 5% |
1 Restated see notes 2 and 18. | |||
2 Core income is defined as income derived from fees and commissions charged for management and/or advice and execution activities relating to client portfolios. | |||
3 These figures have been adjusted to exclude redundancy costs, FSCS levy rebate, onerous contracts provision, disposal of available-for-sale investment and amortisation of client relationships. | |||
4 See note 7. | |||
Total income increased by £2.1m half on half with core income increasing by £1.6m, driven by a 12% rise in fee income to £95.9m (H1 2014: £86.0m), offset by a 17% fall in commission to £40.1m (H1 2014: £48.4m). Fee income increased largely as a result of growth in Funds under Management (H1 2015: £39.1bn, H1 2014: £36.1bn).
Commissions reduced because of lower trading volumes and clients joining on "fee only" rate cards. The lower transaction volumes arose partly because of volatile markets in the first three months of the period. The last three months (March to May 2015) have seen a partial rebound in transaction volumes.
Discretionary income of £112.6m was 5% higher than H1 2014 (£107.7m), and amounted to 83% of core income. Advisory income and Execution Only income accounted for 10% and 7% of core income respectively.
Other income increased by 4% to £12.4m, with Financial Planning increasing by 21% to £7.4m (H1 2014: £6.1m), trail income up by 8% to £2.7m, in line with valuation increases as a result of market growth, and interest income down by 30% to £2.3m (H1 2014: £3.3m) as a result of continued falling margins on cash deposits.
Total fixed operating costs declined by 1% to £90.0m, from £91.1m in the same period last year.
Fixed staff costs increased by 4% to £53.4m (H1 2014: £51.3m), as a result of both inflationary pay rises and a temporary increase in contractor numbers to support the enhanced client advice processes.
Other operating costs declined 8% from £39.8m in the same period last year to £36.6m. Reduced property costs resulting from a smaller office network, and lower discretionary and variable costs all contributed to the decline.
Exceptional gains were £10.1m, compared to losses of £2.0m in the same period last year. The major components are profit of £9.7m from the sale of the Group's holding in Euroclear plc and a £1.2m Financial Services Compensation Scheme levy rebate.
Amortisation of intangible client relationships was 19% lower than in same period last year (H1 2014: £6.4m).
Funds under Management
£bn | 28 September 2014 | Inflows | Outflows | Service Switching | Net Flows | Growth Rate % * | Market Movement | 31 March 2015 | |||||||||||
Discretionary | 24.0 | 1.1 | (0.6) | 0.2 | 0.7 | 6% | 1.5 | 26.2 | |||||||||||
Advisory Managed | 4.1 | 0.1 | (0.2) | (0.4) | (0.5) | -24% | 0.2 | 3.8 | |||||||||||
Advisory Dealing | 1.3 | 0.0 | (0.1) | (0.5) | (0.6) | -92% | 0.0 | 0.7 | |||||||||||
Total Advisory | 5.4 | 0.1 | (0.3) | (0.9) | (1.1) | -41% | 0.2 | 4.5 | |||||||||||
Total Managed/Advised | 29.4 | 1.2 | (0.9) | (0.7) | (0.4) | -3% | 1.7 | 30.7 | |||||||||||
Stocktrade | 4.3 | 0.2 | (0.1) | 0.0 | 0.1 | 5% | 0.2 | 4.6 | |||||||||||
Brewin Dolphin | 3.1 | 0.3 | (0.4) | 0.7 | 0.6 | 39% | 0.1 | 3.8 | |||||||||||
Execution Only | 7.4 | 0.5 | (0.5) | 0.7 | 0.7 | 19% | 0.3 | 8.4 | |||||||||||
Total Funds | 36.8 | 1.7 | (1.4) | 0.0 | 0.3 | 2% | 2.0 | 39.1 | |||||||||||
*Annualised |
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| 31 March 2015 | 28 September 2014 | % change |
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| Indices |
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| FTSE WMA Private Investor Series Balanced Portfolio | 3,684 | 3,462 | 6.4% |
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| FTSE 100 | 6,773 | 6,649 | 1.9% |
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The Group continues to focus on its core Discretionary service whilst managing the transfer of FUM out of the Advisory service. This is reflected in the on-going growth in Discretionary (and Execution Only) FUM and net outflows from Advisory FUM.
Total Discretionary FUM increased by 9% over the period to £26.2bn (FY 2014: £24.0bn), and by 15% over the last twelve months (H1 2014: £22.7bn).
Discretionary net inflows were £0.7bn, an annualised rate of 6%, above the target of achieving 5% per annum net FUM inflows. Discretionary FUM now represents 85% (28 September 2014: 82%) of total Managed/Advised FUM.
Capital
The Group has a strong balance sheet with cash balances at period end of £115m. These underpin its regulatory capital resources which continue to be in significant surplus to requirements.
Dividend
The Group's dividend policy is to grow dividends in line with adjusted earnings, with a target payout ratio of 60% to 80% of annual adjusted diluted earnings per share. In accordance with our normal practice, it is intended that the final dividend will be used to reflect full year profitability. Accordingly, an interim dividend of 3.75p per share is payable on 26 June 2015 to shareholders on the register at the close of business on 5 June 2015 with an ex-dividend date of 4 June 2015.
The variable final dividend will be based on the full year target dividend payout ratio of 60% to 80% adjusted earnings per share.
Going concern
As stated in note 2 to the condensed set of financial statements, the Directors believe that the Group is well placed to manage its business risks successfully. The Group's forecasts and projections, taking account of possible adverse changes in trading performance, show that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Directors continue to adopt a going concern basis for the preparation of the condensed financial statements. In forming their view, the Directors have considered the Group's prospects for a period exceeding 12 months from the date the condensed financial statements are approved.
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 27 to 32 of the 2014 Annual Report and Accounts available via our website www.brewin.co.uk.
Board changes
Kath Cates was appointed to the Board as a Non-Executive Director with effect from 18 December 2014. Michael Williams and Sir Stephen Lamport retired from the Board at the AGM on 20 February 2015. All of the non-executive directors are considered by the Company to be independent and the Board is fully compliant with the UK Corporate Governance Code with respect to Board composition.
Outlook
The economic backdrop in the UK, Eurozone and the US is continuing to improve. Supportive economic policies and continuing low interest rates provide a favourable backdrop to economic growth. Key growth and employment indicators appear positive for the medium term.
Whilst it is too early to assess the impact of the recent UK general election result on the performance of the economy, it is expected that the outcome will provide a favourable environment for the wealth management industry as a whole.
The UK has an ageing population with growing wealth, and a broad history of under-saving. This creates a positive backdrop for the industry in which the firm operates, coupled with positive recent developments in pension legislation.
The Group is entering the final stages of its transformation programme, and remains focused on continuing to develop both the capability and capacity to grow sustainably in the long term.
David Nicol | |
Chief Executive | |
26 May 2015 |
Condensed Consolidated Income Statement
for the period ended 31 March 2015
Unaudited period to31 March2015 | Unaudited26 weeks to30 March20141 | Audited52 weeks to28 September20141 | ||
Notes | £'000 | £'000 | £'000 | |
Revenue | 146,054 | 142,972 | 284,374 | |
Other operating income | 2,336 | 3,339 | 6,108 | |
Total income | 148,390 | 146,311 | 290,482 | |
Staff costs | (79,098) | (76,438) | (149,476) | |
Redundancy costs | (970) | (984) | (2,269) | |
FSCS levy rebate | 1,181 | - | - | |
Onerous contracts provision | 131 | (981) | (2,005) | |
Amortisation of intangible assets - client relationships | 9 | (5,162) | (6,426) | (13,592) |
Impairment of intangible assets - software | - | - | (31,693) | |
Licence provision | - | - | (2,034) | |
Other operating costs | (36,561) | (39,787) | (82,023) | |
Operating expenses | (120,479) | (124,616) | (283,092) | |
Operating profit | 27,911 | 21,695 | 7,390 | |
Finance income | 4 | 525 | 555 | 1,549 |
Other gains and losses | 5 | 9,712 | - | - |
Finance costs | 4 | (224) | (282) | (546) |
Profit before tax | 37,924 | 21,968 | 8,393 | |
Tax | 6 | (7,778) | (3,842) | (1,722) |
Profit for the period | 30,146 | 18,126 | 6,671 | |
Attributable to: | ||||
Equity shareholders of the parent | 30,146 | 18,126 | 6,671 | |
30,146 | 18,126 | 6,671 | ||
Earnings per share | ||||
Basic | 7 | 11.2p | 6.9p | 2.5p |
Diluted | 7 | 10.7p | 6.5p | 2.4p |
1 Restated see notes 2 and 18. |
Condensed Consolidated Statement of Comprehensive Income
for the period ended 31 March 2015
Unaudited period to31 March2015 | Unaudited26 weeks to30 March20141 | Audited52 weeks to28 September20141 | ||
£'000 | £'000 | £'000 | ||
Profit for the period | 30,146 | 18,126 | 6,671 | |
Items that will not be reclassified subsequently to profit and loss: | ||||
Actuarial gain/(loss) on defined benefit pension scheme | 1,328 | (826) | (1,223) | |
Deferred tax charge/(credit) on actuarial gain/(loss) on defined benefit pension scheme | (266) | 165 | 245 | |
1,062 | (661) | (978) | ||
Items that may be reclassified subsequently to profit and loss: | ||||
Reversal of revaluation of available-for-sale investments | (9,565) | - | - | |
Deferred tax credit on revaluation of available-for-sale investments | 1,913 | - | - | |
Exchange differences on translation of foreign operations | (311) | (88) | (302) | |
(7,963) | (88) | (302) | ||
Other comprehensive expense for the period | (6,901) | (749) | (1,280) | |
Total comprehensive income for the period | 23,245 | 17,377 | 5,391 | |
Attributable to: | ||||
Equity shareholders of the parent | 23,245 | 17,377 | 5,391 | |
23,245 | 17,377 | 5,391 | ||
1 Restated see notes 2 and 18. |
Condensed Consolidated Statement of Changes in Equity
for the period ended 31 March 2015
Attributable to the equity shareholders of the parent | |||||||
Called up share capital | Share premium account | Own shares | Revaluation reserve | Merger reserve | Profit and loss account | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Balance at 29 September 2013 | 2,712 | 133,341 | (12,734) | 7,652 | 61,380 | 29,294 | 221,645 |
Restatement (see notes 2 and 18) | - | - | - | - | - | (549) | (549) |
Balance at 29 September 2013 (restated) | 2,712 | 133,341 | (12,734) | 7,652 | 61,380 | 28,745 | 221,096 |
Profit for the period | - | - | - | - | - | 18,126 | 18,126 |
Other comprehensive income for the period | |||||||
Deferred and current tax on other comprehensive income | - | - | - | - | - | 165 | 165 |
Actuarial loss on defined benefit pension scheme | - | - | - | - | - | (826) | (826) |
Exchange differences on translation of foreign operations | - | - | - | - | - | (88) | (88) |
Total comprehensive income for the period | - | - | - | - | - | 17,377 | 17,377 |
Dividends | - | - | - | - | - | (13,438) | (13,438) |
Issue of shares | 25 | 4,540 | - | - | - | - | 4,565 |
Own shares acquired in the period | - | - | (4,135) | - | - | - | (4,135) |
Own shares disposed of on exercise of options | - | - | 3,819 | - | - | (3,819) | - |
Share-based payments | - | - | - | - | - | 3,187 | 3,187 |
Tax on share-based payments | - | - | - | - | - | 2,250 | 2,250 |
Balance at 30 March 2014 | 2,737 | 137,881 | (13,050) | 7,652 | 61,380 | 34,302 | 230,902 |
Loss for the period | - | - | - | - | - | (11,455) | (11,455) |
Other comprehensive income for the period | |||||||
Deferred and current tax on other comprehensive income | - | - | - | - | - | 80 | 80 |
Actuarial loss on defined benefit pension scheme | - | - | - | - | - | (397) | (397) |
Exchange differences on translation of foreign operations | - | - | - | - | - | (214) | (214) |
Total comprehensive income for the period | - | - | - | - | - | (11,986) | (11,986) |
Dividends | - | - | - | - | - | (9,688) | (9,688) |
Issue of shares | 8 | 1,539 | - | - | - | - | 1,547 |
Own shares acquired in the period | - | - | (3,828) | - | - | - | (3,828) |
Own shares disposed of on exercise of options | - | - | 833 | - | - | (833) | - |
Share-based payments | - | - | - | - | - | 5,311 | 5,311 |
Tax on share-based payments | - | - | - | - | - | (988) | (988) |
Balance at 28 September 2014 | 2,745 | 139,420 | (16,045) | 7,652 | 61,380 | 16,118 | 211,270 |
Profit for the period | - | - | - | - | - | 30,146 | 30,146 |
Other comprehensive income for the period | |||||||
Deferred and current tax on other comprehensive income | - | - | - | 1,913 | - | (266) | 1,647 |
Actuarial gain on defined benefit pension scheme | - | - | - | - | - | 1,328 | 1,328 |
Revaluation of available-for-sale investments | - | - | - | (9,565) | - | - | (9,565) |
Exchange differences on translation of foreign operations | - | - | - | - | - | (311) | (311) |
Total comprehensive income for the period | - | - | - | (7,652) | - | 30,897 | 23,245 |
Dividends | - | - | - | - | - | (16,845) | (16,845) |
Issue of shares | 45 | 2,402 | - | - | 9,173 | - | 11,620 |
Own shares acquired in the period | - | - | (13,048) | - | - | - | (13,048) |
Own shares disposed of on exercise of options | - | - | 7,234 | - | - | (7,234) | - |
Share-based payments | - | - | - | - | - | 4,617 | 4,617 |
Tax on share-based payments | - | - | - | - | - | 411 | 411 |
Balance at 31 March 2015 | 2,790 | 141,822 | (21,859) | - | 70,553 | 27,964 | 221,270 |
Condensed Consolidated Balance Sheet
as at 31 March 2015
Unauditedas at31 March2015 | Unauditedas at30 March20141 | Auditedas at28 September20141 | ||
Notes | £'000 | £'000 | £'000 | |
ASSETS | ||||
Non-current assets | ||||
Intangible assets | 9 | 90,245 | 126,435 | 94,311 |
Property, plant and equipment | 10 | 9,139 | 12,886 | 11,076 |
Available-for-sale investments | 11 | - | 10,000 | 10,000 |
Other receivables | 834 | 1,182 | 1,092 | |
Deferred tax asset | 9,684 | 2,621 | 9,136 | |
Total non-current assets | 109,902 | 153,124 | 125,615 | |
Current assets | ||||
Trading investments | 11 | 977 | 897 | 912 |
Trade and other receivables | 279,457 | 265,929 | 302,065 | |
Cash and cash equivalents | 114,816 | 109,174 | 136,383 | |
Total current assets | 395,250 | 376,000 | 439,360 | |
Total assets | 505,152 | 529,124 | 564,975 | |
LIABILITIES | ||||
Current liabilities | ||||
Bank overdrafts | 50 | 231 | 1,270 | |
Trade and other payables | 258,829 | 263,501 | 311,146 | |
Current tax liabilities | 4,421 | 3,342 | 3,888 | |
Provisions | 12 | 2,657 | 4,000 | 4,973 |
Shares to be issued including premium | 13 | 9,361 | 6,112 | 10,068 |
Total current liabilities | 275,318 | 277,186 | 331,345 | |
Net current assets | 119,932 | 98,814 | 108,015 | |
Non-current liabilities | ||||
Retirement benefit obligation | 14 | 5,042 | 8,684 | 7,735 |
Deferred purchase consideration | - | 1,131 | 1,271 | |
Provisions | 12 | 3,522 | 3,055 | 4,142 |
Shares to be issued including premium | 13 | - | 8,166 | 9,212 |
Total non-current liabilities | 8,564 | 21,036 | 22,360 | |
Total liabilities | 283,882 | 298,222 | 353,705 | |
Net assets | 221,270 | 230,902 | 211,270 | |
EQUITY | ||||
Called up share capital | 15 | 2,790 | 2,737 | 2,745 |
Share premium account | 15 | 141,822 | 137,881 | 139,420 |
Own shares | (21,859) | (13,050) | (16,045) | |
Revaluation reserve | - | 7,652 | 7,652 | |
Merger reserve | 70,553 | 61,380 | 61,380 | |
Profit and loss account | 27,964 | 34,302 | 16,118 | |
Equity attributable to equity holders of the parent | 221,270 | 230,902 | 211,270 | |
1 Restated see notes 2 and 18. |
Condensed Consolidated Cash Flow Statement
for the period ended 31 March 2015
Unauditedperiod to31 March2015 | Unaudited26 weeks to30 March20141 | Audited52 weeks to28 September 20141 | ||
Notes | £'000 | £'000 | £'000 | |
Net cash inflow from operating activities | 17 | 1,471 | 16,978 | 59,968 |
Cash flows from investing activities | ||||
Purchase of intangible assets - client relationships | (3) | (147) | (150) | |
Purchase of intangible assets - software | (2,530) | (4,697) | (7,450) | |
Purchases of property, plant and equipment | (737) | (1,559) | (2,751) | |
Proceeds on disposal of available-for-sale investments | 10,147 | - | - | |
Dividend received from available-for-sale investments | - | - | 307 | |
Net cash from/(used in) investing activities | 6,877 | (6,403) | (10,044) | |
Cash flows from financing activities | ||||
Dividends paid to equity shareholders | 8 | (16,845) | (13,438) | (23,126) |
Purchase of own shares | (13,048) | (4,135) | (7,963) | |
Proceeds on issue of shares | 1,597 | 2,447 | 3,048 | |
Net cash used in financing activities | (28,296) | (15,126) | (28,041) | |
Net (decrease)/increase in cash and cash equivalents | (19,948) | (4,551) | 21,883 | |
Cash and cash equivalents at the start of period | 135,113 | 113,533 | 113,533 | |
Effect of foreign exchange rates | (399) | (39) | (303) | |
Cash and cash equivalents at the end of period | 114,766 | 108,943 | 135,113 | |
Cash and cash equivalents shown in current assets | 114,816 | 109,174 | 136,383 | |
Bank overdrafts | (50) | (231) | (1,270) | |
Net cash and cash equivalents | 114,766 | 108,943 | 135,113 | |
1 Restated see notes 2 and 18. | ||||
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 26 May 2015.
A copy of this Interim Financial Report including Condensed Financial Statements for theperiod ended 31 March 2015 is available at the Company's registered office and on the Company's investor relations website (www.brewin.co.uk).
The information for the 52 week period ended 28 September 2014 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 theperiod ended 31 March 2015 should be read in conjunction with the annual audited financial statements of Brewin Dolphin Holdings PLC for the 52 week period ended 28 September 2014.
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 Conduct 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 28 September 2014, except for the adoption of new standards and interpretations effective as of 29 September 2014 and a change in accounting policy for client settlement cash.
The Group has applied for the first time IFRIC 21 'Levies' that requires restatement of previous financial statements. In addition, the Group has amended its accounting policy for client settlement cash.
The nature and the effect of these changes are disclosed below. Several other new standards and amendments apply for the first time during the period, they do not impact the annual consolidated financial statements of the Group or the interim condensed consolidated financial statements of the Group.
IFRIC 21 Levies
IFRIC 21 is effective for annual periods beginning on or after 1 January 2014 and has been applied retrospectively. It is applicable to all levies imposed by financial services regulators under legislation, other than outflows that are within the scope of other standards and fines or other penalties for breaches of legislation. The interpretation clarifies that an entity recognises a liability for a levy, when the activity that triggers payment as identified by the relevant legislation occurs.
The trigger that gives rise to the liability to pay the FSCS Levy is that Brewin Dolphin Limited is a company authorised by the FCA at the levy date of 1 July. At this point, the full FSCS Levy should be recognised.
The impact of this new interpretation in the current period is to reduce other operating costs by £865,000 and increase profit for the period by £688,000. The impact on prior periods is outlined in note 18.
Client settlement cash
Client settlement account balances were previously shown as client settlement cash included within cash and cash equivalents. The accounting policy has been changed to reclassify these balances to either trade and other payables or trade and other receivables, which better reflects the substance of these balances.
The impact of this change in the current period is to reduce cash and cash equivalents by £18.5 million, decrease trade and other payables by £13.9 million, and increase trade and other receivables by £4.6 million. There is no impact on profit for the period. The impact on prior periods is outlined in note 18, firm's cash was not impacted by the change.
3. | Segmental information |
For management reporting purposes the Group currently has a single operating segment. This forms the reportable segment of the Group for the period. Please refer to the Consolidated Income Statement and the Consolidated Balance Sheet, for numerical information.
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 division. All segmental income related to external clients.
The accounting policies of the operating segment are the same as those of the Group.
4. | Finance income and costs |
Unaudited period to31 March2015 | Unaudited26 weeks to30 March2014 | Audited52 weeks to28 September2014 | |
£'000 | £'000 | £'000 | |
Finance income | |||
Dividends from available-for-sale investments | - | - | 472 |
Interest on bank deposits | 525 | 555 | 1,077 |
525 | 555 | 1,549 | |
Finance costs | |||
Finance cost of deferred consideration | 49 | 65 | 129 |
Interest expense on defined pension obligation | 135 | 184 | 338 |
Unwind of discounts on provisions | 20 | 16 | 48 |
Interest on bank overdrafts | 20 | 17 | 31 |
224 | 282 | 546 |
5. | Other gains and losses |
Unaudited period to31 March2015 | Unaudited26 weeks to30 March2014 | Audited52 weeks to28 September2014 | |
£'000 | £'000 | £'000 | |
Profit on disposal of available-for-sale investments | 9,712 | - | - |
The Group sold its holding in Euroclear plc for £10.1 million in December 2014.
6. | Taxation |
Unaudited period to31 March2015 | Unaudited26 weeks to30 March20141 | Audited52 weeks to28 September20141 | |
£'000 | £'000 | £'000 | |
United Kingdom | |||
Current tax | 5,828 | 3,094 | 8,391 |
Prior period | 309 | - | (50) |
Overseas tax | |||
Current tax | 129 | 147 | 204 |
Prior period | 1 | - | (1) |
6,267 | 3,241 | 8,544 | |
United Kingdom deferred tax | |||
Current year | 1,851 | 672 | (6,246) |
Prior period | (340) | (71) | (576) |
Total | 7,778 | 3,842 | 1,722 |
1 Restated see notes 2 and 18. |
The Group calculates the period income tax expense using the tax rate that would be applicable to the expected total annual earnings.
7. | Earnings per share |
The calculation of the basic and diluted earnings per share is based on the following data:
Unaudited period to31 March2015 | Unaudited26 weeks to30 March20141 | Audited52 weeks to28 September20141 | |
'000 | '000 | '000 | |
Number of shares | |||
Basic | |||
Weighted average number of shares in issue in the period | 269,126 | 264,623 | 268,399 |
Diluted | |||
Effect of weighted average number of options outstanding for the period | 9,989 | 11,500 | 11,726 |
Effect of estimated weighted average number of shares to be earned under deferred consideration arrangements | 2,655 | 2,768 | 2,635 |
Diluted weighted average number of options and shares for the period | 281,770 | 278,891 | 282,760 |
Adjusted2 diluted | |||
Effect of full dilution of employee share options which are contingently issuable or have future attributable service costs | 5,148 | 2,275 | 2,196 |
Adjusted diluted weighted average number of options and shares for the period | 286,918 | 281,166 | 284,956 |
£'000 | £'000 | £'000 | |
Basic earnings attributable to ordinary shareholders | |||
Profit for the period | 30,146 | 18,126 | 6,671 |
Disposal of available-for-sale investment | (9,712) | - | - |
Redundancy costs | 970 | 984 | 2,269 |
FSCS levy rebate | (1,181) | - | - |
Onerous contracts provision | (131) | 981 | 2,005 |
Amortisation of intangible assets - client relationships | 5,162 | 6,426 | 13,592 |
Impairment of intangible assets - software | - | - | 31,693 |
Licence provision | - | - | 2,034 |
less tax effect of above | 1,003 | (1,846) | (11,350) |
Adjusted3 basic profit for the period and attributable earnings | 26,257 | 24,671 | 46,914 |
Diluted earnings attributable to ordinary shareholders | |||
Profit for the period | 30,146 | 18,126 | 6,671 |
Finance costs of deferred consideration4 | 49 | 58 | 117 |
less tax | (10) | (13) | (26) |
Adjusted fully diluted profit for the period and attributable earnings | 30,185 | 18,171 | 6,762 |
Disposal of available-for-sale investment | (9,712) | - | - |
Redundancy costs | 970 | 984 | 2,269 |
FSCS levy rebate | (1,181) | - | - |
Onerous contracts provision | (131) | 981 | 2,005 |
Amortisation of intangible assets - client relationships | 5,162 | 6,426 | 13,592 |
Impairment of intangible assets - software | - | - | 31,693 |
Licence provision | - | - | 2,034 |
less tax effect of above | 1,003 | (1,846) | (11,350) |
Adjusted3 diluted profit for the period and attributable earnings | 26,296 | 24,716 | 47,005 |
| |||
Earnings per share | |||
Basic | 11.2p | 6.9p | 2.5p |
Diluted | 10.7p | 6.5p | 2.4p |
| |||
Adjusted3 earnings per share | |||
Basic | 9.8p | 9.3p | 17.5p |
Adjusted2 diluted | 9.2p | 8.8p | 16.5p |
1 Restated see notes 2 and 18. | |||
2 The dilutive shares used for this measure differ from that used for statutory dilutive earnings per share; the future value of service costs attributable to employee share options is ignored and contingently issuable shares for Long-term Incentive Plan ('LTIP') options are assumed to fully vest. The Directors have selected this measure as it represents the underlying effective dilution by offsetting the impact to the calculation of basic shares of the purchase of shares by the Employee Share Ownership Trust ('ESOT') to satisfy options. | |||
3 Excluding disposal of available-for-sale investment, redundancy costs, FSCS levy rebate, onerous contracts provision, amortisation of client relationships, impairment of intangible assets - software and licence provision . | |||
4 Finance costs of deferred consideration are added back where the issue of shares is more dilutive than the interest cost saved. | |||
8. | Dividend |
Unaudited period to31 March2015 | Unaudited26 weeks to30 March2014 | Audited52 weeks to28 September2014 | ||
£'000 | £'000 | £'000 | ||
Amounts recognised as distributions to equity shareholders in the period: | ||||
Final dividend paid 23 March 2015, 6.25p per share (2014: 5.05p per share) | 16,845 | 13,438 | 13,438 | |
Interim dividend paid 4 July 2014, 3.65p per share | - | - | 9,688 | |
16,845 | 13,438 | 23,126 | ||
| ||||
An interim dividend of 3.75p per share was declared by the Board on 26 May 2015 and has not been included as a liability as at 31 March 2015. This interim dividend will be paid on 26 June 2015 to shareholders on the register at the close of business on 5 June 2015 with an ex-dividend date of 4 June 2015.
9. | Intangible assets |
Goodwill | Client relationships |
Software |
Total | ||
£'000 | £'000 | £'000 | £'000 | ||
Cost | |||||
At 29 September 2013 | 48,637 | 100,578 | 46,615 | 195,830 | |
Additions | - | 740 | 4,479 | 5,219 | |
Disposals | - | - | - | - | |
Exchange differences | - | (2) | - | (2) | |
Revaluation of shares to be issued and deferred purchase consideration in respect of acquisitions in prior periods | - | 1,453 | - | 1,453 | |
At 30 March 2014 | 48,637 | 102,769 | 51,094 | 202,500 | |
Additions | - | (793) | 2,563 | 1,770 | |
Disposals | - | - | (2) | (2) | |
Exchange differences | - | (9) | - | (9) | |
Revaluation of shares to be issued and deferred purchase consideration in respect of acquisitions in prior periods | - | 6,079 | - | 6,079 | |
At 28 September 2014 | 48,637 | 108,046 | 53,655 | 210,338 | |
Additions | - | 83 | 2,482 | 2,565 | |
Disposals | - | - | - | - | |
Exchange differences | - | (12) | - | (12) | |
Revaluation of shares to be issued and deferred purchase consideration in respect of acquisitions in prior periods | - | 121 | - | 121 | |
At 31 March 2015 | 48,637 | 108,238 | 56,137 | 213,012 | |
Accumulated amortisation and impairment | |||||
At 29 September 2013 | - | 55,997 | 12,385 | 68,382 | |
Amortisation charge for the period | - | 6,426 | 1,257 | 7,683 | |
Impairment losses for the period | - | - | - | - | |
At 30 March 2014 | - | 62,423 | 13,642 | 76,065 | |
Amortisation charge for the period | - | 7,166 | 1,103 | 8,269 | |
Impairment losses for the period | - | - | 31,693 | 31,693 | |
At 28 September 2014 | - | 69,589 | 46,438 | 116,027 | |
Amortisation charge for the period | - | 5,162 | 1,578 | 6,740 | |
Impairment losses for the period | - | - | - | - | |
At 31 March 2015 | - | 74,751 | 48,016 | 122,767 | |
Net book value | |||||
At 29 September 2013 | 48,637 | 44,581 | 34,230 | 127,448 | |
At 30 March 2014 | 48,637 | 40,346 | 37,452 | 126,435 | |
At 28 September 2014 | 48,637 | 38,457 | 7,217 | 94,311 | |
At 31 March 2015 | 48,637 | 33,487 | 8,121 | 90,245 |
10. | Property, plant and equipment |
Leasehold Improvements | Office Equipment | MotorVehicles | Computer Equipment | Total | ||
£'000 | £'000 | £'000 | £'000 | £'000 | ||
Cost | ||||||
At 29 September 2013 | 12,687 | 13,681 | 34 | 77,771 | 104,173 | |
Additions | 256 | 157 | - | 1,149 | 1,562 | |
Exchange differences | (2) | (7) | - | - | (9) | |
Disposals | (470) | (62) | - | (86) | (618) | |
At 30 March 2014 | 12,471 | 13,769 | 34 | 78,834 | 105,108 | |
Additions | 473 | 79 | - | 671 | 1,223 | |
Exchange differences | (10) | (28) | (2) | - | (40) | |
Disposals | (1,131) | (565) | - | (313) | (2,009) | |
At 28 September 2014 | 11,803 | 13,255 | 32 | 79,192 | 104,282 | |
Additions | 500 | 162 | - | 80 | 742 | |
Exchange differences | (14) | (39) | (2) | - | (55) | |
Disposals | (81) | (60) | - | (41) | (182) | |
At 31 March 2015 | 12,208 | 13,318 | 30 | 79,231 | 104,787 | |
Accumulated depreciation | ||||||
At 29 September 2013 | 7,230 | 10,428 | 14 | 72,181 | 89,853 | |
Charge for the period | 620 | 822 | 4 | 1,349 | 2,795 | |
Exchange differences | (2) | (5) | - | - | (7) | |
Eliminated on disposal | (283) | (54) | - | (82) | (419) | |
At 30 March 2014 | 7,565 | 11,191 | 18 | 73,448 | 92,222 | |
Charge for the period | 614 | 720 | 4 | 1,238 | 2,576 | |
Exchange differences | (10) | (26) | (1) | - | (37) | |
Eliminated on disposal | (738) | (513) | - | (304) | (1,555) | |
At 28 September 2014 | 7,431 | 11,372 | 21 | 74,382 | 93,206 | |
Charge for the period | 649 | 627 | 4 | 1,375 | 2,655 | |
Exchange differences | (13) | (33) | (2) | - | (48) | |
Eliminated on disposal | (71) | (53) | - | (41) | (165) | |
At 31 March 2015 | 7,996 | 11,913 | 23 | 75,716 | 95,648 | |
Net book value | ||||||
At 29 September 2013 | 5,457 | 3,253 | 20 | 5,590 | 14,320 | |
At 30 March 2014 | 4,906 | 2,578 | 16 | 5,386 | 12,886 | |
At 28 September 2014 | 4,372 | 1,883 | 11 | 4,810 | 11,076 | |
At 31 March 2015 | 4,212 | 1,405 | 7 | 3,515 | 9,139 |
11. | Investments |
Available-for-sale
Unlisted investments | ||
£'000 | ||
Fair value | ||
At 31 March 2015 | - | |
At 30 March 2014 | 10,000 | |
At 28 September 2014 | 10,000 | |
The Group sold its unlisted available-for-sale investment in Euroclear plc (refer to note 5) in December 2014.
The holding in Euroclear plc resulted from a £431,000 strategic investment in Crest, the London based settlement system which was taken over by Euroclear plc.
Trading investments
Listed investments | ||
£'000 | ||
Fair value | ||
At 31 March 2015 | 977 | |
At 30 March 2014 | 897 | |
At 28 September 2014 | 912 | |
Investments are measured at fair value which is determined directly by reference to published prices in an active market where available.
12. | Provisions |
Licence provision | Sundry claims and associated costs | Onerous contracts | Unaudited period to31 March2015 | Unaudited26 weeks to30 March2014 | Audited52 weeks to28 September2014 | |
Total | Total | Total | ||||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
At start of period | 1,429 | 1,907 | 5,779 | 9,115 | 7,665 | 7,665 |
Additions | - | 768 | 802 | 1,570 | 1,716 | 6,750 |
Utilisation of provision | (1,429) | (313) | (1,439) | (3,181) | (1,086) | (3,500) |
Unwinding of discount | - | - | 20 | 20 | 16 | 48 |
Unused amounts reversed during the period | - | (413) | (932) | (1,345) | (1,256) | (1,848) |
At end of period | - | 1,949 | 4,230 | 6,179 | 7,055 | 9,115 |
Provisions | ||||||
Included in current liabilities | - | 1,949 | 708 | 2,657 | 4,000 | 4,973 |
Included in non-current liabilities | - | - | 3,522 | 3,522 | 3,055 | 4,142 |
- | 1,949 | 4,230 | 6,179 | 7,055 | 9,115 |
The Group recognises a provision for settlements of sundry claims and associated costs; settlement of £101,000 (30 March 2014: £nil, 28 September 2014: £nil) has been made since the balance sheet date.
The onerous contracts provision is in respect of surplus office space, which the Group may not be able to sublet in the short term. The maximum exposure is the current estimated amount that the Group would have to pay to meet the future obligations under these lease contracts which is approximately £12.9 million as at 31 March 2015, if the assumption regarding sub-lets is removed and the time value of money is ignored.
13. | Shares to be issued including premium and other deferred purchase liabilities |
In prior periods, the Group acquired 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.
14. | Retirement benefit obligation |
The main financial assumptions used in calculating the Group's retirement benefit obligation are as follows:
As at 31 March2015 | As at 30 March2014 | As at 28 September 2014 | |||
Discount rate | 3.30% | 4.30% | 3.90% | ||
RPI Inflation assumption | 2.90% | 3.20% | 3.10% | ||
CPI Inflation assumption | 1.90% | 2.20% | 2.10% | ||
Rate of increase in salaries | 2.90% | 3.20% | 3.10% | ||
LPI Pension Increases | 2.85% | 3.10% | 3.00% | ||
Average assumed life expectancies for members on retirement at age 65. | |||||
Retiring today | |||||
Males | 89.0 years | 88.9 years | 88.9 years | ||
Females | 90.2 years | 90.1 years | 90.1 years | ||
Retiring in 20 years time | |||||
Males | 90.3 years | 90.2 years | 90.2 years | ||
Females | 91.7 years | 91.6 years | 91.6 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 2015 by a qualified independent actuary.
15. | 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 28 September 2014 | 274,452,745 | 615,864 | 2,745 | 139,420 | 142,165 | ||
Settlement of deferred consideration | 4 December 2014 | 282,933 | - | 289.2p | 3 | 815 | 818 |
Settlement of deferred consideration: Tilman Brewin Dolphin Limited | 9 December 2014 | 3,191,058 | - | 288.45p | 32 | - | 32 |
Issue of options | Various | 606,196 | - | 98p - 175.25p | 6 | 940 | 946 |
Nil paid shares now paid up | Various | 482,882 | (482,882) | 104p - 162.5p | 4 | 655 | 659 |
Cost of issue of shares | - | - | - | (8) | (8) | ||
At 31 March 2015 | 279,015,814 | 132,982 | 2,790 | 141,822 | 144,612 |
The share premium arising on the shares issued on the settlement of the deferred consideration for Tilman Brewin Dolphin Limited has been credited to the Merger Reserve.
16. | Share based payments |
In December 2014, 1,667,624 share options were granted to senior executives and the Directors under the Long-term Incentive Plan ('LTIP'). The options vest on the third anniversary of the date of grant provided certain performance conditions and targets, set prior to the grant, have been met. If the performance conditions are not met the options lapse. The fair value at grant date is estimated using a Black-Scholes model, taking into account the terms and conditions upon which the options were granted. There is no cash settlement of the options. The fair value of options granted during the period ended 31 March 2015 was estimated on the date of grant using the following assumptions:
Weighted average share price | 289.2p |
Weighted average exercise price | - |
Expected volatility | 27% |
Expected life (yrs) | 3 |
Risk free rate | 1.2% |
Expected dividend yield | 5.4% |
The weighted average fair value of the options granted during the period was 246.25p (52 week period ended 28 September 2014: 290.31p).
The Group recognised total expenses in the period of £4,617,000 (30 March 2014: £3,187,000, 28 September 2014: £8,498,000) related to equity-settled share-based payment transactions.
17. | Note to the cash flow statement |
Unaudited period to31 March2015 | Unaudited26 weeks to30 March20141 | Audited52 weeks to28 September20141 | |
£'000 | £'000 | £'000 | |
Operating profit | 27,911 | 21,695 | 7,390 |
Adjustments for: | |||
Depreciation of property, plant and equipment | 2,655 | 2,795 | 5,371 |
Amortisation of intangible assets - client relationships | 5,162 | 6,426 | 13,592 |
Amortisation of intangible assets - software | 1,578 | 1,257 | 2,360 |
Impairment of intangible assets | - | - | 31,693 |
Loss on disposal of property, plant and equipment | 16 | 198 | 653 |
Loss on disposal of intangible asset - purchased software | - | - | 2 |
Retirement benefit obligation | (1,500) | (1,500) | (3,003) |
Share-based payment cost | 4,617 | 3,187 | 8,498 |
Translation adjustments | 88 | (51) | (3) |
Interest income | 525 | 555 | 1,077 |
Interest expense | (20) | (17) | (31) |
Operating cash flows before movements in working capital | 41,032 | 34,545 | 67,599 |
(Decrease)/increase in payables and provisions | (56,793) | (10,982) | 39,585 |
Decrease/(increase) in receivables and trading investments | 22,961 | (3,717) | (39,778) |
Cash generated by operating activities | 7,200 | 19,846 | 67,406 |
Tax paid | (5,729) | (2,868) | (7,438) |
Net cash inflow from operating activities | 1,471 | 16,978 | 59,968 |
1 Restated see notes 2 and 18. |
Cash and cash equivalents comprise cash at bank and bank overdrafts.
18. | Restatement of prior period information |
As disclosed in note 2, the Group adopted IFRIC 21 Levies on 29 September 2014 and amended its accounting policy for client settlement cash.
These amendments have resulted in the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity, the Consolidated Balance Sheet and the Consolidated Cash Flow Statement being restated.
The amount of the restatement for each financial statement line item affected by retrospective application of IFRIC 21 and change of accounting policy for client settlement cash is set out below:
As reported 26 weeks to 30 March 2014 | Adjust- ment IFRIC 21 | Adjust- ment client settlement cash | Restated 26 weeks to 30 March 2014 | As reported 52 weeks to 28 September 2014 | Adjust-ment IFRIC 21 | Adjust-ment client settlement cash | Restated 52 weeks to 28 September 2014 | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Consolidated Income Statement | ||||||||
Other operating costs | (40,399) | 612 | - | (39,787) | (81,770) | (253) | - | (82,023) |
Operating expenses | (125,228) | 612 | - | (124,616) | (282,839) | (253) | - | (283,092) |
Operating profit | 21,083 | 612 | - | 21,695 | 7,643 | (253) | - | 7,390 |
Profit before tax | 21,356 | 612 | - | 21,968 | 8,646 | (253) | - | 8,393 |
Tax | (3,707) | (135) | - | (3,842) | (1,820) | 98 | - | (1,722) |
Profit for the period | 17,649 | 477 | - | 18,126 | 6,826 | (155) | - | 6,671 |
Earnings per share | ||||||||
Basic | 6.7p | 0.2p | - | 6.9p | 2.5p | - | - | 2.5p |
Diluted | 6.3p | 0.2p | - | 6.5p | 2.4p | - | - | 2.4p |
Adjusted1 earnings per share | ||||||||
Basic | 9.1p | 0.2p | - | 9.3p | 17.5p | - | - | 17.5p |
Diluted2 | 8.6p | 0.2p | - | 8.8p | 16.5p | - | - | 16.5p |
Consolidated Statement of Comprehensive Income | ||||||||
Profit for the period | 17,649 | 477 | - | 18,126 | 6,826 | (155) | - | 6,671 |
Total comprehensive income for the period | 16,900 | 477 | - | 17,377 | 5,546 | (155) | - | 5,391 |
As reportedas at30 March 2014 | Adjust- ment IFRIC 21 | Adjust- ment client settlement cash | Restatedas at30 March 2014 | As reportedas at28 September 2014 | Adjust-ment IFRIC 21 | Adjust- ment client settlement cash | Restatedas at28 September 2014 | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Consolidated Balance Sheet | ||||||||
Deferred tax asset | 2,621 | - | - | 2,621 | 8,959 | 177 | - | 9,136 |
Total non-current assets | 153,124 | - | - | 153,124 | 125,438 | 177 | - | 125,615 |
Trade and other receivables | 262,672 | - | 3,257 | 265,929 | 297,322 | (865) | 5,608 | 302,065 |
Cash and cash equivalents | ||||||||
- Firm's cash | 109,174 | - | - | 109,174 | 136,383 | - | - | 136,383 |
- Client settlement cash | 27,204 | - | (27,204) | - | 21,687 | - | (21,687) | - |
Total cash and cash equivalents | 136,378 | - | (27,204) | 109,174 | 158,070 | - | (21,687) | 136,383 |
Total current assets | 399,947 | - | (23,947) | 376,000 | 456,304 | (865) | (16,079) | 439,360 |
Total assets | 553,071 | - | (23,947) | 529,124 | 581,742 | (688) | (16,079) | 564,975 |
Trade and other payables | 287,448 | - | (23,947) | 263,501 | 327,225 | - | (16,079) | 311,146 |
Current tax liabilities | 3,270 | 72 | - | 3,342 | 3,872 | 16 | - | 3,888 |
Total current liabilities | 301,061 | 72 | (23,947) | 277,186 | 347,408 | 16 | (16,079) | 331,345 |
Net current assets | 98,886 | (72) | - | 98,814 | 108,896 | (881) | - | 108,015 |
Total liabilities | 322,097 | 72 | (23,947) | 298,222 | 369,768 | 16 | (16,079) | 353,705 |
Net assets | 230,974 | (72) | - | 230,902 | 211,974 | (704) | - | 211,270 |
Profit and loss account | 34,374 | (72) | - | 34,302 | 16,822 | (704) | - | 16,118 |
Equity attributable to equity holders of the parent | 230,974 | (72) | - | 230,902 | 211,974 | (704) | - | 211,270 |
As reported26 weeks to30 March 2014 | Adjust- ment IFRIC 21 | Adjust- ment client settlement cash | Restated26 weeks to30 March 2014 | As reported52 weeks to28 September 2014 | Adjust-ment IFRIC 21 | Adjust-ment client settlement cash | Restated52 weeks to28 September 2014 | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Consolidated Cash Flow Statement | ||||||||
Net cash inflow from operating activities | 23,881 | - | (6,903) | 16,978 | 61,354 | - | (1,386) | 59,968 |
Net (decrease)/increase in cash and cash equivalents | 2,352 | - | (6,903) | (4,551) | 23,269 | - | (1,386) | 21,883 |
Cash and cash equivalents at the start of period | 133,834 | - | (20,301) | 113,533 | 133,834 | - | (20,301) | 113,533 |
Cash and cash equivalents at the end of period | 136,147 | - | (27,204) | 108,943 | 156,800 | - | (21,687) | 135,113 |
Cash and cash equivalents shown in current assets | 136,378 | - | (27,204) | 109,174 | 158,070 | - | (21,687) | 136,383 |
Net cash and cash equivalents | 136,147 | - | (27,204) | 108,943 | 156,800 | - | (21,687) | 135,113 |
1 These figures have been adjusted to exclude redundancy costs, FSCS levy rebate, onerous contracts provision, impairment of intangible assets - software and amortisation of client relationships. 2See note 7. | ||||||||
The impact of retrospective application on each component of equity is shown in the Consolidated Statement of Changes in Equity. As at 29 September 2013, the profit and loss account was restated by £549,000, which was the result of IFRIC 21. There was no impact on equity as a result of the change in accounting policy for client settlement cash.
Consequential amendments have also been made to the notes to the interim financial statements.
19. | Post Balance Sheet Event |
On 14 May 2015, the Group announced the decision to dispose of its Stocktrade business, to Alliance Trust Savings for £14 million in cash, payable in full upon completion. The agreement was signed on 13 May 2015 and the disposal is expected to be completed in 2015 and is conditional upon regulatory conditions customary for this type of transaction.
Based in Edinburgh, Stocktrade is the execution-only division of Brewin Dolphin and as at 31 March 2015, the business had Assets under Administration of £4.6 billion. For the year ended 28 September 2014 Stocktrade had revenues of £9.6 million and contributed an estimated £1.3 million of pre-tax profit subject to final cost allocation as permitted by IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations'.
After accounting for all related costs, the transaction is expected to result in a net gain of approximately £1 million, subject to final separation costs. The net sale proceeds will be used for general corporate purposes.
20. | 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 2014 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.
Cautionary statement
The Interim Management Report (the 'IMR') for the period ended 31 March 2015 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:
a) | the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';
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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 period ended 31 March 2015 and description of principal risks and uncertainties for the remaining six months of the year); and
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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). |
By order of the Board
David Nicol | Andrew Westenberger |
Chief Executive 26 May 2015 | Finance Director
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Independent Review Report
to Brewin Dolphin Holdings PLC
We have been engaged by Brewin Dolphin Holdings PLC ("the Company") to review the condensed set of financial statements in the half-yearly financial report for the period ended 31 March 2015 which comprises the Condensed Consolidated Income Statement, the Statement of Comprehensive Income, the Condensed Consolidated Balance Sheet, the Condensed Consolidated Statement of Changes in Equity and the Condensed Consolidated Cash Flow Statement and related notes 1 to 20. 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 Conduct 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 period ended 31 March 2015 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 Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdon
26 May 2015
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