1st Dec 2005 07:01
Brewin Dolphin Holdings PLC01 December 2005 1 December 2005 The Brewin Dolphin Group Preliminary Results • Total income £145 million (2004 : £121 million) • Discretionary funds were £6.9 billion at 30 September 2005 (2004 : £5.6 billion) • Profit before tax, exceptional item and goodwill amortisation £24.7 million (2004 : £16.1 million) • Profit before tax £13.0 million (2004 : £11.3 million) • Diluted earnings per share before exceptional item and goodwill amortisation 8.3p (2004 : 5.6p). Basic earnings per share before exceptional item and goodwill amortisation 8.7p (2004 : 5.7p). Diluted earnings per share after exceptional item and goodwill amortisation 3.9p (2004 : 3.4p). Basic earnings per share 4.1p (2004 : 3.5p) • Total dividend 4.5p (2004 : 3.5p) per share "The year has started well and providing markets remain at current levels orcontinue to advance steadily, as we are presently forecasting, then we canexpect good progress from your Group over the coming year." John Hall - Chief Executive For further information Jamie Matheson, Executive ChairmanBrewin Dolphin 020 7248 4400 John Hall, Chief ExecutiveBrewin Dolphin 020 7248 4400 Toby Mountford/Anthony KennawayCitigate Dewe Rogerson 020 7638 9571 CHAIRMAN'S STATEMENT It is my great privilege and pleasure to be writing my first annual statement asyour Chairman. I became Chairman at the end of May two-thirds of the waythrough our year and succeeded Sir Fred Holliday to whom I would like to payparticular thanks for his sterling work. He held office during an importantperiod in our Company's history and his reasoned and thoughtful execution of hisduties was invaluable. I wish Sir Fred a happy and well deserved retirement. The year under review has seen our Group return a robust performance in terms ofboth revenue and profits growth. This has been achieved across our two mainincome streams of Private Client Investment Management and Corporate Broking.There have been a number of significant developments during the year includingthe opening of our office in Belfast in February 2005. This marks our firstventure in Ireland and the progress made to date is most satisfactory. We werealso very pleased to have added Corporate Broking services to our office inBirmingham. In addition we have recruited five new teams to other locationsthroughout the Group. A major part of our strength is our extensive branch network and our emphasisthat clients have both freedom of choice and the ability to communicate directlywith the individual manager who looks after them. Since becoming your Chairman I have visited each one of our 34 branches andthree operational centres and without exception I have seen the dedication andteam spirit that prevails throughout. This is, of course, of enormousimportance as our people are our most valuable asset without whom we would notbe able to look after our clients and the interests of our Shareholders. We operate in an environment where the impact of regulation is significant bothin terms of costs and management time. Your Group remains committed to theattainment of the highest standards of business practice and is very consciousof the need to meet, if not exceed, the requirements of the Financial ServicesAuthority. At the same time we share the widely held view that regulation mustbe constructed and executed in a manner that is sensible, practical andrelevant. To this end we are committed to working closely with the Regulatorand Government at various levels. We operate in a market place that is sensitive to events that may take placeacross the globe. Against that background it is not easy or appropriate to makeshort-term predictions about our markets but it remains very much your Company'sobjective to achieve steady growth and returns for Shareholders. What has been achieved in the year under review is due to the exceptional hardwork of my colleagues all around the Group and the continued loyalty of ourclients to whom I must express sincere thanks. Since the year end we havewelcomed Simon Miller as a Non-Executive Director of the Company, hisconsiderable City experience will be invaluable to the Board. He, John Hall, ourChief Executive, with whom I am working very closely in the transitionary periodprior to his retirement, Robin Bayford our Finance Director and Vikram Lall whohas given many successful years to our corporate finance side, will be standingfor election or re-election at the 28 February 2006 Annual General Meeting. Icommend their many and varied talents to you. Your company is firmly committed to pursuing the achievement of another goodperformance for the year ahead. Jamie Matheson30 November 2005 Chief Executive's Report It is always a pleasure to report on a good set of figures and that is certainlythe case for the Group for the year ended 30 September 2005. The marketbackground against which we have been operating during those twelve months hasbeen relatively benign although it did not always appear that this would be thecase. For the year ended 30 September 2005 your Group's profits before tax, before anexceptional item covered later in this report, and before goodwill amortisation,amounted to £24.7m against £16.1m in 2004 an increase of 53%. Fully dilutedearnings per share calculated on the same basis were 8.3p against 5.6p in 2004,an increase of 48%, whilst basic earnings per share, again before an exceptionalitem and goodwill amortisation, were 8.7p against 5.7p, an increase of 53%.Basic earnings were 4.1p per share against 3.5p per share after taking intoaccount the exceptional item and goodwill amortisation, still an increase of17%. We have continued our past practice of paying dividends in April and October.On 27 September 2005 we announced a second interim dividend of 2.5p (2004: 2p)making a total of 4.5p against 3.5p in 2004, an increase of 29%. We proposeannouncing the first interim payment for 2006 at our AGM on Tuesday 28 February2006. When the full Statutory Accounts are published it will be seen we haveanticipated the requirement to prepare consolidated financial statements underthe new International Financial Reporting Standards and prepared a reportshowing the effect of these on our 2005 Results and Balance Sheet. TheseStandards may change; however, applying these in their current state, therewould be no change to earnings per share before goodwill amortisation and anincrease in unadjusted earnings per share due to the removal of goodwillamortisation. The restated Balance Sheet will show a reduction in net assets,from £89 million to £77 million, this is primarily due to the recognition ofpension liabilities. For regulatory purposes, the effect on our capital will notbe significant. The exceptional item referred to above includes the £5m contribution made toFund Distribution Limited for the benefit of those who lost money in ZeroDividend Investment Trust shares. The exceptional charge has been taken to theprofit and loss account, plus other directly attributable costs, less recoveriesto date. We do not believe that any further provision for Split Capitalliabilities is required. Investment Management 2005 2005 2004 2004 Total Income Operating Profit Total Income Operating Profit £000's £000's £000's £000's Discretionary portfolio management 69,165 9,541 52,593 5,477Advisory portfolio management 61,243 7,741 55,896 5,376 130,408 108,489 Operating profit before taxation, goodwillamortisation and exceptional item 17,282 10,853 The value of discretionary funds under management on 30 September 2005 had risento £6.9bn compared with a figure of £5.6bn a year earlier, an increase of 23%.We are particularly pleased with this increase, as can be seen from the figuresabove; discretionary fund management is the most profitable part of ourbusiness. Putting a single aggregate transaction through the market and theoffice is far more efficient, and there is no doubt that being able to react tomarket situations quickly enables us to obtain a better overall return for ourdiscretionary clients and we continue to recommend this service to our clients. Advisory fund management, however, continues to be a very important area for usand the value of funds under advisory management in our nominee or sponsoredmember account has risen to £6.7bn compared to £5.8bn a year ago. Many trustsand other long established clients make use of this service. In addition anumber of our new clients take it as a starting point and clients pay a basicannual fee. Stocktrade has enjoyed another successful year. The strategy to concentrate onalliances and corporate clients has again proved its worth with the number ofcompanies, to which we provide dealing services, rising above 120 with 37 ofthose currently in the FTSE 100. We are also well positioned to take advantageof the increase in activity within SIPPs, providing execution only dealingservices to the leading SIPP Administrators. We had anticipated that the PEP/ISA business could come under pressure as aresult of the reduction in the tax advantages which it enjoys, but we arepleased to report that withdrawals have been more than offset by new businesstransferred in. The fee income has risen to reflect the increase in the generallevel of the market. Over the past twelve months we have strengthened our Financial Planning Divisionto enable us to provide the broadest range of financial advice covering not justinvestment but also financial planning, inheritance tax planning, school feeschemes and pensions advice. Last year we recruited a further eight financialconsultants and we now have thirty-eight fully qualified consultants who arebased in twelve offices around the country. From there they can easily visitour other branches and arrange meetings with clients wherever they are based.We plan to develop this aspect of our coverage in the coming year. We opened a branch in Belfast at the end of February 2005. It is trading underthe name of Bell Lawrie reflecting the close links between Northern Ireland andour Scottish offices. I am pleased to report that it has made a very good startbuilding a significant client base, we have seven investment advisers in thebranch and we expect it to be a significant contributor to Group profits infuture years. In London we have welcomed a number of new investment advisers and also a directmarketing team which specialises in pensions advice, particularly important withthe approach of 'A' day next April. The latter manage portfolios in conjunctionwith our well established and successful model portfolio, or alternatively withone of our investment managers on our usual bespoke lines. Corporate Broking 2005 2005 2004 2004 Total Income Operating Total Income Operating Profit Profit £000's £000's £000's £000's 14,252 12,915Operating profit before taxation, goodwillamortisation and exceptional item 2,840 2,026 Revenues in our Corporate Broking Divisions overall rose by 10% and there was agratifying improvement in margins. The year made a quiet start but momentumgathered pace significantly in the second half and is continuing. During the year we opened a new Corporate Finance branch in Birmingham which hasmade an encouraging start. Additional investment has been made in improvingsystems and in recruiting new staff. We have continued to gain market sharethrough the acquisition of new corporate clients. Conclusion I cannot conclude without thanking all our staff for their immense effort inachieving this excellent set of figures as well as our clients for theircontinued loyal support. The year has started well and providing markets remainat current levels or continue to advance steadily, as we are presentlyforecasting, then we can expect good progress from your Group over the comingyear. John Hall 30 November 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE 53 WEEKS TO 30 SEPTEMBER 2005 (52 WEEKS TO 24 SEPTEMBER 2004) Note 2005 2004 53 Weeks 52 Weeks Continuing Continuing operations Operations Total Total £000's £000's Turnover 136,563 113,007Other operating income 8,097 8,397 TOTAL INCOME 2 144,660 121,404 Staff costs (78,470) (62,252)Other operating costs (57,741) (51,112) (136,211) (113,364) OPERATING PROFIT 8,449 8,040Dividend receivable 221 128Other interest receivable and similar income 4,334 3,148Interest payable and similar charges (15) (42) Profit on ordinary activities beforegoodwill amortisation and exceptional item 2 24,662 16,113Exceptional item 1 (6,831) -Goodwill amortisation (4,842) (4,839) PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 2 12,989 11,274 Tax on profit on ordinary activities 3 (4,938) (4,510) PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 8,051 6,764 Equity dividends 4 (8,841) (6,843) (790) (79) EARNINGS PER SHAREBasic 5 4.1p 3.5pDiluted 5 3.9p 3.4p Excluding goodwill amortisation and exceptionalitemBasic 5 8.7p 5.7pDiluted 5 8.3p 5.6p CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE 53 WEEKS TO 30 SEPTEMBER 2005 (52 WEEKS TO 24 SEPTEMBER 2004) 2005 2004 53 weeks 52 weeks £000's £000's Profit on ordinary activities after taxation 8,051 6,764Revaluation of investments 1,144 7,069 Total recognised gains and losses for the period 9,195 13,833 CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER 2005 (24 SEPTEMBER 2004) 2005 2004 £000's £000's £000's £000'sFIXED ASSETSIntangible assets 38,782 38,589Tangible assets 9,168 7,208Investments 8,954 7,500 56,904 53,297CURRENT ASSETSInvestments 1,227 298Debtors 234,781 200,374Cash 50,392 50,701 286,400 251,373CREDITORS: amountsfalling due within (253,943) (219,424)one year NET CURRENT ASSETS 32,457 31,949 TOTAL ASSETS LESS CURRENT LIABILITIES 89,361 85,246 CAPITAL AND RESERVESCalled up share capital 1,965 1,955Shares to be issued including premium 6,000 3,400Share premium account 79,287 79,081Revaluation reserve 8,213 7,069Merger reserve 4,562 3,929Profit and loss account (10,666) (10,188) EQUITY SHAREHOLDERS' FUNDS (note 6) 89,361 85,246 CONSOLIDATED CASH FLOW STATEMENTFOR THE 53 WEEKS TO 30 SEPTEMBER 2005 (52 WEEKS TO 24 SEPTEMBER 2004) 2005 2004 53 weeks 52 weeks £000's £000's Net cash inflow from operating activities (see below) 17,866 32,079Return on investments and servicing of finance 4,540 3,234Taxation (6,110) (4,402)Capital expenditure (6,291) (2,600)Acquisitions (1,483) (445)Purchase of fixed asset investments (310) -Equity dividends paid (7,837) (4,846) INFLOW BEFORE FINANCING 375 23,020Financing (see below) 210 949 INCREASE IN CASH IN THE PERIOD 585 23,969 NOTES TO THE CASH FLOW STATEMENT RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOW Operating profit 8,449 8,040 Depreciation and amortisation 9,154 9,281 (Increase)/decrease in current asset (929) 76 investments Increase in debtors (33,827) (47,451) Increase in creditors 35,019 63,952 Decrease in provisions - (1,819) Net cash inflow from operating activities 17,866 32,079 Financing Issue of shares for cash 210 949 210 949 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS Increase in cash in the period 585 23,969Net funds at start of period 49,643 25,674 Net funds at end of period 50,228 49,643 ANALYSIS OF NET FUNDS 2005 Cash flow 2004 £000's £000's £000's Firm's cash 38,168 (814) 38,982Firm's overdraft (164) 894 (1,058)Firm's net cash 38,004 80 37,924Client settlement cash 12,224 505 11,719Net funds 50,228 585 49,643 NOTES 1. EXCEPTIONAL ITEM - SPLIT CAPITAL TRUSTS In December 2004 the Group made a £5m contribution to a fund (Fund DistributionLimited) set up under the auspices of the Financial Services Authority for thosewho have lost money in Zero Dividend Shares. The charge for the period, includedwithin other operating costs and staff costs, represents this payment, lessrecoveries to date, plus other directly attributable costs. The Directors believe that, having carefully examined all claims received todate, no further provision for split capital liabilities is required; they alsoconsider that further liabilities, if any, are fully covered by insurance. The Directors remain in discussion with the Group's insurers in respect ofclaims for costs already incurred and expensed regarding split capital trusts.An estimate of the further potential favourable financial effect is not given asthe Directors consider that any such disclosure would seriously prejudice theirongoing negotiations with insurers. 2. TOTAL INCOME AND PROFIT BEFORE TAX 2005 2004 53 weeks 52 weeks Total Profit before Total Profit before income taxation income taxation £000's £000's £000's £000'sPrivate client investment management Discretionary portfolio management 69,165 9,541 52,593 5,477 Advisory portfolio management 61,243 7,741 55,896 5,376 130,408 17,282 108,489 10,853Corporate broking 14,252 2,840 12,915 2,026OPERATING PROFIT before goodwill amortisationand exceptional item 20,122 12,879Interest and investment income (net) 4,540 3,234PROFIT before tax, goodwill amortisation andexceptional item 24,662 16,113Exceptional item (note 1) (6,831) -Goodwill amortisation (4,842) (4,839) 144,660 12,989 121,404 11,274 3. TAX ON PROFIT ON ORDINARY ACTIVITIES 2005 2004 53 weeks 52 weeks £000's £000'sUnited Kingdom corporation tax based onthe taxable profit for the period at 30%(2004 30%) Current 5,374 5,161 Prior year 17 563 Overseas tax Current 127 119 5,518 5,843 Deferred - UK only (454) (603) Prior year deferred - (126) (730) UK only 4,938 4,510 The current tax charge for the periodexceeds 30% (2004 30%) for the followingreasons: - Tax on ordinary activities at thestandard rate 30% (2003 30%) 3,897 3,382Goodwill amortisation - disallowed 783 943proportionLeasehold property depreciation 141 116Deferred tax timing differences 454 603Prior year tax 17 563Disallowable expenses and other timingdifferences 226 236 5,518 5,843 4. DIVIDENDS First interim dividend paid on 6 April 2005 of 2.0pper share (2004 1.5p per share) 3,927 2,933Second interim dividend paid on 25 October 2005 of2.5p per share (2004 2.0p per share) 4,914 3,910 8,841 6,843 5. EARNINGS PER SHARE No No 000's 000'sBasicWeighted average number of shares in issue in the 196,227 194,418periodDilutedWeighted average number of options outstanding for 3,070 1,580the periodEstimated weighted average number of shares earnedunder deferred consideration arrangements 5,421 3,960 Diluted weighted average number ofshares in issue in the period 204,718 199,958 2005 2004 53 weeks 52 weeks £000's £000'sBasic profit for the period andattributable earnings 8,051 6,764Exceptional item 6,831 - Less tax on exceptional item (2,049) -Goodwill amortisation 4,842 4,839 less tax on goodwill amortisation (670) (498)Adjusted basic profit for the period and 17,005 11,105attributable earnings 6. RECONCILIATION OF MOVEMENTS INSHAREHOLDERS' FUNDS £000's £000'sAt start of period 85,246 74,380Issue of shares in period 149 888Estimated movement in value of shares to be issued 3,300 2,400Goodwill previously written off 312 588Revaluation of fixed asset investment 1,144 7,069Profit for the period 8,051 6,764Dividends (8,841) (6,843) At end of period 89,361 85,246 7. The accounting policies used in arriving at the preliminary figures areconsistent with those, which will be published, in the full FinancialStatements. There are no changes in accounting policies from those used in 2004. 8. The financial information in this press release does not constitute statutoryaccounts within the meaning of section 240 of the Companies Act 1985, but isderived from those accounts. Statutory accounts for 2004 have been delivered tothe Register of Companies, and those for 2005 will be delivered following theCompany's Annual General Meeting. The Auditors have reported on those accounts;their reports were unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. 9. The Annual General meeting will be held at 12 noon on 28 February 2006 atMerchant Taylors' Hall, 30 Threadneedle Street, London EC2R 8JB. FUNDS AT 30 SEPTEMBER 2005 (24 SEPTEMBER 2004) 2005 2004 £ Billion £ Billion £ Billion £ Billion In Group's nominee or sponsored member 6.5 5.2Stock not held in Group's nominee 0.4 0.4DISCRETIONARY FUNDS UNDER MANAGEMENT 6.9 5.6 ADVISORY FUNDS UNDER MANAGEMENTIn Group's nominee or sponsored member 6.7 5.8Other funds where valuations are carried out but where the stockis not under the Group's control 3.3 10.0 3.5 9.3 MANAGED FUNDS 16.9 14.9 EXECUTION ONLY STOCKIn Group's nominee or sponsored member 2.0 1.3Stock not held in Group's nominee 0.3 0.7 19.2 16.9 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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