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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Brewin Dolphin Holdings Plc | LSE:BRW | London | Ordinary Share | GB0001765816 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 515.00 | 514.00 | 515.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMBRW
RNS Number : 1970O
Brewin Dolphin Holdings PLC
16 May 2018
16 May 2018
Brewin Dolphin Holdings PLC
Interim Management Report
For the Half Year Ended 31 March 2018
Highlights
-- Another strong period of organic fund inflows and the Group has made further progress towards achieving its strategic plan.
-- Total funds stood at GBP39.7bn at 31 March 2018 (H1 2017: GBP37.8bn, FY 2017: GBP40.1bn); with strong net funds flows of GBP0.9bn offset by lower investment returns; since then total funds have increased and as at 30 April 2018 were c.GBP41bn.
o Discretionary funds of GBP34.3bn, increased by 1.5% (FY 2017: GBP33.8bn).
o Net discretionary funds inflows, including transfers, of GBP1.3bn (H1 2017: GBP1.1bn) representing an annualised growth rate of 7.7% (H1 2017: 7.6%).
-- Total income for the period of GBP161.8m (H1 2017: GBP147.4m).
o Core(1) income of GBP156.3m increased by 11.4% (H1 2017: GBP140.3m).
o Total fee income of GBP115.6m (H1 2017: GBP104.7m), increased by 10.4% representing 71.4% of total income (H1 2017: 71.0%); commission income was GBP32.9m (H1 2017: GBP33.0m).
-- Adjusted(2,4) profit before tax of GBP38.8m increased by 19.8% (H1 2017: GBP32.4m).
o Adjusted(2,4) profit before tax margin 24.0% (H1 2017: 22.0%).
-- Statutory profit before tax of GBP34.1m, 20.1% higher than H1 2017 (GBP28.4m). -- Adjusted(2,4) earnings per share:
o Basic earnings per share increased by 18.9% to 11.3p (H1 2017: 9.5p).
o Diluted earnings per share(3) increased by 18.7% to 10.8p (H1 2017: 9.1p).
-- Statutory earnings per share:
o Basic earnings per share of 9.7p (H1 2017: 8.2p).
o Diluted earnings per share of 9.4p (H1 2017: 7.9p).
-- Interim dividend of 4.4p per share announced, an increase of 3.5% (2017 interim: 4.25p per share).
(1) Core income is defined as income derived from discretionary investment management, financial planning, Brewin Portfolio Service ("BPS") and execution only services.
(2) These figures have been adjusted to exclude redundancy costs - GBPnil (H1 2017: GBP0.1m), onerous contracts - GBP0.4m (H1 2017: GBP0.1m), amortisation of client relationships - GBP4.0m (H1 2017: GBP2.6m), incentivisation awards - GBP0.6m (H1 2017: GBPnil), acquisition costs - GBPnil (H1 2017: GBP1.2m) and FSCS levy refund - GBP0.3m (H1 2017: GBPnil).
(3) See note 6.
(4) See Annual Report and Accounts 2017 page 31 for the explanation of the adjusted measures and why they have been chosen.
LEI: 213800PS7FS5UYOWAC49
Declaration of Interim Dividend
The Board declares an interim dividend of 4.4p per share. The interim dividend is payable on 15 June 2018 to shareholders on the register at the close of business on 25 May 2018 with an ex-dividend date of 24 May 2018.
David Nicol, Chief Executive, said:
"I am pleased to report a robust first half of our financial year with strong net discretionary inflows, despite challenges in the wider market. We continue to deliver against our strategy and build on the positive momentum across the business. We remain positive in our outlook and confident in the strength and increasing relevance of our advice-led service."
For further information:
Brewin Dolphin Holdings PLC David Nicol, Chief Executive Tel: +44 (0)20 7248 4400 FTI Consulting David Waller / Edward Berry Tel: +44 (0)20 3727 1651/1046
Interim Management Report
To the members of Brewin Dolphin Holdings PLC
First half review
The first half of the financial year has seen continued positive momentum with adjusted diluted earnings per share increasing by 18.7% compared to the same period last year (statutory diluted earnings per share: 19.0% higher).
We continue to deliver against our strategy, focusing on generating improved and sustainable organic growth across the range of our core services by leveraging our core competencies of offering advice and investment solutions in a personalised relationship-based model.
Total discretionary funds grew by 1.5% in the period to GBP34.3bn (FY 2017: GBP33.8bn) with sustained net inflows of GBP1.3bn; including GBP0.2bn of net transfers from other services. The annualised growth rate of net discretionary funds flow of 7.7% is in line with the rate for both the first half of 2017 (7.6%) and the full year to 30 September 2017 (8.0%).
Net inflows into our direct discretionary service doubled to GBP0.4bn compared to H1 2017. Gross inflows half-on-half remained stable at GBP0.5bn. Over 17% of direct private client funds now receive our wealth management service which combines our financial planning and investment management services.
Once again we have seen strong net flows into our intermediaries services, across both our Managed Portfolio Service ("MPS") and our bespoke discretionary service. The overall product mix has changed, with net flows into our bespoke discretionary service rising by 50% in comparison to the first half of last year to GBP0.6bn. The combined net flows from our intermediaries services were GBP0.9bn (H1 2017: GBP0.9bn).
The strength of the intermediaries net flows has been driven by the continued focus of our Business Development team in engaging new intermediaries and deepening the existing relationships with intermediaries across the UK. We have seen increasing demand for our bespoke discretionary services in relation to advice around pensions freedoms, leading to an increase in our average new case size of 22%. We have also successfully completed the transition of the relevant assets within our MPS portfolios into our four new manager of manager funds, which has significantly reduced the cost of ownership for all clients, as we leverage our scale with Asset Managers.
Growth remains at the top of our agenda. The initiatives we highlighted at our 2017 results announcement are evolving, we are hiring talented individuals, enhancing and developing our services and focusing on distribution, all of which will be supported by an improved use of technology.
As announced in January 2018, we are opening a new office at 8 Waterloo Place in the West End of London aimed at providing clients with more complex needs a tailored service. We have also made progress on our new simplified wealth planning and investment advice service, WealthPilot, which is based in our London office.
Our Financial Planning Academy is now well established and a second cohort of 12 entrants are due to join in the second half of the year. Additionally, we launched a senior level apprenticeship programme, the Cranfield Executive MBA award, and our first intake into this two-year programme commenced in April 2018.
As ever, we continue to focus on improving operational efficiency, key business processes and upgrades to our technology. A complete technology workspace and communications refresh in Autumn 2017 has aided and increased collaborative working across the Group and enhanced the general working environment.
As we continue to grow the business, we are reviewing both our London head office space requirements and our systems needs in particular those that support client facing staff and our settlement and custody needs.
We completed the changes to our processes and systems to ensure compliance with the Markets in Financial Instruments Directive II ("MiFID II") requirements ahead of January 2018 and are prepared for the introduction of the General Data Protection Regulation ("GDPR") which comes into force on 25 May 2018.
Results and business performance
Adjusted profit before tax of GBP38.8m (H1 2017: GBP32.4m) increased by 19.8% or 13.3% after adjusting for the impact of the acquisition in H2 2017 (see below). The increase is as a result of growth in total income of 9.8% (7.7% excluding the H2 2017 acquisition) and an improved adjusted PBT margin of 24.0% (H1 2017: 22.0%).
Statutory profit before tax for the period was GBP34.1m (H1 2017: GBP28.4m), an increase of 20.1%.
Hot Features
Premium
Unaudited
Unaudited period to period to
31 March 31 March
2018 2017
--------------------------------------------------
GBP'm GBP'm Change
-------------------------------------------------- -------------------- ----------- --------
Core(1) income 156.3 140.3 11.4%
Other income 5.5 7.1 (22.5)%
-------------------------------------------------- -------------------- ----------- --------
Total income 161.8 147.4 9.8%
Fixed staff costs (57.8) (55.1) 4.9%
Other operating costs (36.4) (34.5) 5.5%
-------------------------------------------------- -------------------- ----------- --------
Total fixed operating costs (94.2) (89.6) 5.1%
-------------------------------------------------- -------------------- ----------- --------
Adjusted profit before variable staff costs(2,5) 67.6 57.8 17.0%
Variable staff costs (29.1) (25.4) 14.6%
-------------------------------------------------- -------------------- ----------- --------
Adjusted operating profit(2,5) 38.5 32.4 18.8%
Net finance income 0.3 -
-------------------------------------------------- -------------------- ----------- --------
Adjusted profit before tax(2,5) 38.8 32.4 19.8%
Exceptional items(3) (0.7) (1.4) Amortisation of client relationships (4.0) (2.6) -------------------------------------------------- -------------------- ----------- -------- Profit before tax 34.1 28.4 20.1% Taxation (7.5) (6.1) -------------------------------------------------- -------------------- ----------- -------- Profit after tax 26.6 22.3 19.3% -------------------------------------------------- -------------------- ----------- -------- Earnings per share Basic earnings per share 9.7p 8.2p 18.3% Diluted earnings per share 9.4p 7.9p 19.0% Adjusted(4) earnings per share Basic earnings per share 11.3p 9.5p 18.9% Diluted earnings per share 10.8p 9.1p 18.7% -------------------------------------------------- -------------------- ----------- --------
(1) Core income is defined as income derived from discretionary investment management, financial planning, Brewin Portfolio Service ("BPS") and execution only services.
(2) These figures have been adjusted to exclude redundancy costs - GBPnil (H1 2017: GBP0.1m), onerous contracts - GBP0.4m (H1 2017: GBP0.1m), amortisation of client relationships - GBP4.0m (H1 2017: GBP2.6m), incentivisation awards - GBP0.6m (H1 2017: GBPnil), acquisition costs - GBPnil (H1 2017: GBP1.2m) and FSCS levy refund - GBP0.3m (H1 2017: GBPnil).
(3) Exceptional items include redundancy costs, onerous contracts, acquisition costs, FSCS levy refund and incentivisation awards.
(4) See note 6.
(5) See Annual Report and Accounts 2017 page 31 for the explanation of the adjusted measures and why they have been chosen.
Impact of H2 2017 acquisition
In May 2017, the Group acquired Duncan Lawrie Asset Management Limited. The acquisition contributed GBP3.1m of income for the 6 months ended 31 March 2018 and GBP2.1m to adjusted profit before tax (after associated staff costs of GBP0.7m and administrative, overhead and variable costs of GBP0.3m); this is equivalent to incremental adjusted diluted earnings per share of 0.4p. The impact on statutory profit before tax was a loss of GBP0.3m and a reduction of 0.1p to statutory diluted earnings per share after the costs of incentivisation awards and amortisation attributable to the acquisition, both of which are excluded from the adjusted measures.
Funds
Total funds were GBP39.7bn at 31 March 2018 (H1 2017: GBP37.8bn, FY 2017: GBP40.1bn); with strong net funds flows of GBP0.9bn during the period offset by lower investment returns; since then total funds have increased and, as at 30 April 2018 were c.GBP41bn.
The first six months of the year saw gross discretionary funds inflows of GBP1.7bn (H1 2017: GBP1.6bn, FY 2017: GBP3.4bn) and gross outflows stabilising at GBP0.6bn, equivalent to a 3.6% annualised outflow rate (H1 2017: 4.2%).
Total funds by service category
GBP'bn 31 March 30 September 31 March 2018 Change last Change last
2017 2017 12 months 6 months
------------------------------------------ --------- ------------- -------------- ------------ ------------
Private clients 18.0 18.9 18.8 4.4% (0.5)%
Charities & corporates 4.4 4.5 4.4 -% (2.2)%
------------------------------------------ ------------ ------------
Direct discretionary 22.4 23.4 23.2 3.6% (0.9)%
------------------------------------------ --------- ------------- -------------- ------------ ------------
Intermediaries 7.3 8.1 8.5 16.4% 4.9%
MPS 1.8 2.3 2.6 44.4% 13.0%
------------------------------------------ --------- ------------- -------------- ------------ ------------
Indirect(1) discretionary 9.1 10.4 11.1 22.0% 6.7%
------------------------------------------ --------- ------------- -------------- ------------ ------------
Total discretionary 31.5 33.8 34.3 8.9% 1.5%
BPS 0.1 0.1 0.1 -% -%
Execution only 3.4 3.5 3.7 8.8% 5.7%
Core funds 35.0 37.4 38.1 8.9% 1.9%
Advisory 2.8 2.7 1.6 (42.9)% (40.7)%
------------------------------------------ --------- ------------- -------------- ------------ ------------
Total funds 37.8 40.1 39.7 5.0% (1.0)%
------------------------------------------ --------- ------------- -------------- ------------ ------------
Indices
------------------------------------------ --------- ------------- -------------- ------------ ------------
MSCI WMA Private Investor Balanced Index 1,536 1,545 1,527 (0.6)% (1.2)%
FTSE 100 7,323 7,373 7,057 (3.6)% (4.3)%
------------------------------------------ --------- ------------- -------------- ------------ ------------
(1) intermediary services
Funds flow by service category
GBP'bn Annualised
30 Sept Internal Net growth Investment 31 Mar
2017 Inflows Outflows transfers flows rate performance 2018 Change
---------------- -------- --------- --------- ----------- ------------ --------- --------
Private clients 18.9 0.4 (0.3) 0.3 0.4 4.2% (0.5) 18.8 (0.5)%
Charities &
corporates 4.5 0.1 (0.1) - - -% (0.1) 4.4 (2.2)%
---------------- -------- ---------- --------- ---------
Direct
discretionary 23.4 0.5 (0.4) 0.3 0.4 3.4% (0.6) 23.2 (0.9)%
---------------- -------- -------- --------- ---------- --------- ----------- ------------ --------- --------
Intermediaries 8.1 0.9 (0.2) (0.1) 0.6 14.8% (0.2) 8.5 4.9%
MPS 2.3 0.3 - - 0.3 26.1% - 2.6 13.0%
---------------- -------- -------- --------- ---------- --------- ----------- ------------ --------- --------
Indirect(1)
discretionary 10.4 1.2 (0.2) (0.1) 0.9 17.3% (0.2) 11.1 6.7%
---------------- -------- -------- --------- ---------- --------- ----------- ------------ --------- --------
Total
discretionary 33.8 1.7 (0.6) 0.2 1.3 7.7% (0.8) 34.3 1.5%
---------------- -------- -------- --------- ---------- --------- ----------- ------------ --------- --------
BPS 0.1 - - - - -% - 0.1 -%
Execution only 3.5 0.3 (0.4) 0.7 0.6 34.3% (0.4) 3.7 5.7%
---------------- -------- -------- --------- ---------- --------- ----------- ------------ --------- --------
Core funds 37.4 2.0 (1.0) 0.9 1.9 10.2% (1.2) 38.1 1.9%
Advisory 2.7 - (0.1) (0.9) (1.0) (74.1)% (0.1) 1.6 (40.7)%
Total funds 40.1 2.0 (1.1) - 0.9 4.5% (1.3) 39.7 (1.0)%
---------------- -------- --------- --------- ----------- ------------ --------- --------
(1) intermediary services
Total discretionary funds grew by 1.5% driven by funds inflows and a lower rate of outflows offset by negative overall investment performance over the six months. Total discretionary net funds inflows of GBP1.3bn (H1 2017: GBP1.1bn) resulted from strong gross inflows of GBP1.7bn, gross outflows of GBP0.6bn and net transfers from other service categories of GBP0.2bn. Annualised growth from total discretionary funds was 7.7% (H1 2017: 7.6%) with positive net inflows in all discretionary services.
Direct discretionary funds grew by 3.4% on an annualised basis resulting from GBP0.5bn of gross funds inflows, stable outflows and transfers from other service categories. The intermediaries channel continued to grow strongly representing 69% (GBP0.9bn) of net discretionary funds inflows in the period.
During the period, advisory funds fell by GBP1.1bn, with GBP0.9bn of advisory funds transferred into other services within the Group, this included GBP0.6bn of transfers to direct discretionary from the advisory managed service. The Group has withdrawn from its advisory dealing service, following changes in regulation.
Execution only net fund flows were GBP0.6bn in the period, with GBP0.7bn of positive net transfers from other service categories.
Income
Core income grew 11.4% to GBP156.3m (H1 2017: GBP140.3m) supported by continued organic funds growth and higher financial planning income.
Income is analysed as follows:
Unaudited
Unaudited six months
six months to
to 31 March
31 March 2018 2017
GBP'm GBP'm Change
-------------------------------- --------------- ------------- --------
Private clients 92.3 85.9 7.5%
Charities & corporates 11.3 10.8 4.6%
================================ =============== ============= ========
Direct discretionary 103.6 96.7 7.1%
================================ =============== ============= ========
Intermediaries 31.1 26.2 18.7%
MPS 3.5 2.3 52.2%
================================ --------------- ------------- ========
Indirect discretionary 34.6 28.5 21.4%
================================ =============== ============= ========
Total discretionary 138.2 125.2 10.4%
Financial planning 12.2 9.5 28.4%
BPS 0.5 0.5 -%
Execution only 5.4 5.1 5.9%
================================ =============== =============
Core income 156.3 140.3 11.4%
================================ =============== ============= ========
Advisory investment management 4.4 6.9 (36.2)%
Other income 1.1 0.2 n/a
================================
Total other income 5.5 7.1 (22.5)%
================================ =============== ============= ========
Total income 161.8 147.4 9.8%
-------------------------------- --------------- ------------- --------
Positive net funds inflows in all discretionary channels of GBP1.3bn (H1 2017: GBP1.1bn) supported the 10.4% growth in discretionary income to GBP138.2m (H1 2017: GBP125.2m).
The Group continues to grow its indirect discretionary business, increasing the number of IFA clients who use both the discretionary and model services, which has generated significant income growth over the period.
Financial planning income grew strongly by 28.4% to GBP12.2m (H1 2017: GBP9.5m). Other income grew by GBP0.9m, following the rise in the Bank of England base rate to 0.5%.
Fees and Commissions
Unaudited six Change
Unaudited six months months
GBP'm to 31 March 2018 to 31 March 2017
--------------------------- -------------------------- ---------------------------
Fees Commission Total Fees Commission Total Fees Commission Total
------------------------ ------ ----------- ------ ----- ----------- ------ ------ ----------- ------
Private clients 66.0 26.3 92.3 60.5 25.4 85.9 9.1% 3.5% 7.5%
Charities &
corporates 9.8 1.5 11.3 9.3 1.5 10.8 5.4% -% 4.6%
======================== ====== =========== ====== ===== =========== ====== ====== =========== ======
Direct discretionary 75.8 27.8 103.6 69.8 26.9 96.7 8.6% 3.3% 7.1%
======================== ====== =========== ====== ===== =========== ====== ====== =========== ======
Intermediaries 30.5 0.6 31.1 25.4 0.8 26.2 20.1% (25.0)% 18.7%
MPS 3.5 - 3.5 2.3 - 2.3 52.2% -% 52.2%
======================== ------ ----------- ------ ----- ----------- ------ ====== =========== ======
Indirect discretionary 34.0 0.6 34.6 27.7 0.8 28.5 22.7% (25.0)% 21.4%
======================== ====== =========== ====== ===== =========== ====== ====== =========== ======
Total discretionary 109.8 28.4 138.2 97.5 27.7 125.2 12.6% 2.5% 10.4%
======================== ====== =========== ====== ===== =========== ====== ====== =========== ======
BPS 0.5 - 0.5 0.5 - 0.5 -% -% -%
Execution only 2.2 3.2 5.4 1.9 3.2 5.1 15.8% -% 5.9%
======================== ====== =========== ====== ===== =========== ======
Core income
excluding financial
planning 112.5 31.6 144.1 99.9 30.9 130.8 12.6% 2.3% 10.2%
======================== ====== =========== ====== ===== =========== ====== ====== =========== ======
Core fee income excluding financial planning grew by 12.6% to GBP112.5m reflecting the growth in funds. Overall fee income yield remained broadly consistent with prior years. Core commission income excluding financial planning grew slightly to GBP31.6m, reversing the decline seen over the previous 12 months, as a result of more uncertain investment markets leading to increased transaction volumes.
Costs
Total fixed operating costs increased by 5.1% to GBP94.2m (H1 2017: GBP89.6m).
Fixed staff costs increased by 4.9% to GBP57.8m (H1 2017: GBP55.1m) as a result of higher average headcount, the H2 2017 acquisition, pay rises and higher cost of sales from the continued intermediary net inflows.
Total employee numbers have increased by 52 to 1,646, since 31 March 2017, including the H2 2017 acquisition. During the last 6 months, there has been a net 32 increase, following selective hiring of investment managers and financial planners, as well as strategic hires in support functions.
Variable staff costs in the form of profit share have increased in line with business performance.
Other operating costs increased by 5.5% to GBP36.4m (H1 2017: GBP34.5m), primarily as a result of inflationary pressures, higher IT related, communication and market data costs and higher premises costs.
Exceptional items of GBP0.7m (H1 2017: GBP1.4m) include onerous lease costs and incentivisation awards offset by a FSCS levy refund. These are substantially lower than H1 2017 exceptional items which included acquisition costs relating to the acquisition in H2 2017.
Amortisation of intangible client relationships increased to GBP4.0m (H1 2017: GBP2.6m) and includes GBP1.8m of amortisation in relation to the H2 2017 acquisition.
Capital
The Group has a strong balance sheet with cash balances at the period end of GBP142.0m (H1 2017: GBP152.3m). These underpin its strong regulatory capital resources.
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. The interim dividend has been increased to 4.4p per share (2017 interim: 4.25p per share) and will be payable on 15 June 2018 to shareholders on the register at the close of business on 25 May 2018 with an ex-dividend date of 24 May 2018.
Going concern
As stated in note 1 to the condensed set of interim 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 interim financial statements. In forming their view, the Directors have considered the Group's prospects for a period exceeding twelve months from the date the condensed interim 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 28 and 29 of the 2017 Annual Report and Accounts available on our website www.brewin.co.uk.
Board changes
Mike Kellard was appointed as a Non-Executive Director of the Company on 1 December 2017. As previously announced, Andrew Westenberger will stand down as a director with effect from 16 May 2018. We would like to thank Andrew for his significant contribution over the last five years and wish him well in the future. The Board is fully compliant with the UK Corporate Governance Code with respect to Board composition and, as outlined in the year end accounts, we hope to appoint an additional Non-Executive Director shortly.
Outlook
We remain confident in the prospects for long-term growth for the Group, which have once again been clearly demonstrated by continued positive momentum on all fronts, despite recent market volatility. We remain confident in the strength and increasing relevance of our advice-led service and committed to ensuring that we have skilled and engaged people providing high quality advice as part of a close client relationship. To that end, we believe that the business is on track as we continue to deliver our organic growth strategy.
David Nicol
Chief Executive
15 May 2018
Condensed Consolidated Income Statement
for the six months ended 31 March 2018
Unaudited Unaudited
six months six months Audited
to to year to
31 March 31 March 30 September
2018 2017 2017
Note GBP'000 GBP'000 GBP'000
--------------------------------------------------------- ---- ----------- ----------- -------------
Revenue 160,676 147,185 303,896
Other operating income 1,081 229 568
--------------------------------------------------------- ---- ----------- ----------- -------------
Income 161,757 147,414 304,464
--------------------------------------------------------- ---- ----------- ----------- -------------
Staff costs (86,816) (80,496) (162,689)
Redundancy costs - (104) (742)
Onerous contracts (374) (142) (1,969)
Amortisation of intangible assets - client relationships 8 (3,978) (2,616) (6,650)
Acquisition costs - (1,159) (1,683)
Incentivisation awards (579) - (1,297)
FSCS levy refund 288 - -
Other operating costs (36,433) (34,494) (71,766)
--------------------------------------------------------- ---- ----------- ----------- -------------
Operating expenses (127,892) (119,011) (246,796)
--------------------------------------------------------- ---- ----------- ----------- -------------
Operating profit 33,865 28,403 57,668
Finance income 4 293 102 161
Other gains and losses - - 2
Finance costs 4 (35) (123) (188)
--------------------------------------------------------- ---- ----------- ----------- -------------
Profit before tax 34,123 28,382 57,643
Tax 5 (7,499) (6,065) (12,490)
--------------------------------------------------------- ---- ----------- ----------- -------------
Profit for the period 26,624 22,317 45,153
--------------------------------------------------------- ---- ----------- ----------- -------------
Attributable to:
Equity holders of the parent 26,624 22,317 45,153
--------------------------------------------------------- ---- ----------- ----------- -------------
26,624 22,317 45,153
--------------------------------------------------------- ---- ----------- ----------- -------------
Earnings per share
Basic 6 9.7p 8.2p 16.5p
--------------------------------------------------------- ---- ----------- ----------- -------------
Diluted 6 9.4p 7.9p 16.0p
--------------------------------------------------------- ---- ----------- ----------- -------------
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 31 March 2018
Unaudited Unaudited
six months six months Audited
to to year to
31 March 31 March 30 September
2018 2017 2017
GBP'000 GBP'000 GBP'000
------------------------------------------------------------------ ----------- ----------- -------------
Profit for the period 26,624 22,317 45,153
Items that will not be reclassified subsequently to profit
and loss:
Actuarial gain on defined benefit pension scheme 388 9,061 8,558
Deferred tax charge on actuarial gain on defined benefit
pension scheme (35) (2,142) (1,383)
------------------------------------------------------------------ ----------- ----------- -------------
353 6,919 7,175
------------------------------------------------------------------ ----------- ----------- -------------
Items that may be reclassified subsequently to profit
and loss:
Revaluation of available-for-sale investments (29) 31 (75)
Deferred tax credit/(charge) on revaluation of available-for-sale
investments 5 (6) 14
Exchange differences on translation of foreign operations (31) (45) 92
------------------------------------------------------------------ ----------- ----------- -------------
(55) (20) 31
------------------------------------------------------------------ ----------- ----------- -------------
Other comprehensive income for the period net of tax 298 6,899 7,206
------------------------------------------------------------------ ----------- ----------- -------------
Total comprehensive income for the period 26,922 29,216 52,359
------------------------------------------------------------------ ----------- ----------- -------------
Attributable to:
Equity holders of the parent 26,922 29,216 52,359
------------------------------------------------------------------ ----------- ----------- -------------
26,922 29,216 52,359
------------------------------------------------------------------ ----------- ----------- -------------
Condensed Consolidated Balance Sheet
as at 31 March 2018
Unaudited Unaudited Audited
as at as at as at
31 March 31 March 30 September
2018 2017 2017
Note GBP'000 GBP'000 GBP'000
--------------------------------------------- ---- --------- --------- -------------
Assets
Non-current assets
Intangible assets 8 89,681 76,462 95,791
Property, plant and equipment 9 7,160 3,975 3,840
Other receivables 200 288 200
Defined benefit pension scheme 12 6,442 3,541 4,487
Net deferred tax asset 4,270 4,818 6,743
--------------------------------------------- ---- --------- --------- -------------
Total non-current assets 107,753 89,084 111,061
--------------------------------------------- ---- --------- --------- -------------
Current assets
Available-for-sale investments 10 701 867 736
Trading investments 10 328 1,170 36
Trade and other receivables 238,910 225,035 243,144
Cash and cash equivalents 141,955 152,303 169,995
--------------------------------------------- ---- --------- --------- -------------
Total current assets 381,894 379,375 413,911 --------------------------------------------- ---- --------- --------- ------------- Total assets 489,647 468,459 524,972 --------------------------------------------- ---- --------- --------- ------------- Liabilities Current liabilities Trade and other payables 221,036 208,490 245,309 Current tax liabilities 4,715 4,457 4,993 Provisions 11 4,719 2,759 3,755 --------------------------------------------- ---- --------- --------- ------------- Total current liabilities 230,470 215,706 254,057 --------------------------------------------- ---- --------- --------- ------------- Net current assets 151,424 163,669 159,854 --------------------------------------------- ---- --------- --------- ------------- Non-current liabilities Provisions 11 7,954 6,330 8,339 --------------------------------------------- ---- --------- --------- ------------- Total non-current liabilities 7,954 6,330 8,339 --------------------------------------------- ---- --------- --------- ------------- Total liabilities 238,424 222,036 262,396 --------------------------------------------- ---- --------- --------- ------------- Net assets 251,223 246,423 262,576 --------------------------------------------- ---- --------- --------- ------------- Equity Share capital 13 2,834 2,833 2,833 Share premium account 13 152,432 152,268 152,320 Own shares (26,948) (26,542) (25,921) Revaluation reserve (109) 1 (85) Merger reserve 70,553 70,553 70,553 Profit and loss account 52,461 47,310 62,876 --------------------------------------------- ---- --------- --------- ------------- Equity attributable to equity holders of the parent 251,223 246,423 262,576 --------------------------------------------- ---- --------- --------- -------------
Condensed Consolidated Statement of Changes in Equity
for the six months ended 31 March 2018
Attributable to the equity holders of
the parent
------------------------------------------------------------------------------
Profit
Share and
Share premium Own Revaluation Merger loss
capital account shares reserve reserve account Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- --------- --------- --------- ------------ --------- --------- ---------
At 30 September 2016 (audited) 2,830 151,836 (29,294) (24) 70,553 46,908 242,809
------------------------------------- --------- --------- --------- ------------ --------- --------- ---------
Profit for the period - - - - - 22,317 22,317
Other comprehensive income for
the period
Deferred and current tax on other
comprehensive income - - - (6) - (2,142) (2,148)
Actuarial gain on defined benefit
pension scheme - - - - - 9,061 9,061
Revaluation of available-for-sale
investments - - - 31 - - 31
Exchange differences on translation
of foreign operations - - - - - (45) (45)
------------------------------------- --------- --------- --------- ------------ --------- --------- ---------
Total comprehensive income for
the period - - - 25 - 29,191 29,216
Dividends - - - - - (24,996) (24,996)
Issue of share capital 3 432 - - - - 435
Own shares acquired in the period - - (5,741) - - - (5,741)
Own shares disposed of on exercise
of options - - 8,493 - - (8,493) -
Share-based payments - - - - - 4,149 4,149
Tax on share-based payments - - - - - 551 551
------------------------------------- --------- --------- --------- ------------ --------- --------- ---------
At 31 March 2017 (unaudited) 2,833 152,268 (26,542) 1 70,553 47,310 246,423
------------------------------------- --------- --------- --------- ------------ --------- --------- ---------
Profit for the period - - - - - 22,836 22,836
Other comprehensive income for
the period
Deferred and current tax on other
comprehensive income - - - 20 - 759 779
Actuarial loss on defined benefit
pension scheme - - - - - (503) (503)
Revaluation of available-for-sale
investments - - - (106) - - (106)
Exchange differences on translation
of foreign operations - - - - - 137 137
------------------------------------- --------- --------- --------- ------------ --------- --------- ---------
Total comprehensive (expense)/income
for the period - - - (86) - 23,229 23,143
Dividends - - - - - (11,618) (11,618)
Issue of share capital - 52 - - - - 52
Own shares acquired in the period - - (66) - - - (66)
Own shares disposed of on exercise
of options - - 687 - - (687) -
Share-based payments - - - - - 3,903 3,903
Tax on share-based payments - - - - - 739 739
------------------------------------- --------- --------- --------- ------------ --------- --------- ---------
At 30 September 2017 (audited) 2,833 152,320 (25,921) (85) 70,553 62,876 262,576
------------------------------------- --------- --------- --------- ------------ --------- --------- ---------
Profit for the period - - - - - 26,624 26,624
Other comprehensive income for
the period
Deferred and current tax on other
comprehensive income - - - 5 - (35) (30)
Actuarial gain on defined benefit
pension scheme - - - - - 388 388
Revaluation of available-for-sale
investments - - - (29) - - (29)
Exchange differences on translation
of foreign operations - - - - - (31) (31)
------------------------------------- --------- --------- --------- ------------ --------- --------- ---------
Total comprehensive (expense)/income
for the period - - - (24) - 26,946 26,922
Dividends - - - - - (29,516) (29,516)
Issue of share capital 1 112 - - - - 113
Own shares acquired in the period - - (13,422) - - - (13,422)
Own shares disposed of on exercise
of options - - 12,395 - - (12,395) -
Share-based payments - - - - - 4,279 4,279
Tax on share-based payments - - - - - 271 271
------------------------------------- --------- --------- --------- ------------ --------- --------- --------- At 31 March 2018 (unaudited) 2,834 152,432 (26,948) (109) 70,553 52,461 251,223 ------------------------------------- --------- --------- --------- ------------ --------- --------- ---------
Condensed Consolidated Cash Flow Statement
for the six months ended 31 March 2018
Unaudited Unaudited
six months six months Audited
to to year to
31 March 31 March 30 September
2018 2017 2017
Note GBP'000 GBP'000 GBP'000
------------------------------------------------------- ---- ----------- ----------- -------------
Net cash inflow from operating activities 14 20,126 13,006 67,463
------------------------------------------------------- ---- ----------- ----------- -------------
Cash flows from investing activities
Purchase of intangible assets - client relationships (121) - -
Purchase of intangible assets - software (33) (988) (1,437)
Purchases of property, plant and equipment (4,874) (144) (589)
Purchase of available-for-sale investments - (18) (18)
Purchase of trading investments (300) - -
Acquisition of subsidiary - - (25,500)
Proceeds on disposal of trading investments - - 1,149
Proceeds on disposal of available-for-sale investments 6 15 42
------------------------------------------------------- ---- ----------- ----------- -------------
Net cash used in investing activities (5,322) (1,135) (26,353)
------------------------------------------------------- ---- ----------- ----------- -------------
Cash flows from financing activities
Dividends paid to equity shareholders 7 (29,516) (24,996) (36,614)
Purchase of own shares (13,422) (5,741) (5,807)
Proceeds on issue of shares 113 435 487
------------------------------------------------------- ---- ----------- ----------- -------------
Net cash used in financing activities (42,825) (30,302) (41,934)
------------------------------------------------------- ---- ----------- ----------- -------------
Net decrease in cash and cash equivalents (28,021) (18,431) (824)
------------------------------------------------------- ---- ----------- ----------- -------------
Cash and cash equivalents at the start of period 169,995 170,766 170,766
Effect of foreign exchange rates (19) (32) 53
------------------------------------------------------- ---- ----------- ----------- -------------
Cash and cash equivalents at the end of period 141,955 152,303 169,995
------------------------------------------------------- ---- ----------- ----------- -------------
Notes to the Condensed Set of Financial Statements
1. 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 has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' ('IAS 34'), 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.
The condensed set of financial statements included in this Interim Financial Report for the six months ended 31 March 2018 should be read in conjunction with the annual audited financial statements of Brewin Dolphin Holdings PLC for the year ended 30 September 2017.
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.
Significant accounting policies and use of estimates and judgements
The preparation of interim consolidated financial statements in compliance with IAS 34 requires the use of certain critical accounting judgements and key sources of estimation uncertainty. It also requires the exercise of judgement in applying the Group's accounting policies. There have been no material revisions to the nature and the assumptions used in estimating amounts reported in the annual audited financial statements of Brewin Dolphin Holdings PLC for the year ended 30 September 2017.
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 year ended 30 September 2017.
Several amendments to accounting standards 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.
2. 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 15 May 2018.
A copy of this Interim Financial Report including Condensed Financial Statements for the period ended 31 March 2018 is available at the Company's registered office and on the Company's investor relations website (www.brewin.co.uk).
The information for the period ended 30 September 2017 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that period 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.
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 Condensed Consolidated Income Statement and the Condensed Consolidated Balance Sheet, for numerical information.
The Group's operations are carried out in the United Kingdom, Channel Islands and the Republic of Ireland. 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 Unaudited
six months six months Audited
to to year to
31 March 31 March 30 September
2018 2017 2017
GBP'000 GBP'000 GBP'000
--------------------------------------------------- ----------- ----------- -------------
Finance income
Interest income on defined benefit pension scheme 67 - -
Interest on bank deposits 226 102 161
--------------------------------------------------- ----------- ----------- -------------
293 102 161
--------------------------------------------------- ----------- ----------- -------------
Finance costs
Interest expense on defined benefit pension scheme - 68 119
Unwind of discounts on provisions 25 20 58
Interest on bank overdrafts 10 35 11
--------------------------------------------------- ----------- ----------- -------------
35 123 188
--------------------------------------------------- ----------- ----------- -------------
5. Taxation
The Group calculates the period income tax expense using the tax rate that would be applicable to the expected total annual earnings.
Unaudited Unaudited
six months six months Audited
to to year to
31 March 31 March 30 September
2018 2017 2017
GBP'000 GBP'000 GBP'000
------------------------------------------ ----------- ----------- -------------
Current tax
United Kingdom:
Charge for the period 5,193 4,833 11,594
Adjustments in respect of prior periods 287 (49) (157)
Overseas:
Charge for the period 151 28 309
Adjustments in respect of prior periods - (1) (8)
------------------------------------------ ----------- ----------- -------------
Total current tax 5,631 4,811 11,738
------------------------------------------ ----------- ----------- -------------
Deferred tax
United Kingdom:
Charge for the period 2,148 1,205 705
Adjustments in respect of prior periods (280) 49 47
------------------------------------------ ----------- ----------- -------------
Total deferred tax 1,868 1,254 752
------------------------------------------ ----------- ----------- -------------
Tax charged to the Income Statement 7,499 6,065 12,490
------------------------------------------ ----------- ----------- -------------
6. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Unaudited Unaudited
six months six months Audited
to to year to
31 March 31 March 30 September
2018 2017 2017
'000 '000 '000
--------------------------------------------------------- ----------- ----------- -------------
Number of shares
Basic
Weighted average number of shares in issue in the period 274,397 272,442 272,840
Diluted
Effect of weighted average number of options outstanding
for the period 8,004 8,701 10,162
--------------------------------------------------------- ----------- ----------- -------------
Diluted weighted average number of options and shares
for the period 282,401 281,143 283,002
--------------------------------------------------------- ----------- ----------- -------------
Adjusted(1) diluted
Effect of full dilution of employee share options which
are contingently issuable or have future attributable
service costs 3,094 5,265 2,406
--------------------------------------------------------- ----------- ----------- -------------
Adjusted(1) diluted weighted average number of options
and shares for the period 285,495 286,408 285,408
--------------------------------------------------------- ----------- ----------- -------------
GBP'000 GBP'000 GBP'000
------------------------------------------------------------------ ------- -------- --------
Earnings attributable to ordinary shareholders
Basic and diluted profit for the year 26,624 22,317 45,153
Redundancy costs - 104 742
Onerous contracts costs 374 142 1,969
Amortisation of intangible assets - client relationships 3,978 2,616 6,650
Acquisition costs - 1,159 1,683
Incentivisation awards 579 - 1,297
FSCS levy refund (288) - -
Disposal of available-for-sale investments - - (2)
less tax effect of above (381) (398) (1,481)
------------------------------------------------------------------ ------- -------- --------
Adjusted basic and diluted profit for the period and attributable
earnings 30,886 25,940 56,011
------------------------------------------------------------------ ------- -------- --------
Earnings per share
Basic 9.7p 8.2p 16.5p
------------------------------------------------------------------ ------- -------- --------
Diluted 9.4p 7.9p 16.0p
------------------------------------------------------------------ ------- -------- --------
Adjusted(2) earnings per share
Basic 11.3p 9.5p 20.5p
------------------------------------------------------------------ ------- -------- --------
Adjusted(1) diluted 10.8p 9.1p 19.6p
------------------------------------------------------------------ ------- -------- --------
1. 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.
2. Excluding redundancy costs, onerous contracts costs, amortisation of client relationships, acquisition costs, incentivisation awards, FSCS levy refund and disposal of available-for-sale investments.
7. Dividends
Unaudited Unaudited
six months six months Audited
to to year to
31 March 31 March 30 September
2018 2017 2017
GBP'000 GBP'000 GBP'000
----------------------------------------------------------- ----------- ----------- -------------
Amounts recognised as distributions to equity shareholders
in the period:
2016/2017 Final dividend paid 7 February 2018, 10.75p
per share
(2017: 9.15p per share) 29,516 24,996 24,996
Interim dividend paid 16 June 2017, 4.25p per share - - 11,618
----------------------------------------------------------- ----------- ----------- -------------
29,516 24,996 36,614
----------------------------------------------------------- ----------- ----------- -------------
An interim dividend of 4.4p per share was declared by the Board on 15 May 2018 and has not been included as a liability as at 31 March 2018. This interim dividend will be paid on 15 June 2018 to shareholders on the register at the close of business on 25 May 2018 with an ex-dividend date of 24 May 2018.
8. Intangible assets
Goodwill Client relationships Software Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- --------- --------------------- --------- ---------
Cost
At 30 September 2016 (audited) 48,637 107,902 18,206 174,745
Additions - 119 616 735
Exchange differences - (2) - (2)
---------------------------------------- --------- --------------------- --------- ---------
At 31 March 2017 (unaudited) 48,637 108,019 18,822 175,478
Additions - 25,589 263 25,852
Exchange differences - 5 - 5
---------------------------------------- --------- --------------------- --------- ---------
At 30 September 2017 (audited) 48,637 133,613 19,085 201,335
Additions - 329 33 362
Exchange differences - (1) - (1)
Disposals - - (968) (968)
---------------------------------------- --------- --------------------- --------- ---------
At 31 March 2018 (unaudited) 48,637 133,941 18,150 200,728
---------------------------------------- --------- --------------------- --------- ---------
Accumulated amortisation and impairment
At 30 September 2016 (audited) - 85,105 8,587 93,692
Amortisation charge for the year - 2,616 2,709 5,325
Exchange differences - (1) - (1)
---------------------------------------- --------- --------------------- --------- ---------
At 31 March 2017 (unaudited) - 87,720 11,296 99,016
Amortisation charge for the period - 4,034 2,491 6,525
Exchange differences - 3 - 3
---------------------------------------- --------- --------------------- --------- ---------
At 30 September 2017 (audited) - 91,757 13,787 105,544
Amortisation charge for the period - 3,978 2,494 6,472
Exchange differences - (1) - (1)
Disposals - - (968) (968)
---------------------------------------- --------- --------------------- --------- ---------
At 31 March 2018 (unaudited) - 95,734 15,313 111,047
---------------------------------------- --------- --------------------- --------- ---------
Net book value
---------------------------------------- --------- --------------------- --------- ---------
At 31 March 2018 (unaudited) 48,637 38,207 2,837 89,681
---------------------------------------- --------- --------------------- --------- ---------
At 30 September 2017 (audited) 48,637 41,856 5,298 95,791
---------------------------------------- --------- --------------------- --------- ---------
At 31 March 2017 (unaudited) 48,637 20,299 7,526 76,462
---------------------------------------- --------- --------------------- --------- ---------
9. Property, plant and equipment
Leasehold Office Computer
improvements equipment equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- ------------- ---------- ---------- --------
Cost
At 30 September 2016 (audited) 13,190 13,292 34,113 60,595
Additions 24 40 97 161
Exchange differences (3) (8) - (11)
Disposals - (6) - (6)
---------------------------------------- ------------- ---------- ---------- --------
At 31 March 2017 (unaudited) 13,211 13,318 34,210 60,739
Additions 666 58 88 812
Exchange differences 7 20 - 27
Disposals (178) (2) - (180)
---------------------------------------- ------------- ---------- ---------- --------
At 30 September 2017 (audited) 13,706 13,394 34,298 61,398
Additions 215 62 4,239 4,516
Exchange differences (1) (4) - (5)
Disposals - (1,300) (3,813) (5,113)
---------------------------------------- ------------- ---------- ---------- --------
At 31 March 2018 (unaudited) 13,920 12,152 34,724 60,796
---------------------------------------- ------------- ---------- ---------- --------
Accumulated depreciation and impairment
At 30 September 2016 (audited) 9,940 12,621 33,212 55,773
Charge for the period 500 240 265 1,005
Exchange differences (2) (6) - (8)
Eliminated on disposal - (6) - (6)
---------------------------------------- ------------- ---------- ---------- --------
At 31 March 2017 (unaudited) 10,438 12,849 33,477 56,764
Charge for the period 526 148 238 912
Exchange differences 6 16 - 22
Eliminated on disposal (138) (2) - (140)
---------------------------------------- ------------- ---------- ---------- --------
At 30 September 2017 (audited) 10,832 13,011 33,715 57,558
Charge for the period 432 103 660 1,195
Exchange differences (1) (3) - (4)
Eliminated on disposal - (1,300) (3,813) (5,113)
---------------------------------------- ------------- ---------- ---------- --------
At 31 March 2018 (unaudited) 11,263 11,811 30,562 53,636
---------------------------------------- ------------- ---------- ---------- --------
Net book value
At 31 March 2018 (unaudited) 2,657 341 4,162 7,160
---------------------------------------- ------------- ---------- ---------- --------
At 30 September 2017 (audited) 2,874 383 583 3,840
---------------------------------------- ------------- ---------- ---------- --------
At 31 March 2017 (unaudited) 2,773 469 733 3,975
---------------------------------------- ------------- ---------- ---------- --------
10. Investments
Trading investments (Level 1)
Listed investments
GBP'000
------------------------------- ------------------
At 31 March 2018 (unaudited) 328
------------------------------- ------------------
At 30 September 2017 (audited) 36
------------------------------- ------------------
At 31 March 2017 (unaudited) 1,170
------------------------------- ------------------
The trading investments are measured at fair value which is determined directly by reference to published prices in an active market where available. They are held in an unregulated subsidiary, Brewin Dolphin MP, whose sole objective is to provide seed capital to the model portfolios managed under an investment mandate by Brewin Dolphin Limited.
Available-for-sale investments (Level 3)
Unaudited Unaudited Audited
as at as at as at
31 March 31 March 30 September
2018 2017 2017
GBP'000 GBP'000 GBP'000
-------------------------------------------------------- --------- --------- -------------
At start of period 736 833 833
Additions - 18 18
Net (loss)/gain from changes in fair value recognised
in equity (29) 31 (75)
Disposals (6) (15) (40)
-------------------------------------------------------- --------- --------- -------------
At end of period 701 867 736
-------------------------------------------------------- --------- --------- -------------
Current assets
Available-for-sale investments
* Equity 88 127 95
* Asset-backed security 613 740 641
-------------------------------------------------------- --------- --------- -------------
Total investments 701 867 736
-------------------------------------------------------- --------- --------- -------------
The asset-backed security is a USD fixed rate note, due to mature on 23 September 2019. The available-for-sale investments are held at fair value.
Fair value measurement recognised in the statement of financial position
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:
- Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
- Level 2 fair value measurements are those derived from inputs other than the quoted price included within Level 1 that are observable for the asset or a liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
- Level 3 fair value measurements are those derived from formal valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Fair value of the Group's financial assets and liabilities that are measured at fair value on a recurring basis
Some of the Group's financial assets and liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets and liabilities are determined.
Unaudited Unaudited Audited
fair fair fair
value value value
as at as at as at Relationship
31 March 31 March 30 September Valuation Significant of unobservable
2018 2017 2017 technique(s) unobservable inputs
GBP'000 GBP'000 GBP'000 and key input(s) input(s) to fair value
-------------------- --------- --------- ------------- ------------------- ----------------- -------------------
Level 1
Quoted bid prices
in an active
Trading investments 328 1,170 36 market. n/a n/a
Level 3
As the
The valuation marketability
Available-for-sale is based on Marketability discount increases
investments - published discount up the valuation
Equity 56 95 63 monthly NAVs. to 30%. decreases.
The valuation
is based on the
fair value of
the loan notes
as presented
in the most recent
audited financial
statements of
the company. As the
A marketability marketability
discount is applied Marketability discount increases
as this investment discount ranging the valuation
32 32 32 is highly illiquid. between 30-50%. decreases.
The valuation
is based on the
fair value of
the loan notes
as presented
in the most recent
audited financial
statements of
the company. As the
Available-for-sale A marketability marketability
investments - discount is applied Marketability discount increases
Asset-backed as this investment discount ranging the valuation
securities 613 740 641 is highly illiquid. between 30-50%. decreases.
-------------------- --------- --------- ------------- ------------------- ----------------- -------------------
Sensitivity analysis
A sensitivity analysis of the significant unobservable inputs used in valuing the Level 3 financial instruments is set out below:
Financial asset Assumption Change in assumption Impact on valuation -------------------------------------- ------------- -------------------- --------------------- Current assets - Available-for-sale Marketability Increase by 5% Decrease by GBP2,500 investments - Equity discount Current assets - Available-for-sale Marketability Increase by 5% Decrease by GBP47,000 investments - Asset-backed securities discount -------------------------------------- ------------- -------------------- ---------------------
11. Provisions
Sundry Social
claims security Unaudited Unaudited Audited
and and levies Acquisition as at as at as at
associated Onerous on share related Leasehold 31 March 31 March 30 September
costs contracts awards payments dilapidations 2018 2017 2017
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- ------------- ---------- ----------- ----------- ------------- --------- --------- -------------
At start of
period 587 5,367 3,474 622 2,044 12,094 9,697 9,697
Additions 536 873 674 786 63 2,932 1,316 5,004
Utilisation
of
provision (152) (612) (1,245) - (44) (2,053) (1,559) (1,941)
Unwinding of
discount - 13 - 13 - 26 20 58
Unused
amounts
reversed
during
the year (234) - (36) - (56) (326) (385) (724)
------------- ------------- ---------- ----------- ----------- ------------- --------- --------- -------------
At end of
period 737 5,641 2,867 1,421 2,007 12,673 9,089 12,094
------------- ------------- ---------- ----------- ----------- ------------- --------- --------- -------------
Included in
current
liabilities 737 1,199 1,570 1,213 - 4,719 2,759 3,755
Included in
non-current
liabilities - 4,442 1,297 208 2,007 7,954 6,330 8,339
------------- ------------- ---------- ----------- ----------- ------------- --------- --------- -------------
737 5,641 2,867 1,421 2,007 12,673 9,089 12,094
------------- ------------- ---------- ----------- ----------- ------------- --------- --------- -------------
The Group recognises a provision for settlements of sundry claims and associated costs. The timing of the settlements is unknown, but it is expected that they will be resolved within 12 months.
The onerous contracts provision at 31 March 2018 is in respect of surplus office space. The valuation of an onerous contract is based on the best estimate of the likely costs discounted to present value. Where the provision is in relation to leasehold obligations on premises and it is more likely than not that the premises will be sublet, an allowance for sublease income has been included in the valuation.
Provision of GBP5.6 million (30 September 2017: GBP5.4 million) has been made for 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 GBP11.0 million as at 31 March 2018 (30 September 2017: GBP13.4 million), if the assumption regarding future sublets is removed and the time value of money is ignored. The longest lease term covered by the provision has 15.0 years remaining and accounts for GBP4.3 million of the provision.
The Group has made a provision of GBP2.0 million (30 September 2017: GBP2.0 million) for leasehold dilapidations. These costs are expected to arise at the end of the lease. The leases covered by the provision have a maximum remaining term of 15.0 years.
The social security and levies on share awards provision is for Employer's National Insurance and Apprenticeship Levy on awards outstanding at the end of the period. The provision is based on the Group's share price, the amount of time passed and likelihood of the share awards vesting and represents the best estimate of the expected future cost.
The provision recognised for acquisition related payments is in respect of both incentivisation awards and deferred consideration payable for the acquisition of client relationships. The incentivisation award provision is GBP1.2 million (30 September 2017: GBP0.6 million) and is payable to employees in relation to the retention and acquisition of funds and is based on the best estimate of the likely future obligation discounted for the time value of money. The deferred consideration provision is GBP0.2 million (30 September 2017: GBPnil) and is based on the best estimate of the likely future obligation discounted for the time value of money.
12. Defined benefit pension scheme
The main financial assumptions used in calculating the Group's defined benefit pension scheme are as follows:
As at As at As at
31 March 31 March 30 September
2018 2017 2017
------------------------------------------------------------ ---------- ---------- -------------
Discount rate 2.50% 2.60% 2.60%
RPI Inflation assumption 3.20% 3.30% 3.30%
CPI Inflation assumption 2.20% 2.30% 2.30%
Rate of increase in salaries 3.20% 3.30% 3.30%
LPI Pension Increases 3.10% 3.20% 3.20%
Average assumed life expectancies for members on retirement
at age 65.
Retiring today
Males 88.4 years 88.8 years 88.6 years
Females 89.5 years 90.0 years 89.6 years
Retiring in 20 years' time
Males 89.7 years 90.5 years 89.9 years
Females 91.0 years 91.8 years 91.1 years
------------------------------------------------------------ ---------- ---------- -------------
The value of the defined benefit pension liability as at 31 March 2018 was estimated in accordance with International Accounting Standard 19 by a qualified independent actuary. The latest full actuarial funding valuation was carried out as at 31 December 2014 and the 31 December 2017 actuarial funding valuation is underway.
13. Called up share capital
The following movements in share capital occurred during the period:
Exercise Share Share premium
price capital account Total
Date No. of shares (pence) GBP'000 GBP'000 GBP'000
------------------ -------- ------------- --------- -------- ------------- --------
At 1 October 2017 283,331,882 2,833 152,320 155,153
131.3p -
Issue of options Various 68,068 168.0p 1 112 113
------------------ -------- ------------- --------- -------- ------------- --------
At 31 March 2018 283,399,950 2,834 152,432 155,266
---------------------------- ------------- --------- -------- ------------- --------
14. Note to the cash flow statement
Unaudited Unaudited
six months six months Audited
to to year to
31 March 31 March 30 September
2018 2017 2017
GBP'000 GBP'000 GBP'000
----------------------------------------------------------- ----------- ----------- -------------
Operating profit 33,865 28,403 57,668
Adjustments for:
Depreciation of property, plant and equipment 1,195 1,005 1,917
Amortisation of intangible assets - client relationships 3,978 2,616 6,650
Amortisation of intangible assets - software 2,494 2,709 5,200
Loss on disposal of fixed assets - - 40
Defined benefit pension scheme (1,500) (1,500) (3,000)
Share-based payment expense 4,279 4,149 8,052
Translation adjustments (13) (11) 40
Interest income 226 102 161
Interest expense (10) (35) (11)
----------------------------------------------------------- ----------- ----------- -------------
Operating cash flows before movements in working capital 44,514 37,438 76,717
(Decrease)/increase in payables and provisions (23,570) (13,852) 25,662
Decrease/(increase) in receivables and trading investments 4,242 (6,975) (25,011)
----------------------------------------------------------- ----------- ----------- -------------
Cash generated by operating activities 25,186 16,611 77,368
Tax paid (5,060) (3,605) (9,905)
----------------------------------------------------------- ----------- ----------- -------------
Net cash inflow from operating activities 20,126 13,006 67,463
----------------------------------------------------------- ----------- ----------- -------------
15. 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 2017 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 2018 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.
Statement of Directors' Responsibilities
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' as adopted by the EU;
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 2018 and their impact on the condensed set of financial statements; and description of principal risks and uncertainties for the remaining six months of the year); and
c) the interim management report includes a fair view of the information required by DTR 4.2.8R (disclosures of related parties' transactions and changes therein).
By order of the Board
David Nicol
Chief Executive
15 May 2018
Independent Review Report
to Brewin Dolphin Holdings PLC
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2018, which comprises the condensed consolidated statement of income, condensed consolidated statement of comprehensive income, condensed consolidated balance sheet, condensed consolidated statement of changes in equity, condensed consolidated cash flow statement and the related notes 1 to 15. 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 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and 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 six months ended 31 March 2018 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
Statutory Auditor
London, United Kingdom
15 May 2018
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SFMFAIFASEEI
(END) Dow Jones Newswires
May 16, 2018 02:00 ET (06:00 GMT)
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