BREWIN DOLPHIN (LON:BRW) Interim Management Report for the Half Year

Transparency directive : regulatory news

16/05/2018 07:00
Brewin Dolphin Holdings PLC  -  BRW   

Interim Management Report for the Half Year


Released 07:00 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 £39.7bn at 31 March 2018 (H1 2017: £37.8bn, FY 2017: £40.1bn); with strong net funds flows of £0.9bn offset by lower investment returns; since then total funds have increased and as at 30 April 2018 were c.£41bn.


o Discretionary funds of £34.3bn, increased by 1.5% (FY 2017: £33.8bn).


o Net discretionary funds inflows, including transfers, of £1.3bn (H1 2017: £1.1bn) representing an annualised growth rate of 7.7% (H1 2017: 7.6%).


·    Total income for the period of £161.8m (H1 2017: £147.4m).


o Core1 income of £156.3m increased by 11.4% (H1 2017: £140.3m).


o Total fee income of £115.6m (H1 2017: £104.7m), increased by 10.4% representing 71.4% of total income (H1 2017: 71.0%); commission income was £32.9m (H1 2017: £33.0m).


·    Adjusted2,4 profit before tax of £38.8m increased by 19.8% (H1 2017: £32.4m).


o Adjusted2,4 profit before tax margin 24.0% (H1 2017: 22.0%).


·    Statutory profit before tax of £34.1m, 20.1% higher than H1 2017 (£28.4m).


·    Adjusted2,4 earnings per share:


o Basic earnings per share increased by 18.9% to 11.3p (H1 2017: 9.5p).


o Diluted earnings per share3 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 - £nil (H1 2017: £0.1m), onerous contracts - £0.4m (H1 2017: £0.1m), amortisation of client relationships - £4.0m (H1 2017: £2.6m), incentivisation awards - £0.6m (H1 2017: £nil), acquisition costs - £nil (H1 2017: £1.2m) and FSCS levy refund - £0.3m (H1 2017: £nil).


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 £34.3bn (FY 2017: £33.8bn) with sustained net inflows of £1.3bn; including £0.2bn 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 £0.4bn compared to H1 2017. Gross inflows half-on-half remained stable at £0.5bn.  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 £0.6bn. The combined net flows from our intermediaries services were £0.9bn (H1 2017: £0.9bn).


 


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 £38.8m (H1 2017: £32.4m) 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 £34.1m (H1 2017: £28.4m), an increase of 20.1%.


 

























































































































































 


 


 



Unaudited period to

31 March

2018



Unaudited


period to

31 March

2017






 £'m



 £'m



 Change



Core1 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 costs2,5



 67.6



 57.8



17.0%



Variable staff costs



(29.1)



(25.4)



14.6%



Adjusted operating profit2,5



 38.5



 32.4



18.8%



Net finance income



 0.3



 -






Adjusted profit before tax2,5



 38.8



32.4



19.8%



Exceptional items3



(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%



Adjusted4 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 - £nil (H1 2017: £0.1m), onerous contracts - £0.4m (H1 2017: £0.1m), amortisation of client relationships - £4.0m (H1 2017: £2.6m), incentivisation awards - £0.6m (H1 2017: £nil), acquisition costs - £nil (H1 2017: £1.2m) and FSCS levy refund - £0.3m (H1 2017: £nil).


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 £3.1m of income for the 6 months ended 31 March 2018 and £2.1m to adjusted profit before tax (after associated staff costs of £0.7m and administrative, overhead and variable costs of £0.3m); this is equivalent to incremental adjusted diluted earnings per share of 0.4p. The impact on statutory profit before tax was a loss of £0.3m 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 £39.7bn at 31 March 2018 (H1 2017: £37.8bn, FY 2017: £40.1bn); with strong net funds flows of £0.9bn during the period offset by lower investment returns; since then total funds have increased and, as at 30 April 2018 were c.£41bn.


 


The first six months of the year saw gross discretionary funds inflows of £1.7bn (H1 2017: £1.6bn, FY 2017: £3.4bn) and gross outflows stabilising at £0.6bn, equivalent to a 3.6% annualised outflow rate (H1 2017: 4.2%).


 


Total funds by service category


 




























































































































































£'bn



31 March

2017



30 September

2017



31 March 2018



Change last

12 months



Change last

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%



Indirect1 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


 
































































































































































£'bn



30 Sept

2017



Inflows



Outflows



Internal transfers



Net flows



Annualised growth rate



Investment performance



31 Mar 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%



Indirect1 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



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 £1.3bn (H1 2017: £1.1bn) resulted from strong gross inflows of £1.7bn, gross outflows of £0.6bn and net transfers from other service categories of £0.2bn. 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 £0.5bn of gross funds inflows, stable outflows and transfers from other service categories. The intermediaries channel continued to grow strongly representing 69% (£0.9bn) of net discretionary funds inflows in the period.


 


During the period, advisory funds fell by £1.1bn, with £0.9bn of advisory funds transferred into other services within the Group, this included £0.6bn 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 £0.6bn in the period, with £0.7bn of positive net transfers from other service categories.


 


Income


Core income grew 11.4% to £156.3m (H1 2017: £140.3m) supported by continued organic funds growth and higher financial planning income.


 


Income is analysed as follows:





































































































































Unaudited


six months to


31 March 2018


£'m



 Unaudited


six months to


31 March 2017


£'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 £1.3bn (H1 2017: £1.1bn) supported the 10.4% growth in discretionary income to £138.2m (H1 2017: £125.2m).


 


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 £12.2m (H1 2017: £9.5m). Other income grew by £0.9m, following the rise in the Bank of England base rate to 0.5%.


 


Fees and Commissions


 














































































































































£'m



Unaudited six months


to 31 March 2018


  



 Unaudited six months


to 31 March 2017


  



Change






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 £112.5m reflecting the growth in funds. Overall fee income yield remained broadly consistent with prior years. Core commission income excluding financial planning grew slightly to £31.6m, 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 £94.2m (H1 2017: £89.6m).


 


Fixed staff costs increased by 4.9% to £57.8m (H1 2017: £55.1m) 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 £36.4m (H1 2017: £34.5m), primarily as a result of inflationary pressures, higher IT related, communication and market data costs and higher premises costs.


 


Exceptional items of £0.7m (H1 2017: £1.4m) 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 £4.0m (H1 2017: £2.6m) and includes £1.8m 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 £142.0m (H1 2017: £152.3m). 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


 

























































































































































































































Note



Unaudited

six months to


31 March

2018

£'000



Unaudited

six months to

31 March

2017

£'000



Audited

year to

30 September

2017

£'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

six months to


31 March

2018

£'000



Unaudited

six months to

31 March

2017

£'000



Audited

year to

30 September

2017

£'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


                                                                                                                                                                                                        































































































































































































































































































Note



Unaudited

as at

31 March

2018

£'000



Unaudited

as at

31 March

2017

£'000



Audited

as at

30 September

2017

£'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






 Share

capital

£'000



 Share premium account

£'000



 Own

 shares

£'000



 Revaluation reserve

£'000



 Merger reserve

£'000



 Profit

and loss account

£'000



 Total

£'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


                                                                                                                                                                                                        






















































































































































































Note



Unaudited

six months to


31 March

2018

£'000



Unaudited

six months to

31 March

2017

£'000



Audited

year to

30 September

2017

£'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

six months to


31 March

2018

£'000



Unaudited

six months to

31 March

2017

£'000



Audited

year to

30 September

2017

£'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

six months to


31 March

2018

£'000



Unaudited

six months to

31 March

2017

£'000



Audited

year to

30 September

2017

£'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

six months to


31 March

2018

'000



Unaudited

six months to

31 March

2017

'000



Audited

year to

30 September

2017

'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



Adjusted1 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



Adjusted1 diluted weighted average number of options and shares for the period



 285,495



 286,408



 285,408



 































































































































£'000



 £'000



 £'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















Adjusted2 earnings per share












Basic



11.3p



9.5p



20.5p



Adjusted1 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

six months to


31 March

2018

£'000



Unaudited

six months to

31 March

2017

£'000



Audited

year to

30 September

2017

£'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

£'000



 Client relationships

£'000



 Software

£'000



 Total

£'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 improvements

£'000



Office

equipment

£'000



Computer equipment

£'000



Total

£'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

£'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

as at

31 March

2018

£'000



Unaudited

as at

31 March

2017

£'000



Audited

as at

30 September

2017

£'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

fair value

as at

31 March 2018

£'000



Unaudited

fair value

as at

31 March 2017

£'000



Audited

fair value

as at

30 September 2017

£'000



Valuation technique(s)

and key input(s)



Significant

unobservable input(s)



Relationship of unobservable inputs

to fair value



Level 1





















Trading investments



328



1,170



36



Quoted bid prices in an active market.



n/a



n/a



Level 3





















Available-for-sale investments - Equity



56



95



63



The valuation is based on published monthly NAVs.



Marketability discount up to 30%.



As the marketability discount increases the valuation decreases.






32



32



32



The valuation is based on the fair value of the loan notes as presented in the most recent audited financial statements of the company.


A marketability discount is applied as this investment is highly illiquid.



Marketability discount ranging between 30-50%.



As the marketability discount increases the valuation decreases.



Available-for-sale investments - Asset-backed securities



613



740



641



The valuation is based on the fair value of the loan notes as presented in the most recent audited financial statements of the company.


A marketability discount is applied as this investment is highly illiquid.



Marketability discount ranging between 30-50%.



As the marketability discount increases the valuation 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 investments - Equity



Marketability discount



Increase by 5%



Decrease by £2,500



Current assets - Available-for-sale investments - Asset-backed securities



Marketability discount



Increase by 5%



Decrease by £47,000



 


11. Provisions
































































































































Sundry claims and associated costs

£'000



Onerous contracts

£'000



Social security and levies on share awards

£'000



Acquisition related payments

£'000



Leasehold dilapidations

£'000



Unaudited

as at

31 March

2018

£'000



Unaudited

as at

31 March

2017

£'000



Audited

as at

30 September

2017

£'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 £5.6 million (30 September 2017: £5.4 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 £11.0 million as at 31 March 2018 (30 September 2017: £13.4 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 £4.3 million of the provision.


The Group has made a provision of £2.0 million (30 September 2017: £2.0 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 £1.2 million (30 September 2017: £0.6 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 £0.2 million (30 September 2017: £nil) 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

31 March

2018



As at

31 March

2017



As at

30 September 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:











































Date



No. of shares



Exercise

price

(pence)



Share

capital

£'000



Share premium account

£'000



Total

£'000



At 1 October 2017






 283,331,882






 2,833



152,320



155,153



Issue of options



Various



68,068



 131.3p - 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

six months to


31 March

2018

£'000



Unaudited

six months to

31 March

2017

£'000



Audited

year to

30 September

2017

£'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


 


 



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