TIDMBRK
RNS Number : 4800Z
Brooks Macdonald Group PLC
15 March 2017
BROOKS MACDONALD GROUP PLC
FINANCIAL REPORT FOR THE SIX MONTHSED 31 DECEMBER 2016
Strong growth in funds under management drives revenue and
profits, and higher dividend
Brooks Macdonald Group plc ("Brooks Macdonald" or the "Group"),
the AIM listed integrated wealth management group, today announces
its report for the six months ended 31 December 2016.
Financial Highlights
Half year Half year Change
ended 31.12.16 ended 31.12.15
Total discretionary funds under
management ("FUM") GBP9.33bn GBP7.82bn 19%
Revenue GBP45.34m GBP38.70m 17%
Underlying pre-tax profit* GBP8.87m GBP7.13m 24%
Underlying earnings per share* 51.83p 42.59p 22%
Pre-tax profit GBP8.16m GBP5.48m 49%
Earnings per share 48.61p 32.44p 50%
Interim dividend 15p 12p 25%
*Adjustments are in respect of the costs of deferred
consideration and the amortisation of intangible assets
Business Highlights:
-- Over GBP1bn in discretionary FUM added during the half year
driving double digit increases in profit and earnings per share
o Organic growth (net new discretionary business) of GBP332m or
4.0% over the half year excluding market growth
o Total growth of over GBP1.5bn year on year includes benefit of
market growth
-- Double digit growth in all three investment divisions -
Investment Management, Funds and Brooks Macdonald International
('BMI')
o In Funds we launched two new multi-asset funds for specific
third party mandates and the Defensive Capital Fund is now in
excess of GBP300m
-- Two further strategic alliances completed over the period,
including our first internationally in the UAE
-- Interim dividend increased by 25% to 15p (2015: 12p)
reflecting the Board's continued confidence in the Group's progress
and our strong balance sheet
Chris Knight, Chairman, commented:
"It's been another strong six months for the Group. Growth in
discretionary funds under management drove increases in in profit
and earnings per share.
"Chris Macdonald will retire as Chief Executive on 10(th) April.
The principal architect of the Group's success, he has led the
business with vigour, with determination and with vision for
twenty-five years and all our stakeholders have reason to thank
him. Although he will no longer be an executive director he will
remain on the Board as Deputy Chairman, in which role I know that
he will continue to provide help and encouragement to the
business.
"As previously announced, Caroline Connellan will join the
business in April and succeed Chris Macdonald as Chief Executive.
Caroline brings considerable experience to the business and we are
confident that under her leadership the Group will continue to grow
and prosper."
Chris Macdonald, Chief Executive, commented:
"In my final set of results as Chief Executive, I'm delighted to
be reporting further strategic progress across the Group and double
digit increases in both funds under management and profits. We
continue to see encouraging levels of organic growth across all our
divisions despite volatile client sentiment in light of the macro
environment. We are therefore on track to meet our expectations for
the full year.
"The last 25 years have been an incredible journey, from setting
up the business, to listing on AIM, and growing FUM to over GBP9bn.
It has been fantastic to lead a business defined by a strong
culture and talented people, and I look forward to continuing to be
a part of it in my new role."
An analyst meeting will be held at 9.15 for 9.30am on Wednesday,
15 March at the offices of MHP Communications, 6 Agar Street,
London, WC2N 4HN. Please contact Robert Collett-Creedy on
020 3128 8147 or e-mail brooks@mhpc.com for further details.
Enquiries to:
Brooks Macdonald Group plc www.brooksmacdonald.com
Chris Macdonald, Chief Executive 020 7499 6424
Simon Jackson, Finance Director
Andrew Shepherd, Deputy Chief Executive
Peel Hunt LLP (Nominated Adviser and Broker)
Guy Wiehahn / Adrian Haxby 020 7418 8900
MHP Communications
Reg Hoare / Simon Hockridge / Giles Robinson
/ Charlie Barker 020 3128 8540
Notes to editors
Brooks Macdonald Group plc, through its various subsidiaries,
provides leading investment management services in the UK and
internationally. The Group, which was founded in 1991 and began
trading on AIM in 2005, had discretionary funds under management
(FUM) of GBP9.33bn as at 31 December 2016.
Through its core divisions, Brooks Macdonald offers a range of
investment management services to private high net worth
individuals, pension funds, institutions, charities and trusts. The
Group also provides financial planning as well as offshore fund
management and administration services and acts as fund manager to
regulated OEICs, providing specialist funds in the property and
structured return sectors and managing property assets on behalf of
these funds and other clients.
The Group has twelve offices across the UK and the Channel
Islands including London, Edinburgh, Guernsey, Hale, Hampshire,
Jersey, Leamington Spa, Manchester, Taunton, Tunbridge Wells and
York.
CHAIRMAN'S STATEMENT
Introduction
In the first six months of our financial year to the end of
December 2016, the Group has continued to make good progress.
Growth in discretionary funds under management drove increases in
profit and earnings per share. This was against a difficult
political and economic background with client sentiment being
volatile, albeit investment markets remained supportive over the
period.
We have continued to achieve strong risk adjusted returns for
our clients and have progressed several significant projects across
the Group which will help drive future growth.
Results
Revenues have risen to GBP45.34m (2015: GBP38.70m) and
underlying pre-tax profit has increased by 24% to GBP8.87m (2015:
GBP7.13m), with underlying earnings per share up 22% to 51.83p
(2015: 42.59p).
Statutory profit before tax was GBP8.16m compared to GBP5.48m in
the same period last year.
Reconciliation of underlying profit before tax to profit before
tax
2016 2015
GBPm GBPm
Underlying profit before tax 8.87 7.13
Amortisation of client relationships
and software (1.87) (1.36)
Finance cost of deferred consideration (0.16) (0.29)
Changes in fair value of deferred
consideration 1.32 -
Profit before tax 8.16 5.48
------- -------
Cash resources at the period end amounted to GBP20.54m (2015:
GBP15.43m). The Group had no borrowings as at 31 December 2016
(2015: GBPnil).
Dividend
The Board has declared an interim dividend of 15p (2015: 12p).
This represents an increase of 25% compared to the previous year,
reaffirming the Board's confidence in the future and our strong
balance sheet. The interim dividend will be paid on 21 April 2017
to shareholders on the register as at 24 March 2017.
Funds under management ('FUM')
Funds under management grew by over GBP1bn in the six months and
all three investment businesses, Investment Management and Funds in
the UK and Brooks Macdonald International ('BMI'), based in the
Channel Islands, achieved double digit growth. This growth
consisted of GBP332m of organic growth and GBP697m of investment
growth.
As previously announced, the Group's discretionary funds under
management rose to GBP9.33bn as at 31 December 2016 (as at 30 June
2016: GBP8.30bn), representing a rise of 12.4%. This compares to
the WMA Balanced index, which rose 7.8% over the same six month
period. Over the calendar year our FUM have grown GBP1.51bn,
representing 19.3% growth.
Analysis of discretionary fund flows over the period
Six months Six months Year to
to 31 December to 31 December 30 June
2016 2015 2016
GBPm GBPm GBPm
Opening discretionary FUM 8,301 7,413 7,413
Net new discretionary business 332 394 863
Investment growth 697 15 25
---------------- ---------------- ---------
Total FUM growth 1,029 409 888
Closing FUM 9,330 7,822 8,301
Organic growth (net of markets) 4.0% 5.3% 11.6%
Total growth 12.4% 5.5% 12.0%
Business review
Our vision is focused on being the investment manager of choice
for professional intermediaries and private clients on and
offshore. Our core investment management business continues to grow
its professional connections and now works with over 1,000
introducing firms who refer business to both the UK and
international parts of the Group. Over many years we have built up
strong relationships with a large number of quality professional
intermediaries and this remains our key focus. Over the period we
have continued to gain traction in this space and have completed a
further two strategic alliances, including our first
internationally, with Abacus, based in the UAE.
Within Investment Management we've seen continued traction
across all our client service lines. In particular we have renewed
our focus on our Bespoke Portfolio Service (BPS) for higher net
worth clients, and continue to benefit from changes in the pension
landscape, as well as the growth of ISAs.
Funds had a strong period largely due to growth in our Multi
Asset Funds and also in our Defensive Capital Fund which now
exceeds GBP300m. The Levitas risk rated funds continue to grow in
scale but at a slower rate than originally forecast at the time of
the acquisition which has resulted in a reduction of GBP1.3m in the
estimated fair value of the deferred consideration payable to the
previous owners of the business, as detailed in note 16 to the
accounts.
As previously announced, we will be moving our Funds and
Investment Management businesses closer together during 2017. Both
businesses already work closely with regards to investment
management and the intent is that this should extend to
distribution, also encapsulating our international business.
BMI has achieved improved operating profits following the fall
in revenue which resulted from the change in focus from advisory to
discretionary clients in 2016. This move was aimed to generate more
stable long term revenues and is in line with the strategic focus
of the Group, as is the increased focus on distribution to advisers
in jurisdictions whose regulators are following a path similar to
that of the FCA.
The need for advice for high net worth individuals continues to
grow and our Financial Planning business has had a good period as
well as being a significant introducer of investment management
work across the Group.
Braemar Estates, the Group's property management business, saw
an increase in the value of property assets under administration
over the period to GBP1.21bn (June 2016: GBP1.10bn) and this has
also been reflected in an improvement in its earnings.
The Group remains focused on its organic growth strategy and is
committed to investing in its infrastructure to support the ongoing
development, increasing regulatory demands and expansion of the
Group. We continue to make substantial progress on the delivery of
our information technology upgrade, which is due to complete in
July of this year. We hope shortly after this to be able to merge
our two back office departments into one entity which will enhance
reporting for our clients.
The sector we operate in is currently experiencing a period of
consolidation driven by a number of factors and we continue to
consider potential acquisitions to enhance the core offerings of
the Group and to complement our organic growth. We have also
reviewed the opportunities offered by adding further UK regional
offices to our existing geographic footprint and will be expanding
our coverage through the opening of an office in Cardiff later in
the year.
Principal risks and uncertainties
The Group's activities expose it to a variety of financial and
non-financial risks. Our principal risks, which are described in
the Strategic Report and note 32 of the 2016 Annual Report and
Accounts, include: loss of clients or reputational damage as a
result of poor performance or service; regulatory breaches; loss of
key staff; potential service issues with IT infrastructure;
operational risk due to inadequate processes and controls; and
financial risks such as liquidity risk, market risk and credit
risk.
Board succession
Chris Macdonald, one of the founders of Brooks Macdonald and the
principal architect of the Group's success, will retire as Chief
Executive on 10th April. Chris has led the business with vigour,
with determination and with vision for twenty five years and all
our stakeholders have reason to thank him. Although he will no
longer be an executive director he will remain on the Board and
will be appointed Deputy Chairman, in which role I know that he
will continue to provide help and encouragement to the
business.
As already announced, Caroline Connellan will join Brooks
Macdonald in April and succeed Chris Macdonald as Chief Executive.
Caroline brings considerable experience to the business: for the
last five years, she has held senior management positions at HSBC
Bank, most recently as Head of UK Premier and Wealth. Earlier in
her career she worked for Standard Life as Group Strategy Director
and for McKinsey. We are delighted that Caroline has agreed to join
Brooks Macdonald and are confident that under her leadership the
Group will continue to grow and prosper.
Outlook and summary
The Group remains focused on delivering strong performance at
all levels of the business following good progress in the first
half with discretionary funds and earnings growth.
Market sentiment remains volatile but we have an excellent team
and a well established growth strategy. We therefore look forward
with confidence and are currently on track to deliver in line with
our expectations for the full year.
Christopher Knight
Chairman
14 March 2017
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31 December 2016
Year ended
Six months Six months
ended 31 Dec ended 31 Dec
2016 2015 30 Jun 2016
Note (unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Revenue 45,336 38,698 81,399
Administrative costs 4 (38,282) (32,287) (67,794)
Realised gains and losses on investments 5 4 20 20
Other gains and losses 6 1,234 (572) 2,857
Operating profit 8,292 5,859 16,482
Finance income 7 43 22 58
Finance costs 7 (159) (292) (577)
Share of results of joint venture 14 (15) (107) (107)
Profit before tax 8,161 5,482 15,856
Taxation 8 (1,590) (1,109) (3,117)
Profit for the period attributable to
equity holders of the Company 6,571 4,373 12,739
-------------- -------------- -------------
Other comprehensive income:
Items that may be reclassified subsequently
to profit or loss
Revaluation of available for sale financial
assets - - (6)
Total comprehensive income for the period 6,571 4,373 12,733
-------------- -------------- -------------
Earnings per share
Basic 9 48.61p 32.44p 94.41p
Diluted 9 48.42p 32.28p 94.07p
The accompanying notes form an integral part of these condensed
consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2016
31 Dec 2016 31 Dec 2015 30 Jun 2016
Note (unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Intangible assets 11 64,923 65,495 65,849
Property, plant and equipment 12 3,233 3,558 3,309
Available for sale financial assets 13 655 1,358 1,715
Investment in joint venture 14 - 221 207
Trade and other receivables - - 150
Deferred tax assets 664 710 551
------------- ------------- ------------
Total non-current assets 69,475 71,342 71,781
Current assets
Trade and other receivables 23,092 21,866 23,958
Financial assets at fair value through
profit or loss 15 1,109 5 1,000
Cash and cash equivalents 20,538 15,425 19,478
------------- ------------- ------------
Total current assets 44,739 37,296 44,436
Total assets 114,214 108,638 116,217
------------- ------------- ------------
Liabilities
Non-current liabilities
Deferred consideration 16 (2,468) (7,890) (5,290)
Deferred tax liabilities (3,624) (4,151) (3,951)
Other non-current liabilities (199) (29) (114)
------------- ------------- ------------
Total non-current liabilities (6,291) (12,070) (9,355)
Current liabilities
Trade and other payables (15,779) (14,348) (18,844)
Current tax liabilities (2,554) (1,487) (2,142)
Deferred tax liabilities (74) (157) (84)
Provisions 17 (2,689) (5,109) (2,784)
------------- ------------- ------------
Total current liabilities (21,096) (21,101) (23,854)
Net assets 86,827 75,467 83,008
------------- ------------- ------------
Equity
Share capital 137 137 137
Share premium account 36,090 35,623 35,997
Other reserves 5,905 5,049 5,517
Retained earnings 44,695 34,658 41,357
------------- ------------- ------------
Total equity 86,827 75,467 83,008
------------- ------------- ------------
The condensed consolidated financial statements were approved by
the Board of Directors and authorised for issue on 14 March 2017,
signed on their behalf by:
C A J Macdonald S J Jackson
Chief Executive Finance Director
Company registration number: 4402058
The accompanying notes form an integral part of these condensed
consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 December 2016
Share
Share premium Other Retained
capital account reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 July 2015 136 35,600 5,101 33,327 74,164
--------- --------- ---------- ---------- --------
Comprehensive income
Profit for the period - - - 4,373 4,373
Total comprehensive income - - - 4,373 4,373
Transactions with owners
Issue of ordinary shares 1 23 - - 24
Share-based payments - - 375 - 375
Share-based payments transfer - - (575) 575 -
Purchase of own shares by employee benefit
trust - - - (859) (859)
Deferred tax on share options - - 148 - 148
Dividends paid (note 10) - - - (2,758) (2,758)
--------- --------- ---------- ---------- --------
Total transactions with owners 1 23 (52) (3,042) (3,070)
Balance at 31 December 2015 137 35,623 5,049 34,658 75,467
--------- --------- ---------- ---------- --------
Comprehensive income
Profit for the period - - - 8,366 8,366
Other comprehensive income:
Revaluation of available for sale financial
asset - - (6) - (6)
--------- --------- ---------- ---------- --------
Total comprehensive income - - (6) 8,366 8,360
Transactions with owners
Issue of ordinary shares - 374 - - 374
Share-based payments - - 568 - 568
Share-based payments transfer - - (231) 231 -
Purchase of own shares by employee benefit
trust - - - (284) (284)
Deferred tax on share options - - 137 - 137
Dividends paid (note 10) - - - (1,614) (1,614)
--------- --------- ---------- ---------- --------
Total transactions with owners - 374 474 (1,667) (819)
Balance at 30 June 2016 137 35,997 5,517 41,357 83,008
--------- --------- ---------- ---------- --------
Comprehensive income
Profit for the period - - - 6,571 6,571
--------- --------- ---------- ---------- --------
Total comprehensive income - - - 6,571 6,571
Transactions with owners
Issue of ordinary shares - 93 - - 93
Share-based payments - - 641 - 641
Share-based payments transfer - - (409) 409 -
Purchase of own shares by employee benefit
trust - - - (541) (541)
Deferred tax on share options - - 156 - 156
Dividends paid (note 10) - - - (3,101) (3,101)
--------- --------- ---------- ---------- --------
Total transactions with owners - 93 388 (3,233) (2,752)
Balance at 31 December 2016 137 36,090 5,905 44,695 86,827
--------- --------- ---------- ---------- --------
The accompanying notes form an integral part of these condensed
consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 31 December 2016
Six months Six months
ended ended Year ended
31 Dec 2016 31 Dec 2015 30 Jun 2016
Note (unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Cash generated from operations 18 7,774 5,203 17,536
Taxation paid (1,469) (1,443) (2,773)
Net cash generated from operating activities 6,305 3,760 14,763
Cash flows from investing activities
Purchase of property, plant and equipment 12 (440) (568) (751)
Purchase of intangible assets 11 (943) (1,598) (3,265)
Purchase of available for sale financial
assets 13 (5) - (500)
Deferred consideration paid 16 (1,580) (1,772) (3,901)
Interest received 7 43 22 58
Purchase of financial assets at fair value
through profit or loss - - (1,000)
Proceeds of sales of property, plant and
equipment 13 - 3
Proceeds of sale of available for sale
assets 13 1,219 - -
Investment in joint venture 14 (1) (100) (86)
------------- ------------- -------------
Net cash used in investing activities (1,694) (4,016) (9,442)
Cash flows from financing activities
Proceeds of issue of shares 91 24 398
Purchase of own shares by employee benefit
trust (541) (859) (1,143)
Dividends paid to shareholders 10 (3,101) (2,758) (4,372)
------------- ------------- -------------
Net cash used in financing activities (3,551) (3,593) (5,117)
Net increase / (decrease) cash and cash
equivalents 1,060 (3,849) 204
Cash and cash equivalents at beginning
of period 19,478 19,274 19,274
------------- ------------- -------------
Cash and cash equivalents at end of period 20,538 15,425 19,478
------------- ------------- -------------
The accompanying notes form an integral part of these condensed
consolidated financial statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the six months ended 31 December 2016
1. General information
Brooks Macdonald Group plc ('the Company') is the parent company
of a group of companies ('the Group'), which offers a range of
investment management services and related professional advice to
private high net worth individuals, charities and trusts. The Group
also provides financial planning as well as offshore fund
management and administration services and acts as fund manager to
regulated OEICs, providing specialist funds in the property and
structured return sectors and managing property assets on behalf of
these funds and other clients. The Group's primary activities are
set out in its Annual Report and Accounts for the year ended 30
June 2016.
The Group has offices in London, Edinburgh, Guernsey, Hale,
Hampshire, Jersey, Leamington Spa, Manchester, Taunton, Tunbridge
Wells and York. The Company is a public limited company,
incorporated and domiciled in the United Kingdom under the
Companies Act 2006 and listed on AIM. The address of its registered
office is 72 Welbeck Street, London, W1G 0AY.
The consolidated interim financial information was approved for
issue on 14 March 2017. It has been independently reviewed but is
not audited.
2. Accounting policies
a) Basis of preparation
The Group's condensed consolidated half yearly financial
statements are prepared and presented in accordance with IAS 34
'Interim Financial Reporting' as adopted by the European Union.
They have been prepared on a going concern basis with reference to
the accounting policies and methods of computation and presentation
set out in the Group's consolidated financial statements for the
year ended 30 June 2016, except as stated below. The half yearly
financial statements should be read in conjunction with the Group's
audited financial statements for the year ended 30 June 2016, which
have been prepared in accordance with IFRS as adopted by the
European Union.
The information in this announcement does not comprise statutory
accounts within the meaning of section 434 of the Companies Act
2006. The Group's accounts for the year ended 30 June 2016 have
been reported on by the Group's auditors and delivered to the
Registrar of Companies. The report of the auditors was unqualified
and did not draw attention to any matters by way of emphasis. It
contained no statement under section 498(2) or (3) of the Companies
Act 2006.
b) Changes in accounting policies
The Group's accounting policies that have been applied in
preparing these financial statements are consistent with those
disclosed in the Annual Report and Accounts for the year ended 30
June 2016, except as described below.
New accounting standards, amendments and interpretations adopted
in the period
In the six months ended 31 December 2016, the Group did not
adopt any new standards or amendments issued by the IASB or
interpretations issued by the IFRS Interpretations Committee (IFRS
IC) that have had a material impact on the condensed consolidated
financial statements.
Other new standards, amendments and interpretations listed in
the following table were newly adopted by the Group but have not
had a material impact on the amounts reported in these financial
statements. They may however impact the accounting for future
transactions and arrangements.
Standard, Amendment or Interpretation Effective
date
--------------------------------------------------------------------- ----------
Disclosure initiative (amendments to IAS 1) 1 January
2016
--------------------------------------------------------------------- ----------
Accounting for acquisitions of interests in joint operations 1 January
(amendments to IFRS 11) 2016
--------------------------------------------------------------------- ----------
Investment entities: applying the consolidation exception 1 January
(amendments to IFRS 10, IFRS 12 and IAS 28) 2016
--------------------------------------------------------------------- ----------
Clarification of acceptable methods of depreciation and amortisation 1 January
(amendments to IAS 16 and IAS 38) 2016
--------------------------------------------------------------------- ----------
Annual improvements (2012-2014 cycle) 1 January
2016
--------------------------------------------------------------------- ----------
New accounting standards, amendments and interpretations not yet
adopted
A number of new standards, amendments and interpretations, which
have not been applied in preparing these financial statements, have
been issued and are effective for annual and interim periods
beginning after 1 July 2016:
Standard, Amendment or Interpretation Effective
date
--------------------------------------------------------------------- ----------
Recognition of deferred tax assets for unrealised losses (amendments 1 January
to IAS 12) 2017
--------------------------------------------------------------------- ----------
Disclosure initiative (amendments to IAS 7) 1 January
2017
--------------------------------------------------------------------- ----------
Annual improvements to IFRS standards 2014-2016 cycle (IFRS 1 January
12) 2017
--------------------------------------------------------------------- ----------
Annual improvements to IFRS standards 2014-2016 cycle (IFRS 1 January
1 and IAS 28) 2018
--------------------------------------------------------------------- ----------
Revenue from Contracts with Customers (IFRS 15) 1 January
2018
--------------------------------------------------------------------- ----------
Clarifications to IFRS 15 'Revenue from Contracts with Customers' 1 January
2018
--------------------------------------------------------------------- ----------
Financial Instruments (IFRS 9) 1 January
2018
--------------------------------------------------------------------- ----------
Foreign Currency Transactions and Advance Consideration (IFRIC 1 January
22) 2018
--------------------------------------------------------------------- ----------
Classification and measurement of share-based payment transactions 1 January
(amendments to IFRS 2) 2018
--------------------------------------------------------------------- ----------
Leases (IFRS 16) 1 January
2019
--------------------------------------------------------------------- ----------
Not yet endorsed for use in the EU
The impact of these changes is currently being reviewed and
there is no intention to early adopt. During the six months ended
31 December 2016, IFRS 9 and IFRS 15 were endorsed for use in the
EU.
IFRS 9 'Financial Instruments' may affect the classification and
measurement of financial assets. IFRS 15 'Revenue from Contracts
with Customers' could change how and when revenue is recognised
from contracts with customers. The extent of their impact has not
yet been fully determined.
IFRS 16 'Leases' is expected to have a significant impact on the
Group's future consolidated financial statements. This new standard
will require the recognition a right-of-use asset and associated
lease liability for the office premises that are leased by the
Group. The asset would be depreciated over the lease term and the
liability would accrue interest, resulting in a front-loaded
expense profile. This accounting treatment contrasts with the
current treatment for operating leases, where no asset or liability
is recognised and the lease payments are charged to the
Consolidated Statement of Comprehensive Income on a straight line
basis over the term of the lease.
3. Segmental information
For management purposes the Group's activities are organised
into four operating divisions: Investment Management, Financial
Planning, Funds and Property Management and International. The
Group's other activity, offering nominee and custody services to
clients, is included within Investment Management. These divisions
are the basis on which the Group reports its primary segmental
information. In accordance with IFRS 8 'Operating Segments',
disclosures are required to reflect the information which the Board
uses internally for evaluating the performance of its operating
segments and allocating resources to those segments. The
information presented in this note follows the presentation for
internal reporting to the Group Board of Directors.
Revenues and expenses are allocated to the business segment that
originated the transaction. Revenues and expenses that are not
directly originated by a particular business segment are reported
as group or consolidation adjustments. Sales between segments are
carried out at arm's length. Centrally incurred expenses are
allocated to business segments on an appropriate pro-rata
basis.
Funds and Group &
Investment Financial Property consolidation
Management Planning Management International adjustments Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Six months ended 31 Dec 2016
(unaudited)
Total segment revenues 32,932 2,365 3,782 6,526 - 45,605
Inter segment revenues (143) (98) (28) - - (269)
------------ ---------- ------------ -------------- --------------- --------
External revenues 32,789 2,267 3,754 6,526 - 45,336
------------ ---------- ------------ -------------- --------------- --------
Underlying profit before tax 10,899 180 7 628 (2,843) 8,871
Finance cost of deferred
consideration - - - - (159) (159)
Changes in fair value of deferred
consideration - - - - 1,318 1,318
Amortisation of intangible assets (1,148) (3) (24) (289) (405) (1,869)
--------
Profit before tax 9,751 177 (17) 339 (2,089) 8,161
Taxation (1,590)
--------
Profit for the period 6,571
--------
Six months ended 31 Dec 2015
(unaudited)
Total segment revenues 27,908 2,103 3,146 5,747 - 38,904
Inter segment revenues (110) (64) (32) - - (206)
------------ ---------- ------------ -------------- --------------- --------
External revenues 27,798 2,039 3,114 5,747 - 38,698
------------ ---------- ------------ -------------- --------------- --------
Underlying profit before tax 9,175 (12) (1,030) 517 (1,515) 7,135
Finance cost of deferred
consideration - - - (43) (249) (292)
Amortisation of intangible assets (651) (1) (16) (287) (406) (1,361)
--------
Profit before tax 8,524 (13) (1,046) 187 (2,170) 5,482
Taxation (1,109)
--------
Profit for the period 4,373
--------
Year ended 30 Jun 2016 (audited)
Total segment revenues 58,949 4,387 6,896 11,605 - 81,837
Inter segment revenues (238) (136) (64) - - (438)
------------ ---------- ------------ -------------- --------------- --------
External revenues 58,711 4,251 6,832 11,605 - 81,399
------------ ---------- ------------ -------------- --------------- --------
Underlying profit before tax 19,100 (57) (558) 800 (3,749) 15,536
Finance cost of deferred
consideration - - - (78) (499) (577)
Changes in fair value of deferred
consideration 3 - - 225 3,343 3,571
Amortisation of intangible assets (1,252) (3) (33) (576) (810) (2,674)
--------
Profit before tax 17,851 (60) (591) 371 (1,715) 15,856
Taxation (3,117)
--------
Profit for the period 12,739
--------
a) Geographic analysis
The Group's operations are located in the United Kingdom and the
Channel Islands. The following table presents external revenue
analysed by the geographical location of the Group entity providing
the service.
Six months
ended Year ended
Six months
31 Dec 2016 ended 30 Jun 2016
31 Dec 2015
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
United Kingdom 38,810 32,951 69,794
Channel Islands 6,526 5,747 11,605
Total revenue 45,336 38,698 81,399
------------- -------------- -------------
b) Major clients
The Group is not reliant on any one client or group of connected
clients for the generation of revenues.
4. Administrative costs
The following items are included within administrative expenses
in the Condensed Consolidated Statement of Comprehensive
Income.
Financial Services Compensation Scheme levies
A charge of GBPnil was incurred in respect of Financial Services
Compensation Scheme ('FSCS') levies in the six months ended 31
December 2016 (six months ended 31 December 2015: GBPnil; year
ended 30 June 2016: GBP475,000).
5. Realised gains and losses on investments
During the six months ended 31 December 2016, the Group realised
a net gain of GBP4,000 (six months ended 31 December 2015:
GBP20,000; year ended 30 June 2016: GBP20,000) on disposal of
investments. This comprised of a gain of GBP13,000 on the
investment in the Braemar Group PCC Limited Student Accommodation
Cell and a loss of GBP9,000 on the investment in GLI Finance
Limited redeemable preference shares. The GBP20,000 gain in the six
months ended 31 December 2015 and the year ended 30 June 2016
related to the final disposal of the Group's investment in Sancus
Holdings Limited, through the voluntary winding up of the
company.
6. Other gains and losses
Other gains and losses represent the net changes in the fair
value of the Group's financial instruments recognised in the
Consolidated Statement of Comprehensive Income.
Six months Six months
ended ended
31 Dec 2016 31 Dec 2015 Year ended
30 Jun 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Impairment of available for sale
financial assets (note 13) - (174) (311)
Impairment of investment in joint
venture (note 14) (193) (400) (400)
Unrealised gain / (loss) from changes
in fair value of financial assets
at fair value through profit or
loss (note 15) 109 2 (3)
Gain from changes in fair value
of deferred consideration (note
16) 1,318 - 3,571
------------- ------------- -------------
Other gains and losses 1,234 (572) 2,857
------------- ------------- -------------
7. Finance income and finance costs
Six months
ended
Six months
31 Dec 2016 ended Year ended
31 Dec 2015 30 Jun 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Finance income
Dividends on preference shares 23 - -
Bank interest on deposits 20 22 58
------------- -------------- -------------
Total finance income 43 22 58
------------- -------------- -------------
Finance costs
Finance cost of deferred consideration 159 292 577
------------- -------------- -------------
Total finance costs 159 292 577
------------- -------------- -------------
8. Taxation
The current tax expense for the six months ended 31 December
2016 was calculated based on the estimated average annual effective
tax rate.
Six months
ended
Six months
31 Dec 2016 ended Year ended
31 Dec 2015 30 Jun 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
UK Corporation Tax 1,924 1,437 3,262
Under provision in prior years 75 196 448
------------- -------------- -------------
Total current taxation 1,999 1,633 3,710
Deferred tax credits (282) (190) (259)
Effect of change in tax rate on
deferred tax (127) (334) (334)
Total income tax expense 1,590 1,109 3,117
------------- -------------- -------------
The Finance (No.2) Act 2015, which was substantively enacted in
October 2015, will reduce the main rate of UK Corporation Tax to
19% with effect from 1 April 2017. As a result the effective rate
of Corporation Tax applied to the taxable profit for the period
ended 31 December 2016 is 19.75% (six months ended 31 December
2015: 20.00%; year ended 30 June 2016: 20.00%).
The Finance Act 2016, which was substantively enacted in
September 2016, will further reduce the rate to 17% with effect
from 1 April 2020, replacing the rate of 18% set by the Finance
(No.2) Act 2015. Deferred tax assets and liabilities are calculated
at the rate that is expected to be in force when the temporary
differences unwind, but limited to the extent that such rates have
been substantively enacted. The tax rate used to measure the
deferred tax assets and liabilities of the Group is therefore
18.70% (six months ended 31 December 2015: 18.90%; year ended 30
June 2016: 18.00%) and will be reviewed in future years subject to
new legislation.
9. Earnings per share
The directors believe that underlying earnings per share provide
a truer reflection of the Group's performance. Underlying earnings
per share are calculated based on 'underlying earnings', which is
defined as post-tax profit attributable to equity holders of the
Company ('earnings') before the finance costs of deferred
consideration, changes in the fair value of deferred consideration
and amortisation of intangible non-current assets. The tax effect
of these adjustments is also considered and the tax charge is
adjusted accordingly.
Earnings for the period used to calculate earnings per share as
reported in these condensed consolidated financial statements were
as follows:
Six months
ended
Six months
31 Dec 2016 ended Year ended
31 Dec 2015 30 Jun 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Earnings attributable to ordinary
shareholders 6,571 4,373 12,739
Finance cost of deferred consideration
(note 16) 159 292 577
Changes in fair value of deferred
consideration (note 16) (1,318) - (3,571)
Amortisation of intangible assets
(note 11) 1,869 1,361 2,674
Tax impact of adjustments (274) (284) (556)
------------- -------------- -------------
Underlying earnings 7,007 5,742 11,863
------------- -------------- -------------
Basic earnings per share is calculated by dividing earnings by
the weighted average number of shares in issue throughout the
period. Diluted earnings per share represents the basic earnings
per share adjusted for the effect of dilutive potential shares
issuable on exercise of employee share options under the Group's
share-based payment schemes, weighted for the relevant period.
The weighted average number of shares in issue during the period
was as follows:
Six months
ended
Six months
31 Dec 2016 ended Year ended
31 Dec 2015 30 Jun 2016
(unaudited) (unaudited) (audited)
Number of Number of Number of
shares shares shares
Weighted average number of shares
in issue 13,518,502 13,481,029 13,493,316
Effect of dilutive potential shares
issuable on exercise of employee
share options 53,095 67,712 48,220
------------- -------------- -------------
Diluted weighted average number
of shares in issue 13,571,597 13,548,741 13,541,536
------------- -------------- -------------
Six months
ended
Six months
31 Dec 2016 ended Year ended
31 Dec 2015 30 Jun 2016
(unaudited) (unaudited) (audited)
p p p
Based on reported earnings:
Basic earnings per share 48.61 32.44 94.41
Diluted earnings per share 48.42 32.28 94.07
------------- -------------- -------------
Based on underlying earnings:
Basic earnings per share 51.83 42.59 87.92
Diluted earnings per share 51.63 42.38 87.60
------------- -------------- -------------
10. Dividends
Six months Six months
ended ended
31 Dec 2016 31 Dec 2015 Year ended
30 Jun 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Final dividend paid on ordinary
shares 3,101 2,758 2,758
Interim dividend paid on ordinary
shares - - 1,614
Total dividends 3,101 2,758 4,372
------------- ------------- -------------
An interim dividend of 15.0p (six months ended 31 December 2015:
12.0p) per share was declared by the Board of Directors on 14 March
2017. It will be paid on 21 April 2017 to shareholders who are on
the register at the close of business on 24 March 2017. In
accordance with IAS 10, this dividend has not been included as a
liability in the financial statements at 31 December 2016.
A final dividend for the year ended 30 June 2016 of 23.0p (year
ended 30 June 2015: 20.5p) per share was paid on 28 October
2016.
11. Intangible assets
Contracts
Acquired acquired
client with
relationship fund
Goodwill Software contracts managers Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 July 2015 36,006 1,816 32,747 3,522 74,091
Additions - 1,598 - - 1,598
At 31 December 2015 36,006 3,414 32,747 3,522 75,689
Additions - 1,667 - - 1,667
At 30 June 2016 36,006 5,081 32,747 3,522 77,356
Additions - 943 - - 943
At 31 December 2016 36,006 6,024 32,747 3,522 78,299
--------- --------- -------------- ---------- --------
Accumulated amortisation
At 1 July 2015 - 398 5,938 2,497 8,833
Amortisation charge - 60 1,089 212 1,361
--------- --------- -------------- ---------- --------
At 31 December 2015 - 458 7,027 2,709 10,194
Amortisation charge - 72 1,088 153 1,313
--------- --------- -------------- ---------- --------
At 30 June 2016 - 530 8,115 2,862 11,507
Amortisation charge - 603 1,099 167 1,869
--------- --------- -------------- ---------- --------
At 31 December 2016 - 1,133 9,214 3,029 13,376
--------- --------- -------------- ---------- --------
Net book value
At 1 July 2015 36,006 1,418 26,809 1,025 65,258
At 31 December 2015 36,006 2,956 25,720 813 65,495
At 30 June 2016 36,006 4,551 24,632 660 65,849
--------- --------- -------------- ---------- --------
At 31 December 2016 36,006 4,891 23,533 493 64,923
--------- --------- -------------- ---------- --------
a) Goodwill
Goodwill acquired in a business combination is allocated at
acquisition to the cash generating units ('CGUs') that are expected
to benefit from that business combination. The carrying amount of
goodwill in respect of these CGUs within the operating segments of
the Group comprises:
31 Dec 2016
31 Dec 2015 30 Jun 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Funds and Property Management
Braemar Group Limited ('Braemar') 3,550 3,550 3,550
Levitas Investment Management Services
Limited ('Levitas') 11,213 11,213 11,213
------------- ------------- ------------
14,763 14,763 14,763
International
Brooks Macdonald Asset Management (International)
Limited, Brooks Macdonald Retirement
Services (International) Limited and
DPZ Capital Limited (collectively 'Brooks
Macdonald International') 21,243 21,243 21,243
Total goodwill 36,006 36,006 36,006
------------- ------------- ------------
Due to the slower than anticipated growth in FUM of the Levitas
funds and the resulting reduction in the estimated fair value of
deferred consideration payable, the calculation of the recoverable
amount of the Levitas CGU was reviewed as at 31 December 2016.
Based on the latest forecasts, it was concluded that the estimated
value-in-use of the business is still greater than the carrying
amount and therefore it is not considered that the associated
goodwill is impaired. At the reporting date, there were no
indicators that the carrying amount of goodwill in relation to the
other CGUs should be impaired.
b) Computer software
Computer software includes capitalised software development
costs, where work has been undertaken to improve the Group's IT
software systems that will have a lasting economic benefit.
Computer software is amortised over an estimated useful life of
four years on a straight line basis.
c) Acquired client relationship contracts
This asset represents the fair value of future benefits accruing
to the Group from client relationship contracts acquired either as
part of a business combination or when separate payments are made
to third parties in exchange for a book of clients. The
amortisation of client relationship contracts is charged to the
Condensed Consolidated Statement of Comprehensive Income on a
straight line basis over their estimated useful lives (15 to 20
years).
d) Contracts acquired with fund managers
This asset represents the fair value of future benefits accruing
to the Group from contracts acquired with individual fund managers
when they are recruited by the Group. Payments made to acquire such
contracts are initially recognised at cost and amortised on a
straight line basis over an estimated useful life of five
years.
12. Property, plant and equipment
During the six months ended 31 December 2016, the Group acquired
assets at a cost of GBP440,000 (six months ended 31 December 2015:
GBP568,000; year ended 30 June 2016: GBP751,000). The net book
value of fixed assets disposed of in the period was GBP9,000 (six
months ended 31 December 2015: GBP11,000; year ended 30 June 2016:
GBP27,000), resulting in a gain on disposal of GBP4,000 (six months
ended 31 December 2015: GBPnil; year ended 30 June 2016: GBP9,000
loss).
13. Available for sale financial assets
At 1 July 2016, the Group held investments of 1,426,793.64 class
B ordinary shares, representing an interest of 10.88% in Braemar
Group PCC Limited Student Accommodation Cell ('Student
Accommodation fund') and 750,000 zero dividend preference shares in
GLI Finance Limited ('GLIF'), an AIM-listed company incorporated in
Guernsey. The Group also holds an investment of 500,000 redeemable
preference shares in an unlisted company incorporated in the
UK.
During the six months ended 31 December 2016, the Group disposed
of its holding in the Student Accommodation fund at a market value
of GBP484,000, realising a gain of GBP13,000, and its holding in
GLIF at a market value of GBP735,000, realising a loss of GBP9,000.
The net gain of GBP4,000 has been recognised in the Consolidated
Statement of Comprehensive Income for the six months ended 31
December 2016 within realised gains and losses on investments (note
5).
During the six months ended 31 December 2016, the Group acquired
an offshore bond at a cost of GBP5,000 and converted an existing
loan of GBP150,000, issued by Brooks Macdonald Asset Management
(International) Limited to a third party, into redeemable
preference share capital. The loan was previously included within
trade and other receivables as a non-current asset and has been
reclassified as an available for sale financial asset. The
preference shares carry an entitlement to a fixed preferential
dividend at a rate of eight per cent per annum.
Six months
ended
Six months
31 Dec 2016 ended Year ended
31 Dec 2015 30 Jun 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
At beginning of period 1,715 1,532 1,532
Additions 5 - 500
Reclassification of loan (non-cash
transfer) 150 - -
Net gain / (loss) from changes
in fair value 4 - (6)
Disposals (1,219) - -
Impairment loss - (174) (311)
At end of period 655 1,358 1,715
------------- -------------- -------------
14. Investment in joint venture
Brooks Macdonald Funds Limited, a subsidiary of Brooks Macdonald
Group plc, holds a 60% interest in North Row Capital LLP. The Group
has joint control over the partnership, with the remaining interest
owned by two individual partners who developed the investment
approach behind the IFSL North Row Liquid Property Fund, which was
launched in February 2014. The fund offers investors liquid
exposure to global real estate markets by investing predominantly
in property derivatives, as well as property equity and debt, to
gain exposure to the direct property markets.
Six months
ended
Six months
31 Dec 2016 ended Year ended
31 Dec 2015 30 Jun 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
At beginning of period 207 628 628
Working capital advanced in the
period 1 100 86
Share of loss of joint venture (15) (107) (107)
Impairment loss (193) (400) (400)
At end of period - 221 207
------------- -------------- -------------
At 31 December 2016 the carrying amount of the Group's
investment in North Row Capital LLP has been further reduced to an
estimated recoverable amount of GBPnil by recognising an impairment
loss of GBP193,000 against the investment in joint venture (six
months ended 31 December 2015: GBP400,000; year ended 30 June 2016:
GBP400,000). The expense is included within other gains and losses
on the Condensed Consolidated Statement of Comprehensive Income.
The impairment arose as the forecast future cash flows from the
partnership are estimated to accumulate slower than originally
anticipated and as a result it is not expected that the Group will
realise a return on its investment in the joint venture in the
foreseeable future.
15. Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss comprise
investments in equity share capital of publicly listed companies
and Open Ended Investment Companies (OEICs). The market value of
the investments at 31 December 2016 was GBP1,109,000 (at 31
December 2015: GBP5,000; at 30 June 2016: GBP1,000,000). These
investments are classified as level 1 within the fair value
hierarchy, as the inputs used to determine the fair value are
quoted prices for the shares in active markets at the measurement
date.
16. Deferred consideration
Deferred consideration, which is also included within provisions
in current liabilities (note 17) to the extent that it is due to be
paid within one year of the reporting date, relates to the
directors' best estimate of amounts payable in the future in
respect of a subsidiary undertaking that was acquired by the Group.
Deferred consideration is measured at its fair value based on
discounted expected future cash flows. The movements in the total
deferred consideration balance during the year were as follows:
Six months
ended
Six months
31 Dec 2016 ended Year ended
31 Dec 2015 30 Jun 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
At beginning of the period 6,931 13,826 13,826
Finance cost of deferred consideration 159 292 577
Fair value adjustments (1,318) - (3,571)
Payments made during the period (1,580) (1,772) (3,901)
At end of period 4,192 12,346 6,931
------------- -------------- -------------
Analysed as:
Amounts falling due within one
year 1,724 4,456 1,641
Amounts falling due after more
than one year 2,468 7,890 5,290
At end of period 4,192 12,346 6,931
------------- -------------- -------------
Payments totalling GBP1,580,000 were made during the period (six
months ended 31 December 2015: GBP1,772,000; year ended 30 June
2016: GBP3,901,000). The payments during the period as well as the
outstanding liability at 31 December 2016 relate entirely to
amounts owed to the vendors of Levitas.
17. Provisions
Deferred
Client compensation consideration FSCS levy Total
GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2015 701 4,384 389 5,474
Charge to the Statement of Comprehensive
Income 50 - - 50
Finance cost of deferred consideration - 292 - 292
Transfer from non-current liabilities - 1,552 - 1,552
Utilised during the period (98) (1,772) (389) (2,259)
-------------------- --------------- ---------- --------
At 31 December 2015 653 4,456 - 5,109
Charge to the Statement of Comprehensive
Income 76 - 475 551
Finance cost of deferred consideration - (213) - (213)
Fair value adjustments - (228) - (228)
Transfer from non-current liabilities - (245) - (245)
Utilised during the period (56) (2,129) (5) (2,190)
-------------------- --------------- ---------- --------
At 30 June 2016 673 1,641 470 2,784
Charge to the Statement of Comprehensive
Income 398 - - 398
Finance cost of deferred consideration - 159 - 159
Transfer from non-current liabilities - 1,504 - 1,504
Utilised during the period (106) (1,580) (470) (2,156)
-------------------- --------------- ---------- --------
At 31 December 2016 965 1,724 - 2,689
-------------------- --------------- ---------- --------
a) Client compensation
Client compensation provisions relate to the potential liability
arising from client complaints against the Group. Complaints are
assessed on a case by case basis and provisions for compensation
are made where judged necessary.
b) Deferred consideration
Deferred consideration has been included within provisions as a
current liability to the extent that it is due for payment within
one year of the reporting date. Details of the total deferred
consideration payable are provided in note 16.
c) FSCS levy
At 31 December 2016 provisions include an amount of GBPnil (at
31 December 2015: GBPnil; at 30 June 2016: GBP470,000) in respect
of expected levies by the Financial Services Compensation Scheme.
The expected levy for the 2017/18 scheme year has been announced by
the FSCS but does not yet meet the recognition criteria for a
provision.
18. Reconciliation of operating profit to net cash inflow from operating activities
Six months Six months Year ended
ended 31 Dec ended 31 Dec 30 Jun 2016
2016 (unaudited) 2015 (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Operating profit 8,292 5,859 16,482
Depreciation of property, plant
and equipment 507 549 969
(Gain) / loss on sale of property,
plant and equipment (4) - 9
Gain on sale of available for
sale financial assets (4) - -
Amortisation of intangible assets 1,869 1,361 2,674
Other (gains) / losses (1,234) 572 (2,857)
Decrease / (increase) in trade
and other receivables 865 (464) (2,706)
(Decrease) / increase in trade
and other payables (3,065) (2,546) 1,950
(Decrease) / increase in provisions (178) (437) 53
Decrease / (increase) in other
non-current liabilities 85 (66) 19
Movements in share-based payments
reserve 641 375 943
------------------ ------------------ -------------
Net cash inflow from operating
activities 7,774 5,203 17,536
------------------ ------------------ -------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BIGDXCUBBGRS
(END) Dow Jones Newswires
March 15, 2017 03:00 ET (07:00 GMT)
Brooks (AQSE:BRK.GB)
過去 株価チャート
から 6 2024 まで 7 2024
Brooks (AQSE:BRK.GB)
過去 株価チャート
から 7 2023 まで 7 2024
