the times | Thursday November 25 2021 V3 51
Business
Difficulties with the introduction of a
new IT system and a warning about a
higher-than-expected wages bill took
the shine off strong results from Brewin
Dolphin, the wealth manager.
The company reported £2.1 billion of
net new inflows from customers in the
year to September, helping to push up
pre-tax profits by 16.7 per cent to
Brewin Dolphin profits dented by rising cost of IT and wages
£72.5 million and lifting total assets
under management to £56.9 billion.
However, a new custody and settle-
ment platform would now cost an extra
£20 million next year, the firm warned,
as it added new functions to the system
and took the decision to run it in paral-
lel with existing software for a while as
a precaution.
The risk of adopting a “big bang” ap-
proach and turning off the old system atthe same time as turning on the new
one was “too high”, according to Robin
Beer, the chief executive.
Brewin also said it expected “higher
than normal wage inflation” next year,
partly because of the 1.25 per cent in-
crease in national insurance an-
nounced in the budget, raising its over-
all wages bill by a “mid to high single-
digit percentage”.
The shares were marked 25p lower,or 6.6 per cent, at 350½p. Paul McGin-
nis at Shore Capital said the news on IT
was “disappointing”, adding that the
total cost of the system would now
come in at £70 million — double the
original 2019 budget.
London-based Brewin, which traces
its roots back to 1762, helps manage the
nest-eggs of more than 100,000 afflu-
ent families in the UK and Ireland. It
has 34 branches and about 2,000 staff.While inflows were strong, galloping
markets also helped push up assets
under management by £7.1 billion.
Average investment performance for
clients was 14.9 per cent in the year,
which compared to the benchmark for
private clients of 13.6 per cent. The
FTSE 100 achieved a 20.8 per cent rise
over the same period.
An 11.1p final dividend, up 12.1 per
cent, makes a total for the year of 15.7p.Patrick Hosking Financial Editor
Smartphone
weakness
sends IQE
into free fall
James Hurley
Shares in IQE slid nearly 25 per cent
yesterday after investors reacted to a
profit warning, resulting in the comput-
er chip component firm’s worst day on
the markets in more than 20 years.
Shares in the Cardiff-based business
plummeted after it warned of a hit
caused by softening demand for smart-
phones and the disappointing pace of
the rollout of 5G technology in the
West. IQE has halved in value this year.
In a trading update, the company
forecast a lower annual profit margin
and revenue for this year as it said that
growth in demand for its semiconduc-
tor wafers related to 5G and next-gen-
eration wi-fi products had fallen “below
management expectations”.
IQE, founded in 1988, designs and
makes wafers — the building blocks of
semiconductors. It employs about 650
people in America, Britain and Asia.
Founder Drew Nelson, 65, listed it on
Aim, London’s junior stock market, at
the height of the dotcom boom in 1999.
One of its clients is Apple.
Weaker demand for smartphones
may be related to disruption in global
supply chains and the general shortage
of computer chips. IQE said sales of
other products related to orders from
the defence and security industries
were also lower than expected.
Other issues included a “significant
foreign exchange headwind” caused by
the relative strength of sterling against
the US dollar, in which the majority of
IQE’s revenues are denominated. The
company said it expected an 8 per cent
decline in revenue this year on a con-
stant currency basis. With currency
movements factored in, profits could
fall by as much as 40 per cent.
On Monday, IQE named Americo
Lemos, of New York-based peer
GlobalFoundries, as its incoming chiefexecutive, ending a search of close to a
year for a successor to Nelson.
Phil Smith, IQE’s interim executive
chairman, said: “It is disappointing that
5G infrastructure deployments have
remained weak, but we still expect it...
to provide a multi-year growth cycle.
Broader semiconductor market shorta-Listed companies are issuing “boiler-
plate” statements that fail to offer
investors any insight into company
governance, the Financial Reporting
Council has warned.
The regulator’s annual review of
company reporting against the UK
corporate governance code said that
some statements “are seldom substan-
tiated by actions or examples” and were
therefore useless to investors.
The council analysed a random
sample of 100 FTSE 350 and small-cap
companies.
Some companies were said to be “still
defaulting” to the use of vague lan-
guage to discuss how carbon emission
reductions are going to be achieved, the
regulator said. Nine firms reported
neither board-level discussions on
environmental issues nor disclosure on
climate targets and metrics outside of
Regulator rebukes firms over governance
mandated CO 2 emissions. These in-
cluded three small-cap firms, four
FTSE 250 firms and two FTSE 100
firms.
Other areas of concern included
“very few” companies confirming how
remuneration aligned with company
purposes and values.
Reporting on board appointments,
succession planning and diversity also
remains “weak”, the regulator said.
UK companies listed on the main
market are required to explain in their
annual report and accounts how they
have applied the governance code. It
operates on a “comply or explain” basis,
outlining best practice on board leader-
ship and appointments, audit func-
tions, internal controls and remunera-
tion policies.
A government consultation on “re-
storing trust in audit and corporate
governance”, published this year, has
proposed beefing up the code. New re-
quirements would include “greatertransparency” on potential “material
uncertainties” considered by compa-
nies in their going concern assessment
and greater use of scenario testing. The
government has asked the regulator to
consult on changes to the code that
would mean “minimum clawback con-ditions” being included in directors’ pay
arrangements in the event of serious di-
rector failings. The code may issue fur-
ther guidance on fraud prevention and
detection. Companies also face having
to make more climate-related financial
disclosures.
Sir Jon Thompson, chief executive of
the regulator, said that “in too manycases reporting has not provided in-
sight into the actions and outcomes of
governance, which provides investors
and wider stakeholders with confi-
dence that company leadership is ad-
dressing the material governance
issues that the company is facing”. He
added that, overall, the regulator had
seen “improved reporting”, but that
expectations set out by the FRC a year
earlier remained “unfulfilled”.
The watchdog found that while
75 per cent of companies identified
communities as a key stakeholder, it
was “disappointed” to find a lack of nar-
rative around how community issues
were identified, or how they key issues
identified relate to the company’s im-
pact on those communities, or the com-
pany’s financial performance. Only
18 per cent of companies that identified
communities as a key stakeholder re-
ported on a clear dialogue between that
group and the company. About a fifth of
firms in the sample did not report anysteps that they had taken to prepare for
assessing new climate-related financial
disclosures at a board of committee
level. The regulator said it was “sur-
prised” by the low level of reporting on
climate-related issues by some compa-
nies. One in the sample described cli-
mate change as “not currently consid-
ered to be an emerging or a principle
risk for the group”.
“We consider that climate change
should be seen as a risk for all compa-
nies, regardless of their sector or size,”
the regulator said. Companies that “ex-
celled” in their reporting used a variety
of metrics and compared their metrics
between years.
The watchdog said that 10 per cent of
companies in its sample did not report
on shareholder engagement on remu-
neration. Of those that did report, only
31 gave details of the feedback received
from shareholders and the impact that
this had on remuneration arrange-
ments.Louisa Clarence-Smith
Chief Business Correspondent
10%
of companies are not reporting on
investor engagement on remuneration
Source: Financial Reporting CouncilPay doubles
for Virgin
bank chief
Ben Martin Senior City CorrespondentThe boss of Virgin Money UK, who is
driving through an overhaul of Britain’s
sixth-largest bank that has involved
branch closures and job cuts, has seen
his pay package more than double to
£2.7 million.
The amount handed to David Duffy
in the year to the end of September is
his second highest since Virgin floated
on the London Stock Exchange in 2016.
He received £1.35 million last year. It
has been boosted by the vesting of a
share-based incentive scheme from
2018, according to the bank’s annual re-
port, released yesterday.
Duffy has spearheaded a significant
expansion of the lender, originally
called the Clydesdale and Yorkshire
Bank Group, since it was spun out of
former parent National Australia Bank.
In 2018, Clydesdale acquired Virgin
Money and subsequently took its
name. While the deal has handed the
combined group greater scale to com-
pete with high-street lenders, the inte-
gration of the two businesses has led to
the closure of 83 branches and the loss
of more than 2,000 jobs, leaving the
workforce at just over 7,400 employees.
A further 31 of its remaining 162 sites
will shut next year, resulting in an addi-
tional 112 redundancies.
While Duffy’s pay was swelled by the
share awards, he received only 12 per
cent of the maximum annual bonus for
which he was eligible.
The annual report comes three
weeks after Virgin reported it had re-
turned to the black, swinging to an
annual pre-tax profit of £417 million
from a £168 million loss a year earlier.ges have softened demand... but we be-
lieve these effects to be temporary.”
IQE said that planned closures of fa-
cilities in Pennsylvania and Singapore,
part of a plan to improve production ef-
ficiency, remained on track.
The shares closed down 12¼p, or
24.4 per cent, at 38p.Softening smartphone demand, plus slow 5G and wi-fi product rollouts, saw the component-maker issue a profit warningANTHONY WALLACE/AFP VIA GETTY IMAGES