Interim Financial Report 2014 · 9.1p Adjusted1 earnings per share: Basic earnings per share of 9.1p (31 March 2013: 7.5p) an increase of 21.3%. Diluted earnings per share of 8.6p

Interim Financial Report 2014

Highlights

01

20.3% Adjusted1 profit before tax (“PBT”) margin of 20.3% (2013: 17.1%).

£146.3m Total income of £146.3 million (31 March 2013: £139.0 million), an increase of 5.3%.

£29.7m Adjusted1 profit before tax of £29.7 million (31 March 2013: £23.7 million), an increase of 25.3%.

£21.4m Profit before tax of £21.4 million (31 March 2013: £6.8 million).

£22.7bn Strong growth in discretionary funds to £22.7 billion at 30 March 2014 (29 September 2013: £21.3 billion, 31 March 2013: £20.4 billion).

9.1pAdjusted1 earnings per share:Basic earnings per share of 9.1p (31 March 2013: 7.5p) an increase of 21.3%.Diluted earnings per share of 8.6p (31 March 2013: 7.1p) an increase of 21.1%.

6.7pEarnings per share:Basic earnings per share of 6.7p (31 March 2013: 2.2p).Diluted earnings per share of 6.3p (31 March 2013: 2.0p).

3.65p Interim dividend of 3.65 pence per share in line with guidance.

£32mA post period end non cash impairment charge to be taken in H2 2014 of £32 million pre-tax as a result of the decision announced on 13 May not to proceed with a major software implementation.

1 These figures have been adjusted to exclude redundancy costs, additional FSCS levy, onerous lease contracts provision and amortisation of client relationships.

Interim Management Report

02 Brewin Dolphin Holdings PLC Interim Financial Report 2014

To the members of Brewin Dolphin Holdings PLC

Results for the 6 months ended 30 March 2014The strong underlying results for the half year ended 30 March 2014 reflect the progress the Group has made on delivering against its strategic objectives. Adjusted profit before tax grew by 25% to £29.7 million (31 March 2013: £23.7 million) and adjusted diluted EPS grew by 21% to 8.6 pence per share from 7.1 pence in March 2013.

Growth in adjusted profit before tax was driven by increased income, 5% higher than prior year, together with improving efficiency as reflected by the increase in adjusted profit before tax margin to 20.3% (31 March 2013: 17.1%).

Unaudited 26 weeks to

30 March 2014


31 March 2013 % change

£’m £’m

Income Core1 134.4 118.6 13% Other 11.9 20.4 (42)%

146.3 139.0 5%Salaries (51.3) (53.4) (4)%Other operating costs (40.4) (42.1) (4)%

Total fixed operating costs (91.7) (95.5) (4)%Adjusted2 profit before variable staff costs 54.6 43.5 26%Variable staff costs (25.1) (20.1) 25%

Adjusted2 operating profit 29.5 23.4 26%Net finance income and other gains and losses 0.2 0.3

Adjusted2 profit before tax 29.7 23.7 25%Exceptional costs (8.3) (16.9)

Profit before tax 21.4 6.8 215%Taxation (3.7) (1.6)

Profit after tax 17.7 5.2

Earnings per share Basic earnings per share 6.7p 2.2p 205% Diluted earnings per share 6.3p 2.0p 215%

Adjusted2 earnings per share Basic earnings per share 9.1p 7.5p 21% Diluted earnings per share 8.6p 7.1p 21%

1 Core income is defined as income derived from fees and commissions charged on management and/or advice and execution activities relating to client portfolios. 2 These figures have been adjusted to exclude redundancy costs, additional FSCS levy, onerous lease contracts provision and amortisation of client relationships.

Overall income growth resulted primarily from increasing core income, up 13% to £134.4 million (31 March 2013: £118.6 million). Against a backdrop of stronger equity markets, with average levels in H1 2014 being 6% higher than the same period last year, this was achieved from continued growth in new funds managed within our discretionary service. Income from other services remained flat against the same period last year, with the loss of advisory client funds resulting from the remaining service and pricing reviews being offset by the retention of funds at new standardised fee rates.

Other income continued to fall, to £11.9 million, down 42% (31 March 2013: £20.4 million) as a result of declining margins on cash deposits and a further £6.1 million reduction in trail income following the continued move away from trail paying unit trusts post RDR.

On-going initiatives to improve business efficiency by standardising operating processes and restructuring the business, together with strong cost discipline, resulted in a decline in total fixed operating costs of 4% from the same period last year.

Total fixed operating costs declined by 4% to £91.7 million, from £95.5 million in the same period last year.

03

Control over fixed salary cost inflation combined with reduced headcount from restructuring central functions and elements of the branch network in 2013 resulted in a 4% decline in salary costs to £51.3 million (31 March 2013: £53.4 million). This was despite increasing staff costs associated with the integration of major new technology systems in the period.

Other operating costs also declined 4% from £42.1 million in the same period last year to £40.4 million. Control over discretionary expenditure, lower depreciation from capital expenditure combined with reduced property costs resulting from branch consolidations, more than offset higher technology related costs from new system implementations and higher legal and professional fees.

Variable staff costs in the period grew in line with higher income and profit performance.

Exceptional costs in the period declined to £8.3 million from £16.9 million in the same period last year. This decline was the result of significantly lower charges taken in the period relating to redundancy costs from further restructuring and updated estimates of onerous contract provisions required.

Funds under management

£bn29 September

2013 Inflows OutflowsService

Switching Net FlowsGrowth

Rate %*Market

Movement 30 March

2014

Discretionary 21.3 1.0 (0.6) 0.2 0.6 6% 0.8 22.7

Advisory Managed 4.8 0.1 (0.2) (0.3) (0.4) -16% 0.1 4.5 Advisory Dealing 2.1 0.0 (0.2) (0.4) (0.6) -57% 0.0 1.5 Total Advisory 6.9 0.1 (0.4) (0.7) (1.0) -29% 0.1 6.0

Total Managed/Advised 28.2 1.1 (1.0) (0.5) (0.4) -3% 0.9 28.7

Execution Only 6.7 0.5 (0.4) 0.5 0.6 18% 0.1 7.4

Total Funds 34.9 1.6 (1.4) 0.0 0.2 1% 1.0 36.1

*Annualised

30 March 2014

29 September 2013 % change

Indices FTSE WMA Private Investor Series Balanced Portfolio 3,380 3,314 2.0%FTSE 100 6,615 6,513 1.6%

Total managed/advised funds increased by 1.8% in the period to £28.7 billion from £28.2 billion in September 2013.

The strategy of focusing on our discretionary service whilst completing the remaining reviews of advisory services is reflected in the on-going growth in discretionary funds and net outflows from advisory funds.

Discretionary funds increased by 7% in the period, including £0.6 billion of net new funds, an annualised rate of 6%, above our target of achieving 5% per annum new funds growth. Discretionary funds under management now represent 79% (September 2013: 76%) of total managed/advised funds.

As reported at September 2013, approximately 40% of our managed advisory business was still due to move onto new standard national pricing structures, with the intention that this would be completed by the end of 2014. The completion of this move will bring the yield received for this service to a more sustainable level of approximately 75 bps from the 56 bps earned in 2013. Further progress on this initiative has been achieved in the period, taking the yield up to 61 bps for the six months ended 30 March 2014, although some delays have occurred as a result of ensuring that client communication was fair and appropriate. This work is still planned to be completed by the end of 2014.

Work has progressed in the period on developing and introducing an enhanced investment process in order to improve client experience. The roll out is now underway.

In addition, progress has been made on the various initiatives announced in September 2013 to support ongoing growth in client services managed within our discretionary service, such as the launch of a new website, various marketing initiatives and a refocused intermediary agent sales team.

The funds we hold in relation to our execution only business have grown by 10% to £7.4 billion.

Interim Management Report (continued)


Update on technologyAs previously reported at the full year 2013 results, the first stage of the planned implementation of the JHC Figaro software (“Figaro”) into Stocktrade, our execution only service, took place in September 2013.

The initiative to implement Figaro as a new core system for the Group’s business was launched in 2011 aiming to achieve material cost saving opportunities through lower support headcount and lower technology operating costs. If achieved these benefits would have led to the improvement in the Group’s operating margin from 15% to a planned 20%. By the end of 2012, as reported at the time, it became evident that the project was experiencing delays in design, configuration and testing.

Following the management changes in March 2013 an initial review of the project concluded that the implementation of Figaro was achievable. New project management was put in place, and simpler, standardised and consistent business operating processes were defined.

As a result of the review the management team were able to announce in May 2013 that the design work was largely complete and a new de-risked implementation plan was put in place commencing in the final quarter of 2013. This plan involved a first phase implementation into Stocktrade in order to more securely test the new system.

Following the implementation into Stocktrade initial benefits were experienced by way of improved client accessibility. However, a number of issues with the functionality and robustness of the software were uncovered. These are continuing to take additional time and resource to address. An ongoing deterioration in the Group’s assessment of the project, post the H1 2014 period end, led the Board to undertake a full review of the plans to roll out Figaro more broadly across the Group.

As a result of the investigation into the underlying causes of these issues, the Board concluded in May 2014 that although Figaro is an acceptable solution for Stocktrade, it no longer believes it would be an appropriate operating system for the Group’s discretionary wealth management business or to support the Group’s strategic aims and new margin target of 25% by 2016. Accordingly, it was announced on 13 May 2014 that the project to develop and roll out Figaro to the rest of the business would be terminated.

The financial impact of this post balance sheet date decision is set out in note 17.

In December 2013 it was indicated that a further £20 million of capital expenditure on software development projects was anticipated over the following 18 months, including the project to roll out Figaro to the whole business. As a result of the decision discussed above there will be no increment to the Group’s forecast capital expenditure for 2014 to 2016.

As disclosed in note 8, £4.5 million of capital expenditure (31 March 2013: £9.1 million) was incurred during the period on these projects, of which £3.3 million was on Figaro. Total capitalised software at 30 March 2014 was £37.5 million, of which approximately £36.0 million related to development projects. Within this, capitalised costs on the development of the Figaro system at 31 March 2014 were £33.2 million.

The decision to terminate the Figaro implementation was difficult to make, but one which the Board believes is correct and in shareholders’, clients’, and employees’ long-term interests. The Board concluded that continued implementation would not support its 25% margin target and present the business with unacceptable risks and that a better, more achievable solution is to use existing technology architecture, with some additional enhancements. The current systems are well established and supported while continuing to deal with our high business levels.

As evidenced by the progress already achieved in the last 18 months, margin improvement is being brought about by change in the business and its key operating processes. Technology solutions via selective new and upgraded systems will be enabling elements of, but not be the primary driver of continuing improvement.

StrategyThe strategic aim of the Group remains unchanged and is focused on meeting the objectives that were put in place three years ago and have been reaffirmed by the current executive team. The strategic priorities of this strategy are:

• To grow the number of clients we service and therefore the revenue we generate;

• To improve our efficiency;

• To maintain sufficient capital to maximise opportunities and cover risks; and

• To align dividend growth with underlying earnings growth.

05

Delivering on this strategy requires the simplification of a complex business, standardising operational processes and taking tough decisions with a view to delivering long-term shareholder value. This process continues, and there is much still to be done.

The demand for high quality, trusted, face to face advice is rising. Brewin Dolphin has an experienced network, a strong organisation and brand, and an executive team committed to driving through the necessary change to strengthen the business in order to be able to benefit from this trend.

CapitalThe Group continues to have a strong balance sheet with cash balances at period end of £109 million. These underpin its regulatory capital resources which continue to be in significant surplus to requirements.

The non-cash impairment charge resulting from the decision to end the roll out of the Figaro operating system to the Group’s Discretionary Wealth Management business will not impact the Group’s regulatory capital position, since intangible assets do not form part of the Group’s regulatory capital base.

DividendThe Group’s dividend policy is to grow dividends in line with underlying adjusted earnings. A new dividend policy was announced in December 2013 to target a total annual payout rate of 60 – 80% of adjusted earnings per share. Further it was indicated that the final dividend would be used to reflect full year profitability, as is our normal practice. Accordingly, an interim dividend of 3.65 pence per share will be paid on 4 July 2014 to shareholders on the register on 6 June 2014.

The variable final dividend will be based on the full year target dividend payout ratio of 60% to 80% adjusted earnings per share.

BoardThe Board has been strengthened with the appointment of additional non-executive directors to the Board. Ian Dewar was appointed to the Board on 15 November 2013 and became Chair of the Audit Committee following Jock Worsley’s retirement at the AGM in February 2014. Paul Wilson was appointed to the Board on 9 December 2013 and became Chairman of the Remuneration Committee following the AGM in February 2014. Caroline Taylor was appointed to the Board on 21 May 2014. All of the non-executive directors are considered by the Company to be independent and the Board is now fully compliant with the UK Corporate Governance Code with respect to Board composition.

Going concernAs stated in note 2 to the condensed set of financial statements, the directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of time not less than 12 months from the date of this report. Accordingly, the directors continue to adopt a going concern basis in preparing the condensed financial statements.

Principal risks and uncertaintiesThe 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 27 to 30 of the 2013 Annual Report and Accounts available via our website www.brewin.co.uk.

OutlookOver the last six months the economic backdrop has continued to improve. The combination of economic policy and historically low interest rates has underpinned growth in investment markets. Key indicators on growth and employment look positive for the future despite lacklustre Eurozone growth.

The Chancellor of the Exchequer and the Minister for Work and Pensions have put in place a strategy to modernise UK pensions. It is too early to predict the eventual impact of the Budget on the Group’s funds under management. However, it was a Budget for savers and investors, and was welcomed by our clients.

These results build on the positive trends of the last twelve months, and it is encouraging to see the rationalisation of the business model begin to bear fruit as organic growth is achieved. Tackling the Group’s legacy issues will take time. We are committed, however, to ongoing improvement and strengthening of the business and will continue to make the difficult decisions necessary to achieve this, as evidenced by the refocused systems priorities. The streamlining of the business through improved operating processes and a clearer focus on core services, together with this ongoing strengthening, should not only secure further shareholder returns, but also substantially reduce risk. These twin objectives remain management’s priority.

David Nicol Chief Executive 27 May 2014


Condensed Consolidated Income Statementfor the 26 week period ended 30 March 2014


30 March 2014


31 March 2013

Audited 52 weeks to

29 September 2013

Notes £’000 £’000 £’000

Revenue 142,972 132,193 271,954 Other operating income 3,339 6,790 11,724

Total income 146,311 138,983 283,678

Staff costs (76,438) (73,527) (148,974)Redundancy costs (984) (3,378) (4,795)Additional FSCS levy – (1,107) (1,107)Onerous contracts provision (981) (5,882) (6,232)Amortisation of intangible assets – client relationships 8 (6,426) (6,494) (12,520)Other operating costs (40,399) (42,087) (83,418)

Operating expenses (125,228) (132,475) (257,046)

Operating profit 21,083 6,508 26,632 Finance income 4 555 612 1,452 Other gains and losses – (13) 872 Finance costs 4 (282) (269) (556)

Profit before tax 21,356 6,838 28,400 Tax 5 (3,707) (1,636) (7,257)

Profit for the period 17,649 5,202 21,143

Attributable to:Equity shareholders of the parent 17,649 5,202 21,143

17,649 5,202 21,143

Earnings per shareBasic 6 6.7p 2.2p 8.4p

Diluted 6 6.3p 2.0p 8.0p

1Restated see notes 2 and 16.

11

for the 26 week period ended 30 March 2014

07

Condensed Consolidated Statement of Comprehensive Incomefor the 26 week period ended 30 March 2014


30 March 2014


31 March 2013

Audited 52 weeks to

29 September 2013

£’000 £’000 £’000

Profit for the period 17,649 5,202 21,143

Items that will not be reclassified subsequently to profit and loss:Actuarial loss on defined benefit pension scheme (826) (1,042) (2,046)Deferred tax credit on actuarial loss on defined benefit pension scheme 165 239 403

(661) (803) (1,643)

Items that may be reclassified subsequently to profit and loss:Revaluation of available-for-sale investments – 875 4,000 Deferred tax charge credit on revaluation of available-for-sale investments – (201) (633)Exchange differences on translation of foreign operations (88) 163 147

(88) 837 3,514

Other comprehensive income for the period (749) 34 1,871

Total comprehensive income for the period 16,900 5,236 23,014

Attributable to:Equity shareholders of the parent 16,900 5,236 23,014

16,900 5,236 23,014

1Restated see notes 2 and 16.

1 1


Condensed Consolidated Statement of Changes in Equityfor the 26 week period ended 30 March 2014

Attributable to the equity shareholders of the parent

Called up share

capital

Share premium account

Own shares

Revaluation reserve

Merger reserve

Profit and loss account Total

£’000 £’000 £’000 £’000 £’000 £’000 £’000

Balance at 30 September 2012 2,469 124,271 (12,569) 4,285 22,950 21,331 162,737 Restatement (see notes 2 and 16) – – – – – – –

Restated 2,469 124,271 (12,569) 4,285 22,950 21,331 162,737 Profit for the period – – – – – 5,202 5,202 Other comprehensive income for the period

Deferred and current tax on other comprehensive income – – – (201) – 239 38 Actuarial loss on defined benefit pension scheme – – – – – (1,042) (1,042)Revaluation of available-for-sale investments – – – 875 – – 875 Exchange differences on translation of foreign operations – – – – – 163 163

Total comprehensive income for the period – – – 674 – 4,562 5,236 Dividends – – – – – (8,755) (8,755)Issue of shares 44 7,872 – – – – 7,916 Own shares acquired in the period – – (102) – – – (102)Share-based payments – – – – – 2,729 2,729 Tax on share-based payments – – – – – 51 51

Balance at 31 March 2013 2,513 132,143 (12,671) 4,959 22,950 19,918 169,812

Profit for the period – – – – – 15,941 15,941 Other comprehensive income for the period

Deferred and current tax on other comprehensive income – – – (432) – 164 (268)Actuarial loss on defined benefit pension scheme – – – – – (1,004) (1,004)Revaluation of available-for-sale investments – – – 3,125 – – 3,125 Exchange differences on translation of foreign operations – – – – – (16) (16)

Total comprehensive income for the period – – – 2,693 – 15,085 17,778 Dividends – – – – – (9,322) (9,322)Issue of shares 199 1,198 – – 38,430 – 39,827 Own shares acquired in the period – – (63) – – – (63)Share-based payments – – – – – 3,406 3,406 Tax on share-based payments – – – – – 207 207

Balance at 29 September 2013 2,712 133,341 (12,734) 7,652 61,380 29,294 221,645

Profit for the period – – – – – 17,649 17,649 Other comprehensive income for the period

Deferred and current tax on other comprehensive income – – – – – 165 165 Actuarial loss on defined benefit pension scheme – – – - – (826) (826)Revaluation of available-for-sale investments – – – – – – – Exchange differences on translation of foreign operations – – – – – (88) (88)

Total comprehensive income for the period – – – – – 16,900 16,900 Dividends – – – – – (13,438) (13,438)Issue of shares 25 4,540 – – – – 4,565 Own shares acquired in the period – – (4,135) – – – (4,135)Own shares disposed of on exercise of options – – 3,819 – – (3,819) –Share-based payments – – – – – 3,187 3,187 Tax on share-based payments – – – – – 2,250 2,250

Balance at 30 March 2014 2,737 137,881 (13,050) 7,652 61,380 34,374 230,974

09

Condensed Consolidated Balance Sheetas at 30 March 2014

Unaudited as at

30 March 2014

Unaudited as at

31 March 2013

Audited as at

29 September 2013

Notes £’000 £’000 £’000

ASSETSNon-current assetsIntangible assets 8 126,435 128,741 127,448 Property, plant and equipment 9 12,886 14,758 14,320 Available-for-sale investments 10 10,000 6,875 10,000 Other receivables 1,182 2,248 1,353 Deferred tax asset 2,621 1,254 672

Total non-current assets 153,124 153,876 153,793

Current assetsTrading investments 10 897 863 872 Trade and other receivables 262,672 277,625 258,848 Cash and cash equivalents 136,378 73,697 136,987

Total current assets 399,947 352,185 396,707

Total assets 553,071 506,061 550,500

LIABILITIESCurrent liabilitiesBank overdrafts 231 584 3,153 Trade and other payables 287,448 298,347 289,884 Current tax liabilities 3,270 1,868 2,880 Provisions 11 4,000 3,535 4,405 Shares to be issued including premium 12 6,112 2,636 3,075

Total current liabilities 301,061 306,970 303,397

Net current assets 98,886 45,215 93,310

Non-current liabilities Retirement benefit obligation 13 8,684 9,496 9,177 Deferred purchase consideration 1,131 1,579 1,185 Provisions 11 3,055 4,364 3,260 Shares to be issued including premium 12 8,166 13,840 11,836

Total non-current liabilities 21,036 29,279 25,458

Total liabilities 322,097 336,249 328,855

Net assets 230,974 169,812 221,645

EQUITYCalled up share capital 14 2,737 2,513 2,712 Share premium account 14 137,881 132,143 133,341 Own shares (13,050) (12,671) (12,734)Revaluation reserve 7,652 4,959 7,652 Merger reserve 61,380 22,950 61,380 Profit and loss account 34,374 19,918 29,294

Equity attributable to equity holders of the parent 230,974 169,812 221,645

as at 30 March 2014


Condensed Consolidated Cash Flow Statementfor the 26 week period ended 30 March 2014


30 March 2014


31 March 2013

Audited 52 weeks to

29 September 2013

Notes £’000 £’000 £’000

Net cash inflow from operating activities 15 23,881 13,467 60,516

Cash flows from investing activities Purchase of intangible assets – client relationships (147) (3,079) (3,431)Purchase of intangible assets – software (4,697) (9,098) (15,121)Purchases of property, plant and equipment 9 (1,559) (1,708) (4,502)Proceeds on disposal of available-for-sale investments – – 885 Dividend received from available-for-sale investments – – 286

Net cash used in investing activities (6,403) (13,885) (21,883)

Cash flows from financing activities Dividends paid to equity shareholders (13,438) – (18,077)Purchase of own shares (4,135) (102) (165)Proceeds on issue of shares 2,447 2,049 41,875

Net cash (used in)/from financing activities (15,126) 1,947 23,633

Net increase in cash and cash equivalents 2,352 1,529 62,266

Cash and cash equivalents at the start of period 133,834 71,584 71,584

Effect of foreign exchange rates (39) – (16)

Cash and cash equivalents at the end of period 136,147 73,113 133,834

Firm’s cash 109,174 45,739 116,686 Firm’s overdraft (231) (584) (3,153)

Firm’s net cash 108,943 45,155 113,533 Client settlement cash 27,204 27,958 20,301 Net cash and cash equivalents 136,147 73,113 133,834

Cash and cash equivalents shown in current assets 136,378 73,697 136,987 Bank overdrafts (231) (584) (3,153)

Net cash and cash equivalents 136,147 73,113 133,834

For the purposes of the cash flow statement, cash and cash equivalents include bank overdrafts.

for the 26 week period ended 30 March 2014

11

Notes to the Condensed Set of Financial Statements

1. General informationBrewin 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 27 May 2014.

A copy of this Interim Financial Report including Condensed Financial Statements for the 26 week period ended 30 March 2014 is available at the Company’s registered office and on the Company’s investor relations website.

The information for the 52 week period ended 29 September 2013 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year 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.

2. Accounting policies

Basis of preparationThe 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 for the 26 week period ended 30 March 2014 should be read in conjunction with the annual audited financial statements of Brewin Dolphin Holdings PLC for the 52 week period ended 29 September 2013.

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”, 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.

Going concernThe 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.

Changes in accounting policy and disclosureThe 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 52 week period ended 29 September 2013 with the exception set out below.

IAS 19 (Revised) has been applied retrospectively in accordance with IAS 8 ‘Accounting Policies, Changes in Accounting Estimates And Errors’ and has led to the restatement of prior period amounts. The impact of adopting IAS 19 (Revised) on the Group’s financial statements is for the interest costs on Scheme liabilities and expected return on Scheme assets in the income statement to be replaced with a single net interest cost item calculated by applying the discount rate assumption to the net defined benefit asset or liability. The impact of the restatement is set out in note 16.

3. Related party transactionsThere 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 2013 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.


Notes to the Condensed Set of Financial Statements (continued)

4. Finance income and costs


30 March 2014


31 March 2013

Audited 52 weeks to

29 September 2013

£’000 £’000 £’000

Finance incomeDividends from available-for-sale investments – – 436 Interest on bank deposits 555 612 1,016

555 612 1,452

Finance costsFinance cost of deferred consideration 65 62 149 Interest expense on defined pension obligation 184 200 372 Unwind of discounts on provisions 16 – 18 Interest on bank overdrafts 17 7 17

282 269 556

1 Restated see notes 2 and 16.

5. Taxation


30 March 2014


31 March 2013

Audited 52 weeks to

29 September 2013

£’000 £’000 £’000

United KingdomCurrent tax 3,094 1,498 6,590 Prior period – 328 256

Overseas taxCurrent tax 147 113 194Prior period – –

3,241 1,939 7,040

United Kingdom deferred taxCurrent year 537 (31) 325 Prior period (71) (272) (108)

Total 3,707 1,636 7,257


1

1 1

1

13

6. Earnings per shareThe calculation of the basic and diluted earnings per share is based on the following data:


30 March 2014


31 March 2013

Audited 52 weeks to

29 September 2013

‘000 ‘000 ‘000

Number of sharesBasicWeighted average number of shares in issue in the period 264,623 241,421 250,391 DilutedWeighted average number of options outstanding for the period 13,775 11,570 12,211 Estimated weighted average number of shares earned under deferred consideration arrangements 2,768 1,796 3,434

Diluted weighted average number of options and shares for the period 281,166 254,787 266,036

£’000 £’000 £’000

Basic earnings attributable to ordinary shareholdersProfit for the period 17,649 5,202 21,143 Disposal of available-for-sale investment – – (885)Redundancy costs 984 3,378 4,795 Additional FSCS levy – 1,107 1,107 Onerous contracts provision 981 5,882 6,232 Amortisation of intangible assets – client relationships 6,426 6,494 12,520

less tax effect of above (1,846) (3,962) (5,586)

Adjusted basic profit for the period and attributable earnings excluding redundancy costs, additional FSCS levy, onerous lease contracts provision, amortisation of client relationships and disposal of available-for-sale investment 24,194 18,101 39,326

Diluted earnings attributable to ordinary shareholdersProfit for the period 17,649 5,202 21,143 Finance costs of deferred consideration (Note a) 58 19 142

less tax (13) (4) (33)

Adjusted fully diluted profit for the period and attributable earnings 17,694 5,217 21,252 Disposal of available-for-sale investment – – (885)Redundancy costs 984 3,378 4,795 Additional FSCS levy – 1,107 1,107 Onerous contracts provision 981 5,882 6,232 Amortisation of intangible assets – client relationships 6,426 6,494 12,520

less tax effect of above (1,846) (3,962) (5,586)

Adjusted basic profit for the period and attributable earnings excluding redundancy costs, additional FSCS levy, onerous lease contracts provision, amortisation of client relationships and disposal of available-for-sale investment 24,239 18,116 39,435

Earnings per shareBasic 6.7p 2.2p 8.4p

Diluted 6.3p 2.0p 8.0p

Adjusted earnings per shareExcluding redundancy costs, additional FSCS levy, onerous lease contracts provision, amortisation of client relationships and disposal of available-for-sale investmentBasic 9.1p 7.5p 15.7p

Diluted 8.6p 7.1p 14.8p


a) Finance costs of deferred consideration are added back where the issue of shares is more dilutive than the interest cost saved.

1 1



7. Dividends


30 March 2014


31 March 2013

Audited 52 weeks to

29 September 2013

£’000 £’000 £’000

Amounts recognised as distributions to equity shareholders in the period:

Final dividend paid 28 March 2014, 5.05p per share (2013: 3.6p per share) 13,438 8,755 8,755 Interim dividend paid 28 June 2013, 3.55p per share – – 9,322

13,438 8,755 18,077

An interim dividend of 3.65p per share was declared by the Board on 27 May 2014 and has not been included as a liability as at 30 March 2014. This interim dividend will be paid on 4 July 2014 to shareholders on the register at the close of business on 6 June 2014 with an ex-dividend date of 4 June 2014.

8. Intangible assets

Goodwill Client

relationships

Software development

costs Purchased

software Total £’000 £’000 £’000 £’000 £’000

Cost At 30 September 2012 48,637 94,690 1,608 28,875 173,810 Additions – 4,330 517 8,581 13,428 Exchange differences – 9 – – 9 Revaluation of shares to be issued and deferred purchase consideration in respect of acquisitions in prior periods – 2,636 – – 2,636

At 31 March 2013 48,637 101,665 2,125 37,456 189,883

Additions – 286 536 6,654 7,476 Disposals – – – (156) (156)Exchange differences – (1) – – (1)Revaluation of shares to be issued and deferred purchase consideration in respect of acquisitions in prior periods – (1,372) – – (1,372)

At 29 September 2013 48,637 100,578 2,661 43,954 195,830

Additions – 740 27 4,452^ 5,219 Exchange differences – (2) – – (2)Revaluation of shares to be issued and deferred purchase consideration in respect of acquisitions in prior periods – 1,453 – – 1,453

At 30 March 2014 48,637 102,769 2,688 48,406 202,500

^ £4.2 million of purchased software acquired in the period relate to assets which are under development and not yet in use.

15

Goodwill Client

relationships

Software development

costs Purchased

software Total £’000 £’000 £’000 £’000 £’000

Accumulated amortisation and impairment

At 30 September 2012 – 43,477 762 8,641 52,880 Amortisation charge for the period – 6,494 156 1,612 8,262 Impairment losses for the period – – – – – At 31 March 2013 – 49,971 918 10,253 61,142 Amortisation charge for the period – 6,026 109 1,144 7,279 Eliminated on disposal – – – (39) (39)Impairment losses for the period – – – – – At 29 September 2013 – 55,997 1,027 11,358 68,382 Amortisation charge for the period – 6,426 96 1,161 7,683 Impairment losses for the period – – – – – At 30 March 2014 – 62,423 1,123 12,519 76,065

Net book value At 30 September 2012 48,637 51,213 846 20,234 120,930

At 31 March 2013 48,637 51,694 1,207 27,203 128,741

At 29 September 2013 48,637 44,581 1,634 32,596 127,448

At 30 March 2014 48,637 40,346 1,565 35,887 126,435

9. Property, plant and equipmentDuring the period the Group spent £0.3 million (26 weeks to 31 March 2013: £0.6 million, 52 weeks to 29 September 2013: £2.0 million) on leasehold improvements, £1.1 million (26 weeks to 31 March 2013: £0.8 million, 52 weeks to 29 September 2013: £1.3 million) on computer equipment and £0.2 million (26 weeks to 31 March 2013: £0.3 million, 52 weeks to 29 September 2013: £1.2 million) on office equipment. The depreciation charge for the period was £3.0 million (31 March 2013: £2.9 million, 29 September 2013: £5.6 million).

10. Investments

Available-for-sale investmentsUnlisted

investments Total£’000 £’000

Fair valueAt 30 March 2014 10,000 10,000

At 31 March 2013 6,875 6,875

At 29 September 2013 10,000 10,000

The unlisted available-for-sale investments is Euroclear plc (31 March 2013: Euroclear plc and N+1 Singer Ltd).

The holding in Euroclear plc is as a result of a £431,000 strategic investment in Crest, the London based settlement system. Crest was taken over by Euroclear plc. The Group holds 19,899 ordinary shares of Euroclear plc’s share capital (0.55%). As at 29 September 2013, the Directors updated their valuation of the Group’s holding in Euroclear plc; the valuation is £10 million (31 March 2013: £6 million, 29 September 2013: £10 million). This valuation takes into account a number of different valuation methods including dividend yield.

Trading investmentsListed

investments Total£’000 £’000

Fair valueAt 30 March 2014 897 897 At 31 March 2013 863 863 At 29 September 2013 872 872

Investments are measured at fair value which is determined directly by reference to published prices in an active market where available.



11. Provisions

Sundry claims and associated

costs

Onerous lease

contracts


30 March 2014 Total


31 March 2013 Total

Audited 52 weeks to

29 September 2013 Total

£’000 £’000 £’000 £’000 £’000

At start of period 2,212 5,453 7,665 1,887 1,887 Additions 736 980 1,716 6,770 8,118 Utilisation of provision (147) (939) (1,086) (292) (1,245)Unwinding of discount – 16 16 – 18 Unused amounts reversed during the period (753) (503) (1,256) (466) (1,113)At end of period 2,048 5,007 7,055 7,899 7,665

ProvisionsIncluded in current liabilities 2,048 1,952 4,000 3,535 4,405 Included in non-current liabilities – 3,055 3,055 4,364 3,260

2,048 5,007 7,055 7,899 7,665

The timing of settlements in relation to sundry claims and associated costs cannot be accurately forecast; settlement of £nil (31 March 2013: £0.3 million, 29 September 2013: £nil) has been made since the balance sheet date. The onerous lease contracts provision of £5 million is principally in respect of surplus office space which the Group may not be able to sublet in the short term.

12. Shares to be issued including premium and other deferred purchase liabilitiesThe Group acquires investment businesses and teams of investment managers, bringing with them funds under management (the latter classified as the intangible asset client relationships) on deferred purchase terms based on the value of income introduced over, normally, a three year period. The payment is normally made in ordinary shares and these shares typically have to be held for a further three years. At the discretion of the Board these shares can be purchased in the market rather than issued. The estimated likely cost of these shares has been updated at the half year in light of actual results of previously acquired business teams and to include new acquisitions.

13. Retirement benefit obligationThe main financial assumptions used in calculating the Group’s retirement benefit obligation are as follows:

As at 30 March

2014

As at 31 March

2013

As at 29 September

2013

Discount rate 4.30% 4.40% 4.40%Rate of inflation (RPI) 3.20% 3.40% 3.20%Rate of inflation (CPI) 2.20% 2.40% 2.20%Salary increases 3.20% 3.40% 3.20%LPI Pension increases 3.10% 3.30% 3.10%

Average assumed life expectancies for members on retirement at age 65Existing pensioners

Males 88.9 years 88.8 years 88.8 yearsFemales 90.1 years 90.0 years 89.0 years

Future pensionersMales 90.2 years 90.1 years 90.1 yearsFemales 91.6 years 91.5 years 91.5 years

A full actuarial valuation was carried out as at 1 January 2012 and the results of this valuation have been updated to 30 March 2014 by a qualified independent actuary.

17

14. Called up share capitalThe following movements in share capital occurred during the period:

DateNo. of Fully

Paid SharesNo. of Nil

Paid SharesExercise/

Issue Price

Called up share

capital

Share premium account Total

(pence) £’000 £’000 £’000

At 29 September 2013 271,194,965 1,609,852 2,712 133,341 136,053 Settlement of deferred consideration

5 December 2013 750,852 282p 8 2,110 2,118

Issue of options Various 996,352 – 81.3p –179.75p 9 1,168 1,177 Nil paid shares now paid up Various 819,076 (819,076) 103.3p – 217.5p 8 1,284 1,292 Cost of issue of shares – – (22) (22)

At 30 March 2014 273,761,245 790,776 2,737 137,881 140,618

15. Note to the cash flow statement


30 March 2014


1 March 2013

Audited 2 weeks to

9 September 2013

£’000 £’000 £’000

Operating profit 21,083 6,508 26,632 Adjustments for:Depreciation of property, plant and equipment 2,993 2,895 5,569 Amortisation of intangible assets – client relationships 6,426 6,494 12,520 Amortisation of intangible assets – software 1,257 1,768 3,021 Loss on disposal of property, plant and equipment – 6 591 Loss on disposal of intangible asset – purchased software – – 117 Retirement benefit obligation (1,500) (1,500) (2,995)Share-based payment cost 3,187 2,729 6,135 Translation adjustments (51) 163 147 Interest income 555 612 1,016 Interest expense (17) (7) (17)

Operating cash flows before movements in working capital 33,933 19,668 52,736 (Decrease)/increase in payables and provisions (3,506) 46,212 44,471 Increase in receivables and trading investments (3,678) (50,091) (30,431)

Cash generated by operating activities 26,749 15,789 66,776 Tax paid (2,868) (2,322) (6,260)

Net cash inflow from operating activities 23,881 13,467 60,516


Cash and cash equivalents comprise cash at bank and bank overdrafts.

1 1



16. Restatement of prior period informationAs disclosed in note 2, the Group adopted IAS 19 (Revised) on 1 October 2013, this has resulted in the Consolidated Income Statement and Consolidated Statement of Comprehensive Income being restated. The amount of the restatement for each financial statement line item affected by retrospective application of IAS 19 (Revised) is set out below. The Group has not presented a balance sheet for the beginning of the earliest comparative period as there is no impact to the balance sheet.

As reported 26 weeks to

31 March 2013

Adjustment IAS 19

(Revised)

Restated 26 weeks to

31 March 2013

As reported 52 weeks to

29 September 2013

Adjustment IAS 19

(Revised)

Restated 52 weeks to

29 September 2013

£’000 £’000 £’000 £’000 £’000 £’000

Consolidated Income StatementFinance costs (185) (84) (269) (385) (171) (556)Profit before tax 6,922 (84) 6,838 28,571 (171) 28,400 Tax (1,656) 20 (1,636) (7,297) 40 (7,257)Profit for the period 5,266 (64) 5,202 21,274 (131) 21,143

Earnings per shareBasic 2.2p (0.0p) 2.2p 8.5p (0.1p) 8.4p Diluted 2.1p (0.1p) 2.0p 8.0p (0.0p) 8.0p

Adjusted1 earnings per shareBasic 7.5p (0.0p) 7.5p 15.8p (0.1p) 15.7p Diluted 7.1p (0.0p) 7.1p 14.9p (0.1p) 14.8p

Consolidated Statement of Comprehensive IncomeProfit for the period 5,266 (64) 5,202 21,274 (131) 21,143 Items that will not be reclassified subsequently to profit and loss:Actuarial loss on defined benefit pension scheme (1,126) 84 (1,042) (2,217) 171 (2,046)Deferred tax credit on actuarial loss on defined benefit pension scheme 259 (20) 239 443 (40) 403 Total other comprehensive income that will not be reclassified to income statement (867) 64 (803) (1,774) 131 (1,643)Other comprehensive income/(expense) for the period (30) 64 34 1,740 131 1,871

1 These figures have been adjusted to exclude redundancy costs, additional FSCS levy, onerous lease contracts provision and amortisation of client relationships.

Consequential amendments have also been made to the notes to the interim financial statements. The impact of retrospective application on each component of equity is shown in the Consolidated Statement of Changes in Equity, as required by IAS 1 ‘Presentation of Financial Statements’.

19

17. Post Balance Sheet Event and Contingent LiabilityOn 13 May 2014, the Board announced that it had taken the decision to terminate the roll out of the JHC Systems Figaro software into the Discretionary Wealth Management business of the Group as originally planned.

It is expected that a pre-tax impairment charge of circa £32 million will be taken against Intangible Assets in the second half of 2014 as a result of this decision based on the consequent reassessment of the value in use of the software asset under development.

There is a need for the Group to resolve payment commitments of circa £15 million pre-tax over the next ten years which, under the original contracts, may be payable following implementation into the Discretionary Wealth Management business. The Group is engaged in negotiations to vary and settle these arrangements.

The conditions which gave rise to both this charge and contingent liability did not exist at 30 March 2014, the reporting date for these condensed financial statements. Accordingly no adjustments have been made to these financial statements, but these disclosures are provided on the non-adjusting post balance sheet event and contingent liability.

Cautionary statementThe Interim Management Report (the “IMR”) for the 26 week period ended 30 March 2014 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.

Responsibility Statement 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”;

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 first six months 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 4.2.8 R (disclosures of related parties’ transactions and changes therein).

By order of the Board

D Nicol A WestenbergerChief Executive Finance Director

27 May 2014


Independent Review Report

TO BREWIN DOLPHIN HOLDINGS PLCWe have been engaged by Brewin Dolphin Holdings PLC (“the company”) to review the condensed set of financial statements in the half-yearly financial report for the 26 week period ended 30 March 2014 which comprises the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Statement of Changes in Equity, the Condensed Consolidated Balance Sheet, the Condensed Consolidated Cash Flow Statement and related notes 1 to 17. 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’ responsibilitiesThe 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 2, the annual financial statements of the company 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 responsibilityOur 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 Ireland) 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.

ConclusionBased 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 26 week period ended 30 March 2014 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 LLPChartered Accountants and Statutory AuditorLondon, United Kingdom27 May 2014

Brewin Dolphin Holdings PLC, 12 Smithfield Street, London EC1A 9BD

T 020 7246 1000 F 020 3201 3001 W brewin.co.uk E [email protected]

Documents

Interim Financial Report 2014 · 9.1p Adjusted1 earnings per share: Basic earnings per share of 9.1p (31 March 2013: 7.5p) an increase of 21.3%. Diluted earnings per share of 8.6p