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Brewin Dolphin Hldgs (BRW)

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Friday 23 December, 2011

Brewin Dolphin Hldgs

Extracts from Annual Report and Accounts

RNS Number : 6100U
Brewin Dolphin Holdings PLC
23 December 2011
 



Brewin Dolphin Holdings PLC

(the "Company")

 

 

23 December 2011

 

Extracts from the Company's Annual Report & Accounts for the 53 week period to 30 September 2011

 

The following represents extracts from the Company's Annual Report & Accounts for the 53 week period to 30 September 2011.  The full Annual Report and Accounts can be accessed via the Company's website at www.brewin.co.uk. Copies are in the process of being posted to shareholders.

 

Annual Report Page 3

Highlights

(from continuing operations)

 

Total managed funds £24.0 billion at 30 September 2011 (26 September 2010: £23.2 billion).

 

Discretionary funds £15.6 billion at 30 September 2011 (26 September 2010: £14.0 billion).

 

Total income £264.0 million (26 September 2010: £240.0 million) an increase of 10%.

 

Profit before tax £21.9 million (26 September 2010: £30.0 million) a 27% decrease.



Adjusted* profit before tax £39.6 million (26 September 2010: £39.2 million) a 1% increase.

 

Earnings per share:


-

Basic earnings per share 6.6p (26 September 2010: 9.2p) a decrease of 28%.


-

Diluted earnings per share 6.3p (26 September 2010: 9.1p) a decrease of 31%.

 

Adjusted* earnings per share:


-

Basic earnings per share 12.4p (26 September 2010: 12.2p) an increase of 1.6%.


-

Diluted earnings per share 11.7p (26 September 2010: 12.0p) a decrease of 2.5%.

The total dividend for the period is 7.1p per ordinary share (2010: 7.1p).

Proposed final dividend 3.55p per share (2010: 3.55p).

 

 

* these figures have been adjusted to exclude redundancy costs, additional FSCS levy, contract renewal payments, acquisition of subsidiary costs and amortisation of client relationships.



Annual Report Page 4

Business Review: Executive Chairman's Statement

I am pleased to report that your Company has delivered a resilient performance, despite turbulence across the financial markets worldwide and the effect on the UK of the continuing difficulties in many countries. Combined with our clear focus on the individual requirements of our clients the scale of our operation underpins Brewin Dolphin's ability to retain and attract clients.

With 41 offices throughout the UK, the Channel Islands and Ireland, our business has made good progress. The total income for the year from continuing operations is up by 10% from £240.0 million to £264.0 million and pre tax profit from continuing operations (excluding redundancy costs, additional FSCS levy, contract renewal payments, acquisition of subsidiary costs and amortisation of client relationships) was £39.6 million, a 1% increase on the previous year.

Funds under Management at the year end were £24 billion, 3.4% higher than last year. This increase is wholly attributable to the increase in funds under discretionary management. During the same period the FTSE 100 fell by 8.4% and the APCIMS Private Investor Series Balanced Portfolio fell by 3.8%.

Investment Management

There have been significant developments in our office network this year.

One is the acquisition of Tilman Brewin Dolphin Limited (formerly Tilman Asset Management Limited) in Dublin. We have long believed that there is a strong demand in the Republic of Ireland for the services that Brewin Dolphin offers. We have known Tilman for many years and we have every confidence that it will prove to be an important addition. Tilman Brewin Dolphin manages €0.9 billion funds on behalf of clients and its style and modus operandi fit well with our ethos and approach.

Another development is the imminent opening of an important new office in Bristol. Bristol is a significant city where we were not represented. This closes a noticeable gap in our national coverage.

We now have a network that is of sufficient size to give us good coverage throughout the UK and we continue to attract new teams in a number of locations, including Glasgow, Leeds and London this year.

We have also doubled our Charity team in London and have risen to 9th place in the top 50 Charity Managers survey 2011 by the Charity Finance Magazine.

Dividend

The Board is proposing a final dividend of 3.55p per share to be approved at the AGM in February 2012 and paid on 10 April 2012. This will bring the total dividend for the period to 7.1 p in line with the dividend paid last year.

Regulation

This year we were required to pay a dramatically higher Financial Services Compensation Scheme levy in excess of £6 million (2010: £0.6 million). This related largely to the failure of Keydata. While clearly a charge of this nature is not something that any company would relish, or indeed anticipate, it is important that investors are provided with appropriate redress when the industry has clearly failed them. However, it is important to note that this is only part of the ongoing and increasing cost of regulation. Much work is being done in the United Kingdom and Europe regarding regulatory reform and Brewin Dolphin is fully engaged in the process. We hope that the eventual outcome of a number of important Parliamentary committee hearings and industry inquiries will lead to more efficient and suitable regulation for private investors and greater confidence in the industry as a whole.

 



Annual Report Page 5

 

Board Changes

I am pleased to announce some changes of responsibility within your Board. Henry Algeo has been appointed Chief Operating Officer and has responsibility for Business Support; Information, Communication and Technology; Facilities and Change Management. Henry brings much knowledge and experience to this role in both the operational and client facing sides of our industry. Ben Speke has taken responsibility for Human Resources to add to his Training & Competence and Health & Safety responsibilities. The Board has great confidence in both Henry and Ben and expects that they will bring many improvements to these vital areas of the business.

It has already been announced that our Deputy Chairman, Nick Hood, will retire from the Board at the forthcoming AGM. Nick has been Deputy Chairman since the summer of 2005, having first joined the Brewin Dolphin Board in 2000. He has been a member of the Audit Committee, the Remuneration Committee and the Nomination Committee, chairing the latter two as well as being Senior Independent Director. During his time on the Board he has been unstinting in his efforts and most generous with his time, and he has consistently provided very welcome advice. I am pleased to inform you that your Board has decided to ask Simon Miller to take on the role of Deputy Chairman and Senior Independent Director with effect from the end of our AGM. The search is well underway for two new Non-Executive Directors.

The process has also begun to search for a candidate to take on the role of Finance Director ahead of the anticipated retirement of Robin Bayford. Robin will be a difficult man to replace. He has been Finance Director since the Company floated in 1994 and his contribution to the Company for over 25 years is incalculable. A final date for Robin's departure is yet to be established and shareholders will be made aware of this in due course.

Strategy

Our focus on cost control to achieve efficiencies is undiminished. During the year we undertook a major strategic review of our investment management activities. As a result of this we are concentrating on the dual targets of reinforcing for the long term our continuing high standard of service to clients, and at the same time re-engineering our processes to improve the return to shareholders. It will take three years to achieve maximum benefits for shareholders, by which time we intend to have increased our operating margin to over 20%. Six months into the project, we are on time and on budget. These strategic initiatives will be delivered without increasing our capital expenditure run rate of recent years, and a much fitter and more responsive Brewin Dolphin will emerge. This will enable us to seize the increasing opportunities in our sector.

Last year, we announced our decision to focus on our core investment management business and are progressing with the disposal of our Corporate Advisory & Broking division to N+1. Disposing of a division rather than a clearly identifiable legal entity is inevitably a lengthy legal process and I would like to record my appreciation for the hard work and patience of all those involved.

Outlook

At the time of writing stock market sentiment remains fractious with the euro zone debt crisis and the possibility of another recession causing concern. However it is your Board's belief that long-term equity investments will continue to have an important role in the wealth management market.

The work undertaken as a result of our strategic review will improve the service to clients and the return to shareholders. With this in mind, your Board looks to the future with cautious optimism.

 

Jamie Matheson

6 December 2011

 



Annual Report Page 6

Business Review: Investment Management

DAVID McCORKELL - EXECUTIVE DIRECTOR - HEAD OF INVESTMENT MANAGEMENT

Investment Management has performed well in what has been a volatile year for global financial markets. Our performance has been supported by our position as one of the UK's largest independent private client portfolio managers, with a network of over 40 offices and since August 2011, one in the Republic of Ireland.

Investment Management has seen its total income grow by 10% to £264.0 million in 2011 and operating profits excluding redundancy costs, additional FSCS levy, contract renewal payments, acquisition of subsidiary costs and amortisation of client relationships rose by 0.7% to £39.1 million.

This is analysed as follows:


2011

2010



 £'000

 £'000


Total income

 264,013

 240,012

10.0%

Salaries

(90,676)

 (80,786)

12.2%

Other operating costs

(98,409)

 (87,326)

12.7%

Profit before profit share

 74,928

71,900

4.2%

Profit share

(35,780)

 (33,031)

8.3%

Operating profit *

 39,148

38,869

0.7%

 

acquisition of subsidiary costs and amortisation of client relationships

Income comprises:


2011

2010


£'000

£'000

Fee, interest and other recurring income

160,652

138,087

Commission

 103,361

 101,925

Total income

 264,013

 240,012

 

The split of income and profits between Discretionary and Advisory portfolio management:


Total Income

Operating Profit

Total Income

Operating Profit


2011

2011

2010

2010


£ million

£ million

£ million

£ million

Discretionary Portfolio Management

 180.5

26.8

 157.2

 25.5

Advisory Portfolio Management

 83.5

12.3

82.8

 13.4


 264.0

39.1

 240.0

 38.9

 

Fee, interest and other recurring income has increased by 16.3% (2010: 24%) to 61% of total revenue (2010: 57%) whilst commission rose by 1.4% (201 0:10%). The trend towards Discretionary management in recent years has continued with the level of recurring income increasing.

Funds under Management (FUM)


Advisory funds

Discretionary funds

Total managed funds


£ billion

£ billion

£ billion

Value of funds at 26 September 2010

 9.2

 14.0

 23.2

Inflows

 0.3

 1.6

 1.9

Acquired funds*

 0.2

 0.6

 0.8

Outflows

(0.6)

(0.3)

(0.9)

Transfers

 -

 -

 -

Market movement

(0.7)

(0.3)

(1.0)

Value of funds at 30 September 2011

 8.4

 15.6

 24.0

% change in funds year on year

-8.7%

11.4%

3.4%

* Tilman Brewin Dolphin Limited

 

Excluding the acquisition of Tilman Brewin Dolphin Limited (formerly Tilman Asset Management Limited), there was an inflow of new FUM of £1 .9 billion of which 84% was under discretionary mandates; discretionary funds under management have grown by 10.9% above the APCIMS Private Investor Balanced Portfolio Index and the growth in value of total funds under management has exceeded the APCIMS Private Investor Balanced Portfolio Index by 3.8%.

During the period, the FTSE1 00 Share Index and the APCIMS Private Investor Balanced Portfolio Index fell by 8.4% and 3.8% respectively.

The Business

During the year, five new Investment Management teams have been added to the Group, including a new Charities team in London which will be followed by further specialist charity investment managers before the end of 2011. Our enhanced charities department is now well placed to provide both the investment management and added value services increasingly required by charities, many of whom themselves are under considerable pressure in the current climate. This business is expected to develop further following this expansion



Annual Report Page 7

 

The offices in Marlborough, Manchester, Cardiff and Leicester have moved to bigger and more suitable premises, our Keswick office has relocated to Penrith and we will be opening a branch in Bristol. The office in Llandudno has now closed. The Group has opened an office in Dublin following the acquisition of Tilman Brewin Dolphin Limited.

Currently there are a total of 643 FSA Approved Persons of which 531 are FSA Registered CF30 Client Executives, Investment Managers and Financial Planners around the country. The business could not function without their efforts and those of their support staff and I thank them all for their dedication to their clients during what has not been an easy year.

In my last report I mentioned the Retail Distribution Review (RDR) and I am confident the remaining client executives who have not yet completed the required professional qualifications will have achieved them by the end of 2012. RDR will bring fundamental changes for most of our industry and alter the way all advisers to private investors manage their businesses. We believe these changes will bring opportunities to Brewin Dolphin.

Early in the year, an independent survey of our clients was commissioned. We were very pleased to achieve an overall satisfaction level of 83% and to learn that 76% of our clients are likely to recommend us to others. Building on the strength of these findings, we instigated the major strategic review that we announced at the time of our interim report. This project will mean considerable change for our Investment Management business and enable Brewin Dolphin to provide a more efficient service to more clients in the future.

On 1st October 2011, a new national charging structure for all new Discretionary and Advisory Managed clients was introduced. During the 2011/12 financial year, existing clients will transfer to these new rates. As part of this repricing policy, trail commission will no longer be accepted from unit trust providers and will be switching retail units to non trail paying units in the coming months. The new structure will be more transparent and efficient and above all, fair to all our clients.

The systems used by our Investment Managers will also be changed over the next two years. Investment Managers will be provided with up to date technology which will enable them to manage client portfolios in a more efficient way and to provide an enhanced reporting service to all our clients. This also presents an opportunity to review the systems structure in our business support areas, which will allow the creation of more efficient processes.

Financial Planning, by client demand, has become an important part of Brewin's business and the number of Financial Planners around the Group will be expanded, so that all offices will provide this service in due course.

The Business Development team has had an excellent year. The team introduces Brewin Dolphin services to Independent Financial Advisers (IFAs) and other professional intermediaries around the UK. The team has introduced £482 million of new business in the year, an increase of 27% on last year; increasing demand for these services in the run up to RDR is expected.

Building brand awareness through targeted advertising and sponsorship of national and local events close to many of Brewin's offices has continued throughout the year. Highlights have included a Show Garden at the Chelsea Flower Show in aid of the British Heart Foundation, and supporting the national tour of Zulu War Talks for Help for Heroes. This has resulted in a steady flow of new business leads. Next year Brewin's will be celebrating its 250th Anniversary and marketing activities and our sponsorship of charitable events around the country will be increased as part of these celebrations.

Our Investment Managers have provided an excellent service to their clients during the year and we are determined that we will continue to provide bespoke investment management in an ever changing regulatory environment.

 



Annual Report Page 8

Business Review: Aims, Strategy And Objectives

The Brewin Dolphin Vision

To be the leading independent Investment Management business maintaining trust through complete integrity, fair treatment of all our clients and offering a bespoke service which adds value through personal contact.

Mission

To grow our business to the benefit of our shareholders by maintaining the quality and increasing the depth of service rendered to our clients. 

Objectives

Protect, retain and nurture our people and the application of knowledge through a quality recruitment policy, professional training programme and effective performance management.

Maintain, protect and build on our reputation by delivering what we promise through the provision of competent staff, reliable systems, efficient administration and superior client service.

Build the Brewin Dolphin brand so that it is dynamic and synonymous with business growth across all our activities.

Establish a Group approach to develop and grow the client base organically through the broadening of the service offering.

Influence and successfully embed regulation with the implementation of policies and processes that are flexible enough to maximise all business opportunities.

 



Annual Report Page 9


Business Review: Key Performance Indicators ("KPIs")

The main KPIs used by management are:

Profit per team. We maintain in excess of 150 individual team profit and loss accounts. This enables the Group to monitor front office performance closely, brings the discipline of peer pressure and passes management responsibility to heads of teams.

Team return on funds under management. This again enables the Group to monitor front office performance closely, brings the discipline of peer pressure and passes management responsibility to heads of teams.

Business facing income to salary ratios. This again enables the Group to monitor front office performance closely, brings the discipline of peer pressure and passes management responsibility to heads of teams.

Overheads and business support costs as a percentage of total income. This brings similar controls as those above to the overhead element of the Group. Over the economic cycle the aim is to improve these ratios and drive overheads down while allowing for growth in the business. However, on a year to year basis cyclical revenue can result in adverse movements.

Staff turnover ratio. A low level of leavers, especially from the front office, is an indication of staff satisfaction.

 

Measurement of KPIs

The aggregate team operating profit excluding redundancy costs, additional FSCS levy, contract renewal payments, acquisition of subsidiary costs and amortisation of client relationships was as follows:

 


2011

£'000

2010

£'000

Operating profit excluding redundancy costs, additional FSCS levy, contract renewal payments, acquisition of subsidiary costs and amortisation of client relationships

39,148

38,869

 

Detailed team performance was reasonable considering market conditions.

•     The aggregate team return on funds under management was as follows:


2011

2010

Average team return on discretionary funds

1.19%

1.21%

Average team return on advisory funds

0.91%

0.92%

 

The above small fall was predicted last year. It is anticipated that the introduction of a national rate card from 1 October 2011 for new clients will reverse this fall in 2012. The new rates will be brought in for existing clients during 2012, when trail commission will be phased out, improving transparency for our clients.

      Business facing income to fixed salary ratios were as follows:


2011

2010

Investment Management

4.6

4.5

A slight improvement.

•      Overheads and business support costs as a percentage of income were as follows:


2011

2010

Total fixed business support costs
as a % of income

20.8%

19.0%

Total fixed overhead costs as a % of income

15.1%

12.2%

 

Overhead and business support costs remain disappointingly high. This year fixed overheads include the cost of the Group investing £3m in the previously announced major strategic review. The results of this review are scheduled to roll out over the next three years to improve margins and provide enhanced services to our clients.

•     Staff turnover ratios

Front office staff losses were 10.4% in 2011 (2010: 8%) with gains of 14.5% (2010: 14%).

Targets

The primary target is to grow discretionary funds by 5% p.a. above market movement shown by the FTSE 100 index. This year we have exceeded the movement in the FTSE 100 by 20%, 15.5% if one takes out the Tilman Asset Management Limited acquisition (2010: 8%).

The secondary target is to increase our operating margin to over 20% over a three year period from 1 April 2011.



Annual Report Page 11

Business Review: Finance

The Group

The Brewin Dolphin Group's principal operating company is Brewin Dolphin Limited ("BDL"), which is regulated by the Financial Services Authority ("FSA"). BDL's main business is that of an Investment Manager. Tilman Brewin Dolphin Limited is the Group's Irish subsidiary based in Dublin. It is also operating as an Investment Manager and is regulated by the Central Bank of Ireland.

Competition and Markets

BDL is one of the UK's largest independent Investment Managers. The investment management market is a growing sector, competition is relatively fragmented and price competition is low.

Long Term Value

The Group has consistently over the years enhanced the long term value of the business by building funds under management, especially discretionary funds which are far more highly valued by the market. To this effect while total funds were £1 6bn in 2001, of which £4bn were discretionary, at the end of September 2011 total funds were £24bn of which £1 6bn were discretionary.

Results for 2011 Financial Year

The performance of continuing operations in the period is set out below (see note 13 to the financial statements for discontinued operations):


2011

2010

% Change

Average indices for the year




FTSE 100

5,764

5,319

8.4%

FTSE APCIMS Private Investor Series Balanced Portfolio

2,930

2,739

7.0%






£'000

 £'000


Total income

264,013

240,012

10.0%

Salaries

(90,676)

(80,786)

12.2%

Other operating costs

(98,409)

(87,326)

12.7%

Profit before profit share¥

74,928

71,900

4.2%

Profit share

(35,780)

(33,031)

8.3%

Operating profit ¥

39,148

38,869

0.7%

Net finance income and other gains and losses

494

345

43.2%

Profit before tax¥

39,642

39,214

1.1%

Redundancy costs

(1,008)

(135)


Additional FSCS levy

(6,058)

(595)


Acquisition of subsidiary costs

(228)

-


Contract renewal payments

-

(2,090)


Amortisation of client relationships

(10,486)

(6,349)


Profit before tax

21,862

30,045

-27.2%

Taxation

(6,884)

(9,447)


Profit after tax

14,978

20,598


Interim and proposed final dividend for the year

(16,596)

(16,239)



(1,618)

        4,359






Earnings per share




 Basic earning per share

6.6p

9.2p

-28.3%

 Diluted earnings per share

6.3p

9.1p

-30.8%





Earnings per share ¥




 Basic earning per share

12.4p

12.2p

1.6%

 Diluted earnings per share

11.7p

12.0p

-2.5%

¥ these figures have been adjusted to exclude redundancy costs, additional FSCS levy,

contract renewal payments, acquisition of subsidiary costs and amortisation of client relationships.

 

 

Annual Report Page 12

Business Review: Finance (continued)

Pension Fund

The actuarial gain on the pension fund this year was £2.8m (2010: loss £1.9m). Under IAS19, large annual fluctuations will occur. The Government passed legislation during the year to change the statutory inflation measure for pensions from Retail Price Index (RPI) to Consumer Prices Index (CPI). The change in the inflation measure has led to a reduction in defined benefit obligation of £1.3m out of the £2.8m. The Group has agreed to make additional pension contributions of £3 million per annum with the aim of paying the deficit off over the next 7 years.

Profit Dynamics

The Group has substantial operational gearing arising from its fixed cost base, mitigated by geared profit share. It is estimated that the Group would break even after measured cost reductions, other things being equal, at a FTSE 100 index level of 2,500 (2010: 2,500).

Resources available to the Group

The Group's main resource is its staff: (see note 7 to the financial statements) located in 40 offices around the U.K. and one in the Republic of Ireland.

Investment Management is broken down into small profit centres, in excess of 150, for profit share purposes. Normally the senior members of each team have a shareholding in the Group, which is material to them, so that the long-term interest of the Group is more important than any one year's profit share. Individual team figures, both as to profit and return on funds, are reported in the Group Management Accounts. It is an absolute rule that a loss in one profit centre does not impinge on other centres, although such losses do reduce Group Management's profit share.

Significant Relationships

No client provides more than 2% of the Group's revenue. The Group has two main suppliers of computer software, but is in the process of replacing these suppliers with new entities.

Corporate Responsibility

Environmental, Health and Safety, Social and Community responsibility and Employment Issues are discussed in the Directors' Report, key employment policies are dealt with in the Directors' Remuneration Report.

Dividend

The Board has maintained the total dividend for the period at 7.1p per ordinary share (2010: 7.1p).

Cash Flow and Capital Expenditure

2011 saw a net cash outflow of £1.8m (2010: inflow £21.9m) after paying the £6.1m (2010 £0.6m) additional FSCS levy. There was a £32.9m (2010: £45.1m) inflow of funds from operating activities (a figure calculated net of the FSCS levy). £7.9m (2010: £8.3m) of cash was spent on acquiring teams of Investment Managers and their client relationships, and £8.3m (2010: £13.6m) on computer software and other, mainly computer related, fixed assets.

The purchase of Tilman Asset Management Limited for 100% share consideration resulted in a cash injection to the Group of £5.8m. While purchase of the Group's shares for both the Deferred Profit Share Scheme and Share Incentive Plan resulted in an outflow of cash of £10.6m (2010: £0.1m), against this the issue of shares in the year led to a cash inflow of £2.4m (2010: £14.6m).

Dividends paid in the period came to £16.3m (2010: £16.0m).

Capital Structure, Treasury Policy, Liquidity and Capital Requirement

At 30 September 2011 the Group had net assets of £154.8m (2010: £141.6m). Net assets excluding intangible assets and shares to be issued of £68m (2010: £65m) broadly represent the Group's capital for regulatory purposes. These net assets were largely represented by net cash and cash equivalents of £85m (2010: £87m), including £21m (2010: £25m) of client settlement money. The Group has an agreed overdraft facility of £15m (2010: £15m). At the period end the Group had a surplus of net assets for regulatory capital adequacy purposes of £24.1m (2010: £24.3m).

Our policy is to hold 90% of our clients' and Group's money only at major UK clearers. Our client money is segregated under client money rules.

Client stock is also ring fenced in our nominee companies. Stock is settled via the Crest System which is owned by Euroclear a highly rated bank, and, in the case of foreign stock, the Bank of New York.

 



Annual Report Page 13

Market risk, foreign currency risk, liquidity risk, interest rate risk, and credit risk are small and set out in detail in note 26 to the financial statements.

Post Balance Sheet Events

There have been no material post balance sheet events.

Accounting Policies

There were no changes in accounting policies during the year.

Going Concern

As outlined above under profit dynamics, the Group has substantial operational gearing arising from its fixed cost base, mitigated by geared profit share. It is estimated that the Group would break even after measured cost reductions, other things being equal, at a FTSE 100 index level of 2,500 (2010: 2,500). The Group has errors and omission insurance of £100 million and on average has cash balance of £45 million.

The Group's business activities, performance and position, together with the factors likely to affect its future development, are set out in this Business Review which also describes the financial position of the Group including its liquidity position and borrowing facilities.

The Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and its exposure to credit risk and liquidity risk are described in note 26 to the financial statements.

The Directors believe that the Group is well placed to manage its business risks successfully. The Group's forecasts and projections, taking account of possible adverse changes in trading performance, show that the Group should be able to operate within the level of its current financing arrangements. Accordingly, the Directors continue to adopt the going concern basis for the preparation of the financial statements.

Robin Bayford

Finance Director

6 December 2011



Annual Report Page 14

Business Review: Risks and Uncertainties

Risks to the business are reviewed by the Risk Management Committee and monitored by Investment Management Risk and Controls Committee and the Corporate Advisory and Broking Risk and Controls Committee; they are formally reviewed by the Board twice a year. The Group's risk management policies and procedures are also discussed in the Corporate Governance Statement and financial risks and risk management form part of note 26 to the financial statements. The principal risk to the business remains adverse movements in the market in the short term.

At the Board meeting in October 2011 the following major financial and non financial risks were identified or reconfirmed:

Risk Type

Risk

Key Mitigators

Credit risk

Counterparty risk

Counterparty monitoring for both liquidity and performance as well as intra-day, daily and weekly reports to Group Head of Dealing.

All institutional transactions are cash against delivery.

High value trades monitored and authorised daily.

Earnings risk


Wide staff shareholdings.

Contracts of employment with six months' garden leave.

Remuneration structure and deferred profit share lock in staff.

Interest rate risk

Interest rate risk

No client money is held in fixed interest term deposits.

Liquidity risk

Bank default and other
systemic risk

Several banks are used to hold both clients and firm's money; with levels being constantly reviewed.

Only bank with major UK clearers.

Market heavily regulated.

Capital adequacy

Capital adequacy surplus maintained greater than regulatory requirement.

Large cash balances.

Legal and
Regulatory risk

Data protection

Systems and controls in place to restrict access to client and employee data including:

Centralised control of client data;

Clear desk policy;

Data Protection Policy and Data Protection Steering Group; and

Secure disposal of sensitive documents.

Fast changing regulatory environment leading to breach of rules

Strong and proactive Regulation & Risk and Internal Audit functions.

New business and product lines

New business and product lines reviewed by the Project Boards.

Poor advice/portfolio performance
(including mis-selling)

See below "Poor Investment Performance."

Operational
and IT risk

Business continuity

Large branch network with back up systems in place.

Back up computer site.

Main server located outside London.

Data integrity

Change to data requires authorisation.

Data Architecture Team.

Exception reporting.

Information Security due diligence visits to third party suppliers.

Electronic dealing errors

Close management supervision. 

Multiple validations on equity trading platform.

E-ticket validation controls.

Supplier capacity

Service Level agreements.

Continuous review of suppliers.

Significant strategic change

Board approval of new business initiatives taking into account due diligence.

Change Management Department.              

Risk Appetite Statement.

Project control

Regular meetings by Project Overview committee consisting of Senior Managers and Board Executives. Electronic tracking of resources and full project documentation testing.



Annual Report Page 15

 

Risk Type

Risk

Key Mitigators

Other risk

Financial crime

Segregation of duties.

Authorisation processes.

Acquisition of new teams

Strong vetting system for new recruits.

Reputational
risk

Poor investment performance

Good in-house research.

Business standards team.

Monitoring by Regulation Department.

Strong training and appraisal programme.

MI Dashboard monitoring.

Treating customers fairly embedded into the ethos of the firm.

Adverse publicity

Media Policy, only authorised employees may communicate with the media.

Monitor media coverage.

Settlement
risk

Settlement failure

Experienced management team monitors settlement performance.

Alternative settlement bank.

Counterparty monitoring.

High value trades monitored and authorised daily.

Business Review: Cautionary Statement

This review has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for these strategies to succeed. It should not be relied on by any other party for any other purpose. The review contains forward looking statements these statements are made by the Directors in good faith based on information available to them up to the time of the approval of these reports and should be treated with caution due to inherent uncertainties associated with such statements. The Directors, in preparing this Business Review have complied with s41 7 of the Companies Act 2006.

 



Annual Report Page 27

 

 

Internal Control and Risk Management

 

The Board undertakes a full review of all aspects of the Group's business, identifies the main risks to the business and identifies the key controls to counter these risks. The Board recognises that its' risk management strategy is essential for achieving good business governance, to protect stakeholders and enhance shareholder value. The Board has adopted a risk-based approach to establish a system of internal control. It reviews its effectiveness periodically, by receiving ongoing reports on internal control from the Audit Committee and the BDL Board which is informed by the established Risk Committees. Day-to-day review and monitoring has been delegated to the Investment Management Risk and Controls Committee ("IMRCC"), Corporate Advisory & Broking Risk and Controls Committee ("CABRCC") and Business Support Risk & Controls Committee of Brewin Dolphin Limited, the activities of which include overseeing and reviewing the controls, monitoring and reporting frameworks and related procedures for risk management.

The Regulation & Risk department and Internal Audit also carry out regular reviews. Full details of the risks considered by the Board are set out in the Business Review: Finance on page 11. Business Continuity Management is now embedded within the business and is reviewed and tested annually. The Board recognises the potential operational and financial losses associated with a service interruption, and the importance of maintaining viable business resilience strategies.

 



Annual Report Page 28

CORPORATE GOVERNANCE (CONTINUED)

 

The Directors are responsible for the system of internal control established by the Group, reviewing its effectiveness and reporting to the shareholders that they have done so. They report as follows:

i)

There is an ongoing process for identifying, evaluating and managing the significant risks faced by the Group as outlined above. This has been in place for the period under review and up to the date of approval of the annual report and accounts. It is regularly reviewed by the Board and accords with the revised Turnbull guidance in the Code. Any system of internal control is designed to highlight and manage rather than to eliminate the risk of failure to achieve business objectives, and can provide only reasonable, and not absolute, assurance against material misstatement or loss. The Board has implemented the 'Three Lines of Defence' model to ensure a robust and effective framework to manage internal controls and risks across the organisation. It facilitates the decision making process while providing effective governance around risk management and assurance.

ii)

Financial results, key operating statistics and controls are reported to the Board monthly, and variances are followed up vigorously. Monthly reports are received from the Regulation & Risk and Internal Audit functions.

iii)

The Directors have reviewed the Group's system of internal controls and compliance monitoring and believe that these provide assurance that problems have been identified on a timely basis and dealt with appropriately throughout the period under review and up to the date of approval of the annual report and accounts. The Audit Committee assists the Board in discharging its review responsibilities.

iv)

There is a whistleblowing policy detailing the internal or external procedures through which employees are able to raise any concerns.

 



Annual Report Page 43

Directors' Responsibilities

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and Article 4 of the IAS Regulation and have also chosen to prepare the parent company financial statements under IFRSs as adopted by the EU. Under company law the directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the directors are required to:

properly select and apply accounting policies;

present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

make an assessment of the Company's ability to continue as a going concern.

 

The directors are responsible for keeping proper accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' Responsibility Statement

We confirm that to the best of our knowledge:

1.

the financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

2.

the management report, which is incorporated into the Directors' Report together with the information provided in the Business Review includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

 

By order of the Board

Jamie Matheson

Robin Bayford

Executive Chairman

Finance Director

6 December 2011


 

 



Annual Report Page 44

Independent Auditor's Report

Independent Auditor's Report

to the members of Brewin Dolphin Holdings PLC

We have audited the financial statements of Brewin Dolphin Holdings PLC for the 53 week period ended 30 September 2011 which comprisethe Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Statement of Changes in Equity, the Company Balance Sheet, the Company Statement of Changes in Equity, the Consolidated Cash Flow Statement and Company Cash Flow Statement and the related notes 1 to 36. The financial reporting framework that has beenapplied in their preparation is applicable law and International FinancialReporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's 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 and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group's and the parent company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion:

the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 30 September 2011 and of the group's profit for the period then ended;

the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and

the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the group financial statements, Article 4 of the IAS Regulation.

 

Separate opinion in relation to IFRSs as issued by the IASB

As explained in note 3 to the group financial statements, the group in addition to complying with its legal obligation to apply IFRSs as adopted by the European Union, has also applied IFRSs as issued by the International Accounting Standards Board (IASB).

In our opinion the group financial statements comply with IFRSs as issued by the IASB.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:

the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and

the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

 

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our opinion:

adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

the parent company financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns; or

certain disclosures of directors' remuneration specified by law are not made; or

we have not received all the information and explanations we require for our audit.

 

Under the Listing Rules we are required to review:

the directors' statement, contained within Director's report, in relation to going concern;

the part of the Corporate Governance Statement relating to the company's compliance with the nine provisions of the UK Corporate Governance Code specified for our review; and

certain elements of the report to shareholders by the Board on directors' remuneration.

 

Simon Hardy

Senior Statutory Auditor

for and on behalf of Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

6 December 2011



Annual Report Page 45

CONSOLIDATED INCOME STATEMENT

53 week period ended 30 September 2011



53 weeks to 30 September 2011

52 weeks to 26 September 2010


Note

£'000

£'000

Continuing operations




Revenue

5

248,375

224,013

Other operating income

3i

15,638

15,999

Total income

6

264,013

240,012

Staff costs

7

(126,456)

(115,907)

Redundancy costs

7

(1,008)

(135)

Additional FSCS levy


(6,058)

(595)

Acquisition of subsidiary costs


(228)

-

Amortisation of intangible assets - client relationships

16

(10,486)

(6,349)

Other operating costs


(98,409)

(87,326)

Operating expenses


(242,645)

(210,312)

Operating profit


21,368

29,700

Finance income

9

1,253

1,293

Other gains and losses

10

(27)

(495)

Finance costs

9

(732)

(453)

Profit before tax

6 & 8

21,862

30,045

Tax

11

(6,884)

(9,447)

Profit for the period from continuing operations


14,978

20,598

Discontinued operations




(Loss)/profit for the period from discontinued operations

13

(877)

955

Profit for the period


14,101

21,553

Attributable to:




Equity shareholders of the parent


14,101

21,553



14,101

21,553

Earnings per share




From continuing operations




Basic

15

6.6p

9.2p

Diluted

15

6.3p

9.1p

From continuing and discontinued operations




Basic

15

6.2p

9.7p

Diluted

15

5.9p

9.5p

 



Consolidated Statement of Comprehensive Income

53 week period ended 30 September 2011

 




53 weeks to 30  September 2011

52 weeks to 26 September 2010




£'000

£'000


Profit for the period


14,101

21,553


Loss on revaluation of available-for-sale investments


-

(4,000)


Deferred tax credit on revaluation of available-for-sale investments


56

1,177


Exchange differences on translation of foreign operations


(83)

-


Actuarial profit/(loss) on defined benefit pension scheme


2,766

(1,878)


Deferred tax (charge)/credit on actuarial profit/(loss) on defined benefit pension scheme


(719)

507


Other comprehensive income/(expense) for the period


2,020

(4,194)


Total comprehensive income for the period


16,121

17,359


Attributable to:





Equity shareholders of the parent


16,121

17,359




16,121

17,359

 

 



Annual Report Page 46

 

CONSOLIDATED balance sheet

As at 30 September 2011



As at
30 September
2011

As at
26 September
2010


Note

£'000

£'000

ASSETS




Non-current assets




Intangible assets

16

115,805

91,114

Property, plant and equipment

17

15,869

19,384

Available-for-sale investments

19

6,087

6,114

Other receivables

20

2,377

2,306

Deferred tax asset

21

559

1,097

Total non-current assets


140,697

120,015

Current assets




Trading investments

19

744

632

Trade and other receivables

20

242,492

331,423

Cash and cash equivalents

22

85,702

87,921

Total current assets


328,938

419,976

Total assets


469,635

539,991

LIABILITIES




Current liabilities




Bank overdrafts

23

672

1,046

Trade and other payables

24

267,819

359,086

Current tax liabilities


1,390

4,433

Provisions

33

5,931

5,420

Shares to be issued including premium

25

6,541

438

Total current liabilities


282,353

370,423

Net current assets


46,585

49,553

Non-current liabilities




Retirement benefit obligation

27

7,101

12,498

Deferred purchase consideration

25

2,556

1,749

Provisions

33

-

44

Shares to be issued including premium

25

22,840

13,661

Total non-current liabilities


32,497

27,952

Total liabilities


314,850

398,375

Net assets


154,785

141,616

EQUITY




Called up share capital

28

2,405

2,270

Share premium account

28

116,028

113,612

Own shares

29

(10,686)

(101)

Revaluation reserve


4,118

4,062

Merger reserve


22,950

4,562

Profit and loss account


19,970

17,211

Equity attributable to equity holders of the parent


154,785

141,616

 

 

Approved by the Board of Directors and authorised for issue on 6 December 2011

Signed on its behalf by

 

Jamie Matheson

Robin Bayford

Executive Chairman

Finance Director

 

 

 



Annual Report Page 47

CONSOLIDATED statement of changes in equity

53 week period ended 30 September 2011

 


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 27 September 2009

2,122

94,140

-

6,885

4,562

10,510

118,219

Profit for the period

-

-

-

-

-

21,553

21,553

Other comprehensive income for the period








Deferred and current tax on other comprehensive income

-

-

-

1,177

-

507

1,684

Actuarial loss on defined benefit pension scheme

-

-

-

-

-

(1,878)

(1,878)

Revaluation of available-for-sale investments

-

-

-

(4,000)

-

-

  (4,000)

Total comprehensive income for the period

-

-

-

(2,823)

-

20,182

17,359

Dividends

-

-

-

-

-

(16,038)

(16,038)

Issue of shares

148

19,472

-

-

-

-

19,620

Own shares acquired in the period

-

-

(101)

-

-

-

(101)

Share-based payments

-

-

-

-

-

2,679

2,679

Current tax credit on share-based payments

-

-

-

-

-

23

23

Deferred tax charge on share-based payments

-

-

-

-

-

(145)

(145)

Balance at 26 September 2010

2,270

113,612

(101)

4,062

4,562

17,211

141,616

Profit for the period

-

-

-

-

-

14,101

14,101

Other comprehensive income for the period








Deferred and current tax on other comprehensive income

-

-

-

56

-

(719)

(663)

Actuarial profit on defined benefit pension scheme

-

-

-

-

-

2,766

2,766

Exchange differences on translation of foreign operations

-

-

-

-

-

(83)

  (83)

Total comprehensive income for the period

-

-

-

56

-

16,065

16,121

Dividends

-

-

-

-

-

(16,286)

(16,286)

Issue of shares

135

2,416

-

-

18,388

-

20,939

Own shares acquired in the period

-

-

(10,585)

-

-

-

(10,585)

Share-based payments

-

-

-

-

-

3,029

3,029

Current tax credit on share-based payments

-

-

-

-

-

(124)

(124)

Deferred tax charge on share-based payments

-

-

-

-

-

75

75

Balance at 30 September 2011

2,405

116,028

(10,686)

4,118

22,950

19,970

154,785

 

 



Annual Report Page 48

COMPANY BALANCE SHEET

As at 30 September 2011

 



As at
30 September
2011

As at
26 September
2010


Note

£'000

£'000

ASSETS




Non-current assets




Investment in subsidiaries

18

168,953

140,702

Other receivables

20

130

329

Total non-current assets


169,083

141,031





Current assets




Trade and other receivables

20

19,171

12,242

Cash and cash equivalents

22

597

621

Total current assets


19,768

12,863

Total assets


188,851

153,894





LIABILITIES




Current liabilities




Trade and other payables

24

13,401

7,447

Shares to be issued including premium

25

6,541

438

Total current liabilities


19,942

7,885

Net current (liabilities)/assets


(174)

4,978





Non-current liabilities




Shares to be issued including premium

25

22,840

13,661

Total non-current liabilities


22,840

13,661

Total liabilities


42,782

21,546

Net assets


146,069

132,348





EQUITY




Called up share capital

28

2,405

2,270

Share premium account

28

116,028

113,612

Own shares

29

(10,686)

(101)

Merger reserve


23,235

4,847

Profit and loss account


15,087

11,720


146,069

132,348

 

Approved by the Board of Directors and authorised for issue on 6 December 2011

Signed on its behalf by

 

Jamie Matheson

Robin Bayford

Executive Chairman

Finance Director

 

 

 



Annual Report Page 49

company statement of changes in equity

53 week period ended 30 September 2011


Attributable to the equity shareholders of the company


Called up
share
capital

Share premium
account

Own
shares

Merger
reserve

Profit and
loss
account

Total


£'000

£'000

£'000

£'000

£'000

£'000

Balance at 27 September 2009

2,122

94,140

-

4,847

15,176

116,285

Profit for the period

-

-

-

-

9,903

9,903

Total comprehensive income for the period

-

-

-

-

9,903

9,903

Dividends

-

-

-

-

(16,038)

(16,038)

Issue of shares

148

19,472

-

-

-

19,620

Own shares acquired in the period

-

-

(101)

-

-

(101)

Share-based payments

-

-

-

-

2,679

2,679

Balance at 26 September 2010

2,270

113,612

(101)

4,847

11,720

132,348

Profit for the period

-

-

-

-

16,624

16,624

Total comprehensive income for the period

-

-

-

-

16,624

16,624

Dividends

-

-

-

-

(16,286)

(16,286)

Issue of shares

135

2,416

-

18,388

-

20,939

Own shares acquired in the period

-

-

(10,585)

-

-

(10,585)

Share-based payments

-

-

-

-

3,029

3,029

Balance at 30 September 2011

2,405

116,028

(10,686)

23,235

15,087

146,069

 

 



Annual Report Page 50

consolidated cash flow statement

53 week period ended 30 September 2011



53 weeks to
30 September
2011

52 weeks to
26 September
2010


Note

£'000

£'000

Net cash inflow from operating activities

34

32,858

45,114





Cash flows from investing activities




Purchase of intangible assets - goodwill

16

-

(268)

Purchase of intangible assets - client relationships

16

(7,946)

(8,048)

Purchase of intangible assets - software

16

(3,147)

(5,982)

Purchases of property, plant and equipment

17

(5,171)

(7,669)

Acquisition of subsidiary

35

5,802

-

Dividend received from available-for-sale investments

9

194

188

Net cash used in investing activities


(10,268)

(21,779)





Cash flows from financing activities




Dividends paid to equity shareholders


(16,286)

(16,038)

Purchase of own shares

29

(10,585)

(101)

Proceeds on issue of shares


2,436

14,697

Net cash used in financing activities


(24,435)

(1,442)




  

Net (decrease)/increase in cash and cash equivalents


(1,845)

21,893




  

Cash and cash equivalents at the start of period


86,875

64,982




  

Cash and cash equivalents at the end of period


85,030

86,875





Firm's cash


64,469

62,886

Firm's overdraft


(672)

(1,046)

Firm's net cash


63,797

61,840

Client settlement cash


21,233

25,035

Net cash and cash equivalents


85,030

86,875





Cash and cash equivalents shown in current assets


85,702

87,921

Bank overdrafts


(672)

(1,046)

Net cash and cash equivalents


85,030

86,875

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



Annual Report Page 51

company cash flow statement

53 week period ended 30 September 2011



53 weeks to
30 September
2011

52 weeks to
26 September
2010


Note

£'000

£'000

Net cash inflow from operating activities

34

13,826

1,671

Cash flows from financing activities




Dividends paid to equity shareholders


(16,286)

(16,038)

Proceeds on issue of shares


2,436

14,697

Net cash used in financing activities


(13,850)

(1,341)

Net increase in cash and cash equivalents


(24)

330





Cash and cash equivalents at the start of period


621

291

Cash and cash equivalents at the end of period


597

621

 

 

 



Annual Report Page 52

Notes to the Financial Statements

 

1.

General information

Brewin Dolphin Holdings PLC is a company incorporated in the United Kingdom under the Companies Act 2006. The address of the registered office is given on page 2. The nature of the Group's operations and its principal activities are set out in the Directors' Report and Business Review. The company is registered in England and Wales.

These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the group operates. Foreign operations are included in accordance with the policies set out in note 3.

2.

Adoption of new and revised standards

In the current year, the following new and revised Standards and Interpretations have been adopted and have had no impact on these financial statements.

- IFRIC 19, 'Extinguishing liabilities with equity instruments'.

- IAS 24 (revised), 'Related party disclosures'

- Amendment to IAS 27, 'Consolidated and Separate Financial Statements (2008)'

- Amendment to IAS 32, 'Financial instruments: Presentation'

- Amendment to IFRS 3, 'Business combinations'

- Amendment to IFRIC 14, 'Pre-payments of a Minimum Funding Requirement'

New standards, amendments and interpretations issued but not effective and yet to be endorsed by the EU are as follows:

- IFRS 9, 'Financial instruments'

- IFRS 10, 'Consolidated financial statements'

- IFRS 11, 'Joint arrangements'

- IFRS 12, 'Disclosures of interests in other entities'

- IFRS 13, 'Fair value measurement'

- IAS 19 (revised 2011) 'Employee benefits'

- IAS 27 (revised 2011) 'Separate financial statements'

- IAS 28 (revised 2011) 'Associates and joint ventures'

- Amendment to IAS 12, 'Income taxes' on 'deferred tax'

- Amendment to IFRS 7, 'Financial instruments: Disclosures'

- Amendment to IFRS 1, 'on hyperinflation and fixed dates'

- Amendment to IAS 1, 'Presentation of financial statements' on 'OCI'

The Group is currently reviewing the impact of these new standards, amendments and interpretations but does not intend to adopt the standards early.

IFRS 9 introduces new requirements for the measurement and disclosure of financial instruments. The Group is yet to assess IFRS 9's full impact.

IAS 19 (revised 2011) makes significant changes to the recognition and measurement of defined benefit pension expense and termination benefits, and to the disclosures for all employee benefits. The changes will affect the Group and may also increase the volume of disclosures.

The directors do not expect that the adoption of the other standards listed above will have a material impact on the financial statements of the Group in future periods.

3.

Significant accounting policies

a.

Basis of accounting

 

The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRSs). The financial statements have also been prepared in accordance with IFRSs adopted by the European Union and therefore the Group financial statements comply with Article 4 of the EU IAS Regulation.

The financial statements of the Company have also been prepared in accordance with International Financial Reporting Standards (IFRSs).

The financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments. Historical cost is generally based on the fair value of the consideration given in exchange for the assets. The principal accounting policies adopted are set out below.

b.

Going concern

As discussed in the Business Review, the Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly they continue to adopt the going concern basis in preparing the financial statements.

 



Annual Report Page 53

 

c.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of Brewin Dolphin Holdings PLC and all its subsidiary undertakings.

The acquisition method of accounting has been adopted. Under this method, the results of subsidiary undertakings acquired during the period are included in the consolidated income statement from the date of acquisition.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

In the Company's accounts investments in subsidiary undertakings are stated at cost less any provision for impairment.

In accordance with Section 408 of the Companies Act 2006 Brewin Dolphin Holdings PLC has taken advantage of the legal dispensation not to present its own statement of comprehensive income or income statement. The amount of the profit for the financial period dealt with in the financial statements of the Company is disclosed in note 12 to the financial statements.

d.

Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in the income statement as incurred.

Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below). All other subsequent changes in the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant IFRSs. Changes in the fair value of contingent consideration classified as equity are not recognised.

Where a business combination is achieved in stages, the Group's previously-held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.

The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3(2008) are recognised at their fair value at the acquisition date, except that:

•     deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with lAS 12 "Income Taxes" and lAS 19 "Employee Benefits" respectively;

•     liabilities or equity instruments related to the replacement by the Group of an acquiree's share-based payment awards are measured in accordance with IFRS 2 "Share-based Payment"; and

•     assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations" are measured in accordance with that Standard.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see below), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.

The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date, and is subject to a maximum of one year.

e.

Transaction date accounting

All securities transactions entered into on behalf of clients are recorded in the accounts on the date of the transaction. The underlying investments are not shown in the financial statements of the Group.

f.

Foreign currencies

The individual financial statements of each group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group company are expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

 

 

Annual Report Page 54

Notes to the Financial Statements (continued)

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences are recognised in profit or loss in the period in which they arise.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity.

g.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents gross commission, investment management fees, renewal commissions and corporate advisory & broking retainers, other fees plus other income, excluding VAT, receivable in respect of the period.

Investment management fees, renewal commissions and corporate advisory & broking retainers are recognised in the period in which the related service is provided and investment management commissions are recognised when the transaction is performed.

Other fees including corporate finance fees and placing commissions are taken to the income statement when payment is contractually due.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

Dividend income from investments is recognised when the shareholders' rights to receive payment have been established.

Dividends received and receivable are credited to the income statement to the extent that they represent a realised profit and loss for the Company.

h.

Operating profit

Operating profit is stated as being profit before finance income, finance costs, other gains/losses and tax.

i.

Other operating income

Interest receivable and payable on client free money balances is netted to calculate the Group's share of interest receivable and included under the heading "Other operating income".

j.

Cash and cash equivalents

 

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

k.

Leases

 

Annual rentals on operating leases are charged to the income statement on a straight-line basis over the lease term.

Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.

l.

Share based payments

 

The Group has applied the requirements of IFRS 2 "Share-based payments".

Equity-settled share-based payments to employees are measured at fair value of the equity instruments at the date of grant. The fair value excludes the effect of non market-based vesting conditions.

Fair value is measured by use of a Black-Scholes option pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.

 



Annual Report Page 55

 

m.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax laws and rates that have been enacted at the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited in other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income.

n.

Intangible assets

i) Goodwill

Goodwill represents the excess of the sum of the consideration transferred, the amount of any non controlling interest in the acquiree and the fair value of the acquirer's previously held equity interest (if any) in the entity over the net of the identifiable assets and liabilities at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which is recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised immediately in the income statement and is not reversed in a subsequent period.

Elements of the total sum of the consideration of an acquisition may be deferred or contingent. In such cases the cost of the acquisition indicates the Company's best estimate of the future consideration likely to be made, discounted to present value using a pre-tax discount rate that reflects current market assessments of the time value of money, and is revised at each balance sheet date, potentially leading to adjustments in the income statement. Such deferred or contingent consideration may be settled in shares (see note 3(t)).

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP amounts subject to being tested for impairment at that date. Goodwill written off to reserves under UK GAAP prior to 1998 has not been reinstated and is not included in determining any subsequent profit or loss on disposal.

ii) Client relationships

Intangible assets classified as "client relationships" are recognised when acquired as part of a business combination or when separate payments are made to acquire funds under management by adding teams of investment managers. Client relationships are initially recognised at cost and are subsequently measured at cost less accumulated amortisation and any accumulated impairment losses. If acquired as part of a business combination the initial cost of client relationships is the fair value at the acquisition date.

When separate payments are made to acquire funds under management by adding teams of investment managers, elements of the total consideration may be deferred or contingent. In such cases the cost of the recognised client relationships includes the Company's best estimate of the future consideration likely to be made, discounted to present value using a pre-tax discount rate that reflects current market assessments of the time value of money, and is revised at each balance sheet date. Such deferred or contingent consideration may be settled in shares (see note 3(t)).

Client relationships are amortised over seven to fifteen years, their minimum estimated useful lives.

iii) Computer software

Computer software which is not an integral part of the related hardware is classified as an intangible asset. Costs of acquiring computer software are treated as an intangible asset and amortised over four years on a straight line basis from the date the software comes into use. Computer software developed internally is separately identified and recognised as an intangible asset if it is part of a specifically authorised project which will give probable future economic benefits over a period of not less than four years, and is amortised over four years on a straight line basis from the date the software comes into use.

 

Annual Report Page 56

 

Notes to the Financial Statements (continued)

o.

Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and any recognised impairment. Depreciation has been provided on the basis of equal annual instalments to write off the cost less estimated residual values of tangible fixed assets over their estimated useful lives as follows:

Computer equipment 3 to 4 years

Office equipment 4 to 10 years

Leasehold improvements to first break clause of lease

Motor vehicles 5 years

The gain or loss arising on the disposal or scrappage of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

p.

Financial instruments

 

Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

q.

Financial assets

All financial assets are recognised and derecognised on trade date, where a purchase or sale of an investment is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.

Financial assets are classified into the following specified categories: financial assets 'at fair value through profit or loss' (FVTPL), 'held to maturity' investments, 'available-for-sale' financial assets and 'loans and receivables'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Financial assets at FVTPL

Financial assets are classified as at FVTPL where the financial asset is held-for-trading or it is designated as at FVTPL. A financial asset is classified as held-for-trading if it has been acquired principally for the purpose of selling in the near future.

Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporate any dividends or interest earned on the financial asset. Their value is determined in the manner described in note 19.

Available-for-sale financial assets (AFS)

Certain shares held by the Group are classified as being available-for-sale and are stated at fair value. Fair value is determined in the manner described in note 19. Gains and losses are recognised directly in other comprehensive income and accumulated in the revaluation reserve with the exception of impairment losses which are recognised directly in profit or loss.

Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the revaluation reserve is reclassified to profit or loss.

Dividends on available-for-sale equity instruments are recognised in profit and loss when the Group's right to receive payment is established.

Loans and receivables

Trade receivables, loans, and other receivables that have fixed or determinable payments and are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets.

For listed and unlisted equity investments classified as AFS, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of the impairment.

When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period. In subsequent periods if the amount of impaired loss decreases, in respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income.

 



Annual Report Page 57

r.

Netting of balances

Amounts due to and from counterparties due to settle on balance are shown net where there is a currently enforceable legal right to set off the recognised amounts and an operational intention to settle net. Amounts due to and from counterparties due to settle against delivery of stock are shown gross.

s.

Financial liabilities and equity

Financial liabilities and equity are classified according to the substance of the contractual arrangements entered into.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Financial liabilities

Financial liabilities are classified as either financial liabilities 'at FVTPL' or 'other financial liabilities'. Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is designated as at FVTPL.

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

t.

Shares to be issued including premium

Shares to be issued represent the Company's best estimate of the amount of ordinary shares in the Company, which are likely to be issued following business combinations or the acquisition of client relationships which involve deferred payments in the Company's shares. The sum is discounted to present value using a pre-tax discount rate that reflects current market assessments of the time value of money and is revised annually in the light of actual results. The resulting interest charge from the unwind of the discount is included within finance costs. Where shares are due to be issued within a year then the sum is included in current liabilities. Where the team of investment managers, bringing with them funds under management, have not yet joined and the client relationships assets have not been brought into use, the resultant liability is shown as an amount contracted for but not provided in the accounts.

u.

Retirement benefit costs

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due. Payments made to state-managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Group's obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.

For defined benefit retirement benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in full in the period in which they occur. They are recognised outside the profit or loss and presented in other comprehensive income.

Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-line basis over the average period until the benefits become vested.

The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation, as adjusted for unrecognised past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the scheme.

v.

Impairment of tangible and intangible assets

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Goodwill is tested for impairment at least annually. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

For the purposes of impairment testing, client relationships and goodwill are allocated to each of the Group's cash-generating units. Fair value is established by valuing clients' funds under management in each of the cash-generating units based on the value of funds under management at the period end; the percentages of funds being used depending on values attributed in recent public transactions for the purchase of advisory and discretionary funds. If the carrying amount relating to any cash-generating unit exceeds the calculated fair value less costs to sell, a value in use is calculated using a discounted cash flow method. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

 

Annual Report Page 58

Notes to the Financial Statements (continued)

If the recoverable amount of any asset other than client relationships or goodwill is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount.

An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

w.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

Provisions are measured at the directors' best estimate of the expenditure required to settle the obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation and are discounted to present value where the effect is material.

Where some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that the reimbursement will be received and the amount receivable can be measured reliably.



Annual Report Page 59

 

 

6. Segmental information

For management purposes, the Group is divided into two business streams: Investment Management and Corporate Advisory & Broking which is being discontinued (see note 13). These form the reportable segments of the Group.

Until the 1 August 2011, all operations were carried out in the United Kingdom and the Channel Islands. On 1 August 2011, the Group acquired Tilman Asset Management Limited (see note 35) which is based in Republic of Ireland. This income is reported as part of the Investment Management business stream. All segment income relates to external clients.

The accounting policies of the operating segments are the same as those of the Group.

52 week period ended 30 September 2011




Continuing
operations

Discontinued
operations



Discretionary
Portfolio
Management

Advisory
Portfolio
Management

Total Investment Management

Corporate
Advisory &
Broking

Group


£'000

£'000

£'000

£'000

£'000

Total income

180,518

83,495

264,013

10,346

274,359







Operating profit before redundancy costs, additional FSCS levy, contract renewal payments, acquisition of subsidiary costs and amortisation of client relationships

26,767

12,381

39,148

1,204

40,352

Additional FSCS levy



(6,058)

-

(6,058)

Redundancy costs



(1,008)

(12)

(1,020)

Acquisition of subsidiary costs



(228)

-

(228)

Amortisation of client relationships



(10,486)

-

(10,486)

Operating profit



21,368

1,192

22,560

Finance income (net)



521

-

521

Other gains and losses



(27)

-

(27)

Costs of separation



-

(2,393)

(2,393)

Profit/(loss) before tax



21,862

(1,201)

20,661

 

Other Information






Capital expenditure



8,287

31

8,318

Depreciation



8,704

131

8,835

Amortisation of intangible asset - software



3,370

76

3,446

Share-based payments



3,015

14

3,029







Segment assets excluding current tax assets



458,417

11,218

469,635

Segment liabilities excluding current tax liabilities



269,745

11,218

280,963

 

 



Annual Report Page 60

Notes to the Financial Statements (continued)

 

6.

Segmental information (continued)

 

52 week period ended 26 September 2010




Continuing
operations

Discontinued
operations



Discretionary
Portfolio
Management

Advisory
Portfolio
Management

Total Investment Management

Corporate
Advisory &
Broking

Group


£'000

£'000

£'000

£'000

£'000

Total income

157,233

82,779

240,012

10,877

250,889







Operating profit before redundancy costs, additional FSCS Levy, contract renewal payments, acquisition of subsidiary costs and amortisation of client relationships

25,463

13,406

38,869

1,545

40,414

Contract renewal payments (see note 15)



(2,090)

(101)

(2,191)

Additional FSCS levy



(595)

-

(595)

Redundancy costs



(135)

(118)

(253)

Amortisation of client relationships



(6,349)

-

(6,349)

Operating profit



29,700

1,326

31,026

Finance income (net)



840

-

840

Other gains and losses



(495)

-

(495)

Profit before tax



30,045

1,326

31,371

 

Other Information






Capital expenditure



13,558

93

13,651

Depreciation



10,358

123

10,481

Amortisation of intangible asset - software



1,797

11

1,808

Share-based payments



2,647

32

2,679







Segment assets excluding current tax assets



506,578

33,413

539,991

Segment liabilities excluding current tax liabilities



332,577

33,413

365,990



 

 

Annual Report Page 62

Notes to the Financial Statements (continued)

 

9. Finance income and finance costs

 


2011
53 Weeks

2010
52 Weeks


£'000

£'000

Finance income



Dividends from available-for-sale investments

194

188

Interest on bank deposits

1,059

1,105


1,253

1,293




Finance costs



Finance cost of deferred consideration

317

24

Interest expense on defined pension obligation

369

366

Interest on bank overdrafts

46

63


732

453

 

10. Other gains and losses

 


2011
53 Weeks

2010
52 Weeks


£'000

£'000

Impairment loss recognised on available-for-sale equity investments

27

495

 

11. Taxation

 


Continuing operations

Discontinued operations

Total


2011

2010

2011

2010

2011

2010


53 Weeks

52 Weeks

53 Weeks

52 Weeks

53 Weeks

52 Weeks


£'000

£'000

£'000

£'000

£'000

£'000

United Kingdom







Current tax

6,246

8,340

(122)

371

6,124

8,711

Prior year

422

(363)

-

-

422

(363)

Overseas tax







Current tax

181

153

-

-

181

153

Prior year

-

-

-

-

-

-


6,849

8,130

(122)

371

6,727

8,501

United Kingdom deferred tax







Current year

439

1,142

(202)

-

237

1,142

Prior year

(404)

175

-

-

(404)

175


6,884

9,447

(324)

371

6,560

9,818

 

United Kingdom corporation tax is calculated at 27% (2010: 28%) of the estimated assessable taxable profit for the period. The Finance Act 2011 received royal assent on 19 July 2010 and reduced the corporation tax rate to 26% (28%) from 1 April 2011.

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

 

 



Annual Report Page 63

11. Taxation (continued)

The charge for the year for continuing operations can be reconciled to the profit per the income statement as follows:


2011
53 Weeks

2010
52 Weeks


£'000

£'000

Profit before tax on continuing operations

21,862

30,045

Tax at the UK corporation tax rate of 27% (2010: 28%)

5,903

8,413

Tax effect of expenses that are not deductible in determining taxable profit

591

474

Tax effect of deferred tax timing differences

147

95

Tax effect of leasehold property depreciation

391

320

Tax effect of prior year tax

422

(363)

Tax effect of prior year deferred tax

(404)

175

Tax effect of share-based payments

(117)

342

Tax effect of lower rates in subsidiaries

(35)

-

Tax effect of exempt dividend income

(52)

-

Tax effect of change in tax rate on deferred tax

38

(9)

Tax expense for the period

6,884

9,447

Effective tax rate for the year

31%

31%

 

In addition to the amount credited to the income statement, deferred tax relating to the revaluation of the Group's available-for-sale investments amounting to £56,000 (2010: £1,177,000) has been credited directly to equity and deferred tax relating to the actuarial gain/(loss) in the defined benefit pension scheme amounting to £719,000 (2010: £507,000 credited) has been debited directly to equity. Deferred tax on share-based payments of £75,000 (2010: £145,000 credit) has been debited directly to equity.

13.

Discontinued operations

The Group's operating subsidiary, Brewin Dolphin Limited, signed an agreement on 11 May 2011 for the disposal of its Corporate Advisory and Broking Division to a new partnership called N+1 Brewin. Completion of the disposal is subject, inter alia, to receipt of certain regulatory authorisations for the new entity. The disposal has not yet completed but it is anticipated that it will be in January 2012.

The Group will receive nominal goodwill consideration of £4m for the disposal by way of a 14% preferred interest in N+1 Brewin.

The Corporate Advisory and Broking Division represents a reportable segment of the Group and the effect of the discontinued operation on segment results is disclosed in note 6.

The results of the discontinued operations, which have been included in the consolidated income statement, were as follows:


2011
53 Weeks

2010
52 Weeks


£'000

£'000

Revenue

10,346

10,877

Expenses

(9,154)

(9,551)

Operating profit

1,192

1,326

Costs of separation

(2,393)

-

Profit before tax

(1,201)

1,326

Attributable tax

324

(371)

Net (loss)/profit attributable to discontinued operations (attributable to the owners of the Company)

(877)

955

 

During the year the division contributed a net cash outflow of £1.1m (2010: £1.8m inflow) to the Group's net operating cash flows.



Annual Report Page 64

Notes to the Financial Statements (continued)

 

14. Dividends

 


2011
53 Weeks
£'000

2010
52 Weeks
£'000

Amounts recognised as distributions to equity shareholders in the period:



Final dividend paid 5 April 2011, 3.55p per share (2010: 3.55p per share)

7,989

7,975

Interim dividend paid 22 September 2011, 3.55p per share (2010: 3.55p per share)

8,297

8,063


16,286

16,038




Proposed final dividend for the 53 weeks ended 30 September 2011 of 3.55p



(2010: 3.55p) per share based on shares in issue at 30 November 2011 (8 November 2010)

8,299

8,176

 

The proposed final dividend for the 53 week period ended 30 September 2011 of 3.55p per share is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

Under an arrangement dated 1 April 2011, EES Trustees International Limited (the "Trustee") who holds 6,857,822 number of ordinary shares representing 2.82% of the Company's called up share capital has agreed to waive all dividends due to the Trustee.

15. Earnings per share

From continuing and discontinuing operations

The calculation of the basic and diluted earnings per share is based on the following data:


2011

2010

Number of shares

'000

'000

Basic



Weighted average number of shares in issue in the period

226,796

223,193

Diluted



Weighted average number of options outstanding for the period

4,275

1,486

Estimated weighted average number of shares earned under deferred consideration arrangements

9,464

3,628

Diluted weighted average number of options and shares for the period

240,535

228,307

Earnings attributable to ordinary shareholders



Continuing operations

£'000

£'000

Profit for the period from continuing operations

14,978

20,598

Redundancy costs

1,008

135

less tax

(272)

(38)

Additional FSCS levy

6,058

595

less tax

(1,636)

(167)

Contract renewal payment (Note b)

-

2,090

less tax

-

(585)

Acquisition of subsidiary

228

-

Amortisation of intangible assets - client relationships

10,486

6,349

less tax

(2,831)

(1,778)

Adjusted basic profit for the period and attributable earnings excluding redundancy costs, additional FSCS levy, contract renewal payments, acquisition of subsidiary costs and amortisation of client relationships

28,019

27,199

 

 



Annual Report Page 65

 

15.  Earnings per share (continued)


2011

2010


£'000

£'000

Profit for the period from continuing operations

14,978

20,598

Finance costs of deferred consideration (Note a)

237

203

less tax

(64)

(57)

Adjusted fully diluted profit for the period and attributable earnings

15,151

20,744

Redundancy costs

1,008

135

less tax

(272)

(38)

Additional FSCS levy

6,058

595

less tax

(1,636)

(167)

Contract renewal payment (Note b)

-

2,090

less tax

-

(585)

Acquisition of subsidiary

228

-

Amortisation of intangible assets - client relationships

10,486

6,349

less tax

(2,831)

(1,778)

Adjusted fully diluted profit for the period and attributable earnings excluding redundancy costs, additional FSCS levy, contract renewal payments, acquisition of subsidiary costs and amortisation of client relationships

28,192

27,345

From continuing operations



Basic

6.6p

9.2p

Diluted

6.3p

9.1p

From continuing operations excluding redundancy costs, additional FSCS levy, contract renewal payments, acquisition of subsidiary costs and amortisation of client relationships



Basic

12.4p

12.2p

Diluted

11.7p

12.0p

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

b) Once every ten years, the Group reissues its contracts to all personnel; the cost of this is shown within staff costs.

 

Earnings attributable to ordinary shareholders

2011

2010

Continuing and discontinued operations

£'000

£'000

Profit for the period

14,101

21,553

Redundancy costs

1,020

253

less tax

(275)

(71)

Additional FSCS levy

6,058

595

less tax

(1,636)

(167)

Contract renewal payment (Note b)

-

2,191

less tax

-

(613)

Acquisition of subsidiary

228

-

 

Amortisation of intangible assets - client relationships

10,486

6,349

less tax

(2,831)

(1,778)

Adjusted basic profit for the period and attributable earnings excluding redundancy costs, additional FSCS levy, contract renewal payments, acquisition of subsidiary costs and amortisation of client relationships

27,151

28,312

 



Annual Report Page 66

Notes to the Financial Statements (continued)

15.  Earnings per share (continued)

 


2011

2010


£'000

£'000

Profit for the period

14,101

21,553

Finance costs of deferred consideration (Note a above)

236

203

less tax

(64)

(57)

Adjusted fully diluted profit for the period and attributable earnings

14,273

21,699

Redundancy costs

1,020

253

less tax

(275)

(71)

Additional FSCS levy

6,058

595

less tax

(1,636)

(167)

Contract renewal payment (Note b)

-

2,191

less tax

-

(613)

Acquisition of subsidiary

228

-

Amortisation of intangible assets - client relationships

10,486

6,349

less tax

(2,831)

(1,778)

Adjusted fully diluted profit for the period and attributable earnings excluding redundancy costs, additional FSCS levy, contract renewal payments, acquisition of subsidiary costs and amortisation of client relationships

27,323

28,458

 

The denominators used are the same as those detailed above for both basic and diluted earnings from continuing operations.

From continuing and discontinued operations



Basic

6.2p

9.7p

Diluted

5.9p

9.5p




From continuing and discontinued operations excluding redundancy costs, additional FSCS levy, contract renewal payments, acquisition of subsidiary costs and amortisation of client relationships



Basic

12.0p

12.7p

Diluted

11.4p

12.5p

From discontinued operations



The denominators used are the same as those detailed above for both basic and diluted earnings from continuing operations.




From continuing and discontinued operations excluding redundancy costs, additional FSCS levy, contract renewal payments, acquisition of subsidiary costs and amortisation of client relationships



Basic

(0.4p)

0.5p

Diluted

(0.4p)

0.4p

 

 

 



Annual Report Page 75

 

26. Financial instruments and risk management

 

Overview

The Group has exposure to the following risks from its use of financial instruments:

●  market risk;

●  credit risk;

●  liquidity risk; and

●  operational risk.

 

This note presents information about the Group's exposure to each of the above risks, the Group's policy and processes for measuring and managing risk and the Group's management of capital. Further quantitative disclosures are included throughout these consolidated financial statements.

The Board of Directors have overall responsibility for the establishment and oversight of the Group's risk management framework. The Group's Risk Management Committee considers the major areas of market risk, credit risk, liquidity risk and operational risk. The Board determines the risk appetite and is responsible for the implementation of a risk management framework that recognises the risks faced by the Group. Authority flows from the Board to the Risk Management Committee ("RMC") and from there to specific committees which are integral to the management of risk.

Brewin Dolphin's activities involve the measurement, evaluation, acceptance and management of some degree of risk, or combination of risks. The Board has set a low risk appetite whilst recognising the inevitable risk of being exposed to adverse movements in the stock market.

 



Annual Report Page 76

Notes to the Financial Statements (continued)

26. Financial instruments and risk management (continued)

The Audit Committee oversees how management monitors compliance with the Group's risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in its role by Internal Audit. The Audit Committee's key role in risk management is the assessment of controls that are in place to mitigate risk and the review of the Risk Management Schedule bi-annually which is prepared by the RMC.

Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns. The capital structure of the Group and Company consists of issued share capital, reserves and retained earnings as disclosed in the Consolidated Statement of Changes in Equity.

The Group has an Internal Capital Adequacy Assessment Process ("ICAAP"), as required by the Financial Services Authority ("FSA") for establishing the amount of regulatory capital to be held by the Group; There are two regulated entities in the Group; Brewin Dolphin Limited ("BDL") regulated by the FSA and Tilman Brewin Dolphin Limited regulated by the Central Bank of Ireland.

The ICAAP draws on the Group's Annual Corporate Risk Review which is based on bi-annual risk assessments. It gives consideration to both current and projected financial and capital positions. The ICAAP is updated throughout the year to take account of the bi-annual risk assessments and for any significant changes to business plans and any unexpected issues that may occur. The ICAAP is discussed and approved at a Brewin Dolphin Holdings PLC Board meeting at least annually.

Capital adequacy is monitored daily by management. The Group uses the simplified approach to Credit Risk to calculate Pillar 1 requirements. The Group observed the FSA's regulatory requirements throughout the period.

The regulatory capital resources of the Group calculated in accordance with FSA definitions were as follows:


30 September
2011

26 September 2010


£'000

£'000

Tier 1 capital resources



Ordinary share capital

2,405

2,270

Share premium account

116,028

113,612

Own shares held

(10,686)

(101)

Retained earnings

19,970

17,211

Merger reserve

22,950

4,562

Shares to be issued

29,381

14,099


180,048

151,653

Deduction - Intangible assets

(115,805)

(91,114)


64,243

60,539




Tier 2 capital resources



Revaluation reserve

4,118

4,062

Deductions

-

-


4,118

4,062




Tier 1 plus tier 2 capital resources

68,361

64,601

Deduction - Material holdings

-

-

Total capital before deductions

68,361

64,601

Deductions from total capital

(284)

(641)

Total capital resources after deductions

68,077

63,960

 

There were no changes in the Group's approach for capital management during the period.

Significant accounting policies

Details of the significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each financial asset and financial liability, are disclosed in note 3 to the financial statements.



 

Annual Report Page 77

26. Financial instruments and risk management (continued)

 

Categories of financial instruments

Group




Carrying value


2011

2010


£'000

£'000

Financial assets



Fair value through profit and loss - held for trading

744

632

Loans and receivables (including cash and trade receivables)

321,797

413,099

Available-for-sale financial assets

6,087

6,114


328,628

419,845




Financial liabilities



Amortised cost

297,592

377,775


297,592

377,775

 

Company



Carrying value


2011

2010


£'000

£'000

Financial assets


  

Loans and receivables (including cash and trade receivables)

19,898

13,192


19,898

13,192




Financial liabilities


  

Amortised cost

36,719

21,452


36,719

21,452

 

The carrying value approximates to the fair value of the financial assets and liabilities held.

Fair value measurement recognised in the statement of financial position

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

·      Level 1 at fair value measurement are those derived from quoted prices (unadjusted) in active market for identical assets or liabilities;

·      Level 2 fair value measurement are those derived from inputs other than the quoted price included within Level 1 that are observable for the asset or a liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

·      Level 3 fair value measurements are those derived from formal valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).


Level 1

Level 2

Level 3

Total


£'000

£'000

£'000

£'000

Held for trading




  

Quoted equities

744

-

-

744

Available-for-sale financial assets





Quoted equities

87

-

-

87

Unquoted equities

-

-

6,000

6,000

Total

831

-

6,000

6,831

 

There were no transfers between and Level 1 and 2 during the year.

 



Annual Report Page 78

Notes to the Financial Statements (continued)

26. Financial instruments and risk management (continued)

Reconciliation of Level 3 fair value measurement of financial assets:

Available-for-sale



Unquoted

equities


£'000

Balance at 26 September 2010

6,000

Total gains or losses in other comprehensive income

-

Balance at 30 September 2011

6,000

 

The table above only includes financial assets. There were no financial liabilities subsequently measured at fair value on Level 3 fair value measurement basis.

All gains and losses included in other comprehensive income relate to unquoted equity held at the balance sheet date and are reported as "Loss on Revaluation of available-for-sale investments".

i. Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group's income or the value of its holdings of financial instruments. The objective of the Group's market risk management is to both control and manage our exposure within the Group's risk appetite whilst accepting the inherent risk of market fluctuations.

The Group acts as an Investment Manager and agency stockbroker within the UK and Republic of Ireland; all trades are matched in the market.

The Group deals in foreign currencies on a matched basis on behalf of clients, limiting foreign exchange exposure. The total net foreign exchange exposure at the year end was a creditor of £13,000 (2010: £334,000 debtor).

At the period end Tilman Brewin Dolphin Limited had net assets of £3.4m denominated in their local currency (Euros).

The Group does not hold any derivatives (2010: none).

There has been no change to the Group's exposure to market risks or the manner in which it manages and measures the risk during the period.

Equity price risk

The Group is exposed to equity risk arising from its available-for-sale investments and those held-for-trading. Equity investments designated as available-for-sale are held for strategic purposes rather than trading purposes and the Group does not actively trade in these investments.

Equity price sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to equity price risk at the reporting date.

If equity prices had been 5% higher/lower:

·      profit for the 53 week period ended 30 September 2011 would have been £35,000 higher/lower (2010: £31,000 higher/lower) due to change in the value of held-for-trading investments and available-for-sale investments; and

·      other equity reserves as at 30 September 2011 would increase/decrease by £304,000/£300,000 (2010: increase/decrease by £306,000/£300,000) for the Group as a result of the changes in fair value of available-for-sale investments.

The Group's sensitivity to equity prices has not changed significantly from the prior period.

Interest rate risk

The Group is exposed to interest rate risk in respect of the Group's cash and in respect of client deposits. The latter arises because the interest rate paid to its clients on their deposits is linked to the base rate. The Group holds client deposits on demand (variable interest rate) and in 95 day notice accounts (interest rate marked to market monthly). At the end of the period a 1% increase in base rate would increase profitability by £328,000 (2010: £314,000).

 

 



Annual Report Page 79

26. Financial instruments and risk management (continued)

 

ii. Credit risk

Credit risk refers to the risk that a client or other counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group's exposure to credit risk arises principally from the settlement of client and market transactions and cash deposited at banks. The Group uses the simplified approach to calculate credit risk as defined by the FSA. The aim of the Group's approach to credit risk management is to minimise the risk as far as possible.

Exposure to credit risk is spread over a large number of counterparties and clients and with collateral held, in the main, in Group nominee companies which helps to mitigate credit risk. The collateral held consists of equity and gilts quoted on recognised exchanges plus cash. The Group has no significant concentration of credit risk with the exception of cash where the majority is spread across three major banks.

The Group undertakes traded options as part of its service to clients, this is an insignificant part of the Group's business. This business is transacted as principal as per the LIFFE rules, all such transactions are always on a matched basis, clients are required to pledge collateral if they hold option positions, which are monitored on a daily basis.

Maximum exposure

The maximum exposure to credit risk at the end of the reporting period is equal to the balance sheet figure.

Credit exposure

Credit exposure in relation to both client and market transactions is monitored daily. The Group's exposure to large trades is limited with an average bargain size in the current period of £13,500; there are additional controls for high value trades.

Impaired assets

The total gross amount of individually impaired assets in relation to trade receivables at the period end was £1,132,000 (2010: £908,000). Collateral valued at fair value by the Group in relation to these impaired assets was £112,000 (2010: £137,000). This collateral is stock held in the clients' account which per our client terms and conditions can be sold to meet any unpaid liabilities falling due. The net difference has been provided as a doubtful debt (see note 20). Note 20 also details amounts past due but not impaired.

Credit quality

Financial assets that are neither past due nor impaired in respect of trade receivables relate mainly to bonds, equity and gilt trades quoted on a recognised exchange, are matched in the market, and are either traded on a cash against documents basis or against a client's portfolio in respect of which any one trade would normally be a small percentage of the client's collateral held in the Group nominee. At the period end no financial assets that would otherwise be past due or impaired had been renegotiated (2010: none).

Loans to employees are repayable over 5 to 10 years and are secured against the employees' shareholdings in the Company (see note 20).

The credit risk on liquid funds, cash and cash equivalents is limited due to deposits being held at three major banks with minimum credit ratings of "A", assigned by international credit rating agencies. Deposits are managed by the Treasury Department and are reviewed regularly by the Management Committee.

The Group carries out at least an annual review of all its banks' and custodians' credit ratings.

There has been no change to the Group's exposure to credit risk or the manner in which it manages and measures the risk during the period.

 

 



Annual Report Page 80

Notes to the Financial Statements (continued)

 

26. Financial instruments and risk management (continued)

 

iii.    Liquidity risk

Liquidity risk refers to risk that the Group will be unable to meet its financial obligations as they fall due. The Group maintains adequate cash resources to meet its financial obligations at all times. All client cash deposits are repayable on demand. At 30 September 2011, the Group had access to an overdraft facility of £15 million (2010: £15 million).

The Group has a Liquidity Policy which is reviewed by the Board annually. As the Group normally deals with the market on cash against document basis, liquidity risk is monitored by daily exception reports of unmatched items past settlement date and managed by the Treasury Department and Credit Control Department, reports are reviewed regularly by the Management Committee.

There has been no change to the Group's exposure to liquidity risk or the manner in which it manages and measures the risk during the period.

The following are the undiscounted cash flows, with the exception of shares to be issued, of financial liabilities based on the earliest date on which the Group can be required to pay.

Group

As at 30 September 2011

Up to
1 month

1 month to

3 months

3 months to

1 year

1 year to
5 years

Over
5 years

Total


£'000

£'000

£'000

£'000

£'000

£'000

Financial liabilities






  

Amortised cost

213,615

57,727

17

26,233

-

297,592


213,615

57,727

17

26,233

-

297,592

As at 26 September 2010








Up to
1 month

1 month to

3 months

3 months to

1 year

1 year to
5 years

Over
5 years

Total


£'000

£'000

£'000

£'000

£'000

£'000

Financial liabilities






  

Amortised cost

307,754

54,045

106

15,870

-

377,775


307,754

54,045

106

15,870

-

377,775








Company







As at 30 September 2011








Up to
1 month

1 month to

3 months

3 months to

1 year

1 year to
5 years

Over
5 years

Total


£'000

£'000

£'000

£'000

£'000

£'000

Financial liabilities






  

Amortised cost

7,338

6,541

-

22,840

-

36,719


7,338

6,541

-

22,840

-

36,719

As at 26 September 2010








Up to
1 month

1 month to

3 months

3 months to

1 year

1 year to
5 years

Over
5 years

Total


£'000

£'000

£'000

£'000

£'000

£'000

Financial liabilities






  

Amortised cost

7,353

438

-

13,661

-

21,452


7,353

438

-

13,661

-

21,452

 

 

iv.    Operational risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes whether due to internal, people and systems risks or from external events, including legal and financial crime risk but does not include strategic, reputation and business risk.

The objective of the Group's approach to operational risk management is to both control and manage the risk in a cost effective manner consistent with the Group's risk appetite. Operational risk is monitored and reported via specific committees that report into the Risk Management Committee.

The Group uses the results of its annual risk management and control review process for risk management and Pillar 2 purposes.

Information disclosure under Pillar 3 of the Capital Requirements Directive will be published on the Group's website before 31 December 2011 at www.brewin.co.uk.

 



Annual Report Page 87

34. Notes to the cash flow statement

 

Group

53 weeks

to 30 September
2011
£'000

52 weeks

to 26 September
2010
£'000

Operating profit from continuing operations

21,368

29,700

(Loss)/profit for the period from discontinued operations (note 13)

(1,201)

1,326

Adjustments for:



Depreciation of property, plant and equipment

8,835

10,481

Amortisation of intangible assets - client relationships

10,486

6,349

Amortisation of intangible assets - software

3,446

1,808

Loss on disposal of property, plant and equipment

-

64

Intangible asset impairment

207

-

Retirement benefit obligation

(2,631)

(5,633)

Share-based payment expense

3,029

2,679

Translation adjustments

(83)

-

Unwind of discount of shares to be issued and deferred purchase consideration

317

24

Interest income

1,059

1,105

Interest expense

(732)

(453)

Operating cash flows before movements in working capital

44,100

47,450

Decrease in payables and trading investments

(91,996)

(106,395)

Decrease in receivables and trading investments

90,465

109,775

Cash generated by operating activities

42,569

50,830

Tax paid

(9,711)

(5,716)

Net cash inflow from operating activities

32,858

45,114


 

 

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

 



Annual Report Page 88

34. Notes to the cash flow statement (continued)

 

Company

53 weeks to
30 September
2011
£'000

52 weeks to
26 September
2010
£'000

Operating profit

16,624

9,903

Adjustments for:



Impairment of subsidiary

3,921

-

Unwind of discount of shares to be issued and deferred purchase consideration

11

-

Operating cash flows before movements in working capital

20,556

9,903

Decrease in payables and trading investments

(6,730)

(8,232)

Increase/(decrease) in payables

-

-

Cash generated by operating activities

13,826

1,671

Tax paid

-

-

Net cash inflow from operating activities

13,826

1,671




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



 



 

Annual Report Page 89

 

 

36. Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation. The captions in the primary statements of the Company include amounts attributable to subsidiaries. These amounts have been disclosed in aggregate in the relevant notes to the financial statements and in detail in the following table:


Amounts owed by related parties

Amounts owed to related parties


2011

2010

2011

2010


£'000

£'000

£'000

£'000

Bell Lawrie White & Co. Limited

-

-

2,436

2,436

Brewin Dolphin Limited

19,154

12,235

-

-

Tilman Brewin Dolphin Limited

-

-

-

-

Stocktrade Broking Limited

-

-

4,900

4,900


19,154

12,235

7,336

7,336

All amounts owed by related parties are interest free and repayable on demand.

The only effect of related party transactions on the profit and loss of the Company was in respect of dividends. The Company received dividends of £17,000,000 (2010: £10,000,000) from Brewin Dolphin Limited and £3,920,838 from Tilman Brewin Dolphin Limited.

The Group companies did not enter into any transactions with related parties who are not members of the Group during the period, save as disclosed elsewhere in these financial statements.

 



Annual Report Page 91

FUNDS


At 30 September

2011

£ billion

At  26 September

2010

£ billion

In Group's nominee or sponsored member

15.3

13.8

Stock not held in Group's nominee

0.3

0.2

Discretionary funds under management

15.6

14.0




In Group's nominee or sponsored member

7.2

7.7

Other funds where valuations are carried out but where the stock is not under the Group's control

1.2

1.5

Advisory funds under management

8.4

9.2

Managed funds

24.0

23.2




In Group's nominee or sponsored member

4.1

4.0

Stock not held in Group's nominee

0.3

0.3

Execution only stock

4.4

4.3

Total funds

28.4

27.5




Stock



In Group's nominee or sponsored member

26.6

25.5

Stock not held in Group's nominee

1.8

2.0


28.4

27.5

 

 

 

 

Angela Wright

Company Secretary

Brewin Dolphin Holdings PLC

23 December 2011

 

 


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