Regulatory Story
Go to market news section View chart   Print
Company Brewin Dolphin Holdings PLC
TIDM BRW
Headline

Extract of Annual Report & Accounts

Released 12:09 11-Jan-2013
Number 3750V12

RNS Number : 3750V
Brewin Dolphin Holdings PLC
11 January 2013
 



Brewin Dolphin Holdings PLC

(the "Company")

 

 

11 January 2013

 

Extracts from the Company's Annual Report & Accounts for the 52 week period to 30 September 2012

 

The following represents extracts from the Company's Annual Report & Accounts for the 52 week period to 30 September 2012.  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 £25.9 billion at 30 September 2012 (30 September 2011: £24.0 billion).

 

Discretionary funds £18.2 billion at 30 September 2012 (30 September 2011: £15.6 billion).

 

Total income £269.5 million (30 September 2011: £264.0 million) an increase of 2.1%.

 

Profit before tax £29.9 million (30 September 2011: £21.9 million) a 36.5% increase.



Adjusted* profit before tax £42.9 million (30 September 2011: £39.6 million) an 8.3% increase.

 

Earnings per share:


-

Basic earnings per share 9.1p (30 September 2011: 6.6p) an increase of 37.9%.


-

Diluted earnings per share 8.6p (30 September 2011: 6.3p) an increase of 36.5%.

 

Adjusted* earnings per share:


-

Basic earnings per share 13.2p (30 September 2011: 12.4p) an increase of 6.5%.


-

Diluted earnings per share 12.5p (30 September 2011: 11.7p) an increase of 6.8%.




The total dividend for the period is 7.15p per ordinary share (2011: 7.1p).

Proposed final dividend 3.6p per ordinary share (2011: 3.55p).

 

 

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



Annual Report Page 4 & 5

 


BUSINESS REVIEW: EXECUTIVE CHAIRMAN'S STATEMENT

I am pleased to report that your Group has been able to make further progress during yet another year which has presented many challenges both here in the UK and across the globe. To make progress in this environment continues to reassure us that the services we provide remain relevant and valuable to our clients.

 

Total income for the year rose by 2.1% to £269.5m and profit before tax (excluding redundancy costs, additional FSCS levy, acquisition of subsidiary costs and amortisation of client relationships) by 8.3% to £42.9m.

 

Funds under management at the year-end were £25.9bn up by 7.9% from a year ago. The most significant rise was the 16.7% growth of our discretionary funds to £18.2bn. During the same period the FTSE 100 rose by 12.0% and the APCIMS Private Investor Series Balanced Portfolio rose by 10.2%. Recurring income as a percentage of total revenue improved from 61% to 68% and operating margin from 15% to 16%.

 

We have made good progress in implementing our strategic review and the FSA's Retail Distribution Review (RDR), which we believe gives significant competitive advantages to larger businesses such as ours.

 

2012 has been a remarkable year for our country with the successful London Olympics and the celebrations of Her Majesty The Queen's Diamond Jubilee. Brewin Dolphin marked its 250th anniversary in 2012. This was celebrated in a number of ways, including our very successful garden, which won best in show at the Chelsea Flower Show. This anniversary has been a special opportunity to raise the profile of Brewin Dolphin throughout its market.

 

Our Branches

Providinghigh levels of personal serviceto our clients has been and will remain core to our approach. We retain our beliefin our model which provides a nationalpresence and, while I think it is unlikely that the absolute numberof our offices will expand significantly, we will continueto look for opportunities to add more depth to some of our branches. We have continued over the year to recruit teams andfinancial planners and have rationalised in some geographic areas where appropriate.

 

A year ago I reportedthat we had acquired Tilman Brewin Dolphin Ltd (formerly Tilman Asset Management Ltd) in Dublin.  I am pleased to reportthat this businessis fulfilling our expectations and I remain confidentthat it will continue to make a good contribution to your Group.

 

Dividend

The Board is proposing a final dividend of 3.6p per share, to be approved at the AGM in February 2013 and paid on 8 April 2013. This will bring the total dividend for the period to 7.15p per share (2011: 7.1p).

 

We have been able to maintain the dividend over the last four years, a period of great uncertainty in financial markets, which has also coincided with a requirement for considerable investment in IT and regulation. The Board, however, is very conscious of the need to return to a progressive dividend policy and has thus proposed a small increase in the dividend.

 

Regulation

Regulation continues to be a significant factor impacting us and all other businesses in the financial sector both in the UK and overseas. This year in particular has seen much work being done to ensure that your Group is fully ready to meet the demands of RDR which comes into force on 1 January 2013. We welcome the increased emphasis on professionalism and transparency that the RDR will require within our industry. The advent of the Financial Conduct Authority in the spring will bring further change.

 

Strategy

Our strategic review in 2011 established the objectives of broadening the services that we offer our clients, improving our standards and upgrading our systems. Implementation of this strategy is now well under way. The greater efficiencies that result from this programme will improve the return to our shareholders.

 

We have led the industry by being more transparent about charges. We believe strongly that transparency and competitive single pricing are important for the confidence of all private investors.

 

Board Changes

Robin Bayford is retiring as Group Finance Director on 31 December 2012. Robin has been with the Group for nearly a quarter of a century and has been Group Finance Director since the Group floated in 1994. His contribution to the Group has been invaluable. Robin has for many years been actively involved in our acquisition strategy, which has played such a significant part in the growth of Brewin Dolphin. He has been a valued and steady source of advice and counsel to me and to all his colleagues. We are truly grateful to him for his unique and considerable contribution to the fortunes of your Group.

 

I am delighted that we have recruited Andrew Westenberger who joined the Group in September and will be taking on the post of Group Finance Director on 1 January 2013. Andrew brings considerable and highly relevant experience to our business.

 

Since the year end Henry Algeo has assumed the role of Group Managing Director which will include responsibility for our Investment Management activities. Henry continues to be Chief Operating Officer, and in order to make sure that he is fully supported a number of other appointments have been made below Board level.

 

During the course of the year the Board was very pleased to be able to welcome David Nicol as a Non-Executive Director. David has broad and relevant experience including holding the position of Chief Operating Officer and Director of Morgan Stanley International PLC from 2004 to 2010. He is a Chartered Accountant and will be taking over the Chair of the Audit Committee from 1 January 2013. At that point Jock Worsley will relinquish that role, but I am happy to say that he has indicated a willingness to remain a Non-Executive Director until the AGM in 2014.

 

Since the year end David McCorkell (Head of Investment Management) has retired and resigned from his position as an Executive Director of the Group. David joined the Board in 2006 having been a successful and active practitioner. He had been with the Group and in particular Bell Lawrie since 1986. He played a very active role as a member of the Board including being heavily involved in the development of the strategy which your Group is now pursuing. May I, on your behalf, wish him every good fortune and thank him for all his hard work over the years.

 

Outlook

Many of the problems that caused concern in the financial services industry during the past year remain unresolved. This particularly relates to the Euro and more generally to prolonged economic weakness throughout the developed world. However, equity markets have remained remarkably resilient and there is some sign of improved trading volumes since the summer. Demand for our services remains firm and your Board is confident that our strategy will ensure a successful future for your Group.

 

Jamie Matheson

4 December 2012

 

Annual Report Page 6

 

Business Review: Investment Management

Investment Management and Financial Planning have performed well in a year of volatile markets and against a background of significant regulatory change.

 


2012

2011



 £'000

 £'000


Total income

 269,531

 264,013

2.1%

Salaries

(98,643)

 (90,676)

8.8%

Other operating costs

(94,196)

 (98,409)

-4.3%

Profit before profit share

 76,692

  74,928

2.4%

Profit share

(34,599)

 (35,780)

-3.3%

Operating profit*

 42,093

39,148

7.5%





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

 

 

Over the period, total income has grown by 2.1% to £269.5m from £264m.This result has to be seen in the context of a fall in commission income of 16%, a feature across the industry. The increase of higher quality fee income of £22m, equivalent to 20%, when overall funds under management increased by 7.9%, points to the underlying improvement of the quality of funds under management.

 

 

 

 

 

Income comprises:





2012

2011


£'000

£'000

Fee, interest and other recurring income

182,615

160,652

Commission

 86,916

 103,361

Total income

 269,531

 264,013




 

 

The split of income between Discretionary and Advisory portfolio management:







Total Income

Operating Profit

Total Income

Operating Profit


2012

2012

2011

2011


£ million

£ million

£ million

£ million

Discretionary Portfolio Management

 191.5

29.9

 180.5

 26.8

Advisory Portfolio Management

 78.0

12.1

83.5

 12.3


 269.5

42.0

 264.0

 39.1






 

 

The move away from Advisory Managed Services towards the Discretionary Service has continued, as evidenced by an increase in Discretionary funds of £2.6bn (16.7%) compared to a fall in Advisory funds of £0.7bn (8.3%).

 

Funds under Management (FUM)





Advisory

funds

 

Discretionary funds

Total managed funds


£ billion

£ billion

£ billion

Value of funds at 30 September 2011

 8.4

15.6

24.0

Inflows

 0.1

1.4

1.5

Outflows

(0.6)

 (0.5)

(1.1)

Transfers

(0.6)

0.1

(0.50*)

Market movement

 0.4

1.6

2.0

Value of funds at 30 September 2012

 7.7

18.2

25.9

*£0.5m transferred to Execution Only service




% change in funds year on year

-8.3%

16.7%

7.9%

 

During the period, the FTSE 100 index increased by 12.0% while the FTSE APCIMS Private Investor Series Balanced Index increased by 10.2%.

 

The Business

We have had a number of new teams join around the Group in Birmingham, Jersey, Bristol, London, Newcastle and Dublin. We have opened a new branch in Ipswich. Our Cheltenham office has moved to bigger and more suitable premises. Our Elgin office has relocated to Inverness and the Dumfries office to Penrith. The Bradford office is moving to join colleagues in Leeds.

 

Currently there is a total of 599 FSA registered CF30 Client Executives, Investment Managers and Financial Planners within the Group. The business would not function without the effort and dedication that they and their support staff put in and I would like to thank them all for their hard work in what has been another challenging year.

 

Last year's report mentioned the Retail Distribution Review (RDR) and I am pleased to be able to say that our business has worked extremely hard to ensure that all client executives achieve the required professional qualifications by the end of 2012. As a business we continue to believe that the RDR will bring good opportunities to Brewin Dolphin.

Annual Report Page 7

 

The new national charging structure, bringing consistency in charging across the Group, has been successfully rolled out to the majority of our Discretionary and Advisory Managed clients and work continues in the remaining areas of the business. As was mentioned in our report last year, work continues on the new systems project which will provide our Investment Managers with up to date technology to enable them to manage their clients' investments more efficiently. It will also allow our business support areas to implement more efficient and streamlined processes.

 

Financial Planning has become an integral part of Brewin's business and over the last 12 months recruitment in this area has grown considerably. It remains one of our main focuses to have all offices within the Group providing financial planning to their clients. New IT systems which are in the course of being developed will aid the integration of Financial Planning and Investment Management. We expect the rollout of our new systems to get underway in mid 2013 and to begin closing down many legacy systems towards the end of next year.

 

Our Research team continues to provide an ever wider coverage to assist our Investment Managers in meeting the needs of our clients. Over the past year, the coverage of the team has expanded to include further blue chip UK and European companies, an additional suite of collective investment vehicles and a new financial planning research and due diligence service to meet the needs of our financial planning clients. Along with the Asset Allocation Committee, the Research team continues to perform a pivotal and high performance role within our overall service offering.

 

Our Investment Managers and Financial Planners have continued to provide an excellent service to our clients during another year that has seen much strategic and regulatory change. We as a Group remain determined to continue to provide an outstanding bespoke Investment Management service for our clients.

 

 

 

Henry Algeo

Group Managing Director

4 December 2012

Annual Report Page 9

 

Business Review: Aims, Strategy And Objectives

The Brewin Dolphin Vision

To be the leading independently owned Investment Management and Financial Planning 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 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 10

 

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.

Income to business-facing 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 changes in 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, acquisition of subsidiary costs and amortisation of client relationships was as follows:






2012

2011



£'000

£'000


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

42,093

39,148










 

Detailed team performance was reasonable considering market conditions with a 7.5% increase.

 

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

 






2012

2011






Average team return on discretionary funds

1.12%

1.19%






Average team return on advisory funds

0.96%

0.91%






 

Average discretionary funds rose 11% year on year while discretionary income only rose by 6% resulting in a fall in return on funds.  Average advisory funds on the other hand fell by 11% while income only fell by 7%, reflecting the Group's efforts to concentrate on income generating clients and improving margins.

 

 



The movement can be reconciled in detail as follows:-

 

 


           Advisory

Discretionary

Combined


 %

 %

 %

Opening return on funds under management

 0.91

 1.19

1.08

Lower market volumes

(0.09)

(0.04)

(0.05)

Change in business mix

 0.08

(0.06)

-

Pricing structure

 0.06

 0.03

0.04

Closing return on funds under management

 0.96

 1.12

1.07

 

 

 

·              Income to business-facing fixed salary ratios were as follows:

 






2012

2011






Investment Management

              4.4

4.5










 

This shows front office salaries running in line with revenues

 

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

 






2012

2011






Total overheads and business support costs as a % of income

48.5%

49.2%














 

This reflects our first step in cost saving.

 

 

·              Staff turnover ratios

 

Front office staff losses were 1% in 2012 (2011: 10.4%) with gains of 1.2% (2011: 14.5%).

 

Targets

The primary target is to grow discretionary funds by 5% p.a. above market movement shown by the FTSE 100 index, the main UK share index. This year the target was missed by 0.3% (2011 exceeded by 20%).

 

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

1 April 2011. This year the increase was from 15% to 16%.          

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 independently owned 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 more highly valued by the market.  

 

 

Results for 2012 Financial Year

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






2012

2011

% Change





Average indices for the year




FTSE 100

 5,649

5,764

-2.0%

FTSE APCIMS Private Investor Series Balanced Portfolio

 2,941

2,930

0.4%






 £'000

 £'000


Total income

 269,531

 264,013

2.1%

Salaries

(98,643)

 (90,676)

8.8%

Other operating costs

(94,196)

 (98,409)

-4.3%

Adjusted profit before profit share¥

 76,692

74,928

2.4%

Profit share

(34,599)

 (35,780)

-3.3%

Adjusted operating profit ¥

 42,093

39,148

7.5%

Net finance income and other gains and losses

784

 494

58.7%

Adjusted profit before tax¥

 42,877

39,642

8.2%

Redundancy costs

 (570)

 (1,008)


Additional FSCS levy

 (553)

 (6,058)


Acquisition of subsidiary costs

-

(228)


Amortisation of client relationships

(11,871)

 (10,486)


Profit before tax

 29,883

21,862

36.7%

Taxation

(8,389)

 (6,884)


Profit after tax

 21,494

14,978

43.5%

Interim and proposed final dividend for the year

(17,074)

 (16,596)



 4,420

 (1,618)


 

 

 




Earnings per share




             Basic earnings per share

9.1p

6.6p

37.9%

             Diluted earnings per share

8.6p

6.3p

36.5%





Earnings per share ¥




             Basic earnings per share

13.2p

12.4p

6.5%

             Diluted earnings per share

12.5p

11.7p

6.8%






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

Annual Report Page 12

Business Review: Finance (continued)

 

Pension Fund

The actuarial loss on the pension fund this year was £5.1m (2011: gain £2.8m). Under IAS 19, large annual fluctuations can occur. 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 8 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 breakeven after measured cost reductions, other things being equal, at a FTSE 100 index level of 3,000 (2011: 2,500). The increase in the breakeven level is mainly due to a fall in trading volumes, which has resulted in a 14% fall in bargains; a significant fall against a background of flat markets.

 

Resources available to the Group

The Group's main resource is its staff: (see note 7 to the financial statements) located in 41 offices around the UK 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.

 

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 increased the total dividend for the period to 7.15p per ordinary share (2011: 7.1p).

 

Cash Flow and Capital Expenditure

2012 saw a net cash outflow of £13.4m (2011: outflow £1.8m). There was a £35m (2011: £32.9m) inflow of funds from operating activities. £6.9m (2011: £7.9m) of cash was spent on acquiring teams of Investment Managers and their client relationships, and £23.8m (2011: £8.3m) on computer software and other, mainly computer related, fixed assets. £16.8m of this spend relates to the two year project to replace the Group's main computer systems which it is anticipated will significantly increase the Group's margins.

 

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 £1.9m (2011: £10.6m), against this the issue of shares in the year led to a cash inflow of £0.7m (2011: £2.4m).

 

Dividends paid in the period came to £16.9m (2011: £16.3m).

 

The project to replace the Group's computer system is anticipated to cost a further £17m in 2013. There is only one expected additional major expense to be incurred, resulting from the forthcoming office change in Edinburgh which will cost £4m. Against this, amortisation and depreciation is expected to be £23m enabling the Group to maintain its cash.

 

Capital Structure, Treasury Policy, Liquidity and Capital Requirement

At 30 September 2012 the Group had net assets of £162.7m (2011: £154.8m). Net assets excluding intangible assets and shares to be issued of £61m (2011: £68m) broadly represent the Group's capital for regulatory purposes. These net assets were largely represented by net cash and cash equivalents of £72m (2011: £85m), including £24m (2011: £21m) of client settlement money. The Group has an agreed overdraft facility of £15m (2011: £15m). At the period end the Group had a surplus of net assets for regulatory capital adequacy purposes of £11.4m (2011: £24.1m).

 

Our policy is to hold 90% of our clients' and Groups' 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 Mellon.

 

Annual Report Page 13

 

Business Review: Finance (continued)

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.

 

Risks and Uncertainties

Risks to the business are reported under the Risk Committee Report.

 

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 breakeven after measured cost reductions, other things being equal, at a FTSE 100 index level of 3,000 (2011: 2,500). Cash balances ranged between £36m and £90m over the year.

 

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, at least until the end of next year. Accordingly, the Directors continue to adopt the going concern basis for the preparation of the financial statements.

 

 

Robin Bayford

Finance Director

4 December 2012

 

Business Review: Cautionary Statement

This review has been prepared solely to provideadditional information to shareholders to assess the Group's strategies and the potential for these strategies to succeed. It should not berelied 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 availableto them up tothe time of the approvalof these reportsand should be treated with caution due to inherentuncertainties associated with such statements. The Directors, in preparing this Business Review have complied with s417 of the Companies Act 2006.

 



Annual Report Page 24

 

 

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 those 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.

 

The framework of the Risk Committees can be found on page 26.

 

Day-to-day review and monitoring of risks has been delegated to the Risk and Controls Committee ("RCC") and Business Support  Risk and 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 and Risk Department and Internal Audit also carry out regular reviews. Full details of the principal risks identified by the Board are set out in the Risk Committee Report on page 26. Business Continuity Management is embedded within the business and is reviewed and tested regularly. The Board recognises the potential operational and financial losses associated with a service interruption and the importance of maintaining viable business resilience strategies.

 

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 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 and 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. Both the Audit Committee and the Board Risk Committee assist 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 26

 

RISK COMMITTEE REPORT

Risks and Uncertainties

The principal risks to the business are assessed and reviewed by the Risk Management Committee. They are subsequently submitted to the Board Risk Committee for approval. The principal risks are formally reviewed by the Board twice a year, following recommendation from the Board Risk Committee.

 

The Group's risk management policies and procedures are discussed in both the Corporate Governance Statement and the financial risks and risk management form part of note 26 to the financial statements.

 

The inherent risk to our business which has a direct impact on revenue is adverse movements in the market in the short term.

 

 

Annual Report Page 27

 

At the Board meeting in October 2012 the following principal financial and non-financial risks were identified or reconfirmed:

 

Risk Type

Risk

Key mitigants or controls

Earnings Risk

Loss of client facing staff

•  Firm wide staff share ownership and profit share

•  Contracts of employment with 6 months garden leave for all client facing staff

•  Remuneration structure and deferred profit share lock in staff

Legal and Regulatory Risk

Changing regulatory environment and regulatory breaches

•  Strong and proactive Regulation and Risk function and Internal Audit function


Poor advice/ portfolio performance (including mis-selling)

•  Good in-house research

•  Business Standards Team reviews

•  Monitoring by the Regulation and Risk Department

•  Strong training and appraisal programme

•  Management Information monitoring

•  Treating Customers Fairly embedded into the ethos of the firm

Operational and IT Risk

Business Continuity

•  Large branch network with back-up systems in place

•  Back-up computer site

•  Main server located outside of London


Electronic dealing error (e.g. Fat Fingers)

•  Close management supervision

•  Integrated system error warnings.

•  High value trade monitoring

•  Multiple validation on equity trading platform

•  E-ticket validation controls


Project control

•  Regular meetings by project overview committee consisting of Senior Managers and Board Executives

•  Change Management governance for projects and programmes.


Significant Strategic Change

•  BDH Board approve new business initiatives after appropriate reviews and due diligence

•  Risk Appetite Statement

 

 

 

 

 

Annual Report Page 40

 

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

4 December 2012


 

Annual Report Page 41

 

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 52 week period ended 30 September 2012 which comprise the 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, the related notes 1 to 36, and pages 36 to 39 of the Director's Remuneration Report. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting 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 financialstatements

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 2012 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 opinionin 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 the 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 (Seniorstatutory auditor)

for and on behalf of Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

4 December 2012



Annual Report Page 42

 

CONSOLIDATED INCOME STATEMENT

52 week period ended 30 September 2012

 



 52 weeks to

30 September

2012

53 weeks to

30 September

2011


Note

 £'000

£'000

Continuing operations




Revenue

5

253,112

 248,375

Other operating income

3i

 16,419

 15,638

Total income

5 & 6

269,531

 264,013





Staff costs

7

 (133,242)

(126,456)

Redundancy costs

7

 (570)

(1,008)

Additional FSCS levy


 (553)

(6,058)

Acquisition of subsidiary costs


-

 (228)

Amortisation of intangible assets - client relationships

16

(11,871)

(10,486)

Other operating costs


(94,196)

(98,409)

Operating expenses


 (240,432)

(242,645)





Operating profit


 29,099

 21,368

Finance income

9

 1,661

 1,253

Other gains and losses

10

 (74)

(27)

Finance costs

9

 (803)

 (732)

Profit before tax

6 & 8

 29,883

 21,862

Tax

11

(8,389)

(6,884)

Profit for the period from continuing operations

 21,494

 14,978





Discontinued operations




Loss for the period from discontinued operations

13

(3,092)

 (877)

Profit for the period


 18,402

 14,101





Attributable to:




Equity shareholders of the parent


 18,402

 14,101



 18,402

 14,101





Earnings per share




From continuing operations




Basic

15

9.1p

6.6p

Diluted

15

8.6p

6.3p

From continuing and discontinued operations




Basic

15

7.8p

6.2p

Diluted

15

7.4p

5.9p



Annual Report Page 43

 

Consolidated Statement of Comprehensive Income

 

52 week period ended 30 September 2012

 



 52 weeks to

30 September 2012

53 weeks to

30 September 2011



 £'000

£'000

Profit for the period


18,402

14,101

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


167

56

Exchange differences on translation of foreign operations


(196)

(83)

Actuarial (loss)/profit on defined benefit pension scheme


(5,063)

2,766

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


1,164

(719)

Other comprehensive (expense)/income for the period

(3,928)

2,020

Total comprehensive income for the period

 14,474

16,121





Attributable to:




Equity shareholders of the parent


14,474

16,121



14,474

16,121



Annual Report Page 44

 

CONSOLIDATED balance sheet

As at 30 September 2012



 As at

30 September

 2012

As at

30 September

2011


Note

 £'000

£'000

ASSETS




Non-current assets




Intangible assets

16

120,930

115,805

Property, plant and equipment

17

15,951

15,869

Available-for-sale investments

19

6,013

6,087

Other receivables

20

2,215

2,377

Deferred tax asset

21

860

559

Total non-current assets


145,969

140,697

Current assets




Trading investments

19

759

744

Trade and other receivables

20

227,671

242,492

Cash and cash equivalents

22

71,827

85,702

Total current assets


300,257

328,938

Total assets


446,226

469,635





LIABILITIES




Current liabilities




Bank overdrafts

23

243

672

Trade and other payables

24

248,555

267,819

Current tax liabilities


2,249

1,390

Provisions

33

1,887

5,931

Shares to be issued including premium

25

5,858

6,541

Total current liabilities


258,792

282,353

Net current assets


41,465

46,585





Non-current liabilities




Retirement benefit obligation

27

9,754

7,101

Deferred purchase consideration

25

1,525

2,556

Shares to be issued including premium

25

13,418

22,840

Total non-current liabilities


24,697

32,497

Total liabilities


283,489

314,850

Net assets


162,737

154,785





EQUITY




Called up share capital

28

2,469

2,405

Share premium account

28

124,271

116,028

Own shares

29

(12,569)

(10,686)

Revaluation reserve


4,285

4,118

Merger reserve


22,950

22,950

Profit and loss account


21,331

19,970

Equity attributable to equity holders of the parent


162,737

154,785

 

Approved by the Board of Directors and authorised for issue on 4 December 2012

Signed on its behalf by

 

Jamie Matheson

Robin Bayford

Executive Chairman

Finance Director



Annual Report Page 45

 

CONSOLIDATED statement of changes in equity

52 week period ended 30 September 2012

 


 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









 Balance at 27 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

-

 -

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

 Profit for the period

 -

-

 -

 -

 18,402

18,402

 Other comprehensive income for the period







    Deferred and current tax on other comprehensive income

 -

-

 167

 -

 1,164

1,331

    Actuarial loss on defined benefit pension scheme

 -

-

 -

 -

(5,063)

 (5,063)

    Exchange differences on translation of foreign operations

 -

-

-

 -

 -

 (196)

 (196)

 Total comprehensive income for the period

 -

-

 167

 -

 14,307

14,474

 Dividends

 -

-

 -

 -

(16,887)

 (16,887)

 Issue of shares

64

-

 -

 -

-

8,307

 Own shares acquired in the period

 -

(1,891)

 -

 -

-

 (1,891)

 Own shares disposed of on exercise of options

 -

 8

 -

 -

(8)

 -

 Share-based payments

 -

-

 -

 -

 3,852

3,852

 Current tax charge on share-based payments

 -

-

 -

 -

193

193

 Deferred tax credit on share-based payments

 -

-

 -

 -

(96)

 (96)

 Balance at 30 September 2012

2,469

 124,271

(12,569)

4,285

22,950

 21,331

162,737








 



Annual Report Page 46

 

COMPANY BALANCE SHEET

As at 30 September 2012

 



As at

30 September

2012

As at

30 September

2011


Note

£'000

£'000





ASSETS




Non-current assets




Investment in subsidiaries

18

186,194

168,953

Other receivables

20

420

130

Total non-current assets


186,614

169,083

Current assets




Trade and other receivables

20

226

19,171

Cash and cash equivalents

22

829

597

Total current assets


1,055

19,768

Total assets


187,669

188,851





LIABILITIES




Current liabilities




Trade and other payables

24

12,611

13,401

Shares to be issued including premium

25

5,858

6,541

Total current liabilities


18,469

19,942

Net current liabilities


(17,414)

(174)





Non-current liabilities




Shares to be issued including premium

25

13,418

22,840

Total non-current liabilities


13,418

22,840

Total liabilities


31,887

42,782

Net assets


155,782

146,069





EQUITY




Called up share capital

28

2,469

2,405

Share premium account

28

124,271

116,028

Own shares

29

(12,569)

(10,686)

Merger reserve


23,235

23,235

Profit and loss account


18,376

15,087

Equity attributable to equity holders


155,782

146,069





 

Approved by the Board of Directors and authorised for issue on 4 December 2012

Signed on its behalf by

 

Jamie Matheson

Robin Bayford

Executive Chairman

Finance Director

 

 



Annual Report Page 47

 

company statement of changes in equity

52 week period ended 30 September 2012

 










 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 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


 Profit for the period

 -

-

-

 -

16,332

 16,332


 Total comprehensive income for the period

 -

-

-

 -

16,332

 16,332


 Dividends

 -

-

-

 -

 (16,887)

(16,887)


 Issue of shares

64

 8,243

-

 -

 -

 8,307


 Own shares acquired in the period

 -

-

(1,891)

 -

 -

(1,891)


 Own shares disposed of on exercise of options

 -

-

 8

 -

 (8)

-


 Share-based payments

 -

-

-

 -

3,852

 3,852


 Balance at 30 September 2012

2,469

 124,271

(12,569)

23,235

18,376

 155,782










 

 



Annual Report Page 48

 

consolidated cash flow statement

52 week period ended 30 September 2012

 



 52 weeks to 30 September 2012

53 weeks to 30 September 2011


Note

 £'000

 £'000

 Net cash inflow from operating activities

34

34,979

32,858





 Cash flows from investing activities




 Purchase of intangible assets - client relationships


(6,878)

(7,946)

 Purchase of intangible assets - software


(16,356)

(3,147)

 Purchases of property, plant and equipment

17

(7,412)

(5,171)

 Acquisition of subsidiary

35

-

5,802

 Dividend received from available-for-sale investments

9

278

194

 Net cash used in investing activities


(30,368)

(10,268)





 Cash flows from financing activities




 Dividends paid to equity shareholders

14

(16,887)

(16,286)

 Purchase of own shares

29

(1,891)

(10,585)

 Proceeds on issue of shares


721

2,436

 Net cash used in financing activities


(18,057)

(24,435)





 Net decrease in cash and cash equivalents


(13,446)

(1,845)





 Cash and cash equivalents at the start of period


85,030

86,875





 Cash and cash equivalents at the end of period


71,584

85,030









Firm's cash


48,003

64,469

Firm's overdraft


(243)

(672)

Firm's net cash


47,760

63,797

Client settlement cash


23,824

21,233

Net cash and cash equivalents


71,584

85,030





Cash and cash equivalents shown in current assets


71,827

85,702

Bank overdrafts


(243)

(672)

Net cash and cash equivalents


71,584

85,030









 

 

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

 



Annual Report Page 49

company cash flow statement

52 week period ended 30 September 2012

 


 52 weeks to

30 September 2012

53 weeks to

30 September 2011


 Note

 £'000

£'000

 Net cash inflow from operating activities

34

 18,020

 13,826





 Cash flows from investing activities




 Investment in subsidiary company


(1,622)

-

 Net cash used in investing activities


(1,622)

-





 Cash flows from financing activities




 Dividends paid to equity shareholders


(16,887)

(16,286)

 Proceeds on issue of shares


721

 2,436

 Net cash used in financing activities


(16,166)

(13,850)





 Net increase in cash and cash equivalents 


232

(24)





 Cash and cash equivalents at the start of period


597

621

 Cash and cash equivalents at the end of period


829

597





 



Annual Report Page 50

 

Notes to the Financial Statements

1.   General information

Brewin Dolphin Holdings PLC is a company incorporated in the United Kingdom under the Companies Act. The address of the registered office is given on page 3. 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.


Amendments to IFRS 1 'First-time Adoption of Financial Statements - Sever Hyperinflation and Removal of Fixed Dates for First-time adopters'


- Amendments to IFRS 7 'Financial Instruments: Disclosures - Transfer of Financial Assets'

- Amendments to IAS 12 'Income taxes - Deferred Tax: Recovery of Underlying Assets'


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


- Amendments to IFRS 1 'Repeated application of IFRS 1' and 'Borrowing Costs'

- Amendment to IAS 1 'Clarification of the requirements for comparative information'

- 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 27 (revised 2011) 'Separate financial statements'

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

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


New standards, amendments and interpretations issued but not effective and have been endorsed by the EU are as follows:


- IAS 19 (revised 2011) 'Employee benefits'

- 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) will impact the measurement of the various components representing movements in the defined benefit pension obligation and associated disclosures, but not the Group's total obligation. The amendments to IAS 19 (revised 2011), if applied for the year ended 30 September 2012, would increase profit after tax by approximately £293,000 and increase actuarial losses in other comprehensive income by the same amount. There would be no effect on total equity.



3.   Significant accounting policies

a.   Basis of accounting

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


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.


c.    Basis of consolidation

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

 

Annual Report Page 51


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 pound sterling, which is the functional currency of the Company and the presentation currency for the consolidated financial statements.



Annual Report Page 52

 

Notes to the Financial Statements (continued)

3.     Significant accounting policies (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 and broking retainers, other fees plus other income, excluding VAT, receivable in respect of the period.


Investment management fees, renewal commissions and corporate advisory and 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.


Revenue for the Corporate and Advisory business which has been discontinued is included in the analysis for discontinued operations.


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 recognised as a liability and are also spread on a straight-line basis over the lease term.


l.    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. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 30.


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 53


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.


Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the group intends to settle its current tax assets and liabilities on a net basis.


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.


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.


Annual Report Page 54

 

Notes to the Financial Statements (continued)

3.    Significant accounting policies (continued)

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.


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 on remeasurement 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 AFS 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.

 

Annual Report Page 55

 

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.


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.


Annual Report Page 56

 

Notes to the Financial Statements (continued)

3.    Significant accounting policies (continued)

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.


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.


4.   Critical accounting judgements and key sources of estimation uncertainty

The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities and profits and losses. Evaluation of the accounting judgements takes into account historical experience as well as future expectations.


Retirement benefit obligation

In conjunction with the Group's Actuary, the Group makes estimates about a range of long term trends, including life expectancy. These estimates are governed by the rules set out in IAS 19 Employee Benefits which inevitably lead to significant swings in the pension deficit from year to year, as long term interest rates change and short term market movements affect asset valuations. The detailed assumptions are set out in note 27.


Shares to be issued including premium and deferred purchase consideration

The Group includes within these headings its best estimate discounted to present value of the ultimate sum which will be paid for businesses or client relationships under deferred purchase agreements. This is inevitably judgemental and depends on events which transpire over periods up to five years. Market conditions are an important factor.


Impairment of goodwill and client relationships

For the purposes of impairment testing, the Group values goodwill and client relationships based on the valuation of individual units making up the relevant intangible asset. For an investment management business this is normally 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. A price earnings basis is used where more appropriate.


Valuation of investment in Euroclear plc

The fair valuation of the Group's investment in Euroclear plc is takes into account a number of different valuation methods including dividend yield.



Annual Report Page 57

 


6.

Segmental information

For management purposes since the 2 February 2012, the Group has had one business stream: Investment Management. Prior to the 2 February 2012 it had two business streams: Investment Management and Corporate Advisory and Broking which has been discontinued (see note 9). These form the reportable segments of the Group for the period.


The Group's operations are carried out in the United Kingdom, Channel Islands and the Republic of Ireland. Income generated in the Republic of Ireland 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 2012









 

Continuing operations

 Discontinued operations



Discretionary Portfolio Management

 Advisory Portfolio Management

 Total Investment Management

 Corporate Advisory & Broking

 Group


 £'000

 £'000

 £'000

 £'000

 £'000







 Total income

191,460

78,071

269,531

1,235

270,766







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

29,901

12,192

42,093

(2,317)

39,776

 Additional FSCS levy



(553)

-

(553)

 Redundancy costs



(570)

(47)

(617)

 Amortisation of client relationships



(11,871)

-

(11,871)

 Operating profit/(loss)



29,099

(2,364)

26,735

 Finance income (net)



858

-

858

 Other gains and losses



(74)

-

(74)

 Costs of separation



-

(1,143)

(1,143)

 Profit/(loss) before tax



29,883

(3,507)

26,376













 Other Information






 Capital expenditure



23,768

-

23,768

 Depreciation



7,174

40

7,214

 Amortisation of intangible asset - software



3,563

-

3,563

 Share-based payments



3,852

-

3,852







 Segment assets excluding current tax assets



446,226

-

446,226

 Segment liabilities excluding current tax liabilities


256,543

-

 256,543







Annual Report Page 58

 

Notes to the Financial Statements (continued)

53 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, 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)

9. Finance income and finance costs


2012

2011

 


52 weeks

53 weeks

 


 £'000

 £'000

 

Finance income



 

Dividends from available-for-sale investments

278

194

 

Interest on bank deposits

1,383

1,059

 


1,661

1,253

 




 

Finance costs



 

Finance cost of deferred consideration

192

317

 

Interest expense on defined pension obligation

581

369

 

Interest on bank overdrafts

30

46

 


803

732

 




 

10. Other gains and losses

 



 

 


2012

2011

 


52 weeks

53 weeks

 


£'000

£'000

 




 

Impairment loss recognised on available-for-sale equity investments

74

27

 

  The impairment loss relates to the listed investment in PLUS Markets Group PLC

 

 

11.

Taxation

 


Continuing Operations

Discontinued Operations

Total


2012

2011

2012

2011

2012

2011


52 weeks

53 weeks

52 weeks

53 weeks

52 weeks

53 weeks


 £'000

 £'000

 £'000

 £'000

 £'000

 £'000

United Kingdom







Current tax

6,650

6,246

(617)

(122)

6,033

6,124

Prior year

554

422

-

-

554

422

Overseas tax





-

-

Current tax

261

181

-

-

261

181

Prior year

-

-

-

-

-

-


7,465

6,849

(617)

(122)

6,848

6,727

United Kingdom deferred tax







Current year

1,140

439

-

(202)

1,140

237

Prior year

(216)

(404)

202

-

(14)

(404)


8,389

6,884

(415)

(324)

7,974

6,560








United Kingdom corporation tax is calculated at 25% (2011: 27%) of the estimated assessable taxable profit for the period. The Finance Act 2012 received Royal Assent on 19 July 2011 and reduced the corporation tax rate to 24% (26%) from 1 April 2012.








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








 

 



Annual Report Page 61

 

11.

Taxation (continued)

 








 

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

 

 

2012

2011

 

 

52 weeks

53 weeks

 

 

 £'000

 £'000

 

 

Profit before tax on continuing operations

29,883

21,862

 

 

Tax at the UK corporation tax rate of 25% (2011: 27%)

7,471

5,903

 

 



 

 

Expenses that are not deductible in determining taxable profit

755

1,012

 

 

Prior year tax

141

18

 

 

Lower rates in subsidiaries

(105)

(35)

 

 

Exempt dividend income

(70)

(52)

 

 

Change in tax rate on deferred tax

197

38

 

 

Tax expense for the period

8,389

6,884

 

 

Effective tax rate for the year

28%

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 £167,000 (2011: £56,000) has been credited to other comprehensive income, this is attributable to the reduction in the Corporation Tax rate and deferred tax relating to the actuarial gain/(loss) in the defined benefit pension scheme amounting to £1,164,000 (2011: £719,000 debited) has been credited to other comprehensive income. Deferred tax on share-based payments of £96,000 (2011: £75,000 debited) has been credited to other comprehensive income.

 

 

 

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. The disposal was completed on 1 February 2012. At this date, the Group received a 14% preferred interest in N+1 Brewin LLP.

 

In July 2012, the N+1 Brewin merged with Singer Capital Markets Limited and as a result the Group's holding is now 5.6% of N+1 Singer Limited. This holding has been valued at £nil at the period end.

 

The Corporate Advisory and Broking Division represented 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:

 

 


2012

2011


52 weeks

53 weeks


 £'000

 £'000




Revenue

1,235

10,346

Expenses

(3,599)

(9,154)

Operating (loss)/profit

(2,364)

1,192

Costs of separation

(1,143)

(2,393)

Loss before tax

(3,507)

(1,201)

Attributable tax

415

324

Loss attributable to discontinued operations (attributable to the owners of the Company)

(3,092)

(877)




 

During the year the division contributed a net cash outflow of £3.5m (2011: £1.1m inflow) to the Group's net operating cash flows.

 

 

Annual Report Page 62

 

Notes to the Financial Statements (continued)

 

14. Dividends

 


2012

2011


52 weeks

53 weeks


£'000

£'000

Amounts recognised as distributions to equity shareholders in the period:





2010/2011 Final dividend paid 10 April 2012, 3.55p per share (2011: 3.55p per share)

8,412

7,989

2011/2012 Interim dividend paid 21 September 2012, 3.55p per share (2011: 3.55p per share)

8,475

8,297


16,887

16,286




Proposed final dividend for the 52 weeks ended 30 September 2012 of 3.6p (2011: 3.55p) per share based on shares in issue at 30 November 2012 (30 November 2011)

8,599

8,299




The proposed final dividend for the 52 week period ended 30 September 2012 of 3.6p 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 8,117,309 number of ordinary shares representing 3.26% 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:


2012

2011

Number of shares




'000

'000

Basic



Weighted average number of shares in issue in the period

236,921

226,796

Diluted



Weighted average number of options outstanding for the period

9,764

4,275

Estimated weighted average number of shares earned under deferred consideration arrangements

4,606

9,464

Diluted weighted average number of options and shares for the period

251,291

240,535

 

 

 

 

 

 

Earnings attributable to ordinary shareholders




Continuing operations

2012

2011



£'000

£'000






Profit for the period from continuing operations

21,494

14,978


Redundancy costs

570

1,008


 less tax

(143)

(272)


Additional FSCS levy

553

6,058


 less tax

(138)

(1,636)


Acquisition of subsidiary

-

228


Amortisation of intangible assets - client relationships

11,871

10,486


 less tax

(2,968)

(2,831)


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

31,239

28,019






 



Annual Report Page 63

 

15. Earnings per share (continued)

 

 


2012

2011



£'000

 

£'000

 


Profit for the period from continuing operations

21,494

14,978


Finance costs of deferred consideration (Note a)

115

237


 less tax

(29)

(64)


Adjusted fully diluted profit for the period and attributable earnings

21,580

15,151


Redundancy costs

570

1,008


 less tax

(143)

(272)


Additional FSCS levy

553

6,058


 less tax

(138)

(1,636)


Acquisition of subsidiary

-

228


Amortisation of intangible assets - client relationships

11,871

10,486


 less tax

(2,968)

(2,831)


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

31,325

28,192






From continuing operations




Basic

9.1p

6.6p


Diluted

8.6p

6.3p






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


Basic

13.2p

12.4p


Diluted

12.5p

11.7p






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


 

Earnings attributable to ordinary shareholders

2012

2011


Continuing and discontinued operations





£'000

£'000


Profit for the period

18,402

14,101


Redundancy costs

617

1,020


 less tax

(154)

(275)


Additional FSCS levy

553

6,058


 less tax

(138)

(1,636)


Acquisition of subsidiary

-

228


Amortisation of intangible assets - client relationships

11,871

10,486


 less tax

(2,968)

(2,831)


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

28,183

27,151


 

 

 

 

 

Annual Report Page 64

 

Notes to the Financial Statements (continued)

15. Earnings per share (continued)                                                                      2012                    2011 


£'000

£'000

Profit for the period

18,402

14,101

Finance costs of deferred consideration (Note a above)

115

236

 less tax

(29)

(64)

Adjusted fully diluted profit for the period and attributable earnings

18,488

14,273

Redundancy costs

617

1,020

 less tax

(154)

(275)

Additional FSCS levy

553

6,058

 less tax

(138)

(1,636)

Acquisition of subsidiary

-

228

Amortisation of intangible assets - client relationships

11,871

10,486

 less tax

(2,968)

(2,831)

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

28,269

27,323

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

7.8p

6.2p

Diluted

7.4p

5.9p

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

Basic

11.9p

12.0p

Diluted

11.2p

11.4p

From discontinued operations



 

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

 

 

Basic

(1.3p)

(0.4p)

 

Diluted

(1.2p)

(0.4p)

 

 

 

 



Annual Report Page 73

 

26. Financial instruments and risk management

 

Overview

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

 

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 policyand processes for measuring and managing risk and the Group's management of capital. Furtherquantitative disclosures are included throughout these consolidated financial statements.

 

The Board of Directors have overall responsibility for setting the Group's risk appetite and for establishing and overseeing the risk management framework to recognisethe risks faced by the Group. The Directors established a Board Risk Committeein October 2011 (see Risk Committee Report).The Board is advised by the Board Risk Committee in its considerations and processesin the areas such as: the risk appetite and business activities that expose the business to material risks. Authority flows from the Board Risk Committee and then to the Risk Management Committee("RMC") and from there to specific committees which are integral to the management of risk. The RMC identifies and reviews the principal risks of the Group and considersthe areas of market risk, credit risk, liquidity risk and operational risk.

 

The Board Risk Committee has delegated responsibility to oversee how management monitors compliance with the Group's risk management policies and procedures and reviews the adequacyof the risk management frameworkin relation to the risks faced by the Group. The Board Risk Committeereviews the assessment of controls that are in place to mitigate risk and the Risk Management and Principal Risks documentbi-annually which is prepared by the RMC.

 

Annual Report Page 74

 

Notes to the Financial Statements (continued)

26. Financial instruments and risk management (continued)

Brewin Dolphin's risk management activities involve the measurement, evaluation, acceptance and management of some degree of risk, or combination of risks. The Board has to date set a low risk appetite whilst recognising the inevitable risk of being exposed to adverse movements in the stock market. In light of the changes that the Group is currently undertaking the Board Risk Committee, reconsidered the risk appetite which was subsequently approved by the Board in October 2012. Brewin Dolphin is not willing to accept risk which has not been subject to evaluation by the appropriate risk governance forums.

 

When the BDH Board considers it necessary and under a clearly defined mandate, Brewin Dolphin will accept a modest risk appetite for the purposes of moving the business to a position of greater security in respect of regulatory, finance, operational or other risks and to undertake changes in the best interests of its clients. The BDH Board recognise that under such circumstances a modest risk appetite may result in increased risk and so the BDH Board will only undertake such steps if they are clearly judged to be in the best interests of the Group's stakeholders.

 

Capital risk management

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

 

The Group has an Internal Capital AdequacyAssessment Process ("ICAAP"), as required by the Financial Services Authority ("FSA")for establishing the amountof 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 DolphinLimited regulatedby the Central Bank of Ireland.

 

The ICAAP draws on the Group's Principal Risk Review which is based on bi-annualrisk assessments. It gives consideration to both current and projected financial and capital positions. The ICAAP is updatedthroughout the year to take accountof the bi-annual risk assessments and for any significant changes to businessplans 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 adequacyis monitored daily by management. The Group uses the simplified approach to Credit Risk to calculate Pillar1 requirements.The Group observedthe FSA's regulatory requirementsthroughout the period.

 

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

 


 30 September 2012

 30 September 2011


 £'000

 £'000

Tier 1 capital resources



Ordinary share capital

 2,469

 2,405

Share premium account

 124,271

 116,028

Own shares held

(12,569)

(10,686)

Retained earnings

 21,331

 19,970

Merger reserve

 22,950

 22,950

Shares to be issued

 19,276

 29,381


 177,728

 180,048

Deduction - Intangible assets

(120,930)

(115,805)


 56,798

 64,243




Tier 2 capital resources



Revaluation reserve

 4,285

 4,118

Deductions

-

-


 4,285

 4,118




Tier 1 plus tier 2 capital resources

 61,083

 68,361

Deduction - Material holdings

-

-

Total capital before deductions

 61,083

 68,361

Deductions from total capital

(452)

(284)

Total capital resources after deductions

 60,631

 68,077




 

 

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

 

Significant accounting policies

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

 



Annual Report Page 75

 

26. Financial instruments and risk management (continued)

 

Categories of financial instruments

 

Group






Carrying value



2012

2011



£'000

£'000

Financial assets




Fair value through profit and loss - held for trading


 759

 744

Loans and receivables (including cash and trade receivables)


 292,939

 321,797

Available-for-sale financial assets


6,013

6,087



 299,711

 328,628





Financial liabilities




Amortised cost


 267,382

 297,592



 267,382

 297,592





 

 

 

Company






Carrying value



2012

2011



£'000

£'000

Financial assets




Loans and receivables (including cash and trade receivables)


1,475

19,898



1,475

19,898





Financial liabilities








Amortised cost


26,614

36,719



26,614

36,719





 

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 fair value measurements are those derived from quoted prices (unadjusted) in active   market for identical assets or liabilities;

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

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



 







Level 1

Level 2

Level 3

Total


£'000

£'000

£'000

£'000

Held for trading





Quoted equities

759

 -

 -

759

Available-for-sale financial assets





Quoted equities

 13

 -

 -

 13

Unquoted equities

-

 -

6,000

 6,000

Total

772

 -

6,000

 6,772






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

 

Annual Report Page 76

 

Notes to the Financial Statements (continued)

 

Reconciliation of Level 3 fair value measurement of financialassets:

Available-for-sale

 

 


Unquoted equities



£'000


Balance at 30 September 2011

 6,000


Total gains or losses:



in other comprehensive income

-


Balance at 30 September 2012

 6,000





 

The table aboveonly includes financialassets. There were no financialliabilities subsequently measured at fair value on the Level 3 fair value measurement basis.

 

I.  Marketrisk

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 whilstaccepting 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 matchedin the market.

 

The Group deals in foreign currencies on a matchedbasis on behalf of clients,limiting foreign exchange exposure. The total net foreign exchange exposure at the year end was a debtor of £421,000 (2011: £13,000 creditor).

 

At the period end Tilman Brewin Dolphin Limited had net assets of £4.1m (2011: £3.4m) denominated in theirlocal currency (Euros). TheGroup does not hold any derivatives (2011: none).

 

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

 

Equity price risk

The Group is exposedto equity risk arising from its available-for-saleinvestments and those held-for-trading. Equity investments designated as available-for-sale are held for strategic purposesrather than tradingpurposes 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 reportingdate.

 

If equity prices had been 5% higher/lower:

 

• profit for the 52 week period ended 30 September 2012 would have been £1,000 higher/lower (2011: £35,000 higher/lower) due to changes in the value of held-for-trading investments and available-for-saleinvestments; and

 

• other equity reserves as at 30 September 2012 would increase/decrease by £301,000/£300,000 (2011: increase/decrease by £304,000/£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 becausethe interest rate paid to its clientson their depositsis linked to the base rate. The Group holds client deposits on demand (variableinterest 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 (2011: £328,000).

 

Annual Report Page 77

 

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 resultingin financial loss to the Group. The Group's exposure to credit risk arisesprincipally from the settlement of client and market transactions and cash deposited at banks. The Group uses the simplified approach to calculate credit risk as definedby the FSA. The aim of the Group's approach to credit risk management is to minimisethe 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 mitigatecredit risk. The collateral held consists of equity and gilts quotedon 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 majorbanks.

 

The Group undertakes traded options as part of its serviceto 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 optionpositions, which are monitored on a daily basis.

 

Maximum exposure

The maximumexposure 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 anaverage bargain size in the current period of £13,000; there are additional controls for high value trades.

 

Impaired assets

The total gross amount of individually impaired assets in relation to trade receivablesat the period end was £321,000 (2011: £1,132,000). Collateral valued at fair value by the Group in relation to these impaired assets was £120,000 (2011: £112,000). This collateral is stock held in the clients'account which per our clientterms and conditions can be sold to meet any unpaidliabilities falling due. The net difference has been providedas a doubtful debt (see note 20). Note 20 also details amounts past due but not impaired.

 

Credit quality

Financial assets that are neitherpast 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 againstdocuments basis or against a client's portfolioin respect of which any one trade would normally be a small percentageof the client's collateral held in the Group nominee. At the periodend no financial assets that would otherwisebe past due or impaired had been renegotiated (2011: 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 depositsbeing held at three major banks with minimum credit ratings of "A", assigned by internationalcredit rating agencies. Deposits are managed by the TreasuryDepartment 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 78

 

Notes to the Financial Statements (continued)

 

26. Financial instruments and risk management (continued)

 

III.   Liquidity risk

Liquidity risk refers to the 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 2012, the Group had access to an overdraft facility of £15 million (2011: £15 million).

 

The Group has a Liquidity Policy which is reviewed by the Board annually. As the Group normally deals with the market on a 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 2012







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

 202,154

47,544

 49

 17,635

-

 267,382


 202,154

47,544

 49

 17,635

-

 267,382







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








Company







As at 30 September 2012







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

5,858

 -

 13,418

-

 26,614


 7,338

5,858

 -

 13,418

-

 26,614








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








 

Annual Report Page 79

 

26. Financial instruments and risk management (continued)

 

IV Operational risk

Operational risk is the risk of loss resultingfrom inadequate or failedinternal processes, peopleand systems or from external events, including legal risk.

 

The objective of the Group's approach to managing operational risk is to identify, assess and mitigate operational risk in a cost effective manner through the Operational Risk Framework and within the Group's risk appetite. The Operational Risk Framework is supported by the"three lines of defence model". This model embeds risk management across the organisation as it distinguishes among functions owning and managing risks; functions overseeing risks; and functions providing independent assurance. Thus each line of defence plays an important role in ensuring effective risk management.

 

Operational risks are monitored and reported to the relevant risk committees or boards.

 

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

 

Information disclosure under Pillar 3 of the Capital Requirements Directive will be published on the Group's website before 31 December 2012 at www.brewin.co.uk.

 



Annual Report Page 87

 

34. Notes to the cash flow statement

 


52 weeks to      

30 September 2012

53 weeks to

30 September 2011



£'000

£'000


Group




Operating profit from continuing operations

29,099

21,368


Loss for the period from discontinued operations (note 13)

(3,507)

 (1,201)


Adjustments for:




Depreciation of property, plant and equipment

7,214

8,835


Amortisation of intangible assets - client relationships

11,871

10,486


Amortisation of intangible assets - software

3,563

3,446


Loss on disposal of property, plant and equipment

 105

 -


 Intangible asset impairment

 -

 207


Retirement benefit obligation

 (2,410)

(2,631)


Share-based payment expense

3,852

3,029


Own shares disposed of on exercise of options

 (8)

 -


Translation adjustments

(196)

 (83)


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

 192

 317


 Interest income

1,383

1,059


Interest expense

(803)

(732)


Operating cash flows before movements in working capital

50,355

44,100


Decrease in payables and trading investments

(24,377)

(91,996)


Decrease in receivables and trading investments

14,910

90,465


Cash generated by operating activities

40,888

42,569


Tax paid

(5,911)

(9,711)


Net cash inflow from operating activities

34,977

32,858






Company








Operating profit

16,332

16,624


Adjustments for:




Impairment of subsidiary

 -

3,921


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

34

11


Operating cash flows before movements in working capital

16,366

20,556


Increase/(decrease) in payables and trading investments

1,654

(6,730)


Increase/(decrease) in payables

 -

 -


Cash generated by operating activities

18,020

13,826


 Tax paid

 -

 -


Net cash inflow from operating activities

18,020

13,826






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


2012

2011

2012

2011


£'000

£'000

£'000

£'000

Bell Lawrie White & Co. Limited

 -

 -

2,436

2,436

Brewin Dolphin Limited

 209

19,154

 -

 -

Tilman Brewin Dolphin Limited

 -

 -

 -

 -

Stocktrade Broking Limited

 -

 -

4,900

4,900


 209

19,154

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 (2011: £17,000,000) from Brewin Dolphin Limited and £nil (2011: £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 2012

 At 30 September 2011


 £ Billion

 £ Billion

In Group's nominee or sponsored member

17.9

15.3

Stock not held in Group's nominee

0.3

0.3

Discretionary funds under management

18.2

15.6




In Group's nominee or sponsored member

6.7

7.2

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

1.0

1.2

Advisory funds under management

7.7

8.4




Managed funds

25.9

24.0







In Group's nominee or sponsored member

5.2

4.1

Stock not held in Group's nominee

0.2

0.3

Execution only stock

5.4

4.4

Total funds

31.3

28.4




Stock



In Group's nominee or sponsored member

29.8

26.6

Stock not held in Group's nominee

1.5

1.8


31.3

28.4




 

 

 

Angela Wright

Company Secretary

Brewin Dolphin Holdings PLC

11 January 2013

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR FFLFFXFFEBBE
Close


London Stock Exchange plc is not responsible for and does not check content on this Website. Website users are responsible for checking content. Any news item (including any prospectus) which is addressed solely to the persons and countries specified therein should not be relied upon other than by such persons and/or outside the specified countries. Terms and conditions, including restrictions on use and distribution apply.

 


Extract of Annual Report & Accounts - RNS