Annual Report and Accounts 2013 Annual Report and Accounts 2013

Brewin Dolphin Holdings PLC, 12 Smithfield Street, London EC1A 9BD T 020 7246 1000 F 020 3201 3001 W brewin.co.uk E [email protected] Brewin Dolphin provides a range of investment management, financial advice and execution only services in the UK and Eire.

“Our priorities are clear. They are to reinforce our high standard of service to clients and ensure an improved return to shareholders. Discretionary Investment Management is currently the core of our business model and our mission is to provide a compelling and consistent offering, relevant to all our clients. Over the past decade we have evolved from a stockbroker into a private client investment manager. Our evolution must continue as we strive to become the leading provider of personal Discretionary Wealth Management in the UK.”

David Nicol, Chief Executive

Investment proposition • Strong client relationships with a long-term track record of personalised service • Growth market with good long-term prospects • New management team with clear goals and a strategy to achieve them • Our strategy will generate value for all stakeholders

We are already creating value in 2013 • Total income grew by 9% to £283.7m • Adjusted profit before tax grew by 22% to £52.3m • Adjusted profit margin increased from 16.5% to 18.5% • Discretionary funds under management (FUM) grew by 17% to £21.3bn • Adjusted earnings per share (EPS) grew by 19.2% to 14.9p (2012: 12.5p) • Full year dividend increased by 20% to 8.6p • Total Shareholder Return was 63% Contents Business review Section 1 Business review Financial Highlights 02 Business Highlights 03 Chairman’s Statement 04 Overview of the Business and Strategy 06 Strategic Report 08 A. Business Description 09 B. Market Environment 10 C. Objectives and Strategy 11 D. Progress Report 12 E. Results for the Year 18 F. Principal Risks and Uncertainties 27 G. Future Developments 31 H. Corporate Responsibility 31

Section 2 Governance Directors’ Report & Directors and their Biographies 32 Directors’ Report 34 Corporate Responsibility 36 Corporate Governance 39 Risk Committee Report 44 Audit Committee Report 46 Directors’ Remuneration Report 49 Directors’ Responsibilities 66

Section 3 Financial Statements Independent Auditor’s Report 67 Consolidated Income Statement 70 Consolidated Statement of Comprehensive Income 71 Consolidated Balance Sheet 72 Consolidated Statement of Changes in Equity 73 Company Balance Sheet 74 Company Statement of Changes in Equity 75 Consolidated Cash Flow Statement 76 Company Cash Flow Statement 77 Notes to the Financial Statements 78

Section 4 Information Other Five Year Record 120

Shareholders at 11 November 2013 121 Appendix – Calculation of KPIs 122 Directors, Secretary and Officers 123 Branch Address List 124

01 Financial Highlights

Total adjusted income £283.7m Adjusted2 profit before tax £52.3m 2013 2013 20121 £260.4m 2012 £42.9m 9.0% increase 22.0% increase

Total income £283.7m Profit before tax £28.6m 2013 2013 2012 £269.5m 2012 £29.9m 5.3% increase 4.4% decrease

Adjusted2 earnings per share Basic earnings per share 15.8p Diluted earnings per share 14.9p 2013 2013 2012 13.2p 2012 12.5p 19.7% increase 19.2% increase

Earnings per share Basic earnings per share 8.5p Diluted earnings per share 8.0p 2013 2013 2012 9.1p 2012 8.6p

Final dividend Full year dividend 5.05p 40% increase 8.6p 20% increase

The Board is implementing a new dividend policy from 2014 based on a target dividend payout ratio of between 60-80% of adjusted earnings per share.

1 The September 2012 income figure has been adjusted to exclude shared revenue which prior to the Retail Distribution Review (“RDR”) was recorded as income for Brewin Dolphin with a corresponding operating expense apportioning the income to external parties. At 29 September 2013 At 30 September 2012 2 These figures have been adjusted to exclude redundancy costs, additional FSCS levy, onerous contracts provision, amortisation of client relationships and disposal of available–for–sale investments.

02 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Business Highlights Business review

Strategy 2 Adjusted profit margin 18.5% We are now two and a half years into the transformation 2013 and growth strategy announced in 2011. This strategy has 2012 16.5% two main priorities: continued strong growth and increased efficiency. These priorities are underpinned by a series of initiatives to transform the business, ensuring it is best placed to enhance client service, meet regulatory demands and generate shareholder returns.

To improve shareholder returns and value, we have added two further strategic priorities: Discretionary funds £21.3bn 1) ensuring we maintain sufficient capital to deliver our strategy; and 2013 2) aligning dividend growth with underlying earnings. 2012 £18.2bn

This year we announced a new operating margin target of 25%, which we aim to achieve by the end of the financial year 2016.

Total managed funds £28.2bn Capital 2013 2012 £25.9bn We successfully raised £38.6m through an equity placing in May 2013 to improve our capital strength and investment capacity. This will allow us to accelerate the strategy, capitalise on our competitive position and drive future growth in earnings and shareholder returns.

Management Team

The Board of the Company has been restructured with the appointment of three new Executive Directors, David Nicol – Chief Executive, Andrew Westenberger – Finance Director and Stephen Ford – Head of Investment Management who have joined fellow Executive Director, Michael Williams. The new management team has been in place since March. They are intent on expanding the business to take advantage of the opportunities they perceive in the much changed market environment today. The management team has thoroughly reviewed and refocused the 2011 Strategic Plan.

At 29 September 2013 At 30 September 2012

03 Chairman’s Statement

Dear Shareholder, The UK Corporate Governance Code also requires that the boards of listed businesses should have at least an equal 2013 has been a year of significant change for Brewin number of independent Non-Executive Directors excluding Dolphin. This has encompassed a comprehensive review the Chairman. of every aspect of the way in which the Group operates and has resulted in a series of actions which have materially There are four Non-Executive Directors on the Board, strengthened its position as one of the UK’s leading excluding me. Jock Worsley retires from the Board at the independent wealth managers with in excess of 100,000 AGM in February 2014 after 10 years of service. He has clients and £28 billion under management. been Chairman of the Audit Committee and was appointed Senior Independent Director at the end of March 2013. Board changes His wise counsel will be greatly missed. Ian Dewar, who Jamie Matheson, my predecessor, retired at the end of was appointed to the Board on the 15 November 2013, March and I would once more like to pay tribute to his long will succeed Jock as Chairman of the Audit Committee. and successful tenure. Henry Algeo, Ben Speke, Barry Angela Knight will become Senior Independent Director. Howard and Sarah Soar stood down at the same time. We will seek to recruit one more Non-Executive Director David McCorkell retired in October 2012 and Robin Bayford during the current year. Brewin Dolphin will then be fully in December 2012. In October 2013 Angela Wright retired compliant with the UK Corporate Governance Code. as Company Secretary and continues to work for Brewin Dolphin as Group Chief Accountant. I should like to record Biographies of each director are contained on the Board’s appreciation of their substantial contribution to pages 32 and 33.1 the Group over many years. Running the business Following these changes the Board has been reshaped and The Boards of Brewin Dolphin Holdings PLC and Brewin this process continues. In accordance with the UK Corporate Dolphin Limited, the principal operating company, are now Governance Code, the roles of Chairman and CEO have identical, although their respective roles are slightly different. been split. I was appointed Non-Executive Chairman, The smaller board format serves the business effectively David Nicol became Chief Executive, Stephen Ford was and allows for more focused discussion. appointed Head of Investment Management and together with Andrew Westenberger, the new Finance Director, The business is run on a day to day basis by the Chief and Michael Williams, they are the four key executives in Executive supported by an Executive Committee. There the firm. These appointments have been accompanied by are four Board committees, Audit, Risk, Remuneration and other management changes designed to create greater Nomination. Each of these is chaired by an Independent accountability and clearer lines of responsibility. Non-Executive Director.

1 Biography of Ian Dewar will be included in the notice of AGM.

04 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Business review Our focus remains unchanged. It is to promote continued strong growth and increased efficiency, thereby ensuring improved returns to shareholders. These are the pillars upon which decisions will be made.

Focus The plan has been structured to take into account best Our focus remains unchanged. It is to promote continued practice guidelines from institutional shareholders and strong growth and increased efficiency, thereby ensuring shareholder representative bodies. improved returns to shareholders. These are the pillars upon which decisions will be made. Dividend The Board is proposing a final dividend of 5.05p per share, The UK wealth management sector has been the focus to be paid on 28 March 2014 to shareholders on the register of much attention over the past year. The impact of the on 28 February 2014. This will bring the total dividend for Retail Distribution Review (‘RDR’) which came into effect in the period to 8.6p per share (2012: 7.15p). January 2013 has caused the sector to re-examine the way business has been carried out historically and the result will Shareholders undoubtedly be in the long-term interests of both clients Brewin Dolphin has some 1,000 shareholders, representing a and managers. The change in regulator, from the Financial wide range of institutions and individuals. Approximately 18% Services Authority into two successor organisations, will of the equity is held by present employees of the business. likewise result in changes in how the sector operates. These are designed to make the industry more transparent Shareholders’ support enabled the company to raise and accountable to its clients and Brewin Dolphin aims to £38.6m in May by way of a placing at a small discount to take a leading role in continuing the development of industry the market price. Your Board welcomes interaction with best practice. shareholders and is committed to maintaining an open and regular dialogue. Enhancing the profitability of the Group remains a key objective of the Board. An exercise examining costs and This year’s AGM will be held at 11.30am on 17 February efficiencies was undertaken in the second half of the year 2014 at the Lincoln Centre, 18 Lincoln’s Inn Fields, London and savings were identified and made. WC2A 3ED. I very much hope you will be able to attend.

Remuneration Simon Miller The Remuneration Committee has recently undertaken 3 December 2013 a review of the current remuneration packages of the Company’s Executive Directors. Following this review, the Committee proposes to rebalance the packages of the Chief Executive, the Finance Director and the Head of Investment Management towards more emphasis on longer term delivery of the Company’s strategic financial objectives.

05 Overview of the Business and Strategy

Our business Our market Brewin Dolphin provides a range of investment management, We operate in a growth market with good long-term financial advice and execution only services primarily to prospects from increasing demand for our service. individuals and families throughout the UK and Eire. Our aim • Our industry faces big challenges: is to help clients make the most from their money. – Increasing regulatory focus • We earn the trust of clients and thereby create loyal and long term client relationships. – Changing client behaviours • We offer a personal approach to client service, combined – Harnessing new technology with the expertise of our professionally qualified staff. – Industry consolidation • We charge clients for services based on the value of • Competition is intensifying. assets we manage and/or the investment business we transact, on their behalf. Our industry offers many opportunities The market environment has changed considerably in recent • We have a long history and have grown rapidly through years, presenting challenges and opportunities. Increased acquisitions. transparency combined with growth has encouraged both • We have 35 offices in the UK and Eire. new entrants and new business models to challenge the • We have more than 100,000 clients and 1,877 employees. status quo in the industry. • We manage more than £28 billion of investments on behalf of clients.

Our Strategy – Overview

To Vision be the leading provider of personal discretionary wealth management in the UK

Generate shareholder value by Primary Goal growing revenue and delivering a high quality service to our clients efficiently

Build a business to Manage Corporate be proud of based on Be an excellent responsibly values of client service, employer Objectives for long-term teamwork and integrity

Maintain sufficient Grow the number of Strategic Grow our dividend in Improve our capital to maximise clients we serve and Priorities line with earnings efficiency opportunities and therefore the revenue cover risks we generate

Initiatives Improve market competitiveness and drive organic growth Achieve operational excellence to improve quality and lower costs

Enhance the service model for our clients Focus our business around our primary services Invest in technology to improve quality of service Sustainable and transparent pricing Invest in our people Increased cost discipline Develop plans to attract new clients Simplify and streamline our operating model

Harness our technology to lower costs

06 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Progress Business review We have already made good progress.

Strategic Priority KPI Progress this year Target Revenue Growth Discretionary FUM inflows 6% 5% Discretionary service yield 91 96 bps 95 bps Managed Advisory service yield 46 56 bps 75 bps Revenue growth 9% n/a Improved Efficiency Adjusted PBT margin 16.5 18.5% 25%+ Discretionary income per CF301 £283k £370k £490k % of managed FUM in Discretionary 70 76% 80% service Discretionary FUM per CF30 £33m £41m £50m Support staff to CF30 ratio 2.5 to 1 2.0 to 1 Average client portfolio £420k £500k Capital Sufficiency Solvency ratio 226% Min 150% Dividend Growth Dividend pay out 57 58% 60-80% Adjusted EPS growth 19.2% n/a Dividend growth 20% n/a

Key Risks • Some key risks and uncertainties could however threaten further progress.

Strategy and business model Operational – Correlation of earnings to financial markets – Unsuitable advice or investment service – Cultural inertia, poor project management – Breach of regulatory rules/reporting requirements preventing change – Failure of processes, technology or external services – Over reliance on key employees and client – Compensation claims/industry levies relationships – Possible weak due diligence/execution of past acquisitions

• We are seeking to manage risks by refocusing strategic priorities to reduce certain key risks. • The business is now well capitalised to both deliver strategy and cover risks.

1 Controlled Function 30 (CF30) is an FCA approved customer function of dealing in, advising on or managing investments on behalf of clients.

07 Strategic Report

A. Business Description 09 B. Market Environment 10 C. Objectives and Strategy 11 D. Progress Report 12 E. Results for the Year 18 F. Principal Risks and Uncertainties 27 G. Future Developments 31 H. Corporate Responsibility 31

08 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 A. Business Description Business review We are committed to building Brewin Dolphin is one of the largest providers of personalised investment management services in the UK and Eire. the firm into the best in our We offer a range of services from managing portfolios on an advisory or discretionary basis (our primary services) to industry for wealth management dealing, without advice (execution only) and with advice (advisory dealing). Our clients are mainly individuals, but also include Charities, Trusts and Institutions.

In recent years, as part of our primary offering, we have developed our financial planning service which we offer to clients, increasingly on an integrated basis with our investment management service, in order to offer a comprehensive solution to the demands of today’s investors.

The Group today is principally an investment management business, though our roots date back 250 years and are in stockbroking. We have grown rapidly since becoming listed on the London Stock Exchange in 1994 by acquiring smaller regional private client stockbroking firms and hiring teams of investment managers. Over the past decade, the business has changed from predominantly offering execution only and advisory dealing services to one which is focused on discretionary investment management. This is evidenced by the significant growth in discretionary assets which now make up 76% of our managed assets, compared to c.40% in 2004.

Our business model is based on providing a personalised service, combined with the investment expertise of each individual investment manager supported by our award winning research. Over recent years we have developed risk rated model portfolios for our smaller accounts.

The advice we offer is comprehensive. A complete wealth management service for private client portfolios, incorporating Individual Savings Accounts, Self-Invested Personal Pensions and Estate Planning through to highly specialised investment mandates on behalf of Charities, Pension Funds and Institutions.

Local presence and proximity to our clients have always been a key component of Brewin Dolphin and helps us maintain a high level of personalised service. We are committed to this approach. We provide our service via 35 offices throughout the UK and Eire with the support of 1,877 employees.

09 Strategic Report (continued)

B. Market Environment Our industry offers many opportunities The market environment has changed considerably in recent Personal financial services remains a growth market with years, presenting challenges and opportunities. Increased good long-term prospects. There is increasing demand as transparency combined with growth has encouraged both society becomes more self-reliant in specific areas such as new entrants and new business models to challenge the retirement provision and long-term care as well as savings status quo in the industry. in general. In addition, the policy responses to the 2008 downturn have benefited those invested in risk assets such Increased regulatory focus as equities and property and this has helped to create a higher There have been welcome and important changes to number of investors. regulation – the most notable of which is the new regulator, the Financial Conduct Authority (‘FCA’), and the development The UK has an estimated two million individuals with liquid of its wealth management division which provides both assets over £100,0001 and the Wealth Management industry increased scrutiny and guidance to our sector. In addition, in the UK managed £548 billion2 at the end of 2012. The table many new rules including the Retail Distribution Review below shows the funds under management for the sector along (‘RDR’) are now in place, giving us a stable period in which to with the market share. In view of the size differentials the sector consolidate and benefit from their introduction. could see further consolidation. RDR’s full implementation in 2013 has intensified the competitive environment. The move away from financial advice for the mass market and increased pricing Funds Under Management (FUM) of Peer Group transparency has prompted a change in client behaviour.

Changing client behaviours £172.8 billion Clients are increasingly sophisticated and using more (£’bn) complex technology which is leading to the development

3 Share

of new propositions and fuelling a real trend towards self- 4 directed solutions. Investors are becoming more sceptical

AuM FY12 Estimated Sector of in-house funds and products and also expect more education and guidance from their advisers. Scale has St James's Place 34.8 20.1% become a more important consideration as investors require Brewin Dolphin 25.9 15.0% reassurance regarding the security of their assets as well as Investec Wealth the robustness of the organisation dealing with their money. Management Ltd 20.0 11.6% Rathbones 18.0 10.4% Competition is intensifying Charles Stanley 15.4 8.9% One of the consequences of RDR has been the creation Cazenove Capital of the so called ‘advice gap’, which has led to a large Management 12.2 7.1% potential market for investors seeking some guidance but Smith and Williamson 12.1 7.0% who are unable to justify paying for full advice or have no Quilter Cheviot 12.0 6.9% such requirement. New propositions are being created to Close Brothers AM 8.3 4.8% address this new market which could present a threat to JM Finn 6.5 3.8% established providers as they fully leverage the capabilities of Ashcourt Rowan 4.1 2.4% today’s technology. In addition, there is increased competition Brooks MacDonald 3.5 2.0% for high net worth clients and these are two of the key Total 172.8 100.0% challenges facing the sector.

1 MDRC, UK High Net Worth 2013 Report 2 The City UK, Fund Management 2013 Report 3 Per Annual Report and Accounts with the exception of Quilters Cheviot which is based on other publically available information. 4 Sector comprises the competitors that Brewin Dolphin considers its peer group.

10 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 C. Objectives and Strategy Business review

Our primary goal and corporate objectives summarise the long term targets for the Group. These have been refreshed to build on its heritage and the principles on which it has prospered for 250 years.

Generate shareholder value by Primary Goal growing revenue and delivering a high quality service to our clients efficiently

Build a business to be Manage Corporate proud of based on values Be an excellent responsibly of client service, teamwork employer Objectives for long term and integrity

Strategic Maintain sufficient Grow the number of Grow our dividend in line Improve our capital to maximise clients we serve and Priorities with earnings efficiency opportunities and therefore the revenue we cover risks generate

Management has formulated a strategy in order to achieve The new management team completed an initial appraisal these objectives, taking into account our business model of the strategy, reported on at the time of our interim results. and the market environment. This strategy is dynamic and This re-affirmed the two strategic priorities, namely growth and is designed to best exploit the opportunities, address the efficiency, but also added two new strategic priorities: challenges in our market and deliver on four priorities to:- • maintain sufficient capital to maximise opportunities and • grow the number of clients we service and therefore the cover risks; and revenue we generate; • ensure that shareholders fully participate in the • improve our efficiency; performance of the business by growing the dividend in • maintain sufficient capital to maximise opportunities and line with earnings. cover risks; and Additional equity capital of £38.6m was raised via a placing • grow our dividend in line with earnings. to underpin and accelerate the strategy and help deliver Improving revenue and efficiency have been the principal on the two additional priorities of capital sufficiency and strategic priorities for the last two years. dividend growth.

A series of initiatives are underway to deliver these strategic priorities, including the move to a transparent national charging structure for our services, the design and implementation of new technology to help lower support costs, and the restructuring of our organisational model to reduce the cost of central overheads.

11 Strategic Report (continued)

The refocused strategy is underpinned by several initiatives:

Initiatives Improve market competitiveness and drive organic growth Achieve operational excellence to improve quality and lower costs

Harness our technology to lower costs

The new focus reflects our view that to meet our objectives personalised nature of the service we offer. This challenge will successfully in this environment our business model needs to be addressed by many of our current strategic initiatives in evolve, in particular: order to de-risk and improve the efficiency of the business.

• we need to simplify what we do and concentrate on our A series of actions, some of which are underway and others primary services. This will not only help us maintain our completed are helping to deliver our strategic priorities. competitive position by improving the quality of what These are being pursued by management to grow the number we can do best for clients, it will also help improve of clients we service and therefore the revenue we generate operational efficiency and create additional capacity and to improve our efficiency so that we achieve our 25% to invest in the business; and margin target.

• we need to invest in our primary services, successfully integrate technology and continue to improve the client D. Progress report experience. Many projects have been undertaken over the past year to The business will grow and prosper if it simplifies and focuses support our strategic priorities. the business model. A strategy of growth purely reliant on team acquisitions is, in our view, unsustainable in the current Growth market environment. We believe that by building a simplified We have completed moving our Discretionary and a large scalable business, focused on delivering our primary services portion of the Managed Advisory and Execution Only services we can achieve a leadership position in the industry. onto standard national pricing. We now have circa £20bn on national pricing but there is still approximately 40% of Our strategy does allow for expansion through whole business our Managed Advisory business to complete during 2014. acquisition and hiring of individuals but only when we can This has allowed us to continue to remove Unit Trust trail successfully integrate them into our culture and business from the business and standardise the yield we receive for model. In the past our acquisitions strategy has involved the services we offer at a more sustainable level: insufficient integration which has led to inefficiencies and lack of standardisation in key business processes. This has resulted in 2013 Yield 2012 Yield Service higher operational costs, which have impaired the ability of the bps bps business to reinvest in new technology to continue improving Discretionary 96 91 client service. It has also had a negative impact on shareholder returns and the management of risk. Advisory Managed 56 46 Advisory Dealing 29 42 The strategy has sought to address these issues over the last two years and we have been successful at standardising Execution Only 30 26 elements of the business such as pricing, client valuations and client communication. There is significant scope to Over the last year many clients have moved away from our further improve the business processes without changing the dealing based services into our primary managed services and this is evident in our client fund flows.

12 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Funds under management (“FUM”) Business review

£bn (rounded to one decimal place) Transfers 30 within 29 September Managed/ Other Market September 2012 Inflows Outflows Advised Transfers Net Flows Movement 2013

Discretionary 18.2 2.1 (1.0) 0.3 (0.3) 1.1 2.0 21.3 Managed

Advisory Managed 4.9 0.1 (0.5) (0.0) (0.1) (0.6) 0.5 4.8 Advisory Dealing 2.8 0.1 (0.4) (0.2) (0.3) (0.9) 0.2 2.1 Total Advisory 7.7 0.2 (1.0) (0.3) (0.4) (1.5) 0.6 6.9 Total Managed/ 25.9 2.3 (2.0) (0.0) (0.7) (0.4) 2.7 28.2 Advised

Execution Only 5.4 0.9 (0.7) n/a 0.7 0.9 0.4 6.7

Total Funds 31.3 3.2 (2.7) (0.0) 0.0 0.5 3.1 34.9

29 September 30 September Indices Change 2013 2012

FTSE APCIMS Private Investor Series Balanced Portfolio 3,315 3,014 10.0%

FTSE 100 6,513 5,742 13.4%

Total managed and advised funds were £28.2bn, up by 8.9% Client funds held on an Execution Only basis grew by from a year ago. The strategy of focusing on our Discretionary £1.3bn, a 24% increase of which £0.9bn represented service and our move to fair and consistent national pricing new inflows and £0.7bn was transferred from Advisory to across all client services has resulted in a continued move Execution Only as a result of our service review and move away from Advisory to Discretionary services. to standard pricing. During the year, the FTSE100 index increased by 13.4% and the FTSE APCIMS Balanced Index Discretionary funds grew by £3.1bn in the year, a 17% increased by 10.0%. increase (2012: 16.7% increase) as a result of continuing good net inflows of £1.1bn (2012: £1.0bn) and higher Discretionary funds now make up 76% (2012: 70%) of total market levels £2.0bn (2012: £1.6bn). managed and advised funds, continuing the long term trend and representing good progress towards our target of 80% Advisory funds fell by £0.8bn in the year, a 10.4% decline by 2016. (2012: 8.3% decrease), as a result of net outflows of £1.5bn (2012: £1.1bn) partially offset by higher market levels During 2014 we will introduce an enhanced investment £0.7bn (2012: £0.4bn). The figures also show the lack of process. We aim to improve the client experience around demand from new clients for our Advisory Managed and a consistent structure which will be supported by new Advisory Dealing services which continue to see outflows. technology to underpin the change. This will mean we can The reduction in demand for these services combined consolidate our operating model within a national framework with the absence of any yield premium (to cover the risk and ensure we offer a more consistent client experience. of providing investment advice) and the flow to Execution Only has shaped Management’s view that we should withdraw our Advisory Dealing service.

13 Strategic Report (continued)

To benefit from our enhanced investment process and more We have reviewed the number of offices which resulted in focused service offering, we intend to develop five growth six offices being merged or closed (Inverness, Teesside, channels to achieve our target of 5% pa growth from net Bradford, Hereford, Stoke and Swansea). At the same time inflows in Discretionary business. we have experienced the departure of a small number of teams including the majority of our Leicester office. Despite a) Direct – A new website due in Spring 2014 will focus these reorganisations and departures, some of which were on our primary services combined with a number of to competitor firms, early indications of clients remaining are marketing initiatives. positive. This has been achieved without having to hire any b) Agent – Financial Advisers are big supporters of our new staff. business and we believe our enhanced investment process will facilitate new, national partnerships. We also reviewed the Appointed Representatives of the c) Customer Advocacy – Our existing clients are our best Group in the context of our refocused strategy and advocates and we intend to build upon our high “Net concluded that the risks of self-employed agents providing Promoter Score”. advice under our brand, in return for half the commission they generated was an out of date approach and not in the d) Professional Services – Our proposition to accountants best interests of our clients. Over the year several Appointed and solicitors will be updated during 2014. Representatives have transferred their business elsewhere e) Direct to Client Proposition – There is a significant and one has become an employee. demand for a simplified, lower cost service. We have an award winning model portfolio service and we are working Maintaining Capital Sufficiency on delivering this service directly to consumers. As highlighted in our objectives and strategy section, we have added a new strategic priority to ensure that sufficient capital We believe that the best way to grow is organically and our solvency is maintained in order to: energies are devoted to building the brand value and meeting 1 Finance the necessary investment in the business, to deliver the needs of the market. the strategic priorities and stated operating margin target; and Improving Efficiency We have made progress in simplifying the business model 2 Provide sufficient capacity to support the key risks and in parallel to the development of our new IT systems. We uncertainties. successfully implemented the first stage of our new core operating system into Stocktrade, our Execution Only The Group successfully raised £38.6m equity capital via a service, in September 2013 and we are already seeing the placing, in order to increase capital levels. Together with benefits. We will now roll the system out across the rest profits retained during the year, this helped our capital of the Group during 2014 and implement new software to solvency levels increase from 123% in September 2012 to support our Investment Management and Financial Planning 226% in September 2013. services. Technology and process improvement is critical to our success and we will continue to invest in these areas We intend to operate at a minimum solvency level of 150% over the foreseeable future. in future.

In conjunction with the development of our new operating Growing the Dividend to Shareholders system we are also simplifying our service offerings. We have The Board is implementing a dividend policy from 2014 reviewed the risk, profitability and demand for our ancillary based on a target dividend payout ratio of between 60% to services many of which are either in the process of being 80% of annual reported adjusted diluted earnings per share closed or are no longer available to new business. This to deliver the new strategic priority of ensuring that dividends will lead to a greater concentration of resource around our grow in line with underlying adjusted earnings. The objective primary discretionary wealth service. of this priority is to ensure that shareholders fully benefit in a timely way from any improvement to earnings. The rationalisation of our services, combined with our enhanced investment process and supported by new Historically, the Board has adopted a policy of paying broadly technology, should facilitate a more efficient balance of equal interim and final dividends on the ordinary shares. In Advisers to Funds under Management. the future, the Board intends to establish an interim dividend and grow it in real terms. The variable final dividend will be based upon the full year target dividend payout ratio of 60% to 80% of adjusted earnings per share.

14 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Key performance illustrations Business review Adjusted PBT margin Discretionary service yield

25 Target 25% 91bps 96bps 95bps 20 18.5% Target

16.5% 2012 2013 15

Managed advisory service yield 10 46bps 56bps 75bps 5 Target

2012 2013 2012 2013 2016

Solvency ratio Discretionary income per CF301

£283k £370k £490k 226% Target Minimum 150%

123% 2012 2013

Discretionary FUM per CF301

£50m 2012 2013 £33m £41m Target

Discretionary FUM inflows 2012 2013

6.5% 6% Target +5%

% of managed FUM in discretionary service

2012 2013 2014 70% 76% 80% TargetTarget

Final Dividend Full Year Dividend 2012 2013 8.6p 7.15p Average client portfolio 5.05p 3.6p £420k £500k TargetTarget

2012 2013 2012 2013 2012 2013

1 Controlled Function 30 (CF30) is an FCA approved customer function of dealing in, advising on or managing investments on behalf of clients. 15 Strategic Report (continued)

Key performance indicators To implement our strategy successfully, we must measure progress. The table below summarises the key performance indicators for each strategic priority, with a measure of our performance to date. We also indicate potential challenges to success and the actions we are taking to mitigate them.

Strategic Priority Metrics Definition/Source Progress Targets Potential challenges/(response) Revenue Growth Discretionary FUM inflows The value of annual net inflows as a percentage of 6% 5% Failure to innovate service – Strategy focused on opening FUM for our Discretionary service increasing competitiveness with investment in service The average annual total fee and commission income Failure to complete transition to national rate card for Discretionary service yield measured as a percentage return on average annual 91 96bps 95 bps Advisory managed service – Centrally led project has been FUM for our Discretionary service key strategic initiative Managed Advisory service yield As above, for our Managed Advisory service 46 56 bps 75 bps Adverse financial market conditions, loss of clients, key staff, failure to stay competitive – Key focus of strategy, The percentage increase in Group total annual Revenue growth 9% n/a staff incentive schemes (adjusted) income Reported Group total annual adjusted profit before tax Adjusted PBT margin 16.5 18.5% 25%+ as a percentage of Group total (adjusted) income Total annual fee and commission income from our Discretionary service divided by the period end Discretionary income per CF30 £283k £370k £490k number of client facing professional investment managers and financial planning staff (“CF30s”) Failure to achieve operational efficiencies to enable reduced support headcount – Key focus of strategy The proportion of our period end value of client FUM % of managed FUM in in our Discretionary service, as a percentage of total 70 76% 80% Discretionary service period end managed and advised FUM Failure to deliver new technology to improve capacity to Improved Efficiency The period end total value of client FUM in our manage more clients per head – Key focus of strategy Discretionary FUM per CF30 Discretionary service divided by the period end £33m £41m £50m number of client facing staff (as above) Inability to attract new clients or accounts of sufficient The ratio of period end total of non client facing Support staff to CF30 ratio 2.5 to 1 2.0 to 1 value – Key focus of strategy professional staff to total period end client facing staff The average value of FUM per client for our managed/ advised services. Calculated based on period end Average client portfolio £420k £500k total reported managed/advised FUM divided by period end number of client relationships The ratio, as a percentage, of the Group’s period end Capital Sufficiency Solvency ratio total regulatory capital to the period end minimum total 226% Min 150% regulatory capital requirement The ratio of total annual dividend per share (interim Dividend pay out and final), as a percentage, to total reported annual 57 58% 60-80% adjusted diluted earnings per share Loss of profitability The annual percentage change in reported adjusted Availability of distributable reserves as impacted by Dividend Growth Adjusted EPS growth 19.2% n/a diluted earnings per share non-adjusted losses e.g. further exceptionals, write-offs The percentage change in total annual dividend per Dividend growth 20% n/a share (interim and final)

A detailed explanation of the calculations used for this year’s KPIs are contained in the Appendix (page 122).

16 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Business review

17 Strategic Report (continued)

E. Results for the Year

Financial Highlights The strong underlying results for the year ended 29 September 2013 reflect the combination of improving market conditions and progress we have made on delivering our strategic objectives. Adjusted profit before tax grew by 22% to £52.3m from £42.9m last year and adjusted diluted EPS grew by 19% to 14.9p per share from 12.5p last year.

The underlying adjusted profit growth was driven by increased income, 9% higher than prior year, together with improving efficiency as reflected by fixed operating cost growth being limited to 3% and the increase in adjusted profit before tax margin to 18.5% from 16.5% in the prior year.

Profit before tax for the year was £28.6m (2012: £29.9m), a 4% decline on the prior year. This was a result of significant restructuring costs incurred in the year and material provisions for onerous contracts which are explained below.

2013 2012 £m £m Change Total income 283.7 260.4 9%

Salaries (105.3) (98.6) 7% Other operating costs (83.4) (85.1) -2% Total fixed operating costs (188.7) (183.7) 3% Adjusted profit before variable staff costs1 95.0 76.7 24% Variable staff costs (43.7) (34.6) 26% Adjusted operating profit1 51.3 42.1 Net finance income and other gains and losses 1.0 0.8 Adjusted profit before tax1 52.3 42.9 22% Exceptional costs/gains (11.2) (1.1) Amortisation of client relationships (12.5) (11.9) Profit before tax 28.6 29.9 -4% Taxation (7.3) (8.4) Profit after tax 21.3 21.5

Earnings per share Basic earnings per share 8.5p 9.1p Diluted earnings per share 8.0p 8.6p Earnings per share1 Basic earnings per share 15.8p 13.2p Diluted earnings per share 14.9p 12.5p

1 Excluding redundancy costs, additional FSCS levy, onerous contracts provision, amortisation of client relationships and disposal of available-for-sale investment.

18 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Reconciliation of adjusted income and operating expenses to financial statements Business review

2013 2012 £m £m Income – per financial statements 283.7 269.5 Reclassification of items previously reported as operating expenses – (9.1)

Adjusted income used for purposes of financial highlights and strategic report 283.7 260.4 Other operating costs – per financial statements 83.4 94.2 Reclassification of items previously reported as income – (9.1) Adjusted other operating expenses used for purposes of financial highlights and 83.4 85.1 strategic report

Prior to the introduction of RDR (1 January 2013), Brewin Dolphin collected income from client portfolios on behalf of intermediaries which it recorded as income with an offsetting expense. Post RDR, intermediaries are required to collect and record their income directly from clients and consequently this income is no longer recorded in Brewin Dolphin’s results.

This has no impact on reported profit, however we have chosen to adjust the comparative figures for 2012 to be on a post RDR basis as we believe this offers a more fair and appropriate analysis of underlying income and cost trends.

Income Total income grew by 9% to £283.7m (2012: £260.4m) in the year and is analysed as follows:

2013 2012 £m £m Change Commissions 93.5 84.1

Fees 152.0 121.4 Core income1 245.5 205.5 19%

Financial Planning 11.7 9.3 Trail 14.8 29.2 Interest 11.7 16.4 Other income 38.2 54.9 -30% Total income 283.7 260.4 9%

1 Core income is defined as income derived from fees and commissions charged on management and/or advice and execution activities relating to client portfolios.

19 Strategic Report (continued)

Core income from our Discretionary, Advisory and Execution Only services, grew strongly by 19% to £245.5m (2012: £205.5m). This was driven by a combination of increased average client fund balances due to higher market levels and continued inflows, and improved returns as a result of the move to new pricing structures.

Income and yield by service type

2013 2012 £m £m Change Income

Discretionary 192.7 156.3 23% Advisory Managed 27.5 23.3 18% Advisory Dealing 7.2 12.8 -44% Total Managed/Advised 227.4 192.4 18%

Execution Only 18.1 13.1 38% Total 245.5 205.5 19%

Yield Bps Bps Discretionary 96 91 Advisory Managed 56 46 Advisory Dealing 29 42 Execution Only 30 26

20 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 The strong growth in FUM and improved yield resulted in a 23% increase in income to £192.7m (2012: £156.3m) from our Business review Discretionary service. Despite lower levels of Advisory Managed FUM, overall income from Managed/Advised services increased by 18% due to the improved yield from re-pricing. The decline in income from advisory dealing resulted from the steep decline in funds under this category as a result of the service review and re-pricing initiative.

Overall fees and commissions grew, with fees growing particularly strongly, up 25% to £152.0m (2012: £121.4m) as a result of the growth in Discretionary services and the on-going introduction of fees to all Advisory Managed accounts in line with new pricing structures.

Aggregate other income declined by 30% to £38.2m from £54.9m in 2012, primarily due to the planned significant reduction in trail income which decreased to £14.8m (2012: £29.2m) as a result of our initiative to switch to trail free ‘clean units’. Since the beginning of this year all new funds have been purchased on a ‘clean’ basis post the implementation of RDR.

Income from financial planning activities grew by 26% during the year to £11.7m (2012: £9.3m) as a result of our strategy to offer an integrated wealth management service.

Net interest earned from the management of client cash deposits reduced by 29% in the year to £11.7m (2012: £16.4m) as a result of reduced interest rates on deposits available from our banks, whilst maintaining interest rates payable on client cash balances.

Costs

Reconciliation of adjusted operating expenses to financial statements 2013 2012 £m £m Change Fixed staff cost 105.3 98.7 7% Underlying non-staff costs 84.2 89.7 -6% Insurance recovery (0.8) (4.7) Non-staff costs 83.4 85.0 -2% Total adjusted fixed operating costs 188.7 183.7 3% Variable staff costs 43.7 34.6 26%

Redundancy costs 4.8 0.6 Additional FSCS levy 1.1 0.5 Onerous contracts 6.2 – Total exceptional costs 12.1 1.1

Amortisation of client relationships 12.5 11.9 Total adjusted operating expenses 257.0 231.3 Reclassification1 – 9.1 As reported in Income Statement 257.0 240.4

1 Reconciliation of adjusted income and operating expenses to financial statements (page19 )

21 Strategic Report (continued)

Significant progress has been made in bringing costs under control during the year.

Fixed staff costs Fixed staff cost growth was limited to 7% year on year, below the rate of income growth, a reversal of previous years’ trends and contributing to the improved operating margin. This was achieved through a combination of hiring discipline together with reduced run rate central function costs following the restructuring exercise undertaken during the year. The exceptional costs associated with this are described below.

Variable staff costs Variable staff costs increased by 26% to £43.7m (2012: £34.6m). The increase was driven primarily by the rise in adjusted profit before variable staff costs (+24%) to which the majority of variable staff cost is linked, and management’s decision to increase the overall level of variable staff compensation to assist in staff retention. The overall ratio of total (fixed and variable) staff costs to adjusted income increased accordingly during the year to 53% from 51% in 2012.

Non-staff costs A significant reduction in underlying non-staff costs of 6% year on year was achieved, falling to £84.2m from £89.7m in 2012. This was due to tighter controls around discretionary expenditure, in particular in areas such as marketing, advertising and legal/ consulting fees, and the reduction contributed significantly to the improvement in operating margin during the year.

Insurance recovery During the year the Group reached final settlement with its insurers with respect to certain material past claims relating to insured losses incurred in prior years. This resulted in an additional £0.8m (2012: £4.7m) recovery being recognised in the year.

Exceptional costs Redundancy costs Redundancy costs of £4.8m (2012: £0.6m) incurred in the year primarily resulted from two organisational restructurings: 1) In March various head office functions were restructured in order to better service business needs and reduce costs. This resulted in approximately £3.0m in redundancy payments and reduced central functions headcount by approximately 100. This resulted in an ongoing staff costs saving of £6.0m per annum. 2) During the second half, a rationalisation of the branch network was undertaken, resulting in the closure of our offices in Inverness, Teesside, Hereford and Swansea. The management of clients together with some of the staff moved to local larger offices where we consider we are better able to serve our clients’ needs in the longer term. A further £1.4m of redundancy payments were incurred as a consequence, with run rate savings to branch staff costs to be felt from 2014 onwards. Onerous contracts provisions Provisions in respect of onerous contracts totalling £6.2m, £5.7m relating to surplus property space which may not be able to be continually sub-let, were made in the year. Of this, approximately £0.5m relates to the remaining lease commitments of up to four years on recently closed offices, £4.3m relates to lease commitments of up to 20 years on excess space resulting from the consolidation of operations into one office in Edinburgh, and £0.9m from excess space resulting from the consolidation into one office in London. The £0.4m non-property related provision relates to software applications no longer being used as a result of the central functions restructuring. The maximum total future undiscounted exposure resulting from the aggregate of the onerous property leases is approximately £23.0m.

Exceptional gain During the year the Group sold its remaining stake in NPLUS1 Singer Ltd realising an exceptional gain on disposal of £0.9m.

22 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Cash flow and capital expenditure Business review Our strategy aims to deliver not only growing earnings, but also rising free cash flow, being the cash generated from operations less what we invest in the business. This will ensure that dividend growth can be aligned with earnings growth without material short term reductions to tangible equity.

The table below shows how underlying profitability translated into cash generation:

2013 2012 £m £m Adjusted profit before tax 52.3 42.9 Less – Exceptional costs/gains (11.2) (1.1) Amortisation of client relationships (12.5) (11.9) Statutory PBT 28.6 30.0 Add – non cash expenses included 27.1 26.9 Less – discontinued operations – (3.5) Less – pension contributions not included above (3.0) (3.0) Operating cash flows before working capital 52.7 50.4 Less – tax paid (6.3) (5.9) Underlying cash from operations 46.4 44.5 Net investment – Purchase of client relationships (3.4) (6.9) – Purchase of fixed assets (4.5) (7.4) – Purchase of software (15.1) (16.4) – Net gains and dividends on available-for-sale investment 1.2 0.3 (21.8) (30.4) Underlying free cash flow 24.6 14.1 Net financing – Dividends paid (18.1) (16.9) – Shares purchased (0.2) (1.9) – Shares issued for cash 41.9 0.7 23.6 (18.1) Underlying increase/(decrease) in cash 48.2 (4.0) Decrease/(increase) in working capital 17.6 (12.1) Movement in firm's cash 65.8 (16.0) Movement in client balances (3.5) 2.6 Movement in total cash 62.3 (13.4)

Reconciliation to reported cash from operations Underlying cash from operations per above 46.4 44.5 Movement in client balances per above (3.5) 2.6 Movement in working capital per above 17.6 (12.1) Cash from operations per note 34 60.5 35.0

23 Strategic Report (continued)

The Group’s cash balances increased materially by £65.8m to £113.5m at 29 September 2013, from £47.8m at 30 September 2012.

In addition to underlying cash generated from operations of £46.4m (2012: £44.5m), the large increase was the result primarily of the equity capital raising in May 2013, generating net proceeds of £38.6m, in addition to positive working capital movement of £17.6m in the year.

Underlying free cash flow increased to £24.6m from £14.1m in 2012, due to lower total capital investment in the year (£21.8m, versus 2012: £30.4m).

Upfront cash spent on acquiring teams of investment managers and their client relationships declined to £3.4m from £6.9m in 2012 due to the significant absence of further team hires in the year beyond what was already in progress at 30 September 2012.

Investment in fixed assets declined to £4.5m in the year (2012: £7.4m), primarily due to lower spend on computer hardware in support of the implementation of the new core software operating system.

Development of the new core settlement system which has been underway for 18 months, reflected in total £16.8m further capital investment in computer hardware and software development costs to bring the new software into use. In addition to £17m spent in 2012, total cumulative investment in the project is approximately £34m. It is anticipated an additional £20m will be spent over the course of the next 18 months to bring the implementation to a successful completion.

Dividends paid in the period came to £18.1m (2012: £16.9m).

There has been a cash outflow from the purchase of shares for the Share Incentive Plan (SIP) of £0.2m and £nil for the Deferred Profit Share Scheme (DPSP) during the year, (2012: £1.9m SIP and DPSP). The Group instructed the trustees of the DPSP to purchase £4m of shares after the end of the financial year.

Investment in new technology to improve the quality of our client service, as well as lowering the cost of delivering that service, is a key initiative to achieve the strategic priority of improving operational efficiency. We will continue to develop ways of investing and successfully integrating new software solutions into our business model. This will result in future capital investment, though at a lower level than the current run rate, once the core system is fully in place. Free cash flow as a proportion of underlying earnings should therefore increase over time as earnings grow.

24 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Resources available to the Group Business review Our primary assets, in addition to our employees, are the value of:

1) Client relationships acquired via introduction from new teams of investment managers hired;

2) Fixed tangible assets, i.e. investment in fixtures and fittings in our offices and in communications and technology hardware to support our operations; and

3) Purchase, development and configuration of new software applications to support our operations.

We invest across all three categories to develop the assets of the business, securing growth and preserving and improving our operational efficiency.

As our strategy has changed in recent years from focusing solely on growth by acquiring additional client relationships to seeking also to improve operational efficiency, we have been investing more in the development of new software and less on acquiring teams of investment managers.

Pension Fund The actuarial loss on the pension fund this year was £2.2m (2012: £5.1m). Under IAS19, large annual fluctuations can occur. The Group has agreed to make additional pension contributions of £3m per annum with the aim of paying the deficit off, over the next seven years.

The net pension deficit reduced by £0.6m during the year to £9.2m (2012: £9.8m). This primarily resulted from better than expected investment returns on assets exceeding the increase in the actuarial value of liabilities.

Capital Structure, Treasury Policy, Liquidity and Capital Requirement At 29 September 2013 the Group had net assets of £221.6m (2012: £162.7m). Net assets excluding intangible assets and shares to be issued of £109.1m (2012: £61.1m) broadly represent the Group’s capital for regulatory purposes. These net assets were largely represented by net cash and cash equivalents of £137m (2012: £72m), including £20.3m (2012: £23.8m) of client settlement money. The Group has an agreed unsecured overdraft facility of £15m (2012: £15m). At the period end the Group had a surplus of net assets for regulatory capital adequacy purposes of £60.5m (2012: £11.4m), the increase is mainly attributable to the capital raised during the placing in May.

The Group aims to hold at least 90% of both clients’ and Groups’ money only at major UK clearers. Client money is segregated under rules set out in the FCA Client Asset Source Book.

Client stock is segregated and held 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.

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.

25 Strategic Report (continued)

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.

Significant Relationships No client provides more than 2% of the Group’s revenue. The Group has two main suppliers of computer software.

Going Concern The Group has substantial operational gearing arising from its fixed cost base; this is mitigated by variable staff costs which if income falls would reduce variable costs. Cash balances ranged between £28m and £124m 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 the Strategic Report 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 has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Directors continue to adopt the going concern basis for the preparation of the financial statements.

26 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 F. Principal Risks and Uncertainties Business review

Risks The Group’s principal risks and uncertainties together with the key mitigants and controls are set out on pages 28 and 29.

Details of the risk framework and governance are set out in the Risk Committee report (pages 44–45).

The origins and nature of the Group’s principal risks change over time and are the result of, among other factors, the market environment and the Group’s strategy.

As discussed above when explaining the Group’s current strategy, management takes careful consideration of the risk implications of different strategic initiatives. The strategic refocus instigated by the new management team has in part been driven by the appreciation that the Group’s risk profile was increasing over time as a result of external factors such as increased regulatory scrutiny and competitive pressures as well as from the Group’s former strategy of inorganic growth.

The current strategy is aimed at managing and where possible reducing the operational, business and strategic risks over time. For example, initiatives already underway, such as the standardisation of the business model and withdrawal from certain activities and services, should result in reduced risks.

Equally, the increased focus on organic growth will limit the addition of further risk relating to acquisitions. Risks resulting from the past strategy, however, may remain.

In the long term, successful implementation of the strategy and realisation of strategic priorities will reduce the Group’s strategic risk by making it more competitive and better able to continue to prosper in a challenging market environment.

In the short term, however, strategic risks may well increase due to the challenges of delivering the business transformation itself. In particular, the inability to implement change due to cultural inertia, vested interests or poor project management is an emergent risk as the refocused strategy is implemented.

27 Strategic Report (continued)

Risk Type Risk Description Key Mitigants & Control Business & Strategic Risks • Alignment with vendors through earn out Weak due diligence on arrangements target companies or Acquisitions & • Robust board governance and challenge poor execution of Disposals from independent non executives transactions and associated commercial terms • 3rd party legal, accounting and commercial due diligence commissioned Strategy & • Initiatives to enhance margin and reduce Business fixed operating cost base Model Failure to manage volumes, margins, earnings volatility, • Initiatives to ensure consistent pricing of diversification, resilience Profitability & services to market dislocation and Resilience cost control or impact of • Variable staff incentive pay linked to industry levies and long term profitability contractual commitments • Manage material onerous lease exposures through subletting/assignment Failure to innovate, respond • Long term loyal client relationships and focus to new entrants to the on personalised service Product Differentiation market, offer distinct services & Disintermediation at a competitive pricing level, • Strategic initiatives to keep innovating client service Products, and meet or respond to Clients & client needs • Initiatives to innovate and offer wealth/ Reputation investment management services to Over-reliance on key clients as broad as possible client types e.g. or limited product range, development of Direct to Client, managed Concentration or the failure to attract new services, intermediary propositions business • Diversified client base • Efforts to communicate to employees the strategic benefits: improved client service, higher job satisfaction and career progression, better efficiency and growth Inability to implement change opportunities and consequent reward due to cultural inertia, vested potential Change Management interests, or poor project • Strong project governance with third party Capacity & management Constraints to specialist help, direct executive oversight Growth and board scrutiny • Promotion of change advocacy networks in the Group Failure to invest in technology and legacy systems, • Investing in new systems technology and Infrastructure facilities or other support replacing legacy systems infrastructure • Team approach to managing client relationships is a key aspect of the strategic Over-reliance on key Management, initiatives to improve efficiency employees, a lack of career Staff & Development & progression, inadequate • Active succession planning for key Internal Succession training, and poor role management roles underway Culture handover • Incentive policies to create significant equity tie-ins

28 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Risk Type Risk Description Key Mitigants & Control Business review Financial Risks Increased funding Pension requirements to meet • Scheme closed to new members Obligation Pension deficit financial obligations under a Risk • Recovery plan agreed with Trustees defined benefit scheme Operational Risks • Dedicated employees undertake all Group dealing • Close management supervision of dealers • Error warnings integrated into dealing systems Dealing errors, fat fingers, • Monitoring of high value trades pre and post Trading Errors late or mis-booked trades trade and missed fund deal dates • Multiple validations on equity trading platform • Comprehensive insurance cover for errors and losses • Monitoring of losses and underlying causes • Internal competencies being developed e.g. Processes, project management, change and transformation Technology Over-reliance or critical skills dependency due to lack of & External Service Providers Services alternatives, or internal skills • Key vendors subject to active management and /capacity governance framework, SLAs etc • Monitoring of key risk indicators • Dedicated business continuity function within the Group • Large branch network with appropriate continuity plans in place to ensure service can be Failure of Business Continuity maintained Plan (BCP) arrangements Business Continuity due to either an inadequacy • Use of external facilities to enhance the resilience or failure to test regularly of the Group to a business continuity event • BCP subject to periodic testing • Rapid response to significant systems failures or interruptions • Treating Customers Fairly embedded within the ethos of the Group • Implementation of new investment process Insufficient or inadequate supported by new technologies information on clients’ • Robust Training & Competency programme Investment needs or capacity for loss, Suitability Investment Advice unsuitable advice, portfolio • Dedicated Business Standards Team to review & Mandate & Suitability holdings inconsistent with business quality Breaches clients’ attitude to risk, or failure to adhere to • Monitoring undertaken by Risk & Regulation investment mandate. Department • Management information • Effective complaint handling process and insurance cover to mitigate losses

29 Strategic Report (continued)

Risk Type Risk Description Key Mitigants & Control Operational Risks (continued) • Proactive and effective Regulation & Risk and Internal Audit functions • Supervisory process in place for staff holding a controlled function • Annual declarations to be made by all staff reviewed by Regulation & Risk • Client Asset Oversight Committee Breaches of regulatory established to strengthen governance over obligations, including client client money and custody arrangements money/asset rules, and AML/KYC, conflicts of • Client Asset reviews undertaken by Regulatory Failure interest, breach of data Regulation & Risk and Internal Audit protection obligations and failure to respond • Risk-based AML methodology used for to regulatory change. assessing all clients Regulatory • Systems and controls to ensure employees Compliance access rights to data are appropriate & Financial • Personal Account Dealing and Gifts policies Crime in effect and overseen centrally • Regulation & Risk Department advise on impact of regulatory change to prompt timely business responses • Centralised independent invoice processing and payment • Authorisation process in place for key Misappropriation of client departments that deal with clients or Group or firm's assets, deliberate assets Fraud mis-reporting or misrouting • Segregation of duties across the Group of payments. • Payment authorisation controls • Monitoring of payments and transfers • Comprehensive insurance cover

30 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 G. Future Developments Business review The risks of not adapting our business model to a changing environment are significant and would erode shareholder value. Therefore we have developed an ambitious strategy to evolve the business and become the leading provider of Discretionary Wealth Management and the firm of choice for our clients, employees and shareholders. We will continue to invest in our people, processes and technology to improve the client offering and if we achieve these goals, we will deliver significant value for shareholders, clients and employees.

H. Corporate Responsibility The Corporate Responsibility report on pages 36 to 38 includes information on environmental matters, employees (including gender ratios) and community issues. Approved by the Board of Directors on 3 December 2013 and signed its behalf by:

David Nicol Andrew Westenberger Chief Executive Finance Director

31 Directors and their biographies

Simon Edward Callum Miller (n) (r) Chairman Simon Miller was appointed Chairman in March 2013. He joined the Board in 2005 and became Deputy Chairman and Senior Independent Director in 2012. He read law at Cambridge and was called to the bar. He subsequently worked for Lazard Brothers and County Natwest. Since 1994 he has been Chairman of Dunedin LLP. He is also Chairman of Artemis Alpha Trust, Blackrock North American Income Trust and JPMorgan Global Convertible Income Fund.

David Richardson Nicol, CA, Chartered FCSI (n) Chief Executive David Nicol is a chartered accountant. He was a Director of Morgan Stanley International PLC from 2004 to 2010. He worked for Morgan Stanley for 26 years in a number of Operations and Finance roles and was appointed EMEA CAO in 2004. David was a Non-Executive Director of Euroclear plc from 1998 to 2010. He trained and qualified in 1980 as a Chartered Accountant with Ernst & Young and spent two years working for KPMG in Hong Kong before joining Morgan Stanley in London in 1984. David Nicol is on the Board of the Chartered Institute of Securities and Investments, the Council of the Institute of Chartered Accountants of Scotland and is a member of the Appointment Committee of the Hermes Property Unit Trust. David joined the Board as a Non-Executive Director in March 2012 and was subsequently appointed as Chief Executive in March 2013.

Andrew Westenberger, FCA Finance Director Andrew Westenberger joined the Board in January 2013. He was Group Finance Director of Evolution Group PLC from 2009 until August 2011 and a Director of its principal subsidiary Williams de Broe Limited. Andrew qualified as a chartered accountant with Coopers & Lybrand, and from 2000 to 2008 held various senior finance roles in London and New York with Barclays Capital.

Stephen Ford, FCSI, CAIA Head of Investment Management Stephen Ford joined Brewin Dolphin in March 2000 and has held a number of senior management roles. He was appointed as a Director of the operating company, Brewin Dolphin Limited in 2009 and of Brewin Dolphin Holdings PLC in March 2013. Stephen previously led the financial services division at a regional Building Society and holds the Chartered Wealth Manager and Chartered Alternative Investment Analyst designation.

32 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Michael John Ross Williams, FCSI Executive Director Michael Williams joined Brewin Dolphin & Co. in 1968 and became a partner in 1978. He has consistently been involved in portfolio management. He joined the Brewin Dolphin Holdings Board on incorporation in 1987. Governance Directors’ Report &

Francis Edward (Jock) Worsley, OBE, FCA (a)* (n) (r) rk) Senior Independent Director Jock Worsley is a chartered accountant. He was appointed to the Board in September 2003. He was a founder of the Financial Training Company and its Executive Chairman from 1972 until 1993. He has been President of the Institute of Chartered Accountants of England and Wales, Deputy Chairman of Lautro, a member of the Building Societies Commission and Independent Complaints Commissioner for SIB and the FSA. He was Chairman of the Cancer Research Campaign from 1998 until its merger in 2002 with the Imperial Cancer Research Fund.

Angela Ann Knight, CBE (a) (n) (r)* (rk)* Non-Executive Director Angela Knight was a Councillor and Chief Whip on Sheffield City Council from 1987 to 1992. She entered Parliament in 1992 as MP for Erewash and was Economic Secretary to the HM Treasury between 1995 and 1997. She was Chief Executive of The Association of Private Client Investment Managers and Stockbrokers from September 1997 to December 2006 & Chief Executive of the British Bankers Association from April 2007 to July 2012. She is currently Chief Executive of Energy UK and a non- executive director on the Board of Tullett Prebon PLC and a Non-Executive member of Transport for London. Angela was appointed as a Non-Executive Director in July 2007.

Sir Stephen Mark Jeffrey Lamport, KCVO (a) (n)* (r) rk) Non-Executive Director Sir Stephen was appointed as a Non-Executive Director in March 2007. He served in the Diplomatic Service from 1974 to 1993. In March 1993, he joined The Prince of Wales’s Household as Deputy Private Secretary and was appointed Private Secretary and Treasurer to The Prince of Wales in October 1996. From October 2002 to December 2007, he was Group Director for Public Policy and Government Affairs for The Royal Bank of Scotland. In August 2008 he was appointed Receiver-General of Westminster Abbey. He was appointed KCVO in 2002. He is Deputy Lieutenant for Surrey and sits on a number of Boards for charitable organisations.

(a) Member of the Audit Committee (n) Member of the Nomination Committee (r) Member of the Renumeration Committee (rk) Member of the Risk Committee * Denotes Committee Chairman 33 Directors’ Report

The Directors present their report and the audited accounts person has any special rights of control over the Company’s for the 52 week period ended 29 September 2013. The share capital and all issued shares are either fully or nil paid. comparative figures are for the 52 week period ended The Company has over the last three year period, issued a 30 September 2012. total of 7.4% of its issued share capital of ordinary shares in Review of the Business and its Future Development relation to the acquisition of businesses and client Accompanying this Directors’ Report are the Strategic Report, relationships. Corporate Governance Report, Corporate Responsibility Financial Instruments and Risk Management Report, Risk Committee Report, Audit Committee Report and Disclosures regarding financial instruments are provided Directors’ Remuneration Report. These reports form part of within the Strategic Report and note 26 to the financial the front half of the Annual Report. statements. Note 26 also contains details of risks and risk A review of the business and its future development is set management. out in the Strategic Report. A description of the principal Branches risks and uncertainties is given on page 27 of the Strategic Operations are carried out in the UK, Channel Islands and Report. Republic of Ireland. Details of branches are set out on Cautionary Statement page 124. The review of the business and its Future Development in Directors the Annual Report has been prepared solely to provide The directors are listed on page 123. Biographies of the additional information to shareholders to assess the Group’s directors are given on pages 32 and 33.1 strategies and the potential for these strategies to succeed. It should not be relied on by any other party for any other With regard to the appointment and replacement of purpose. The review contains forward looking statements directors, the Company is governed by its Articles of which are made by the Directors in good faith based on Association, the UK Corporate Governance Code 2012 (the information available to them up to the time of the approval “Code”), the Companies Act 2006 and related legislation. of these reports and should be treated with caution due to The Articles themselves may be amended by special inherent uncertainties associated with such statements. The resolution of the shareholders. The powers of directors are Directors, in preparing this Strategic Report, have complied described in the Corporate Governance Report on page 39. with s417 of the Companies Act 2006. Directors’ Interests in Shares and Substantial Results and Dividends Shareholdings The results of the Group are set out in detail on page 70. The interests of the directors in the shares of the Company The Company paid a final dividend and an interim dividend are set out on page 59 in the Directors’ Remuneration during the period, as detailed in note 14 to the financial Report. The interests of substantial shareholders and statements. A final dividend of 5.05 pence per ordinary share directors are set out on page 121. is proposed and if approved, will be payable on 28 March Directors’ Indemnities 2014 to shareholders on the register at close of business on The Company has made qualifying third party indemnity 28 February 2014. provisions for the benefit of its directors during the period Capital Structure and these remain in force at the date of this report. Details of the Company’s authorised and issued share Substantial Shareholdings capital, together with details of the movements therein are As at 29 September 2013, the Company had received set out in note 28 to the financial statements. This includes notifications in accordance with the Financial Conduct the rights and obligations attaching to shares and restrictions Authority’s Disclosure and Transparency Rule 5.1.2 of the on the transfer of shares. The Company has one class of following interests of 3% or more in the voting rights of ordinary shares which carry no right to fixed income. the Company. There are no specific restrictions on the size of a holding nor on the transfer of shares, which are both governed by the % of general provisions of the Articles of Association and Date of Number of voting prevailing legislation. The Directors are not aware of any Shareholder notification voting rights rights agreements between holders of the Company’s shares that Norges Bank 04/06/2013 10,244,649 3.76 may result in restrictions on the transfer of securities or on Kames Capital 30/04/2013 23,977,303 8.79 voting rights. Details of employee share schemes are set out FIL Investment 06/12/2012 12,477,394 4.57 in note 30. Shares held by Computershare (Trustees) Limited International abstain from voting. Under the rules of the Group’s Share Aberforth Partners 04/04/2012 11,494,100 4.21 Incentive Plan (“BDSIP”), shares are held in trust for Legal & General 28/11/2008 8,563,901 3.14 participants by Equiniti Share Plan Trustees Limited (the “Trustee”). Voting rights are exercised by the Trustees on A notification under DTR 5.1.2 was received from Royal receipt of the participant’s instructions; if no such instruction London Asset Management on 13 November 2013 that their is received by the Trustees then no vote is registered. No interest in total voting rights is 13,810,865 (5.06%). There

1 Ian Dewar’s biography is given in the notice of AGM. 1 Ian Dewar’s biography is given in the notice of AGM.

34 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 were no other changes between the date of this report and 30 November 2013. Annual General Meeting The Annual General Meeting (“AGM”) will be held at 11.30am on 17 February 2014 at The Lincoln Centre, 18 Lincoln’s Inn Fields, London, WC2A 3ED. The Notice of Meeting will be posted to shareholders in January 2014. Purchase of Own Shares At the Annual General Meeting on 22 February 2013 shareholders approved a resolution for the Company to make purchases of its own shares to a maximum number of 25,284,375 ordinary shares. This resolution remains valid until the conclusion of the next Annual General Meeting in 2014. As at 3 December 2013 the Directors had not used this authority. Employees The average number of persons, including directors, employed by the Group and their remuneration, is set out in note 7 to the financial statements. Political Donations No political donations were made during the period (2012: £nil).

Auditor Governance Directors’ Report & Each of the persons who is a director at the date of approval of this annual report confirms that: • so far as the director is aware, there is no relevant audit information of which the Company’s Auditor is unaware; and • the director has taken all steps that he/she ought to have taken as a director in order to make himself/herself aware of any relevant audit information and to establish that the Company’s Auditor is aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006. Deloitte LLP has expressed its willingness to continue in office as auditor and a resolution to reappoint them will be proposed at the forthcoming Annual General Meeting.

By order of the Board Brewin Dolphin Holdings PLC – no. 2685806

Louise Meads Secretary 3 December 2013

35 Corporate Responsibility

As a leading UK company, we take very seriously our getting to know our clients so that we can do the very best responsibilities as a corporate citizen. We are proud of the for them. We are constantly striving to be better, to work contribution we have made to the UK and to the local harder for our clients and provide a better offering. communities in which we have operated over the past People 250 years. Our primary goal today is to create shareholder We recognise that our people are our greatest assets and value, but in a responsible way which serves all stakeholders that to deliver on the standards we set for ourselves we and the wider society. need to attract, nurture and retain the best people. One of We aim to manage the business responsibly and for the our objectives is to be the employer of choice within the long-term benefit of all stakeholders: clients, shareholders, wealth management sector. We seek out the best available employees, regulators, suppliers and local communities. advisers in the UK, with strong client focus, professionalism and integrity. Corporate Citizenship Governance The Board share a strong commitment to responsible Diversity and Inclusion management. Our Chairman, Simon Miller is responsible for Brewin Dolphin is an inclusive employer and we view this as Corporate Responsibility. a critical component of our success. It allows us to be more creative, bring more value to our clients and to create a more Our Culture enriching environment for our employees. With a rich heritage, Brewin Dolphin has developed into a modern public company, whilst retaining the values of The Board has a strong commitment to maintaining a founding members. Our key values are integrity, teamwork working environment based on equality and diversity. All and client focus and these have been developed over our employment decisions are made irrespective of colour, race, long history. Our cultural values underpin everything that we age, nationality, ethnic or national origin, sex, mental or do and these values have been a key factor in our success physical disabilities, marital status or sexual preference. For as a leading discretionary wealth manager. They have employees who may have a disability, the firm ensures where allowed us to recruit and retain some of the most talented possible that procedures and equipment are in place to aid people in the industry, serve our clients in the best way and them. For the purposes of training, career development and provide returns for our shareholders. As the Group continues promotion, all employees are treated equally. Applications for on its journey, and as we develop our strategic plans, no employment by disabled persons are always fully doubt many changes will take place but our values will considered, with regard to the aptitude of the applicant remain constant. concerned. In the event of employees becoming disabled, every effort is made to ensure that their employment within Governance the firm continues and that appropriate training is arranged, We view sound governance as a critical component of with suitable equipment supplied in order that they can Brewin Dolphin’s success and it remains of the highest continue in their role. It is the policy of the firm that the priority. A robust operating environment and compliance and training, career development and promotion of disabled risk control culture is at the heart of how we work. We have persons should, as far as possible, be identical to that of an effective and engaged Board, with strong non-executive other employees. presence and well-functioning governance committees. Through our compensation policies and employee profit At the end of September 2013, the overall female ratio for share scheme, we seek to ensure that our values are the Group was 45%, with a female senior manager ratio of reinforced in employee behaviour and that effective risk 14%. The Board has committed to a diversity target of 25% management is encouraged. for the Board and is considering ways in which this can best be achieved. More information on our corporate governance can be found on page 39. People Development Brewin Dolphin is a meritocracy – we recognise hard work, Business standards and clients behaviour aligned to our values and a commitment to the Our focus on our clients drives everything that we do. Many firm, its objectives and its clients. We support the advanced of our clients and their families have entrusted us to look development of our emerging leaders and invest heavily in after their wealth for generation after generation – a employees. Our development opportunities take place both testament to the high quality of personal service we continue in the classroom and in the workplace. Brewin Dolphin’s to provide. Brewin Dolphin pursues business standards of training and development programmes centre around the highest excellence, leading to rewarding and enduring creating leaders able to provide the best possible service for partnerships with our clients. We take an integrated our clients and this is done through managing and approach to protecting and growing wealth that combines developing our talent. The Brewin Dolphin Graduate Trainee our skills and experience in both investment management Scheme and the work experience scheme continue to and financial planning. We work hard to retain the trust provide a structured and wide ranging programme for new placed in us and to continue to deliver a high quality service. entrants to wealth management. Through this programme Our aim is to be the trusted advisor of choice and we work we contribute to local economies through offering in partnership with our clients to achieve this. We spend time opportunities for work experience.

36 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Employee Engagement Brewin Dolphin Foundation Delivering on our objectives requires employees to be In recognition of Brewin Dolphin’s 250th anniversary, the engaged and play an active role in achieving the firm’s Brewin Dolphin Foundation was born. The fundamental aim objectives. To this end the Board seeks to ensure that all of the Foundation is to increase the positive contribution we employees are aware of and are consulted upon desired make to the world outside Brewin Dolphin. Staff are able to behaviours and financial and economic factors affecting the apply to the Foundation for grants for small charities that performance of the company. support the local community. In the first year we have seen good levels of applications to the grant making scheme and We empower employees through regular communications look forward to increasing our grant making levels in the which outline the direction of the firm, its strategy and coming year. financial performance. We view this as a critical component of our employee engagement programme as it enables engagement in the firm’s vision and strategy. We consult employees on matters that affect their interests and encourage the involvement of employees in the Group’s performance through the discretionary bonus scheme. Health and Safety We view our business as a community to which our Fundraising employees belong. We work hard to ensure that the working Both on an individual and team level, in the last financial year, environment is safe and conducive to healthy and happy Brewin Dolphin staff raised over £100,000 for their chosen employees who are able to balance work and family causes which the Company further supplemented in commitments. The Group has a Health and Safety at Work fundraising matching. These included climbing mountains, policy which is reviewed annually by the Board. The Group organising charity football tournaments, cake sales, long Board Executive Director responsible for health and safety is distance bike rides, marathons, bake offs, and quadrathlons, David Nicol.

for charities such as Leukaemia and Lymphoma Research, Governance Directors’ Report & The Group is committed to the health and safety of its Macmillan Cancer Support, Children First, Cancer Research employees, clients, sub-contractors and others who may be UK and Friends of ANCHOR (Aberdeen Royal Infirmary). affected by our work activities. The Group evaluates the risks Many individual offices have also nominated charity partners, to health and safety in the business and manages this and their annual fundraising efforts have included supporting through an effective Health and Safety Management System. local hospices, Exeter Royal Academy for Deaf Education, The Group provides necessary information, instruction, Devon Air Ambulance, Ninewells Cancer Campaign, The training and supervision to ensure that employees are able to Prince’s Trust, Warning Zone, Walk on Wales and The discharge their duties effectively. The Health and Safety Laura Centre. Management System used by the Group ensures Payroll Giving compliance with all applicable legal and regulatory We offer the opportunity for employees to participate in requirements and internal standards and seeks by payroll giving. In the first year of the Brewin Dolphin continuous improvement, to develop health and safety Foundation, we received the Payroll Giving Bronze award, performance. awarded by the Institute of Fundraising, in recognition of the Communities Group’s commitment to payroll giving. Brewin Dolphin is committed to the communities in which it Volunteering and Education operates and encourages its employees to participate in In the past year we have supported local school children in local initiatives. We take an active role in contributing to local conjunction with Enabling Enterprises and Careers communities and our efforts range from local sponsorships Academies and we are proud to help provide bursaries for and volunteering, to offering work experience schemes. underprivileged children at the Reeds School in Surrey. Many Employees also take great pride in the impact they make to of our employees volunteer to organisations of their choice their local communities and regularly demonstrate a passion across the country. for making a difference.

37 Corporate Responsibility (continued)

Local sponsorships and community support Environmental Sustainability We are actively involved in our local communities and are Brewin Dolphin has a firm commitment to reducing its proud to support many local causes. We have been a environmental impact and managing the business in a long-term supporter of Durham County Cricket team and the sustainable way. The Board has reviewed areas where there Arundel and Cheltenham Cricket Festivals. For the second may be environmental risk from direct actions by the firm year running we sponsored the Big Bike Ride, a 400 mile and we encourage employees and suppliers to take actions cycle from Durham to Lords in aid of the PCA Benevolent to reduce their environmental impact. The Group’s Fund and the Tom Maynard Trust. We also support environmental policy is published on our website www. numerous other local events such as the Scottish Schools brewin.co.uk. Full disclosures concerning greenhouse gas Rugby Tournament, Marlborough Jazz and Literature emissions for its 2014 financial year end, as required by The Festivals, Ilkely Literature Festival, Taunton Flower Festival, Companies Act 2006 (Strategic Report and Directors’ New Forest Show, Moy Highland Field Sports Fair, the Report) Regulations 2013, will be included in next year’s Chalke Valley History Festival and the Borders Book Festival. Annual Report. The Group’s major suppliers mainly provide market data and computer hardware and software. Our external consultants with whom we work seek to minimise our computer footprint through virtualisation or consolidation of services wherever possible. Replacement of equipment is in accordance with this policy. Obsolete computer equipment is passed to Euro Recycling who provide a fully compliant WEEE service which adheres to the EU Waste Electrical and Electronic Equipment Directive (WEEE Directive). The WEEE Directive aims to minimise the impact of waste electrical and electronic goods on the environment, by increasing re-use and recycling and reducing the amount of WEEE going to landfill. Travel Brewin Dolphin utilises virtual communications wherever possible to reduce our carbon footprint and measures to Brewin Dolphin Birmingham hosted a five-a-side football reduce travel are encouraged. The impact of the travel tournament for 12 local businesses in aid of Leukaemia and undertaken by our employees in the course of their duties is Lymphoma Research (LLR). shown in the following table. CO2 emissions for the 52 week period to 29 September 2013 are outlined below.1

Tonnes

Emissions CO2e Air 247 Rail 213 Road 765 1,226

1 The data has been collected for all our branches, and calculated in accordance with the guidelines set out in DEFRA Guidance on How to Report GHG Emissions.

Paper and materials The majority of our paper used is from sustainable sources and is produced in accordance with the Forest Stewardship Council and, where possible, the materials used are made up of 50% recycled and 50% virgin wood fibre for our Brewin Roulers at the finish line in Paris reports, client reports, letterhead and marketing materials. The Company makes every effort to improve its environmental footprint through the encouraged use of double sided printing, electronic communication, both to and from its clients, and internally by the widespread use of the intranet and email communication. Recycling of paper, toners and printer cartridges is encouraged across the Group. Through its confidential paper recycling programme, the Group has recycled over 383,000 kgs during the period, which is the equivalent of saving 6,517 trees and 959 cubic metres of landfill.

38 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Corporate Governance

Compliance with the Code decision making process and the rigorous level of challenge The Directors are committed to a high standard of corporate provided by him evidence that he remains independent in governance and to compliance with the best practice character and judgement. provisions of the UK Corporate Governance Code (“the Details of attendance of the individual members of the Board Code”), which was issued by the Financial Reporting Council at its meetings during the year is shown in the table below. in 2010 and revised in September 2012. The following statement, the Directors’ Remuneration Report, the Audit Maximum Committee Report, the Risk Committee Report and the possible Strategic Report explain how the provisions set out in the attendance Total Code have been applied by the Group and detail the S Miller 14 14 Group’s compliance with the provisions of the Code for the D Nicol 14 14 year. The Directors consider that the Company has been in J Worsley 14 13 compliance with the provisions set out in the Code S Ford1 8 7 throughout the 52 weeks ended 29 September 2013, A Knight 14 14 except for the following circumstances: S Lamport 14 11 A Westenberger2 11 11 • The requirement under the code (B.1.2) for at least half M Williams 14 14 the Board, excluding the Chairman, to comprise J Matheson3 6 6 Non-Executive Directors was not met during the year. H Algeo3 6 6 3 The Company is compliant with this provision since the I Speke 6 6 3 appointment of Ian Dewar on 15 November 2013. For S Soar 6 6 B Howard3 6 6 details of the position before this appointment, see R Bayford4 3 3 below section ‘The Board’. D McCorkell5 0 0

• In designing schemes of performance-related 1 appointed 20/03/2013 remuneration, the remuneration of Directors fully 2 appointed 01/01/2013

3 Governance Directors’ Report & complies with the provisions in Section D to the Code, resigned 20/03/2013 4 resigned 31/12/2012 save for Michael Williams, Executive Director which does 5 resigned 22/10/2012 not fully comply with Section D.1.1 and Schedule A of The Chairman and Non-Executive Directors meet periodically the Code. Michael Williams’ profit share participation is without executive directors present and at least once a year, determined by reference to his own team’s investment the Senior Independent Director meets with Non-Executive management performance in line with other investment Directors without the Chairman present. managers within the Group. One third of bonus above £50,000 is compulsorily deferred into shares. The Board delegates primary responsibility for managing the day to day running of the Group to the Chief Executive, The Board supported by an Executive Committee, see page 40 for At 29 September 2013 the Board had eight members, further details, but maintains a formal schedule of matters comprising the Chairman, four Executive Directors and three which require direct Board oversight and/or approval. This Non-Executive Directors. David McCorkell resigned as a schedule is approved by the Board annually. The matters for Director with effect from 22 October 2012. Jamie Matheson, which approval is retained by the Board include: Henry Algeo, Sarah Soar, Ben Speke and Barry Howard resigned as Directors with effect from 21 March 2013 and • Setting of Group strategy and long term objectives; Stephen Ford was appointed on the same date. Ian Dewar was appointed as a Non-Executive Director on 15 November • Annual operating and capital expenditure budgets and 2013. Jock Worsley, currently the Senior Independent any material changes to them; Director, has stated his intention to retire from the Board at • Changes to capital or corporate structure; the 2014 AGM. Angela Knight will be nominated as Senior Independent Director following Jock’s retirement in February • Interim and Annual report and accounts and financial 2014. Biographies of all the current directors are presented statements; on pages 32 and 33. Biographies of the recently appointed • Dividend policy and declaration of dividends; Non-Executive Director, Ian Dewar, will be included in the notice of the AGM. Each of the Non-Executive Directors is • Major capital projects, material contracts, major considered by the Board to be independent, notwithstanding investments or disposals; the fact that Jock Worsley has served in excess of nine years • Changes to Board composition; on the Board. The non-executive directors provide a strong, independent element on the Board and are well placed to • Remuneration policy and any introduction of or changes constructively challenge and scrutinise the performance of to share incentive plans; management. They bring robust opinions, knowledge and • Major change in Group Pension Scheme; skill to Board discussions. The Board has considered Jock Worsely’s independence in light of the length of his • Material litigation; and appointment and is in no doubt that his thinking and • Directors’ and Officers’ Liability insurance.

39 Corporate Governance (continued)

Additionally, the Board retains direct responsibility for After due consideration, the Chairman confirms that all reviewing Group performance and ensuring that a sound directors continue to perform effectively and demonstrate system of internal control and risk management is commitment to the role and recommends that all directors maintained. be re-elected by shareholders, with the exception of Jock Worsley who retires at the 2014 AGM. The biographical In addition to the scheduled Board meetings, the Board also details of the Directors’ can be found on pages 32 and 33. has a separate meeting devoted to reviewing the Group’s Ian Dewar has been appointed by the Board after the year strategic objectives, which provides a further opportunity for end and a resolution for his re-appointment will be included all directors and particularly the non-executive directors, to in the notice of AGM, along with biographical details. ensure that the strategy is rigorously reviewed and challenged and that the processes in place for assessing its Directors’ Conflicts of Interest implementation are effective. The Board has a policy and effective procedures for managing and, where appropriate, approving conflicts or Development potential conflicts of interest. It is a recurring agenda item at Appropriate training and induction is made available to newly all Board meetings and gives each Director the opportunity appointed directors, taking into account any previous to raise any conflict of interest they may have, or to update experience they may already have as directors of a public the Board on any change to a previous conflict of interest limited company or otherwise. Training sessions are already lodged. A Register of Conflicts is held by the undertaken for the entire Board and individually as Company Secretary and a log of all conflicts raised is appropriate. maintained and updated accordingly. All Directors are aware The Roles of the Chief Executive and Chairman that it is their responsibility to raise and update any conflicts There is a clear division of duties between the Chief of interest they may have. Executive and the Chairman, with roles that have been Committees of the Board clearly defined in writing and are reviewed annually and The Board had five standing committees at the end of the agreed by the Board. This ensures that a clear balance of year: the Nomination Committee, Remuneration Committee, power and authority is present. Audit Committee, Risk Committee and the Executive Board Evaluation Committee. These Committees have written terms of In line with the Code, a formal evaluation of the Board and its reference, which are reviewed regularly and any Committees is carried out on an annual basis. In 2013, the amendments approved by the Board. Minutes of all Board process involved individual directors meeting with the Committee meetings are reviewed by the Board. Chairman to discuss an agreed list of topics designed to Membership of the Committees is as set out on pages 41 to cover all key areas of Board effectiveness. A non-attributable 42. The terms of reference of the Committees can be viewed summary of the comments and recommendations were on the Company’s website, together with Committee discussed and reviewed by the Board. The discussions membership. related to the performance and structure of the current All the Committees are able to call on independent Board, i.e. since 21 March 2013. There were no material professional advisers if they consider it necessary. areas of concern highlighted though some areas for improvement were identified and the Board agreed Executive Committee appropriate actions to address these areas. Overall, the The Committee comprises the four Executive Directors plus evaluation process confirmed that the Board was operating the Head of Human Resources, the Head of Risk and effectively within a culture that allowed open and challenging Regulation and the Chief Administration Officer. The role of debate and that all directors individually made valuable the Executive Committee is to manage the day to day contributions and demonstrated commitment to the role. An running of the Group, including the development and external evaluation of the Board was last conducted in 2011 implementation of strategy, the monitoring of operating and and it is the Board’s intention that an external facilitator will financial performance, the prioritisation and allocation of be used next year. resources and the assessment and control of risk. Appointment of Directors Nomination Committee The Company’s Articles of Association, the Companies Act Composition and Responsibilities 2006 and other applicable regulations and policies govern The Committee comprises Sir Stephen Lamport (Chairman), the appointment of the directors. The directors’ service Jock Worsley, Angela Knight, Simon Miller and David Nicol. agreements or letters of appointment (as applicable) are The Committee is responsible for reviewing the composition available for viewing via the Company Secretary. Directors of the Board and Board Committees to ensure they are may be elected by shareholders in a general meeting or properly constituted and balanced in terms of skills, appointed by the Board of directors in accordance with the experience and diversity. provisions of the Articles of Association. In accordance with the Code all directors will be subject to annual re-election at the Annual General Meeting.

40 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 In addition to this, it: Egon Zehnder does not have any other connection with the Company. • manages the search process for new directors; Simon Miller, previously Deputy Chairman, was appointed as • recommends to the Board the appointment of new Chairman on 21 March 2013, in accordance with the directors; and Board’s succession planning. • considers succession plans for the Board and other A table detailing the attendance of the individual members of senior roles. the committee during the year is shown below: Main activities of the Committee during the year During the year, the Nomination Committee met six times, to Maximum Number of consider the appointment of a new Chief Executive and two number of meetings Non-Executive Directors in addition to its regular review of meetings attended Board composition and succession plans. The process for S Lamport (Chairman) 6 6 Board appointments is for the Committee to prepare a role A Knight 6 6 specification following an evaluation of the requirements of a S Miller 6 5 specific role, such as that of the Chief Executive, or of the D Nicol 6 6 general balance of skills and experience on the Board in the J Worsley 6 6 case of non-executive appointments. The Committee then J Matheson1 2 1 appoints independent external search consultants to identify 1 resigned 20/03/2013 suitable candidates, conducts interviews of short-listed candidates, and recommends an appointment subject to Remuneration Committee Board approval. Recommended candidates are then The Remuneration Committee is chaired by Angela Knight interviewed by all other Board members before an (since 21 March 2013) and the other members are Jock appointment is made. The Board believes that appointments Worsley and Sir Stephen Lamport. Further information on should be based on merit, compared against objective

the work of the Remuneration Committee can be found in its Governance Directors’ Report & criteria, with the ultimate aim of ensuring the Board has the report on page 49. right skills, knowledge and experience that enable it to discharge its responsibilities properly. Consideration of the A table detailing the attendance of the individual members of benefits of diversity on the Board in all its aspects, including the Committee during the year is shown below: gender, is an important part of this process. The Board has reviewed its policy on gender diversity during the year and Maximum Number of has committed to an aim that at least 25% of its members number of meetings will be women by September 2015. Women currently meetings attended represent 12.5% of the Board and 14% of the Executive A Knight1 (Chairman) 12 12 Committee. Further information on diversity within the Group S Lamport 12 11 can be found on page 36. S Miller2 12 12 J Worsley3 9 9 The Committee interviewed a selection of head-hunters and 1 appointed Chairman 20/03/2013 appointed Egon Zehnder to assist in the recruitment of a 2 resigned as Chairman 20/03/2013 chief executive. David Nicol a Non-Executive member of the 3 resigned 01/01/2013 and appointed 20/03/2013 Board, indicated that he would like his name to be considered. With immediate effect he took no further part in Audit Committee the selection process. He was interviewed by the The members of the Audit Committee are Jock Worsley Committee, independently referenced by Egon Zehnder, (Chairman), Angela Knight and Sir Stephen Lamport (from approved by the regulator and appointed as Chief Executive 21 March 2013). Jack Worsley has notified his intention not on 21 March 2013. Two other candidates, one internal and to stand for re-election at the 2014 AGM and Ian Dewar will one external, were interviewed for the post. become Chairman of the Audit Committee after the AGM. Details of meeting attendance of the individual members of As part of the changes to the composition of the Board the Committee during the year are shown below: made in March 2013 and the planned retirement of Jock Worsley at the 2014 AGM, the Committee identified the need to appoint two new non-executive directors to the Maximum Number of Board. Egon Zehnder was appointed as the external adviser number of meetings meetings attended for these searches and provided with role specifications prepared by the Committee. Ian Dewar was appointed as J Worsley (Chairman)1 10 10 non-executive director on 15 November 2013. Ian will A Knight 10 9 2 become the Chairman of the Audit Committee following S Lamport 5 5 S Miller3 5 4 Jock Worsley’s retirement at the AGM in February. The D Nicol4 5 5 process for identifying and appointing one other non- executive director is in progress. 1 appointed Chairman 20/03/2013 2 appointed 20/03/2013 3 resigned 20/03/2013 4 appointed Chairman 01/01/2013 and resigned from Committee 20/03/2013

41 Corporate Governance (continued)

A separate Audit Committee Report is set out on page 46 They report as follows: and provides details of the role, composition, responsibilities i) There is an ongoing process for identifying, evaluating and of the Committee and its relationship with internal and managing the significant risks faced by the Group as external auditors. outlined above. This has been in place for the period under Board Risk Committee review and up to the date of approval of the annual report The members of the Risk Committee are Angela Knight and accounts. It is regularly reviewed by the Board and (Chairman), Jock Worsley, Sir Stephen Lamport (from accords with the revised Turnbull guidance in the Code. Any 21 March 2013) and the Group Head of Risk and Regulation. system of internal control is designed to highlight and Further information is given in the Risk Committee Report on manage rather than to eliminate the risk of failure to achieve page 44. business objectives, and can provide only reasonable, and not absolute, assurance against material misstatement or Details of meeting attendance of the individual members of loss. The Board has implemented the ‘Three Lines of the committee during the year are shown below: Defence’ model to ensure a robust and effective framework to manage internal controls and risks across the Maximum Number of organisation. It facilitates the decision making process while number of meetings providing effective governance around risk management and meetings attended assurance. A Knight1 (Chairman) 5 5 S Lamport2 3 3 ii) Financial results, key operating statistics and controls are J Worsley 5 5 reported to the Board regularly, and variances are followed S Miller3 2 2 up. Regular reports are received from the Risk & Compliance D Nicol4 1 1 and Internal Audit functions. Head of Regulation and Risk 5 5 iii) The Directors have reviewed the Group’s system of 1 appointed Chairman 01/01/2013 internal controls and compliance monitoring and believe that 2 appointed 20/03/2013 3 resigned 20/03/2013 these provide assurance that problems have been identified 4 appointed 01/01/2013 and resigned 20/03/2013 on a timely basis and dealt with appropriately throughout the period under review and up to the date of approval of the Internal Control and Risk Management annual report and accounts. Both the Audit Committee and The Board undertakes a full review of all aspects of the the Board Risk Committee assist the Board in discharging its Group’s business to identify the main risks to the business review responsibilities. and the key controls to counter those risks. The Board recognises that its risk management strategy is essential for iv) There is a whistleblowing policy detailing the internal or achieving good business governance to protect stakeholders external procedures through which employees are able to and enhance shareholder value. The Board has adopted a raise any concerns. risk-based approach to establish a system of internal Company Secretary control. It reviews its effectiveness periodically, by receiving The Company Secretary is responsible for advising the ongoing reports on internal control from the Audit Committee Board on all Corporate Governance matters as well as and the Board Risk Committee. ensuring good information flows within the Board and its An explanation of the Group’s Risk framework is given in the Committees. All Directors have access to the services of the Risk Committee report on page 45. Company Secretary and may take, if necessary, independent, professional advice at the Company’s expense. Business Continuity Management is embedded within the business and is reviewed and tested periodically. The Board Insurance recognises the potential operational and financial losses The Company maintains appropriate insurance cover in associated with a service interruption and the importance of respect of litigation against the Directors. 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.

42 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Relationship with Shareholders The Company places a great deal of importance on communication with shareholders and aims to keep shareholders informed by regular communication. The Chairman, Chief Executive, Finance Director and Head of Investment Management meet regularly with the Group’s institutional investors, analysts and financial press. Annual and Interim reports are distributed to other parties who may have an interest in the Group’s performance and the Group’s website is kept up-to-date covering all corporate activity. The Board is provided with regular feedback following meetings with shareholders. The Company recognises the importance of ensuring effective communication with all of its shareholders. The Company welcomes all shareholders to its AGM, with the opportunity to ask questions formally at the meeting or more informally with all members of the Board afterwards. The Company’s policy is to announce the number of proxy votes cast on resolutions at the AGM. For shareholders who are clients of Brewin Dolphin Limited and who hold their shares in one of our nominee accounts, we provide an on-line voting service on the Group website for shareholders to vote before our AGM. Model Code The Company has its own internal dealing rules which extend the FCA Listing Rules Model Code provisions to all Governance Directors’ Report & employees.

Louise Meads Company Secretary 3 December 2013

43 Risk Committee Report

Board Risk Committee Chairman’s Statement The Committee is responsible for reviewing: Assessing, quantifying and controlling risks is a vital • the alignment of the Group’s strategy to the risk ingredient of good governance for all companies. In financial appetite, tolerance and policy of the Board; services, risk and risk management is of particular importance. The Company has been reviewing and changing • the quality of the Group operating structure as a a number of aspects of its operation as set out elsewhere in mitigation and key control to Group-wide risks; this report and as part of this process, we have been making • the quality and timeliness of the Company’s overall risk considerable enhancements to the Group’s risk assessment processes that inform the Board’s decision management during the year. The risk register has been making; redesigned to categorise risk exposures more easily and to use a common framework for historical loss, risk appetite • the Company’s capability to identify and manage new and the assessment of risk profile. risk types and the overall adequacy of stress testing; Further improvements will be made in 2013/14 by creating a • reports detailing any material breaches of risk limits and clearer framework for aligning key risk indicators with the the adequacy of proposed action; Board’s appetite for risk and harmonising risk assessment • the adequacy and effectiveness of the Company’s risk methodology for operational and regulatory risks. Taken management systems including procedures for the together, this will strengthen clarity and consistency across identification, assessment and reporting of risks and all types of operational risk. reviewing and approving the statements to be included The Committee has remained closely interested in the in the annual report concerning risk management; and development of the Group’s investment processes. We see • the remit of the risk management function and ensuring this as a key part of the Group-wide initiative to remain in the it has adequate resources and appropriate access to forefront of efficiency and standards that underpin excellence information to enable it to perform its function effectively of service and assurance that all our clients are treated fairly and in accordance with the relevant professional and receive suitable advice. standards. The Committee also ensures the function This report sets out a summary of the Committee’s work has adequate independence. across the last year and will be building on these issues in The Committee reports on its proceedings to the Board and the year ahead. on any appropriate matters to the Audit Committee, Committee members identifying any issues it considers where action or The Board Risk Committee (“the Committee”) is chaired by improvement is needed and making recommendations on Angela Knight and comprises three independent Non- the steps to be taken. The Board Risk Committee works Executive Directors (Angela Knight, Sir Stephen Lamport and closely with the Audit Committee in ensuring that all aspects Jock Worsley) plus the Group Head of Risk and Regulation. of the Group’s risks are considered. Other executives such as the Chief Executive, Finance Director, Head of Investment Management and representatives from internal and external audit are invited to attend meetings where appropriate. Role and responsibilities of the Board Risk Committee The Committee was formed in October 2011 in recognition of the increasing importance and complexity of risk. It has assumed the responsibilities in relation to risk that were previously under the remit of the Audit Committee. The Committee has oversight of the risk management framework of the Group and specifically the effectiveness of risk management, governance and regulation activity within the Group. The Committee supports the Board in its consideration of the business activities that expose the business to material risks, taking into account forward- looking aspects of risk exposure. The Committee advises the Board on the considerations and process for setting the Risk Appetite and related tolerances. The Board retains responsibility for approval of the Risk Appetite. The terms of reference are reviewed annually by the Committee and are then referred to the Board for approval.

44 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 At an executive level the Risk Management Committee Risks and uncertainties meets quarterly to review risk and compliance management The principal risks to the business are assessed and information and progress mitigation initiatives. The Risk reviewed by the Risk Management Committee and Executive Management Committee is chaired by the Head of Risk and Committee and subsequently submitted to the Board Risk Regulation and includes the Chief Executive, Head of Committee for recommendation to the Board. The principal Investment Management, the Head of Dealing, the Finance risks are formally approved by the Board twice a year. Director and heads of key support functions. Operational The Group’s risk management policies and procedures are and regulatory risk issues are a standing agenda item for the set out in the Corporate Governance Report. Further Committee which acts as an escalation point for issues discussion of the Group’s exposures to financial risks are arising from internal, external and regulatory audits. The Risk included in note 26 to the financial statements. Management Committee is supported by the Risk and Controls Committee which provides a forum for reviewing The Group’s principal risks are categorised as strategic, operational risks and controls. The current framework of the business, operational and financial. It is recognised that Risk Committees is shown below: reputation risk is an important consequential impact and this has been identified as a business risk. The Group has Brewin Dolphin Holdings PLC deployed a range of preventative and detective controls and Brewin Dolphin Limited which together with risk transfer through insurance mitigate Boards its risks. These are kept under regular review to ensure that the Group manages its risk profile within its appetite and capacity for risk. A description of the Group’s principal risks and uncertainties, Board Risk Committee Executive Committee together with the key mitigants and controls are set out in the Strategic Report on page 27. Governance Directors’ Report & Risk Management Committee Angela Knight Chairman of the Risk Committee 3 December 2013 Risk & Controls Committee

Reporting line

Additional reporting line

Overview of the work undertaken by the Committee during the year The number of meetings and attendance for the year are on page 42 of the Corporate Governance Report. The Board Risk Committee discharged its responsibilities as set out in its terms of reference by undertaking the following work during the year: • reviewing regular reports from the Group Head of Risk and Regulation and evaluating the effectiveness of the Group’s Risk and Regulation department; • receiving regular reports from the Group’s Risk Management Committee; • reviewing the high level risk register; • considering emerging risks faced by the business; • considering the output from the process used to identify, evaluate and mitigate risks; • reviewing the Group’s ICAAP, in conjunction with the Audit Committee; • reviewing the risk committee framework and terms of reference of each committee; and • considering and reviewing the Board’s Risk Appetite.

45 Audit Committee Report

Audit Committee Chairman’s Statement • monitoring the work of the Group’s Internal Audit The Committee met 10 times during 2012/13. Much of its function and reviewing its effectiveness; time was spent on regular activities as set out in this report. • reviewing regular reports from the Head of Compliance In addition to these matters, the Committee’s areas of focus and keeping under review the adequacy and included the new systems programme, the Company’s effectiveness of the Group’s Compliance function; information security framework and compliance with the Retail Distribution Review. The Committee reviewed reports • reviewing the Group’s procedures for handling from Internal Audit on a wide range of issues, including allegations from whistleblowers and for detecting fraud; management responses and agreed actions. These, with • making recommendations to the Board on the Cyber Threat, will continue to be the areas of focus for appointment or reappointment of the external auditor 2013/2014. and on the approval of their remuneration and terms of Committee members engagement; The current members of the Audit Committee are the • reviewing and monitoring the external auditors’ independent Non-Executive Directors Jock Worsley independence and objectivity and the effectiveness of (Chairman), Angela Knight and Sir Stephen Lamport. The the audit process; and composition of the Committee is reviewed by the Nomination Committee which makes recommendations for change to • maintaining and reviewing the policy on the engagement the Board as appropriate. of the external auditors to supply non-audit services, taking into account relevant guidance regarding the Jock Worsley has acted as Chairman of the Audit provision of non-audit services by the external audit firm. Committee since 1 October 2003, with the exception of the period 1 January 2013 to 21 March 2013 when David Nicol The Audit Committee is required to report its findings to the was appointed as Chairman of the Committee. David Board, identifying any matters in respect of which it resigned from the Committee upon his appointment as Chief considers that action or improvement is needed, and making Executive on 21 March 2013 and Jock Worsley resumed his recommendations on the steps to be taken. position as Chairman of the Committee on that date, whilst a Meetings new non‑executive director with the requisite skills and The Audit Committee maintains a formal schedule of items experience was sought. Angela Knight was a member of the that are to be considered at each committee meeting and Committee throughout the period and Sir Stephen Lamport within the annual audit cycle, to ensure that its work is in line was appointed to the Committee on 21 March 2013. Ian with the requirements of the Code and all areas of its remit Dewar was appointed as a Non-Executive Director on are addressed. The items to be reviewed are agreed by the 15 November 2013 and will become Chairman of the Audit Audit Committee Chairman on behalf of his fellow members. Committee following Jock’s retirement at the AGM in Each member has the right to require reports on additional February 2014. matters of interest. The Board is satisfied that at least one member of the The Chief Executive, Finance Director, Head of Investment Committee has recent and relevant financial experience. Management, Head of Risk and Regulation and Head of Jock Worsley is a qualified Chartered Accountant and the Internal Audit, normally attend Audit Committee meetings. At other members of the Committee are financially literate. The the Committee’s request, other senior management are Group provides an induction programme for new Audit invited to present reports as relevant to enable the Committee members and ongoing training to enable the Committee to discharge its duties and the external auditors committee members to carry out their duties. attend a number of meetings. Role and responsibilities of the Audit Committee The number of meetings and attendance for the year are on The Audit Committee is a formally constituted Committee of page 41 of the Corporate Governance Report. the Board whose terms of reference include all matters indicated by Disclosure and Transparency Rule 7.1 and the Overview of the work undertaken by the Committee UK Corporate Governance Code (“the Code”). The terms of during the year reference are considered annually by the Audit Committee During the year, the Audit Committee discharged its and subsequently referred to the Board for approval. responsibilities as set out in its terms of reference, through undertaking the following activities: The Audit Committee is responsible for: • review of the Annual Report and Financial Statements, • monitoring the integrity of the financial statements of the half‑yearly Financial Report and Interim Management Group and any formal announcement relating to the Statements. In doing so, the Committee received Group’s financial performance and reviewing significant reports from the external auditors on their audit of the financial reporting judgements contained therein, prior to Annual Report and Financial Statements and review of their submission to the Board; the half-yearly Financial Report. Further explanation of • reviewing the Group’s internal financial controls and the the significant issues that the committee considered in Group’s internal control systems; relation to the financial statements and how these were addressed is set out below;

46 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 • review of the effectiveness of the external audit process, • the value, including impairment of intangible assets the external auditors’ strategy and plan for the audit and – goodwill, client relationships and software with the qualifications, expertise, resources and particular consideration being given to the carrying value independence of the external auditors; of software assets being developed; • consideration of the appropriate timing for an external • onerous contracts provisions; provisions were made tender of audit services; during the year primarily in respect of surplus space identified as part of a review of the Group’s property • review and approval of the Internal Audit annual plan, portfolio and take into account the uncertainty of future review of reports from Internal Audit including rental income; management responses to the findings of the reports and their proposals. Satisfactory completion of • assumptions underlying the calculation of the pension management undertakings arising from these reports is scheme deficit; monitored; • the appropriateness of valuation methodologies used to • evaluation of the effectiveness of Internal Audit; support the valuation of investments, particularly that of the Group’s investment in Euroclear; • review of the Company’s procedures for handling allegations from whistleblowers and for detecting fraud; • estimates of shares to be issued and deferred purchase consideration in respect of acquisitions of business or • consideration of regular reports from the Group’s Head client relationships based on discounted estimates of of Compliance and evaluation of the effectiveness of the future earnings; and Group’s Compliance and Risk function; • estimates of provisions in relation to outstanding legal • consideration of reports on other areas of focus during cases and claims. the year such as the new systems programme, information security framework and compliance with the After consideration the Committee concluded that the Retail Distribution Review; annual report, taken as a whole, is fair, balanced and Governance Directors’ Report & understandable and that it provides the necessary • consideration of a report from the external auditors on information for shareholders to assess performance, their review of the effectiveness of controls across the business model and strategy. Group and review of a report on management action taken in response to the report; External Auditors The Audit Committee is responsible for the development, • review of the effectiveness of the Group’s internal implementation and monitoring of the Group’s policy on controls and disclosures made in the annual report and external audit. The policy sets out inter alia, the categories of financial statements on this matter; any non-audit services which the external auditors will be • review and agreement of the scope of the audit work to allowed to undertake and provides an approval process for be undertaken by the external auditors and the fees to the provision of any other non-audit services. This policy is be paid to the external auditors; available on the Investor Relations section of the Company’s website, under the Board Committees’ subsection. • review of the Audit Committee’s own terms of reference; and The Board generally only uses the auditors for audit and related activities. If there is a business case to use the • review and assessment of its own effectiveness. external auditors for the provision of non-audit services, prior The Audit Committee reports its findings to the Board, permission is required from the Audit Committee which will identifying any matter on which it considers that action or review the proposal to ensure that it will not impact the improvement is needed and makes recommendations on the auditor’s objectivity and independence. The majority of tax steps to be taken accordingly. advisory and similar work is carried out by another major accountancy firm. An analysis of auditor’s remuneration is Financial reporting and significant financial provided in note 8 to the financial statements. judgements The Committee reviews whether suitable accounting policies As part of its evaluation of the independence of the external have been adopted and whether management has made auditors, the Audit Committee reviewed: appropriate estimates and judgements, obtaining support • the external auditor’s plan for the current year, noting the from the external auditors in making these assessments. role of the senior statutory audit partner, who signs the The Committee reviewed the following significant financial audit report and who, in accordance with professional judgements made by management for the year ended rules, has not held office for more than five years, and 29 September 2013, including consideration of the external any changes in the key audit staff. The 2012/13 audit auditor’s view and challenges made by them during their was the fifth cycle for the current audit partner and a audit, and concluded that the judgements were reasonable new lead audit partner has been appointed for the and appropriate: 2013/14 audit;

47 Audit Committee Report (continued)

• the arrangements for day-to-day management of the • the quality of the external auditor’s reporting on internal audit relationship; controls. • a report from the external auditor describing their Following the annual review of effectiveness, the Audit arrangements to identify, report and manage any Committee recommended to the Board that reappointment conflicts of interest; of the auditors be proposed to shareholders at the 2014 AGM. • the overall extent of non-audit services provided by the external auditor, in addition to its case-by-case approval Internal Audit of the provision of non-audit services by the external The Internal Audit function was conducted for the period by auditors; and Grant Thornton LLP. The Audit Committee assists the Board to fulfil its responsibilities relating to the adequacy of the • the performance of the auditor who were first appointed resourcing and plans of the Internal Audit function. To fulfil in April 2002 and reappointed following a review in these duties the Audit Committee reviewed: 2007. • Internal Audit’s methodology, reporting lines and access The Audit Committee is responsible for recommending to the to the Audit Committee and all members of the Board; Board the appointment, reappointment or removal of the external auditor. It has been the policy of the Board to • Internal Audit’s plans and its achievement of the planned undertake a major review of the appointment every six years activity; and this review was scheduled for 2013. However, it was • the results of key audits and other significant findings, agreed by the Committee and the Board that the the adequacy of management’s response and the appointment of a new Finance Director, new Chief Executive, timeliness of resolution; and transition to a new Chairman of the Audit Committee and transition to a new lead Deloitte audit partner for 2013/14 • the timeliness of reporting. made this timing inappropriate. Overview The Committee has considered the existing UK Corporate As a result of its work during the year, the Audit Committee Governance Code provision for companies to put the has concluded that it has acted in accordance with its terms external audit contract out to tender at least every ten years of reference and has ensured the independence and and also the FRC’s guidance on aligning the timing of such objectivity of the external auditors. The Chairman of the re-tenders with audit engagement partner rotation. It has Audit Committee will be available at the AGM to answer any also noted the recently published final decision of the questions about the work of the Committee. Competition Commission, likely to be effective 1 October 2014, including transitional arrangements. The Committee’s current intention is that it will initiate a re-tendering process before the end of the current audit partner’s rotation Jock Worsley (2017/18). This will be kept under review and the Committee Chairman of the Audit Committee will use its regular reviews of auditor effectiveness to assess 3 December 2013 the most appropriate time for such a re-tender during that period. The Audit Committee has considered the likelihood of a withdrawal of the external auditor from the market and noted that there are no contractual obligations to restrict the choice of replacement external auditor. The external auditor meets privately with the Audit Committee at least twice a year without senior executive management being present. An annual review of the effectiveness of the external auditor is carried out by the Audit Committee, taking into consideration: • the arrangements for ensuring the external auditors’ independence and objectivity; • the external auditor fulfilment of the agreed audit plan; • the robustness and perceptiveness of the auditor in their handling of the key accounting and audit judgements; and

48 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Directors’ Remuneration Report

Annual statement from the Chairman of the Remuneration Committee This has been a year of change for the industry and for Brewin Dolphin and so, a comparable significant amount of activity for the Remuneration Committee. There have been a number of changes to the management team and the Committee has taken this opportunity to develop a new approach to incentivise remuneration for executive directors. This includes a proposed Long Term Incentive Plan (LTIP) and changes to the annual bonus for executive directors; the introduction of an LTIP is accompanied by a reduction in the maximum level of annual bonus. The details of both schemes are set out in this report and we have sought by their design to ensure that targets are clear and stretching, and tied into the Brewin Dolphin strategy of driving organic growth and achieving operational excellence to improve quality and lower costs. The Committee consulted with major shareholders on these proposed changes to executive remuneration and subsequently adjusted the 2014 LTIP performance criteria and introduced an additional post vesting holding period in response to shareholders’ views. As the Group’s financial year ended on 29 September 2013, it is not technically required to put the directors’ remuneration policy to a binding shareholder vote until the AGM in February 2015. However the Committee has decided that it would not be right to delay shareholder approval, and instead has elected to put the remuneration policy to the vote at the AGM in February 2014. This means that the directors’ remuneration policy will be binding on the Company from the 2014 AGM. Meanwhile, the second part of the remuneration report, which is the annual report on remuneration, will be subject to an advisory vote at the 2014 AGM, in accordance with the regulations. In considering the new remuneration policy, the Committee was concerned that it needed to be able to attract and retain a high calibre management that will serve the Company well. We have benchmarked against relevant competitors and the significant amount of remuneration that is related to performance will help drive the strategy forward over the short and longer term, avoiding creating incentives for excessive risk taking whilst maintaining a flexible cost base. Lastly, the Remuneration Committee has introduced a directors’ shareholding policy to align the interests of the Executive Directors with shareholders.

Directors’ Remuneration Policy – subject to binding vote by shareholders at the 2014 AGM Governance Directors’ Report & This section of the Remuneration Report has been prepared in accordance with Part 4 of The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013. It sets out the Directors’ Remuneration Policy for the Group. The Policy has been developed taking into account the principles of the UK Corporate Governance Code, executive remuneration guidelines produced by shareholder organisations, and the remuneration principles of the Financial Conduct Authority’s (FCA) Remuneration Code so far as they apply to the Group. Overview The Committee determines the Group’s policy on the remuneration of the Board Chairman, Executive Directors and other members of executive management including employees designated as Code Staff under the FCA Remuneration Code. The Committee’s terms of reference are available on the Group’s website. In determining the Directors’ Remuneration Policy, the Committee takes into account the following objectives: • to attract, retain and motivate talented Directors and senior management of the calibre required to manage the business successfully, whilst seeking to avoid paying more than is necessary to meet this objective; • to motivate and reward good performance; and • to meet relevant regulatory requirements, including the requirements of the FCA Remuneration Code so far as these apply to the Group. The main principles of the policy are to: • ensure that total remuneration is set at a level that is market competitive by benchmarking against relevant external comparators, taking account of size, complexity, and sector, and to ensure that the overall package takes account of market practice; • maintain appropriate proportions of fixed and performance‑related pay, to help to drive performance over the short and longer term, maintain a flexible cost base, and avoid creating incentives for excessive risk-taking; • align incentive plans with the business strategy, prudent risk management, and shareholder interests; and • achieve consistency with the general remuneration philosophy applied to Brewin Dolphin employees as a whole. Details of the remuneration components are provided in Figure 1 – the Remuneration Policy table for Executive Directors.

49 Directors’ Remuneration Report (continued)

How the views of shareholders are taken into account The Committee will regularly compare the Group’s Directors’ Remuneration Policy with shareholder guidelines and takes account of the results of shareholder votes on remuneration. If any material changes to the Remuneration Policy are contemplated, the Committee Chairman will consult with major shareholders about these in advance. Details of votes cast for and against the resolution to approve last year’s remuneration report are provided in the Annual Report on Remuneration section of the Directors’ Remuneration Report. Consideration of employment conditions elsewhere in the Group The Group applies a consistent remuneration philosophy for employees at all levels. Fixed pay components for all employees are benchmarked against relevant market comparators and the Committee takes account of the aggregate rate of base salary increase for all employees when determining increases in fixed pay for Directors. All employees are eligible for performance-related annual bonus and the principle of bonus deferral applies to annual bonuses for employees whose bonuses exceed certain thresholds established by the Committee. The Group does not operate formal employee consultation on remuneration. However, employees are able to provide direct feedback on the Group’s remuneration policies to their line managers or the Human Resources department. The Committee monitors the effectiveness of the Group’s remuneration policy in recruiting, retaining, engaging and motivating employees, and receives regular reports on how the Group’s remuneration policies are viewed by employees and whether they are meeting business needs. The Committee does not seek to apply fixed ratios between the total remuneration levels of different roles in the Group, as this would prevent it from recruiting and retaining the necessary talent in a highly competitive employment market. Benchmarking The Committee takes account of market benchmark data when setting total remuneration packages for Executive Directors. Comparisons are made with other FTSE-listed companies of similar size and business profile to Brewin Dolphin. Practices in the private client investment management sector, and other related sectors, are also considered. Benchmark data is used by the Committee as a reference point, alongside other factors such as the individual’s role and experience, and company and personal performance, rather than as a direct determinant of pay levels. Future policy table Figure 1 summarises the key aspects of the Group’s Remuneration Policy for Executive Directors.

50 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Figure 1: Remuneration Policy table for Executive Directors Purpose and link to short and long‑term Maximum Element strategy Operation, performance measures and periods, deferral and clawback opportunity Total Fixed Pay Provides a level of Rather than having separate base salary, pension and benefits components, Total Fixed Pay is fixed remuneration Executive Directors receive a Total Fixed Pay sum, which they can receive all in benchmarked against sufficient to cash, or may choose to ‘sacrifice’ part of the cash and instead receive part as a relevant market recruit and retain defined pension contribution and/or fringe benefits such as car benefit, private levels of aggregate necessary talent, medical insurance, or long-term illness/disability insurance (known as ‘Permanent fixed pay (ie. base and to permit a zero Health Insurance’). In addition to their Total Fixed Pay, Executive Directors can salary+pension variable pay award benefit from life insurance at a level of six times annual salary. Individual levels of contribution+benefits, should that be Total Fixed Pay are reviewed annually, with any increases normally effective from paid in the market), appropriate. 1 January, unless there are exceptional reasons for an increase at another time of and is targeted to be the year. Any increases are generally targeted at around the general level of salary not more than around inflation in the Group, but may vary from this for exceptional reasons such as a median of relevant change in the individual’s role or responsibilities, or a need to bring an individual’s comparators. remuneration to a market competitive level. Annual variable Rewards annual Executive Directors1 are considered each year for a discretionary annual variable The maximum pay Group and personal pay award, which takes account of both Group and personal performance. The individual award of performance, and, main weighting is on Group financial performance. annual variable pay is (Discretionary) through the use of currently 2x the Total Group performance is assessed primarily by reference to a ‘balanced scorecard’ of deferral into shares, Fixed Pay (except for Group financial key performance indicators (KPIs) and targets, which are set each also aligns reward Michael Williams1). year by the Committee based on the priorities for the year. The KPIs may include, with longer-term for example, profit before tax and operating profit margin. Non-financial KPIs may However, subject to performance. also be included in the scorecard, but non-financial performance has a lower obtaining shareholder weighting than financial performance. For each KPI, there is a threshold, target and approval for the ‘stretch’ (i.e. excellent) performance level; the maximum annual variable pay is paid proposed new for stretch performance. long‑term incentive

plan, this will reduce Governance Directors’ Report & In common with all other employees of the Group, a significant proportion of to 1.5x Total Fixed variable pay is compulsorily deferred under the Deferred Profit Share Plan (DPSP) Pay with effect from into Brewin Dolphin Holdings PLC ordinary shares or nil-priced options over the 2013-14 financial shares, which vest in one tranche, normally after three years. The deferral policy for year. Executive Directors is shown in the table below:

Portion of variable pay What fraction is deferred? Portion up to £50,000 None Portion between £50,000 and 1x fixed One-third remuneration Portion above 1x fixed remuneration Two-thirds Executive Directors may also voluntarily defer annual variable pay, but receive no matching shares in return. The Committee may seek to clawback annual variable pay in exceptional situations, such as misstatement of performance, failure of risk management or serious misconduct 1 Michael Williams, is an Executive Director, but, as an Investment Manager, is remunerated based on the performance of his team. His base pay is set substantially lower than other Executive Directors and his annual bonus is dependent on the profits of his Investment Management team and is not subject to a cap. One third of the portion of his bonus above £50k is deferred into Brewin Dolphin Holdings PLC shares or nil-cost options over shares which vest in one tranche, normally after three years. Long-Term Rewards Executive Directors will be eligible to be considered each year for a conditional The normal maximum Incentive Plan achievement award over Brewin Dolphin shares, which will vest in one tranche, normally no annual award under (LTIP) of long-term earlier than 3 years from the date of award. Vesting will be subject to performance the LTIP rules is up to performance conditions and targets set prior to each grant by the Committee. These 100% of Total Fixed (Discretionary) objectives. performance conditions will be related to financial performance (for example, EPS Pay (in face value (New for 2014, growth and profit margin percentage) and will be aligned to the business strategy. of shares at grant), subject to For each performance metric used, there will be a threshold level of performance but may be up to shareholder at which no more than 25% of the portion of the award relating to that KPI will 150% in exceptional approval) vest, and a stretch level of performance, at which 100% of the portion of the award circumstances. relating to that KPI will vest. Executive Directors will be required to hold net of tax vested shares for a period of two years following vesting. The Committee may seek to clawback LTIP in exceptional situations, such as misstatement of performance, failure of risk management or serious misconduct.

51 Directors’ Remuneration Report (continued)

Differences in remuneration policy for Executive Directors compared to other employees The approach to remuneration for the Executive Directors is generally consistent with that for employees across the Company as a whole. However, there are some differences which the Committee believes are necessary to reflect the different responsibilities of employees across the Company, and the need to recruit, retain and motivate employees in a variety of roles. For example, below Executive Director level, the portion of annual variable pay that is deferred is structured differently and is capped at one third rather than the two-thirds deferral that applies to Executive Directors. Awards of market purchased shares are made to selected individuals from time to time, excluding Executive Directors, which vest subject to continued service, to recognise individuals’ value to the Company and to create further alignment with shareholders. External non-executive director positions Executive directors are permitted to serve as non-executive directors of other companies, on the grounds that this can help to broaden the skills and experience of the Director, provided there is no competition with the Company’s business activities and where these duties do not interfere with the individual’s ability to perform his duties for the Company. Where an outside appointment is accepted in furtherance of the Company’s business, any fees received are remitted to the Company. If the appointment is not connected to the Company’s business, the Executive Director is entitled to retain any fees received. Approach to remuneration for new Executive Director appointments The remuneration package for a new Executive Director would be set in accordance with the terms and maximum levels of the Group’s approved remuneration policy in force at the time of appointment. The Committee may also offer additional cash and/or share‑based elements when it considers these to be in the best interests of the Group and shareholders, for the purpose of replacing awards or potential foreseeable earnings which are forgone by the individual on becoming an Executive Director. This includes the use of awards made under 9.4.2 of the Listing Rules. In considering any such payments the Committee would take account of the amount of remuneration foregone and the nature, vesting dates and any performance requirements attached to the remuneration foregone. Shareholders will be informed of any such payments and the rationale for these. For an internal appointment, any deferred pay element awarded in respect of the prior role may be allowed to pay out according to its terms, adjusted as relevant to take into account the appointment. In addition, ongoing remuneration obligations existing prior to appointment may be permitted to continue where this is considered to be in the best interests of the Group and shareholders. For external and internal appointments, the Company may meet certain relocation expenses as appropriate. Service contracts and loss of office payments Service contracts normally continue until the director’s agreed retirement date or such other date as the parties agree. The service contracts contain provision for early termination. Notice periods are limited to 6 months by either party. If the employing company terminates the employment of an Executive Director without giving the period of notice required under the contract, the Executive Director would be entitled to claim recompense for up to six months’ Total Fixed Pay. In cases of ‘good leavers’ the Committee may consider a discretionary award of annual variable pay, subject to performance, in respect of the portion of any financial year that the individual has been working with the Company, although not for the period of any payment in lieu of notice or ‘garden leave’. In the event of a change of control of the Company there is no enhancement to these terms. In summary, the contractual provisions are as follows: Figure 2: Provision Detailed terms Notice period 6 months Termination payment in the event of Total Fixed Pay in respect of the unexpired period of contractual notice. termination by the Company without In certain cases, the Committee may also consider a discretionary award of due notice annual variable pay, subject to performance, in respect of the portion of any financial year that the individual has been working with the Company, although not for the period of any payment in lieu of notice or ‘garden leave’ Change of control Same terms as above on termination. Any outstanding share-based entitlements granted to an Executive Director under the Company’s LTIP or other share plans will be determined based on the relevant plan rules. The default treatment is that any outstanding awards lapse on cessation of employment. However, in certain prescribed circumstances, such as death, disability, redundancy, retirement or other circumstances at the discretion of the Committee (taking into account the individual’s performance and the reasons for their departure) ‘good leaver’ status can be applied. In such cases, the normal practice, unless there are exceptional circumstances, is for any LTIP awards held to be pro-rated for the period of the performance period that has expired, and the performance conditions would continue to apply. Share awards under the Deferred Profit Share Plan will vest in full on the original vesting schedule.

52 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 An Executive Director’s service contract may be terminated without notice and without any further payment or compensation, except for sums accrued up to the date of termination, on the occurrence of certain events such as gross misconduct. Legacy arrangements For the avoidance of doubt, the Directors’ Remuneration Policy includes authority for the Company to honour any commitments entered into with current or former Directors that have been disclosed to shareholders in previous Remuneration Reports. Details of any payments to former directors will be set out in the implementation section of this report as they arise. Illustrations of application of remuneration policy Figure 3a below shows the minimum (Total Fixed) remuneration, the target level of total remuneration (Total Fixed Pay + on-target annual variable pay + on-target LTIP vesting), and the maximum (Total Fixed Pay + Maximum Annual Variable Pay + Maximum LTIP vesting), for each Executive Director, excluding Michael Williams. Michael Williams participates in the Group’s profit sharing scheme and is not subject to a maximum profit share cap. A separate chart showing minimum (Total Fixed) remuneration and actual total remuneration for 2013 is shown in Figure 3b as an illustration. Figure 3a: Illustration of Executive Director total remuneration Figure 3b: Michael Williams’ minimum remuneration and at different levels of performance actual 2013 remuneration

£’000 £’000

1500 1500

1250 1250

29% 1000 1000 29% 29%

20% 750 750 Governance Directors’ Report & 20% 20% 43% 40% 43% 43% 500 500 40% 40%

73%

250 250 40% 28% 40% 28% 40% 28%

27% 0 0 Minimum On-Target Maximum Minimum On-Target Maximum Minimum On-Target Maximum Minimum 2013 actual Chief Executive Finance Director Head of Investment Mgt Total xed Annual Bonus Fixed Annual Bonus LTIP

Fees policy for the Board Chairman and other Non‑Executive Directors Figure 4, below, sets out the Company’s policy on fees for the Board Chairman and other Non-Executive Directors. Figure 4: Chairman and Non-Executive Directors’ fees Purpose and link Element to strategy Operation Maximum

Board Chairman To pay a market The Board Chairman is paid a single fee for all his A resolution is being proposed at the 2014 AGM fee competitive all- responsibilities. The level of the fee is reviewed to increase the maximum aggregate fee for all inclusive fee that takes periodically by the Committee, with reference to Non‑Executive Directors including the Board account of the role and market levels in comparably sized FTSE companies, Chairman to £450,000 from the current maximum of responsibilities. and a recommendation is then made to the Board £350,000. This is to accommodate the change from (without the Chairman being present). executive chairman to Non-Executive Chairman and give some flexibility for an additional NED in future if required. The current fee for the Chairman is £125,000. This is subject to review periodically and potential change under this Policy.

Non-Executive To pay a market The non-executives are paid a basic fee. There are As above. Director fees competitive basic fee, also supplements for Committee Chairmanships and The current basic fee is £40,000, and supplements and supplements for the SID. for the Committee Chairmanships and role of SID significant additional The fee levels are reviewed periodically by the range between £4,000 and £6,000 but are subject responsibilities Chairman and Executive Directors. to review and potential change periodically under such as Committee this Policy. Chairmanships.

Non-Executive Directors are engaged under letters of appointment; they do not have contracts of service and are not entitled to compensation on early termination of their appointment. Compliance with the FCA Remuneration Code The Committee regularly reviews its remuneration policy’s compliance with the principles of the Remuneration Code of the UK financial services regulator, as applicable to the Group. The remuneration policy is designed to be consistent with the prudent management of risk and the sustained, long-term performance of the Group.

53 Directors’ Remuneration Report (continued)

Annual Report on Remuneration – subject to advisory vote by shareholders at the 2014 AGM This part of the report has been prepared in accordance with Part 3 of the revised Schedule 8 set out in The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013, and 9.8.6R of the Listing Rules. The Annual Remuneration Report will be put to an advisory shareholder vote at the 2014 AGM. The information on pages 54 to 65 has been audited. Remuneration for the FY2013 Figure 5 below sets out the remuneration received by the Directors in relation to performance in the year to 29 September 2013 and the prior year comparisons. Figure 5: Directors’ Emoluments Annual Bonus Annual mandatory Bonus Profit Annual deferral into voluntary share Compen- Bonus the Deferred deferral awarded Total Long- sation for Salary & paid in Profit Share into the as Annual Term loss of £’000 Fees Benefits(1) Pension(2) cash(3) Plan (DPSP)(3) DPSP(3) pension(3) Bonus Incentive(4) office(5) Other(6) Total Executive Directors Henry Algeo(a) 2013 128 3 9 – – – – – n/a 150 n/a 290 2012 229 4 20 65 34 – 60 159 n/a n/a n/a 412 Robin Bayford(b) 2013 74 2 – – – – – – n/a n/a n/a 76 2012 269 4 – – 41 132 – 173 n/a n/a n/a 446 Stephen Ford(c) 2013 158 5 – 127 70 – – 197 n/a n/a 11 371 2012 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Barry Howard(a) 2013 143 8 1 – – – – – n/a n/a n/a 152 2012 295 10 3 84 17 – – 101 n/a n/a – 409 Jamie Matheson(a) 2013 159 3 – – – – – – n/a 170 n/a 332 2012 311 4 5 178 64 – – 242 n/a n/a n/a 562 David McCorkell(d) 2013 15 – 2 – – – – – n/a 30 n/a 47 2012 227 4 33 42 – – 32 74 n/a n/a n/a 338 David Nicol(e) 2013 183 1 – 147 83 – – 230 n/a n/a n/a 414 2012 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Sarah Soar(a) 2013 93 6 5 – – – – – n/a 105 n/a 209 2012 184 7 8 93 22 – – 115 n/a n/a n/a 314 Ben Speke(a) 2013 98 2 14 – – – – – n/a 120 n/a 234 2012 191 2 30 50 29 40 20 139 n/a n/a n/a 362 Andrew 2013 225 2 – 181 100 – – 281 n/a n/a n/a 508 Westenberger(f) 2012 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Michael Williams 2013 152 3 10 284 117 – – 401 n/a n/a 9 575 2012 143 2 8 156 53 – – 209 n/a n/a – 362 Non-Executive Chairman Simon Miller(h) 2013 101 – – – – – – n/a n/a n/a n/a 101 2012 63 – – – – – – n/a n/a n/a n/a 63 Non-Executive Directors Nick Hood(g) 2013 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 2012 23 – – – – – – n/a n/a n/a n/a 23 Angela Knight 2013 47 – – – – – – n/a n/a n/a n/a 47 2012 39 – – – – – – n/a n/a n/a n/a 39 Stephen Lamport 2013 43 – – – – – – n/a n/a n/a n/a 43 2012 39 – – – – – – n/a n/a n/a n/a 39 David Nicol(e) 2013 22 – – – – – – n/a n/a n/a n/a 22 2012 22 – – – – – – n/a n/a n/a n/a 22 Jock Worsley 2013 60 – – – – – – n/a n/a n/a n/a 60 2012 56 – – – – – – n/a n/a n/a n/a 56 Total 2013 1,701 35 41 740 370 – – 1,110 – 575 20 3,482 2012 2,091 37 107 668 260 172 112 1,212 – – – 3,447

Note 1: Executives can elect to use part of their total fixed remuneration to fund benefits including Permanent Health Insurance and Private Medical Insurance. Benefits in kind includes a notional interest free loan in relation to nil-paid shares. Note 2: Executives can elect to sacrifice fixed remuneration into the Company defined contribution pension scheme. Michael Williams is the only director who remains an active member of the Defined Benefit Scheme and the £10,000 shown above is the employers’ contribution into that scheme. Note 3: This relates to the payment of the annual bonus for the year ending 29 September 2013. Annual bonus is subject to a mandatory deferral policy as set out on page 51. Directors can elect to voluntarily defer annual bonus into the DPSP or sacrifice part of their annual bonus into the Company defined contribution pension scheme. Note 4: There are no long term incentives vesting to Executive Directors during the relevant period. Note 5: The details of payments made to Directors who resigned from the Board during the year are set out on page 61. Note 6: Relates to dividend equivalent payments made under the Deferred Profit Share Plan. Note a: Resigned 21 March 2013. Note b: Retired 31 December 2012. Note c: Appointed 21 March 2013. Note d: Retired 22 October 2012. Note e: NED until 21 March 2013 when he was appointed as Chief Executive. Note f: Appointed 1 January 2013. Note g: Retired 24 February 2012. Note h: Non-Executive Director until appointment as Non-Executive Chairman on 21 March 2013.

54 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Annual bonus for the year ending 29 September 2013 In prior years, Executive Directors’ annual bonuses were paid from a profit sharing pool. However, for the year ending 29 September 2013, annual bonuses for the Chief Executive, Finance Director and Head of Investment Management were determined by the Committee based on an assessment of performance relative to Key Performance Indicators. This new approach was intended to achieve a more direct relationship between progress towards the Company’s strategic goals and the bonuses that were awarded. The bonus award for Michael Williams, as an Investment Manager, is assessed in relation to the profitability of his Investment Management team which was significantly higher in 2013 than in the prior year. Figure 6 below shows the Key Performance Indicators that were considered by the Committee, their weightings and the Committee’s assessment of performance for the year. Figure 6: Key Performance Indicators for 2013 bonus award

Performance expectation for Actual for year ending year ending Key Performance Prior year 29 September 29 September Indicator Weighting performance 20132 2013 Comment

Profit before tax1 35% £42.9m £49.1m £52.3m Strong performance, exceeding prior year by 22%, and exceeding expectation by 6.5%.

Operating margin1 35% 16.5% 17.2% 18.5% Strong performance, exceeding prior year by 200 basis points and expectation by 130 basis points. Governance Directors’ Report & Non-financial 30% n/a n/a n/a Significant progress in performance clarifying and developing indicators strategy, simplification of business model whilst maintaining prudent risk management.

1Adjusted for exceptional items 2Expectation was set at market forecast.

Based on this assessment of performance, the Committee has awarded the following annual bonuses to Executive Directors, with the split between cash and deferred shares as indicated in the table below:

Deferred Cash Shares1 Total % of Name Role £ £ £ fixed pay4

David Nicol2 Chief Executive 147,099 83,429 230,529 125

Andrew Westenberger3 Finance Director 181,250 100,000 281,250 125

Stephen Ford2 Head of Investment Management 127,340 70,256 197,596 125

Michael Williams Investment Manager 284,393 117,197 401,590 260

1See deferral table (page 51). 2Appointed 21 March 2013. 3Appointed 1 January 2013 4Bonus and bonus as a % of fixed pay are shown pro-rated for the period of service as a director during the year. Andrew Westenberger and Stephen Ford received salary, benefits and bonus in relation to their non-qualifying services as employees, prior to their appointment as directors on 1 January 2013 and 21 March 2013 respectively.

55 Directors’ Remuneration Report (continued)

With the exception of Michael Williams, the maximum annual bonus for each individual Executive Director is currently 200% of total fixed pay. Annual bonus awards are delivered part in cash and part in deferred shares that vest after 3 years. The table below shows how the split is calculated:

Portion of variable pay Fraction deferred Up to £50,000 None Between £50,000 and 1 x fixed remuneration One third Above 1 x fixed remuneration Two thirds

In Michael Williams’ case, as he is an Investment Manager with significantly lower base pay, the first £50,000 is in cash, and the balance above £50,000 is two-thirds cash/one-third shares. The Remuneration Committee has the discretion to adjust the final outcome upwards or downwards in the event that an exceptional event outside of the directors’ control occurs which, in the Committee’s opinion, materially affected the bonus out-turn. There were no such events during 2013. Both the cash and share element of the bonus is subject to clawback. Please see the Directors’ Remuneration Policy table for further details. David McCorkell, Jamie Matheson, Sarah Soar, Ben Speke and Henry Algeo left employment during the year. Under the terms of their contract, they were not entitled to a bonus in relation to the year under review. Outstanding share awards The table below sets out details of Executive Directors’ outstanding share awards (which will vest in future years subject to performance and/or continued service). Figure 7: Outstanding share awards

Number of Number of options at Granted Exercised Lapsed options at End of Exercise 30 September during during during 29 September Performance Maturity Scheme Grant Date Price 2012* year year year 2013** Period Date Exercise Period Henry Algeo(a) 2004 ASOP 28/11/08 103.50p 10,000 – – – 10,000 28/11/13 28/11/13 28/11/13 28/11/18 2004 ASOP 07/12/09 165.70p 4,000 – – – 4,000 07/12/14 07/12/14 07/12/14 06/12/19 DPSP 02/12/10 £0.00 38,288 – – – 38,288 n/a 02/12/13 02/12/13 01/12/16 DPSP 08/12/11 £0.00 55,851 – – – 55,851 n/a 08/12/14 08/12/14 07/12/17 DPSP 06/12/12 £0.00 – 17,805 – – 17,805 n/a 06/12/15 06/12/15 05/12/18 Total 108,139 17,805 – – 125,944 Robin Bayford(b) DPSP 02/12/10 £0.00 146,550 – – – 146,550 n/a 02/12/13 02/12/13 01/12/16 DPSP 08/12/11 £0.00 112,826 – – – 112,826 n/a 08/12/14 08/12/14 07/12/17 DPSP 06/12/12 £0.00 – 90,815 – – 90,815 n/a 06/12/15 06/12/15 05/12/18 Total 259,376 90,815 – – 350,191 Stephen Ford(c) SEMP 18/12/06 184.50p 13,550 – – – 13,550 18/12/10 18/12/10 18/12/10 18/12/13 SEMP 11/06/07 217.50p 4,597 – – – 4,597 11/06/11 11/06/11 11/06/11 11/06/14 SEMP 14/12/07 162.50p 6,153 – – – 6,153 14/12/12 14/12/12 14/12/12 14/12/15 SEMP 24/07/08 104.00p 24,038 – – – 24,038 24/07/12 24/07/12 24/07/12 24/07/15 2004 ASOP 28/11/08 103.50p 10,000 – – – 10,000 28/11/13 28/11/13 28/11/13 28/11/18 2004 ASOP 07/12/09 165.70p 4,000 – – – 4,000 07/12/14 07/12/14 07/12/14 06/12/19 DPSP 02/12/10 £0.00 51,284 – – – 51,284 n/a 02/12/13 02/12/13 01/12/16 DPSP 08/12/11 £0.00 121,746 – – – 121,746 n/a 08/12/14 08/12/14 07/12/17 DPSP 06/12/12 £0.00 – 108,506 – – 108,506 n/a 06/12/15 06/12/15 05/12/18 Total 235,368 108,506 – – 343,874 Barry Howard(a) SEMP 26/05/05 101.00p 49,504 – – 49,504 – 26/05/09 26/05/09 26/05/09 26/05/12 SEMP 18/12/06 184.50p 27,100 – – – 27,100 18/12/10 18/12/10 18/12/10 18/12/13 2004 ASOP 29/11/07 168.00p 10,925 – 10,925 – – 29/11/12 29/11/12 29/11/12 29/11/17 SEMP 14/12/07 162.50p 15,384 – – – 15,384 14/12/12 14/12/12 14/12/12 14/12/15 SEMP 24/07/08 104.00p 24,038 – – – 24,038 24/07/12 24/07/12 24/07/12 24/07/15 SEMP 12/12/08 108.60p 9,208 – – – 9,208 12/12/12 12/12/12 12/12/12 12/12/15 DPSP 02/12/10 £0.00 51,801 – – – 51,801 n/a 02/12/13 02/12/13 01/12/16 DPSP 08/12/11 £0.00 50,774 – – – 50,774 n/a 08/12/14 08/12/14 07/12/17 DPSP 06/12/12 £0.00 – 8,928 – – 8,928 n/a 06/12/15 06/12/15 05/12/18 Total 238,734 8,928 10,925 49,504 187,233

56 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Figure 7: Outstanding share awards (continued)

Jamie Matheson(a) DPSP 02/12/10 £0.00 87,837 – – – 87,837 n/a 02/12/13 02/12/13 01/12/16 DPSP 08/12/11 £0.00 86,316 – – – 86,316 n/a 08/12/14 08/12/14 07/12/17 DPSP 06/12/12 £0.00 – 33,667 – – 33,667 n/a 06/12/15 06/12/15 05/12/18 Total 174,153 33,667 – – 207,820 David McCorkell(d) DPSP 02/12/10 £0.00 56,306 – – – 56,306 n/a 02/12/13 02/12/13 01/12/16 DPSP 08/12/11 £0.00 55,851 – – – 55,851 n/a 08/12/14 08/12/14 07/12/17 Total 112,157 – – – 112,157 Sarah Soar(a) SEMP 26/05/05 101.00p 9,900 – – 9,900 – 26/05/09 26/05/09 26/05/09 26/05/12 SEMP 19/12/05 157.00p 6,369 – – 6,369 – 19/12/09 19/12/09 19/12/09 19/12/12 SEMP 18/12/06 184.50p 5,420 – – – 5,420 18/12/10 18/12/10 18/12/10 18/12/13 SEMP 14/12/07 162.50p 15,384 – – – 15,384 14/12/11 14/12/11 14/12/11 14/12/14 SEMP 24/07/08 104.00p 24,038 – – – 24,038 24/07/12 24/07/12 24/07/12 24/07/15 SEMP 12/12/08 108.60p 9,208 – – – 9,208 12/12/12 12/12/12 12/12/12 12/12/15 DPSP 02/12/10 £0.00 38,288 – – – 38,288 n/a 02/12/13 02/12/13 01/12/16 DPSP 08/12/11 £0.00 38,080 – – – 38,080 n/a 08/12/14 08/12/14 07/12/17 DPSP 06/12/12 £0.00 – 11,328 – – 11,328 n/a 06/12/15 06/12/15 05/12/18 Total 146,687 11,328 – 16,269 141,746 Ben Speke(a) DPSP 02/12/10 £0.00 74,324 – – – 74,324 n/a 02/12/13 02/12/13 01/12/16 DPSP 08/12/11 £0.00 57,007 – – – 57,007 n/a 08/12/14 08/12/14 07/12/17 DPSP 06/12/12 £0.00 – 36,128 – – 36,128 n/a 06/12/15 06/12/15 05/12/18 Governance Directors’ Report & Total 131,331 36,128 – – 167,459 Michael Williams DPSP 02/12/10 £0.00 62,217 – – – 62,217 n/a 02/12/13 02/12/13 01/12/16 DPSP 08/12/11 £0.00 35,405 – – – 35,405 n/a 08/12/14 08/12/14 07/12/17 DPSP 06/12/12 £0.00 – 27,794 – – 27,794 n/a 06/12/15 06/12/15 05/12/18 Total 97,622 27,794 – – 125,416

* or date of appointment if later ** or date of resignation if earlier The share price at 29 September 2013 was £2.65 Note a: Resigned 21 March 2013. SEMP options lapsed upon cessation of employment on 21 September 2013. DPSP awards will vest on normal vesting schedule in accordance with good leaver provisions. Note b: Retired 31 December 2012. DPSP awards will vest on normal vesting schedule in accordance with good leaver provisions. Note c: Appointed 21 March 2013.

57 Directors’ Remuneration Report (continued)

Deferred Bonus The Executive Directors receive part of their annual variable pay as a deferred award in BDH shares (“DPSP”), normally in the form of options with a zero exercise price. These options are subject to service conditions and vest in one tranche three years from the date of grant. Share Incentive Plan (“SIP”) All employees of the Group are eligible to participate in the SIP following six months of service. Employees may use funds from their gross salary up to a maximum of 10% of their gross salary in regular monthly payments (being not less than £10 and not greater than £125) to acquire ordinary shares in the Company (“Partnership Shares”). Partnership Shares are acquired monthly. For every Partnership Share purchased, the employee receives one matching share up to the value of £20. All shares to date awarded under this scheme have been purchased in the market by the Trustees and it is the intention of the Board to continue this policy in the year to September 2014. Share schemes under which no awards were made in 2013 2004 Approved Share Option Plan (“ASOP”) Awards under the ASOP have been historically granted to directors and other employees. These awards have been subject to a condition that the year-on-year growth in annual fee income charged on portfolios shall not be less than 10% per annum compound or a 33% increase in annual fees over a three-year period. The performance criteria are set by the Remuneration Committee and selected to recognise that income growth is a key driver of shareholder value. The options are exercisable from five to ten years from grant. These options are only granted once an employee has been with the Group for two years. Awards have not been made under the ASOP since 2011. The Board does not intend to issue any options or shares under this scheme in 2014. Senior Employee Matching Purchase Share Scheme (“SEMP”) Awards have not been made under this scheme since 2009. The SEMP was additional to the above scheme and allowed a further 5% issue of options over a ten year period, provided that a similar number of shares were subscribed for by senior executives at the price the options are issued. The Board does not intend to issue any options or shares under this scheme in the future. Dilution By agreement with shareholders, the aggregate number of shares which may be issued at any date of grant, when aggregated with shares issued or issuable pursuant to options or awards granted in the preceding 10 years under any employee share plan operated by the Company other than the SEMP, shall not exceed 10% of the issued share capital. The current cumulative dilution level over the ten year period to 29 September 2013 is 5.14%. This includes 1.49% issued under the SEMP and 0.64% under the all-employee plans (discontinued SAYE scheme).

58 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Directors’ shareholding and share interests To align the interests of the Executive Directors with shareholders, Executive Directors are required to build up shareholdings through the retention of shares vesting under the Company’s share plans. The Executive Directors are required to build up a shareholding equivalent to 100% of total fixed pay over a period of five years, excluding awards that have not yet vested or have vested but not yet been exercised. The Chairman and Non-Executive Directors are encouraged to hold shares in the Company but are not subject to a formal shareholding guideline. The interests of the Directors and their connected persons in the share capital of the Company are shown in the table below. Figure 8: Share Interests

As at 29 September 2013 Outstanding Locked in Senior matching Employee Outstanding shares Beneficially Beneficially Beneficially Outstanding Matching Approved under owned at owned at owned at Deferred Share Share the Share 30 September 29 September 30 November Profit Share Scheme Option Incentive Director 2012* 2013** 2013 Plan awards options awards Plan Henry Algeo 74,916 75,358 n/a 111,944 – 14,000 440 Robin Bayford 587,685 496,870 n/a 350,191 – – – Stephen Ford 190,514 195,111 195,111 281,536 48,338 14,000 – Barry Howard 125,657 137,024 n/a 111,503 75,730 – 440 Angela Knight 1,683 2,583 2,583 – – – – Sir Stephen Lamport 4,500 4,950 4,950 – – – – Jamie Mattheson 485,061 485,503 n/a 207,820 – – 440 David McCorkell 666,120 666,204 n/a 112,157 – – 393

Simon Miller 45,000 50,000 50,000 – – – – Governance Directors’ Report & David Nicol – 58,000 58,000 – – – – Sarah Soar 256,267 261,060 n/a 87,696 54,050 – 440 Ben Speke 360,287 360,287 n/a 167,459 – – – Andrew Westenberger – – – – – – – Michael Williams 968,397 969,316 969,420 125,416 – – 413 Jock Worsley 18,000 18,000 18,000 – – – –

*or date of appointment if later **or date of resignation if earlier

A shareholding guideline has been introduced but was not in place as at 29 September 2013. The % of shareholding guideline achieved will be disclosed in the 2014 accounts. In addition, Directors during the year held the following nil paid shares:

30 September 29 September Latest 2012* 2013** Price repayment date Nil Paid Nil Paid Stephen Ford £2.175 June 2014 4,597 – Total 4,597 – Barry Howard £1.845 December 2013 27,100 27,100 £1.625 December 2014 15,384 15,384 £1.040 July 2015 24,038 24,038 £1.086 December 2015 9,208 9,208 Total 75,730 75,730 Sarah Soar £1.570 December 2012 6,369 – £1.845 December 2013 5,420 5,420 £1.625 December 2014 15,384 15,384 £1.040 July 2015 24,038 24,038 £1.086 December 2015 9,208 9,208 Total 60,419 54,050

*or date of appointment if later **or date of resignation if earlier

59 Directors’ Remuneration Report (continued)

Material Contracts with Directors There were no material contracts between the Group and the Directors other than the loans outstanding for nil paid shares for Stephen Ford, Barry Howard and Sarah Soar as part of the discontinued SEMP, all nil paid shares have been paid up during the financial year. The Directors undertake transactions in stocks and shares in the ordinary course of the Group’s business for their own account. The transactions are not material to the Group in the context of its operations. £nil was outstanding in respect of these transactions at 29 September 2013 and 30 September 2012. Total pension entitlements Executive Directors may opt to receive pension paid for from their aggregate fixed pay amount. They may also receive part of their annual bonus in the form of pension contribution. Defined Contribution Scheme Executive Directors’ may join the Company Defined Contribution Scheme. Andrew Westenberger and David Nicol have not made contributions to the Scheme and do not receive any benefit from the Company under the Scheme. Michael Williams has elected to sacrifice salary into this scheme. Stephen Ford has not sacrificed salary into the scheme in relation to his qualifying services as a Director during the year. Defined Benefit Scheme Entry to the Company Defined Benefit Scheme was withdrawn in 2004 for new staff members. Robin Bayford, Jamie Matheson and Sarah Soar all transferred their pension benefits out of the Defined Benefit Scheme in December 2007. However, their dependants remained eligible for dependants’ pensions from this scheme. Michael Williams remains an active member of this scheme while David McCorkell and Ben Speke remained deferred members of this scheme and as above, their dependants remained eligible for dependants’ pensions from this scheme. Details of the accrued pension at the year-end are as follows: Figure 9: Defined Benefit Pension

Cost to Group over and above Transfer value member’s of increase contributions in accrued where still Increase Change in Increase pension less accruing Accrued in accrued Transfer value Transfer value transfer value in accrued member’s service in the pension pension of accrued of accrued over year less pension contributions Scheme over entitlement at (implicitly pension at pension at members’ (explicitly over year to the year to 30 September including 30 September 29 September contributions excluding 29 September 29 September 2012*# inflation) 2012# 2013** made inflation*) 2013 2013 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 Stephen Ford 4 3 0 29 30 1 0 0 David McCorkell 2 8 0 124 126 2 0 2 0 Ben Speke3 15 1 285 299 14 0 6 0 Michael Williams1 17 2 335 371 31 2 36 10

*An inflation adjustment of 2.6% has been excluded from the increase to the accrued pension. **At leaving date if prior to 29 September 2013. #On appointment if later than 30 September 2012. 1For these members, the increase in accrued pension has been subject to a minimum of zero to reflect their leaving benefit underpin as at 1 April 2004. 2Resigned 22 October 2012. 3Resigned 21 March 2013. 4Appointed 21 March 2013.

Transfer values have been calculated in accordance with the Pension Schemes (Transfer Value) Regulations 2008. There is no additional benefit receivable if a director retires early, unless in the event of ill health (when no actuarial reduction is applied). Death-in-Service Benefits Executive Directors are eligible for Death-in-Service benefit cover which is equal to six times the Director’s fixed remuneration.

60 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Payments within the year to past directors There have been no disclosable payments made to directors after they have left office during the year. Loss of office payments David McCorkell resigned from the Board with effect from 22 October 2012. The emoluments shown in Figure 5 are pro-rated for the period to the date on which he ceased to be a director. He continued to be employed following the cessation of his directorship, for a further six months during which his base salary, pension and benefits remained unchanged. Mr McCorkell ceased to be employed by the Company with effect from 21 April 2013 and received a severance payment of £30,000. With effect from 22 April 2013, the Company entered into a consultancy agreement with Mr McCorkell, to enable the Company to continue to benefit from his skills and experience, under which an annual fee of £50,000 will be paid. The consultancy agreement will terminate on 30 June 2017. Jamie Matheson, Sarah Soar, Ben Speke and Henry Algeo resigned from the Board with effect from 21 March 2013. The emoluments for these directors shown in Figure 5 are pro-rated for the period up to the date on which they ceased to be a director. They continued to be employed following the cessation of their directorships, for a further six months, during which their base salary, pension and benefit arrangements remained unchanged. All four ceased to be employed with effect from 21 September 2013. Each received a severance payment equal to six months’ total fixed pay, as summarised Figure 5. The Company also agreed to continue these departing directors’ private medical insurance cover on the same terms until 30 April 2014. Barry Howard also resigned from the Board on 21 March 2013. The emoluments shown in Figure 5 are pro-rated up to the date on which he ceased to be a director. He will continue to be employed until 19 February 2014. His base salary, pension and benefit arrangements will remain unchanged during that period. He will receive a severance payment of £78,500 upon cessation of his employment. The Remuneration Committee exercised its discretion to treat all of the departing directors referred to in the paragraphs above as “Good Leavers” in respect of bonus awards already made under the Deferred Profit Share Plan (“DPSP”); the shares they Governance Directors’ Report & had earned for past performance under the scheme have been or will be permitted to vest to them. However, no further bonus payments or awards were paid to the departing directors for the financial year ending on 29 September 2013. Figure 10: Percentage increase in the remuneration of the Chief Executive

Jamie Matheson* David Nicol** Total 2012 2013 2013 2013 Change Chief Executive (£) – salary 340,000 159,210 183,229 342,439 1% – bonus 242,408 – 230,529 230,529 -5% Average per employee (£) – salary 43,647 – – 44,242 1% – bonus 16,083 – – 21,685 35%

*Jamie Matheson was the former Executive Chairman who resigned as a director with effect from 21 March 2013. In accordance with his contract, he did not receive a bonus in relation to the year to 29 September 2013. **David Nicol is the Chief Executive who was appointed on 21 March 2013. Bonus and salary above relate to the period of his qualifying service as Chief Executve.

Figure 10 shows the movement in the salary and annual bonus for the Chief Executive between the current and previous financial year compared to that for the average UK employee. The Committee has chosen this comparator and it feels that is provides a more appropriate reflection of the earnings of the average worker than the movement in the Group’s total wage bill, which is distorted by movements in the number of employees. As the Chief Executive was appointed during the year, the 2013 figure includes the remuneration of the previous Executive Chairman, as the most appropriate prior comparator. Rather than having separate base salary, pension and benefit components, executive directors and other senior staff receive a total fixed pay sum which they can receive part as a defined pension contribution and/or benefits such as car benefit, private medical insurance or long-term illness/disability insurance. More junior staff receive a base salary and pension contributions additionally. As such, an analysis of the movement in benefits for the Chief Executive and the average employee was not considered to be practical or meaningful and has not been included in Figure 10.

61 Directors’ Remuneration Report (continued)

Performance Graph The chart below shows the Company’s Total Shareholder Return (TSR) performance against the performance of the FTSE All Share Index – Financial Services from 30 September 2008 to 29 September 2013. The FTSE All Share – Financial Services index was chosen as a comparator because it is the index that encompasses most of our key competitors. TSR is calculated assuming dividends are reinvested on receipt. Figure 11: Total Shareholder Return performance

£300

£250

£200

£150

£100

£50

September 2008 September 2009 September 2010 September 2011 September 2012 September 2013

Brewin Dolphin Holdings PLC TR FTSE All Share/Financials TR

Figure 12 shows the total remuneration figure for the director undertaking the role of Chief Executive during each of those financial years. The total remuneration figure includes the annual bonus which was awarded based on performance in those years. Where this bonus is subject to deferral, it is shown in the year in which it was awarded. The annual bonus is shown as a percentage of the maximum for 2012 and 2013 – there was no maximum amount for bonus in the preceding years. No long term incentive awards were made to the high paid executive director during the period. Figure 12: Total remuneration for Chief Executive

Year ending September 2009 2010 2011 2012 2013 Total Remuneration (£’000) 589 643 593 557 578 Annual bonus (% max) n/a n/a n/a 39% 63%

Relative importance of the spend on pay Figure 13 shows the movement in spend on staff costs versus that in dividends. Figure 13: Distribution Statement

2012 2013 £’000 £’000 Increase Staff costs 122,393 137,326 12% Dividends 17,230 22,6121 31%

1 based on the proposed final dividend for the 52 week period ended 29 September 2013 of 5.05p per share which is subject to approval by shareholders at the Annual General Meeting (see note 14).

62 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Remuneration Committee Governance The Remuneration Committee is governed by formal terms of reference agreed by the Board. The terms of reference were reviewed during the year to ensure they continued to accurately reflect the remit of the Committee. The terms of reference of the Remuneration Committee can be viewed on the Company’s website. The members of the Committee are listed in the table below. All of these are independent Non-Executive Directors with the exception of the Company Chairman who was independent on his appointment. The members of the Committee during the last financial year and their attendance at the meetings of the Committee are shown in the Corporate Governance Report on page 39. None of the Remuneration Committee members has any personal financial interests (other than as shareholders), conflicts of interest arising from cross Directorships or day-to-day involvement in running the business. The Remuneration Committee determines the individual remuneration packages of each Executive Director. The Chief Executive and Finance Director attend meetings by invitation and assist the Committee in its deliberations, except when issues relating to their own remuneration are discussed. No directors are involved in deciding their own remuneration. The Committee can call for external reports and assistance. Independent legal advice may be sought by the Committee as required. The Company Secretary acts as Secretary to the Committee. The Committee reviews the remuneration policy for senior employees below the Board as well as the policy on pay and conditions of employees throughout the Group. These are considered when determining Executive Directors remuneration. During the period the Committee met twelve times and a number of issues were considered and discussed, including but not limited to: • Remuneration policy for executive directors, including structure and performance criteria for the annual incentive plan and the introduction of a new Long Term Incentive Plan; • Introduction of a shareholding guideline for executive directors; Governance Directors’ Report & • Adoption of a clawback policy for the annual incentive plan; • Determination of remuneration packages for directors joining the Board; • Approval of compensation arrangements for directors leaving the Board; • Approval of the grant of options under the Deferred Profit Share Plan; • Determination of annual incentive payable to executive directors in respect of FY2013; • Oversight of remuneration arrangements for senior executives; • Review of the Company’s Pillar 3 Remuneration disclosures; and • Review of the Committee’s terms of reference. External advisers The Remuneration Committee is advised by New Bridge Street (“NBS”), appointed by the Committee. NBS is a member of the Remuneration Consultants Group and abides by its Code of Conduct which requires its advice to be impartial and objective. The total fees paid to NBS in respect of its services to the Committee during the year were £58,525. External Directorships Figure 14 below sets out details of the external directorships held by the Executive Directors and any fees that they received in respect of their services during the year. Figure 14: External directorships and remuneration

Director Name Position FY 2013* FY 2012 Jamie Matheson STV Group plc Non-Executive Director £17,500 £35,000 Jamie Matheson Maven Income and Growth VCT 5 plc Non-Executive Director £6,000 £12,000 David Nicol Hermes Property Unity Trust Member of appointments Committee £13,750 n/a

*Pro-rated for the period to 21 March 2013 for Jamie Matheson and from 21 March 2013 for David Nicol to reflect their respective resignation and appointment as directors of the Company.

63 Directors’ Remuneration Report (continued)

How the policy will be applied in 2014 onwards (i) Base salary review The Executive Directors salaries were last reviewed in September 2013. There will be no salary increases for 2014. The current salaries are shown in Figure 15: Figure 15: Current salaries for the Executive Directors

Salary as at Salary as at 29 September 30 September 2013 2012* Change David Nicol £350,000 £350,000 – Stephen Ford £300,000 £300,000 – Andrew Westenberger £300,000 £300,000 – Michael Williams £154,500 £154,500 –

*or date of appointment if later

(ii) Fees for the Chairman and Non-Executive Directors As detailed in the remuneration policy, the Company’s approach to setting non-executive directors’ remuneration is with reference to market levels in comparably sized FTSE companies, levels of responsibility and time commitments. These fees are reviewed periodically by the Board. A summary of current fees is as follows: Figure 16: Current fees of the Chairman and Non-Executive Directors

As at 29 September 2013 Chairman £125,000 Base fee* £40,000 Senior Independent Director £4,000 Committee Chairman £4,000 – £6,000

*with the exception of J Worsley where the base fee is £50,000

(iii) Performance targets for the 2013-14 annual bonus, and LTIP awards to be granted in 2014 For FY 2014, the annual bonus will be based on performance against a balanced scorecard comprising three Key Performance Areas: profit before tax (35% weighting); operating profit margin (35% weighting) and personal performance/ non-financial targets (30%). Profit and margin will be adjusted to exclude the impact of exceptional items. The Committee has chosen not to disclose, in advance, the annual bonus performance targets for the forthcoming year as these include items which the Committee considers commercially sensitive. Full retrospective disclosure of the targets and performance against them will be seen in next year’s Annual Remuneration Report. The Committee is seeking approval to implement an LTIP with effect from 2014; details of this are included with the Notice of AGM. If the new Plan is approved, the LTIP awards granted in 2014 will be subject to two separate performance conditions, each accounting for one-half of the award. The performance conditions are as follows: Figure 17: Performance targets for the LTIP awards to be granted in 2014

Weighting Stretch (each measured Threshold (100% Performance metric independently) (25% vesting) vesting) Measurement period Adjusted EPS 50% 8% 18% CAGR measured over the three financial years Compound Annual Growth Rate (CAGR) 2013-14, 2014-15 and 2015-16, using 2012-13 as the base year. 2016 full year adjusted 50% 23% 25% Measured in 2015-16 financial year. operating profit margin

There is also a general underpin: the Committee will assess the overall health of the business and whether prudent risk management has been applied and may scale-back the vesting level if it considers this to be appropriate having taken account of this general underpin.

64 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Statement of shareholder voting At last year’s AGM, the Directors’ Remuneration Report received the following votes from shareholders: Figure 18: Shareholder Voting

2013 AGM % Votes cast in favour 129,412,408 89% Votes cast against 15,444,463 11% Total votes cast 144,856,871 Abstentions 20,429,927

Whilst our Remuneration Policy was approved by shareholders last year, we received 11% votes against the resolution. This was largely due to some shareholders having concerns about the size of increases in fixed pay. These increases were intended to re-position the base salaries at a more competitive level and balance the introduction of a cap on variable pay. However, the total remuneration, after application of the increases in 2012, remained substantially below market median levels for a company of Brewin Dolphin’s size. There have been no increases in base salary at the start of the 2013-14 financial year. Approval This Directors’ Remuneration Report, including both the Policy and Annual Remuneration Report has been approved by the Board of Directors.

Signed on behalf of the Board of Directors

Angela Knight

Chairman of the Remuneration Committee Governance Directors’ Report & 3 December 2013

65 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 (“EU”) 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, International Accounting Standards 1 requires that directors: • 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. In addition, each of the directors considers that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s performance, business model and strategy; and 2. the management report, which is incorporated into the Directors’ Report together with the information provided in the Strategic Report 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

David Nicol Andrew Westenberger Chief Executive Finance Director 3 December 2013

66 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Independent Auditor’s Report

To the members of Brewin Dolphin Holdings PLC Our assessment of risks of material misstatement Opinion on financial statements The assessed risks of material misstatement described below are those that had the greatest effect on our audit In our opinion: strategy, the allocation of resources in the audit, and • the financial statements give a true and fair view of the directing the efforts of the engagement team: state of the Group’s and of the Parent Company’s affairs • the assessment of the Group’s calculation of intangible as at 29 September 2013 and of the Group’s profit for assets, comprising goodwill, client relationships and the period then ended; software development. This is a complex and • the Group financial statements have been properly judgemental process, concerning estimates of future prepared in accordance with International Financial cash flows and growth rates based on management’s Reporting Standards (IFRSs) as adopted by the assessment of future profitability; European Union; • the assessment of the Group’s calculation of provisions • the Parent Company financial statements have been for onerous leases, is a complex and judgemental properly prepared in accordance with IFRSs as adopted process due to the uncertainty of future rental receipts; by the European Union and as applied in accordance • the calculation of the pension scheme deficit is with the provisions of the Companies Act 2006; and susceptible to small changes in the underlying • the financial statements have been prepared in assumptions and requires significant management accordance with the requirements of the Companies Act judgement in relation to mortality, price inflation, 2006 and as regards the Group’s Financial Statements, discount rates, pension increases and earnings growth; Article 4 of the IAS Regulation. • no active market exists for the Group’s investment in The financial statements comprise the consolidated income Euroclear, making the valuation of this investment a statement, the consolidated and Parent Company statement judgemental process; of financial position, the consolidated statement of • the assessment of provisions in relation to outstanding comprehensive income, the consolidated and Parent legal cases and claims, and the associated estimates of Company statement of changes in equity, the consolidated insurance recoveries require significant judgement due statement of cash flows and the related notes 1 to 35. The to the need to estimate the expenditure required to financial reporting framework that has been applied in their settle the obligations; and preparation is applicable law and IFRSs as adopted by the European Union and as regards the parent company • the assessment of shares to be issued and deferred financial statements, as applied in accordance with the purchase consideration payable in respect of provisions of the Companies Act 2006. acquisitions of businesses or client relationships. This requires significant judgements from management due Going concern to the estimates of future earnings from acquisitions and As required by the Listing Rules we have reviewed the discount rates used. directors’ statement on page 26 that the Group is a going concern. We confirm that: Our application of materiality Financial Statements We determined planning materiality for the Group to be • we have not identified material uncertainties related to £2.86m, which is approximately 10% of pre-tax profit, and events or conditions that may cast significant doubt on below 2% of equity. the Group’s ability to continue as a going concern which we believe would need to be disclosed in accordance We agreed with the Audit Committee that we would report with IFRSs as adopted by the European Union; and to the Committee all audit differences in excess of £57,000, as well as differences below that threshold that, in our view, • we have concluded that management’s use of the going warranted reporting on qualitative grounds. We also report to concern basis of accounting in the preparation of the the Audit Committee on any disclosure matters that we financial statements is appropriate. identified when assessing the overall presentation of the However, because not all future events or conditions can be financial statements. predicted, this statement is not a guarantee as to the An overview of the scope of our audit Group’s ability to continue as a going concern. The majority of the operations of the Group are based in the United Kingdom and are audited by Deloitte LLP. The only exception to this is Tilman Brewin Dolphin Limited, an Irish Company, which represents 4% of pre-tax profit and which is audited by another firm. We have supervised their work on the figures included in the Group’s financial statements for this entity through the issuance of instructions, receipt of summaries of work performed and ongoing dialogue throughout the audit process.

67 Independent Auditor’s Report (continued)

The way in which we scoped our response to the risks Other matters on which we are required to report by identified above was as follows: exception • we challenged the appropriateness of the various inputs Adequacy of explanations received and accounting used by management in their impairment calculations, records and validated these to external information where Under the Companies Act 2006 we are required to report to available. you if, in our opinion: • we assessed in detail management’s assumptions in • we have not received all the information and respect of the amount of space identified as surplus to explanations we require for our audit; or requirements; the potential income which could be • adequate accounting records have not been kept by the earned from sub-letting this space; and the potential parent company, or returns adequate for our audit have time to identify tenants. not been received from branches not visited by us; or • we evaluated the appropriateness of the principal • the parent company financial statements are not in actuarial assumptions used in the calculation of the agreement with the accounting records and returns. retirement benefit obligation, using our own actuarial experts to make enquiries of the Group’s actuary as to We have nothing to report in respect of these matters. the key assumptions made, and compared these to our Directors’ remuneration knowledge of market practice. Under the Companies Act 2006 we are also required to • we evaluated the appropriateness and consistency of report if, in our opinion, certain disclosures of directors’ the methodologies used for the valuation of the Group’s remuneration have not been made or the part of the investment in Euroclear. Directors’ Remuneration Report to be audited is not in agreement with the accounting records and returns. Under • we challenged management’s identification of the Listing Rules we are required to review certain elements outstanding legal cases and claims received, reviewed of the Directors’ Remuneration Report. We have nothing to associated legal correspondence and obtained direct report arising from these matters or our review. confirmation from the Group’s legal advisors as to the adequacy of the level of provisions. We also tested the Corporate Governance Statement acknowledgement of any associated insurance Under the Listing Rules we are also required to review the recoverable. part of the Corporate Governance Statement relating to the Company’s compliance with nine provisions of the UK • we evaluated management’s calculation of shares to be Corporate Governance Code. We have nothing to report issued and deferred purchase consideration and arising from our review. challenged estimates of future earnings from acquisitions and discount rates used. Our duty to read other information in the Annual Report The Audit Committee’s consideration of these risks is set out Under the International Standards on Auditing (UK and on pages 46 to 47. Ireland), we are required to report to you if, in our opinion, Opinions on other matters prescribed by the information in the annual report is: Companies Act 2006 • materially inconsistent with the information in the audited In our opinion: financial statements; or • the information given in the Strategic Report and the • apparently materially incorrect based on, or materially Directors’ Report for the financial period for which the inconsistent with, our knowledge of the group acquired financial statements are prepared is consistent with the in the course of performing our audit; or financial statements; and • is otherwise misleading. • the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with In particular, we are required to consider whether we have the Companies Act 2006. identified any inconsistencies between our knowledge acquired during the audit and the directors’ statement that they consider the annual report is fair, balanced and understandable and whether the annual report appropriately discloses those matters that we communicated to the audit committee which we consider should have been disclosed. We confirm that we have not identified any such inconsistencies or misleading statements.

68 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 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. 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. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group’s 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 and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any Financial Statements apparent material misstatements or inconsistencies we consider the implications for our report.

Simon Hardy FCA (Senior Statutory Auditor) for and on behalf of Deloitte LLP Chartered Accountants and Statutory Auditor London, United Kingdom 3 December 2013

69 Consolidated Income Statement 52 week period ended 29 September 2013

52 weeks to 52 weeks to 29 September 30 September 2013 2012 Note £’000 £’000 Continuing operations Revenue 5 271,954 253,112 Other operating income 3i 11,724 16,419 Total income 5 & 6 283,678 269,531

Staff costs 7 (148,974) (133,242) Redundancy costs 7 (4,795) (570) Additional FSCS levy (1,107) (553) Onerous contracts provision 33 (6,232) – Amortisation of intangible assets – client relationships 16 (12,520) (11,871) Other operating costs (83,418) (94,196) Operating expenses (257,046) (240,432)

Operating profit 26,632 29,099 Finance income 9 1,452 1,661 Other gains and losses 10 872 (74) Finance costs 9 (385) (803) Profit before tax 6 & 8 28,571 29,883 Tax 11 (7,297) (8,389) Profit for the period from continuing operations 21,274 21,494

Discontinued operations Loss for the period from discontinued operations 13 – (3,092) Profit for the period 21,274 18,402

Attributable to: Equity shareholders of the parent 21,274 18,402 21,274 18,402

Earnings per share From continuing operations Basic 15 8.5p 9.1p Diluted 15 8.0p 8.6p

From continuing and discontinued operations Basic 15 8.5p 7.8p Diluted 15 8.0p 7.4p

70 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Consolidated Statement of Comprehensive Income 52 week period ended 29 September 2013

52 weeks to 52 weeks to 52 weeks to 52 weeks to 29 September 30 September 29 September 30 September 2013 2012 2013 2012 Note £’000 £’000 Note £’000 £’000 Continuing operations Profit for the period 21,274 18,402 Revenue 5 271,954 253,112 Items that will not be reclassified subsequently to profit and loss: Other operating income 3i 11,724 16,419 Actuarial loss on defined benefit pension scheme 27 (2,217) (5,063) Total income 5 & 6 283,678 269,531 Deferred tax credit on actuarial loss on defined benefit pension scheme 443 1,164 (1,774) (3,899) Staff costs 7 (148,974) (133,242) Items that may be reclassified subsequently to profit and loss: Redundancy costs 7 (4,795) (570) Gain on revaluation of available-for-sale investments 19 4,000 – Additional FSCS levy (1,107) (553) Deferred tax (charge)/credit on revaluation of available-for-sale investments (633) 167 Onerous contracts provision 33 (6,232) – Exchange differences on translation of foreign operations 147 (196) Amortisation of intangible assets – client relationships 16 (12,520) (11,871) Other operating costs (83,418) (94,196) 3,514 (29) Operating expenses (257,046) (240,432) Other comprehensive income/(expense) for the period 1,740 (3,928) Total comprehensive income for the period 23,014 14,474 Operating profit 26,632 29,099 Finance income 9 1,452 1,661 Attributable to: Other gains and losses 10 872 (74) Equity shareholders of the parent 23,014 14,474 Finance costs 9 (385) (803) 23,014 14,474 Profit before tax 6 & 8 28,571 29,883 Tax 11 (7,297) (8,389) Profit for the period from continuing operations 21,274 21,494

Discontinued operations Loss for the period from discontinued operations 13 – (3,092) Profit for the period 21,274 18,402

Attributable to: Equity shareholders of the parent 21,274 18,402 21,274 18,402

Earnings per share

From continuing operations Financial Statements Basic 15 8.5p 9.1p Diluted 15 8.0p 8.6p

From continuing and discontinued operations Basic 15 8.5p 7.8p Diluted 15 8.0p 7.4p

71 Consolidated Balance Sheet As at 29 September 2013

As at As at 29 September 30 September 2013 2012 Note £’000 £’000 ASSETS Non-current assets Intangible assets 16 127,448 120,930 Property, plant and equipment 17 14,320 15,951 Available-for-sale investments 19 10,000 6,013 Other receivables 20 1,353 2,215 Deferred tax asset 21 672 860 Total non-current assets 153,793 145,969 Current assets Trading investments 19 872 759 Trade and other receivables 20 258,848 227,671 Cash and cash equivalents 22 136,987 71,827 Total current assets 396,707 300,257 Total assets 550,500 446,226

LIABILITIES Current liabilities Bank overdrafts 23 3,153 243 Trade and other payables 24 289,884 248,555 Current tax liabilities 2,880 2,249 Provisions 33 4,405 1,887 Shares to be issued including premium 25 3,075 5,858 Total current liabilities 303,397 258,792 Net current assets 93,310 41,465 Non-current liabilities Retirement benefit obligation 27 9,177 9,754 Deferred purchase consideration 25 1,185 1,525 Provisions 33 3,260 – Shares to be issued including premium 25 11,836 13,418 Total non-current liabilities 25,458 24,697 Total liabilities 328,855 283,489 Net assets 221,645 162,737

EQUITY Called up share capital 28 2,712 2,469 Share premium account 28 133,341 124,271 Own shares 29 (12,734) (12,569) Revaluation reserve 7,652 4,285 Merger reserve 61,380 22,950 Profit and loss account 29,294 21,331 Equity attributable to equity holders of the parent 221,645 162,737

Approved by the Board of Directors and authorised for issue on 3 December 2013 Signed on its behalf by

D Nicol A Westenberger Chief Executive Finance Director

72 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Consolidated Statement of Changes in Equity 52 week period ended 29 September 2013

Attributable to the equity shareholders of the Parent Called Share Profit up share premium Own Revaluation Merger and loss capital account shares reserve reserve account Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 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 8,243 – – – – 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 Tax on share-based payments – – – – – 97 97 Balance at 30 September 2012 2,469 124,271 (12,569) 4,285 22,950 21,331 162,737 Profit for the period – – – – – 21,274 21,274 Other comprehensive income for the period Deferred and current tax on other comprehensive income – – – (633) – 443 (190) Actuarial loss on defined benefit pension scheme – – – – – (2,217) (2,217) Revaluation of available-for-sale investments – – – 4,000 – – 4,000 Exchange differences on translation of foreign operations – – – – – 147 147 Total comprehensive income for the period – – – 3,367 – 19,647 23,014 Dividends – – – – – (18,077) (18,077) Issue of shares 243 9,070 – – 38,430 – 47,743 Own shares acquired in the period – – (165) – – – (165) Share-based payments – – – – – 6,135 6,135

Tax on share-based payments – – – – – 258 258 Financial Statements Balance at 29 September 2013 2,712 133,341 (12,734) 7,652 61,380 29,294 221,645

73 Company Balance Sheet As at 29 September 2013

As at As at 29 September 30 September 2013 2012 Note £’000 £’000 ASSETS Non-current assets Investment in subsidiaries 18 191,699 186,194 Other receivables 20 319 420 Total non-current assets 192,018 186,614 Current assets Trade and other receivables 20 44,567 226 Cash and cash equivalents 22 136 829 Total current assets 44,703 1,055 Total assets 236,721 187,669

LIABILITIES Current liabilities Trade and other payables 24 10,671 12,611 Shares to be issued including premium 25 3,075 5,858 Total current liabilities 13,746 18,469 Net current assets/(liabilities) 30,957 (17,414) Non-current liabilities Shares to be issued including premium 25 11,836 13,418 Total non-current liabilities 11,836 13,418 Total liabilities 25,582 31,887 Net assets 211,139 155,782

EQUITY Called up share capital 28 2,712 2,469 Share premium account 28 133,341 124,271 Own shares 29 (12,734) (12,569) Merger reserve 61,665 23,235 Profit and loss account 26,155 18,376 Equity attributable to equity holders 211,139 155,782

Approved by the Board of Directors and authorised for issue on 3 December 2013 Signed on its behalf by

D Nicol A Westenberger Chief Executive Finance Director

74 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Company Statement of Changes in Equity 52 week period ended 29 September 2013

Attributable to the equity shareholders of the Company Called Share Profit up share premium Own Merger and loss capital account shares reserve account Total £’000 £’000 £’000 £’000 £’000 £’000 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 Profit for the period – – – – 19,721 19,721 Total comprehensive income for the period – – – – 19,721 19,721 Dividends – – – – (18,077) (18,077) Issue of shares 243 9,070 – 38,430 – 47,743 Own shares acquired in the period – – (165) – – (165) Share-based payments – – – – 6,135 6,135 Balance at 29 September 2013 2,712 133,341 (12,734) 61,665 26,155 211,139

Financial Statements

75 Consolidated Cash Flow Statement 52 week period ended 29 September 2013

52 weeks to 52 weeks to 29 September 30 September 2013 2012 Note £’000 £’000 Net cash inflow from operating activities 34 60,516 34,979

Cash flows from investing activities Purchase of intangible assets – client relationships (3,431) (6,878) Purchase of intangible assets – software (15,121) (16,356) Purchases of property, plant and equipment (4,502) (7,412) Proceeds on disposal of available-for-sale investments 885 – Dividend received from available-for-sale investments 286 278 Net cash used in investing activities (21,883) (30,368)

Cash flows from financing activities Dividends paid to equity shareholders 14 (18,077) (16,887) Purchase of own shares 29 (165) (1,891) Proceeds on issue of shares 41,875 721 Net cash from/(used in) financing activities 23,633 (18,057)

Net increase/(decrease) in cash and cash equivalents 62,266 (13,446)

Cash and cash equivalents at the start of period 71,584 85,030

Effect of foreign exchange rates (16) –

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

Firm’s cash 116,686 48,003 Firm’s overdraft (3,153) (243) Firm’s net cash 113,533 47,760 Client settlement cash 20,301 23,824 Net cash and cash equivalents 133,834 71,584

Cash and cash equivalents shown in current assets 136,987 71,827 Bank overdrafts (3,153) (243) Net cash and cash equivalents 133,834 71,584

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

76 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Company Cash Flow Statement 52 week period ended 29 September 2013

52 weeks to 52 weeks to 29 September 30 September 2013 2012 Note £’000 £’000 Net cash (outflow)/inflow from operating activities 34 (24,491) 18,020 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 14 (18,077) (16,887) Proceeds on issue of shares 41,875 721 Net cash used in financing activities 23,798 (16,166)

Net (decrease)/increase in cash and cash equivalents (693) 232

Cash and cash equivalents at the start of period 829 597 Cash and cash equivalents at the end of period 136 829

Financial Statements

77 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 123. The nature of the Group’s operations and its principal activities are set out in the Narrative Reports. 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 affected the amounts reported in these financial statements. Standards affecting the financial statements Amendments to IAS 1 Presentation The Group has applied the amendments to IAS 1 titled ‘Presentation of Items of of financial statements (amended Other Comprehensive Income’ in advance of the effective date (annual periods June 2011) beginning on or after 1 July 2012.) The amendment increases the required level of disclosure within the statement of comprehensive income. The impact of this amendment has been to analyse items within the statement of comprehensive income between items that will not be reclassified subsequently to profit or loss and items that will be reclassified subsequently to profit or loss in accordance with the respective IFRS standard to which the item relates. The financial statements have also been amended to analyse income tax on the same basis. The amendments have been applied retrospectively, and hence the presentation of items of comprehensive income have restated to reflect the change. Other than the above mentioned presentation changes, the application of the amendments to IAS 1 do not result in any impact on profit or loss, comprehensive income and total comprehensive income. Annual Improvements to IFRSs: The amendments impact the following standards which are applicable to the 2009-2011 Cycle Group: • IFRS 1 First-time Adoption of International Financial Reporting Standards • IAS 1 Presentation of Financial Statements • IAS 16 Property, Plant and Equipment • IAS 32 Financial Instruments: Presentation • IAS 34 Interim Financial Reporting New standards, amendments and interpretations issued but not effective and yet to be endorsed by the EU are as follows: IFRS 9 Financial Instruments IFRS 10 Consolidated Financial Statements IFRS 10, IFRS 12 and Investment entities IAS 27 (amended) IFRS 11 Joint Arrangements IFRS 12 Disclosure of Interests in Other Entities IAS 27 (revised) Separate Financial Statements IAS 28 (revised) Investments in Associates and Joint Ventures Transition Guidance Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12) IFRIC 21 Levies Amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets Amendments to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39 Financial Instruments: Recognition and Measurement) New standards, amendments and interpretations issued but not effective and have been endorsed by the EU are as follows: IFRS 7(amended) Disclosures – Offsetting Financial Assets and Financial Liabilities IAS 32 (amended) Offsetting Financial Assets and Financial Liabilities

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

78 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 2. Adoption of new and revised standards (continued) IFRS 13 will apply to all transactions and balances (whether financial or non-financial) from which IFRSs require or permit joint value measurement, with the exception of: • share–based payment transactions within the scope of IFRS 2 Share-based Payment • leasing transactions within the scope of IAS 17 Leases. • measurements that have similarities to fair value but are not fair value, such as net realisable in IAS 2 Inventories or value in use in IAS 36 Impairment of Assets. 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 29 September 2013, would reduce profit after tax by approximately £130,000 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. Basis of consolidation The consolidated financial statements incorporate the financial statements of Brewin Dolphin Holdings PLC and all its subsidiary undertakings. The acquisition method of accounting has been adopted. Under this method, the results of subsidiary undertakings acquired during the period are included in the consolidated income statement from the date of acquisition. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation. In the Company’s accounts investments in subsidiary undertakings are stated at cost less any provision for impairment. In accordance with Section 408 of the Companies Act 2006 Brewin Dolphin Holdings PLC has taken advantage of

the legal dispensation not to present its own statement of comprehensive income or income statement. The amount Financial Statements 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. c. Going concern The directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements. Further detail is contained in the Strategic Report. 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

79 Notes to the Financial Statements (continued)

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 Financial statements of the Group and the 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 the Group and the Company are expressed in pound sterling, which is the functional currency of the Group and the Company and the presentation currency for the consolidated financial statements. 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 (receivable until the disposal of the Corporate and Advisory business on 1 February 2012), other fees plus other income, excluding VAT, receivable in respect of the period. Investment management fees, renewal commissions and corporate advisory and broking retainers (receivable until the disposal of the Corporate and Advisory business on 1 February 2012) 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 was disposed of on 1 February 2012 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.

80 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 3. Significant accounting policies (continued) 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 Rentals on operating leases are charged to the income statement on a straight-line basis over the lease term, except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease are consumed. Benefits received and receivable as an incentive to enter into an operating lease are recognised as a liability. The aggregate benefit of incentives is spread on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed. 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. Financial Statements 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 taxable 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 substantively enacted at the balance sheet date.

81 Notes to the Financial Statements (continued)

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(s)). 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(s)). Client relationships are amortised over seven to fifteen years, their minimum estimated useful lives. iii) Computer software Computer software which is not an integral part of the related hardware is classified as an intangible asset. Costs of acquiring computer software are treated as an intangible asset and amortised over four to ten years, dependent upon the assessment of the expected useful life of the software, 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 and is amortised over four to ten years on a straight line basis from the date the software comes into use, dependent on the assessment of the expected useful life of the software. The assessment of the expected useful life of computer software is based on the contractual terms or where appropriate past experience of the life of similar assets. 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.

82 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 3. Significant accounting policies (continued) p. 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 and is included in the ‘other gains and losses’ line item in the income statement. 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 Financial Statements after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets. For listed and unlisted equity investments classified as AFS, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of the impairment. When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period. In subsequent periods if the amount of impaired loss decreases, in respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income. q. 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 at FTVPL 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. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ‘other gains and losses’ line item in the income statement. Fair value is determined in the manner described in note 19.

83 Notes to the Financial Statements (continued)

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. 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. 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. t. 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. u. 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 and whenever there is an indication that it may be impaired. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. For the purposes of impairment testing, client relationships and goodwill are allocated to each of the Group’s cash‑generating units. Fair value is established by valuing clients’ funds under management in each of the cash‑generating units based on the value of funds under management at the period end; the percentages of funds being used depending on values attributed in recent public transactions for the purchase of advisory and discretionary funds. If the carrying amount relating to any cash-generating unit exceeds the calculated fair value less costs to sell, a value in use is calculated using a discounted cash flow method. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. 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.

84 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 3. Significant accounting policies (continued) v. 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. Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.

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 can 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 Financial Statements The fair valuation of the Group’s investment in Euroclear plc takes into account a number of different valuation methods including dividend yield. Onerous contracts provisions The Group has made a best estimate discounted to present value of the likely costs of onerous contracts, allowing for sublease income where the provision is in relation to premises and it is more likely than not that the premises will be sublet.

85 Notes to the Financial Statements (continued)

5. Revenue

2013 2012 £’000 £’000 52 weeks 52 weeks Continuing operations Investment management commission income 93,451 83,982 Financial planning and trail income 26,469 38,561 Investment management fees 152,034 130,569 271,954 253,112 Other operating income 11,724 16,419 Revenue from continuing operations 283,678 269,531 Discontinued operations Corporate Advisory & Broking Division (see note 13) – 1,235 Total revenue from continuing and discontinued operations 283,678 270,766

6. Segmental information For management purposes the Group currently has one business division: Investment Management. This forms the reportable segment of the Group for the period. During the 52 week period ended 30 September 2012, the Group had one business division from 2 February 2012: Investment Management. Prior to 2 February 2012, it had two business divisions: Investment Management and Corporate Advisory and Broking which was discontinued (see note 13). 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 division. All segment income relates to external clients. Net financing The accounting policies of the operating segments are the same as those of the Group. – Dividends paid 52 week period ended 29 September 2013 Investment Management £’000 Total income 283,678 Operating profit before redundancy costs, additional FSCS levy, onerous contracts provision and amortisation of client relationships 51,286 Additional FSCS levy (1,107) Onerous contracts provision (6,232) Redundancy costs (4,795) Amortisation of client relationships (12,520) Operating profit 26,632 Finance income (net) 1,067 Other gains and losses 872 Profit before tax 28,571

Other Information Capital expenditure 19,623 Depreciation 5,569 Amortisation of intangible asset – software 3,021 Share-based payments 6,135

Segment assets excluding current tax assets 550,500 Segment liabilities excluding current tax liabilities 325,975

86 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 6. Segmental information (continued) 52 week period ended 30 September 2012 Continuing Discontinued operations operations Corporate Investment Advisory & Management Broking Group £’000 £’000 £’000 Total income 269,531 1,235 270,766 Operating profit before redundancy costs, additional FSCS levy, onerous contracts provision and amortisation of client relationships 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 281,240 – 281,240

7. Staff costs and related party transactions Group Continuing and discontinued operations 2013 2012 52 weeks 52 weeks No. No. The average monthly number of employees including Directors by category was: Investment Management 1,127 1,103 Financial Statements Corporate Advisory & Broking – 20 Business Support 833 787 1,960 1,910

Continuing Operations Discontinued Operations Total 2013 2012 2013 2012 2013 2012 52 weeks 52 weeks 52 weeks 52 weeks 52 weeks 52 weeks £’000 £’000 £’000 £’000 £’000 £’000 The aggregate payroll costs were as follows including Directors: Wages and salaries 115,686 107,597 – 1,576 115,686 109,173 Social security costs 16,443 13,104 – 196 16,443 13,300 Share-based payments 6,135 3,852 – – 6,135 3,852 Termination benefits – redundancy costs 4,795 570 – 47 4,795 617 Other pension costs 10,710 8,689 – 62 10,710 8,751 153,769 133,812 – 1,881 153,769 135,693 The Company does not have any employees (2012: none).

87 Notes to the Financial Statements (continued)

7. Staff costs and related party transactions (continued) Remuneration of key management personnel The remuneration of the directors, who are the key management personnel of the Group, is set out in the Directors’ Remuneration Report on page 49. Directors’ transactions Material contracts with Directors and loans to Directors are shown in the Directors’ Remuneration Report on page 60; there are no other related party transactions with Directors.

8. Profit for the period Profit for the period has been arrived at after charging / (crediting):

Continuing Operations Discontinued Operations Total 2013 2012 2013 2012 2013 2012 52 weeks 52 weeks 52 weeks 52 weeks 52 weeks 52 weeks £’000 £’000 £’000 £’000 £’000 £’000 Net foreign exchange gains (879) (749) – – (879) (749) Depreciation of property, plant and equipment (note 17) 5,569 7,174 – 40 5,569 7,214 Amortisation of intangible assets – client relationships (note 16) 12,520 11,871 – – 12,520 11,871 Amortisation of intangible assets – software (note 16) 3,021 3,563 – – 3,021 3,563 Staff costs (note 7) 153,769 133,812 – 1,881 153,769 135,693 Other pension costs (note 7) – Defined benefit scheme – including death in service contributions 1,190 1,089 – 49 1,190 1,138 Defined contribution scheme 9,520 7,600 – 13 9,520 7,613 Impairment loss recognised on available-for-sale equity investments (note 10) 13 74 – – 13 74 Reversal of impairment of trade receivables (note 20) (11) (206) – – (11) (206) Auditor’s remuneration (see analysis below) 430 473 – – 430 473

2013 2012 52 weeks 52 weeks £’000 £’000 £’000 £’000 Analysis of auditor’s remuneration Fees payable to the Company’s auditor for the audit of the Company’s annual accounts 57 55 Fees payable to the Company’s auditor and their associates for other services to the Group: the audit of the Company’s subsidiaries pursuant to legislation 201 195 Other services pursuant to legislation Interim review 40 40 Regulatory assurance work 57 45 97 85 Tax services – – Information technology services – – Corporate finance services – – Other services Assurance services for external parties 13 78 AAF 01/06 – controls assurance report 62 60 75 138 430 473 Details of the Group’s policy on the use of the auditor for non-audit services is set out in the Audit Committee Report on page 47.

88 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 9. Finance income and finance costs 2013 2012 52 weeks 52 weeks £’000 £’000 Finance income Dividends from available-for-sale investments 436 278 Interest on bank deposits 1,016 1,383 1,452 1,661

Finance costs Finance cost of deferred consideration 149 192 Interest expense on defined pension obligation 201 581 Unwinding of discount on provisions 18 – Interest on bank overdrafts 17 30 385 803

10. Other gains and losses 2013 2012 52 weeks 52 weeks £’000 £’000 Profit on disposal of available-for-sale investments 885 – Impairment loss recognised on available-for-sale equity investments (13) (74) 872 (74)

The impairment loss of £13k relates to the listed investment in PLUS Markets Group PLC (2012: £74k). The profit on disposal of available-for-sale investments arose on the disposal of the Group’s holding in NPLUS1 Singer Limited (see note 13).

11. Taxation

Continuing Operations Discontinued Operations Total 2013 2012 2013 2012 2013 2012 52 weeks 52 weeks 52 weeks 52 weeks 52 weeks 52 weeks £’000 £’000 £’000 £’000 £’000 £’000

United Kingdom Financial Statements Current tax 6,590 6,650 – (617) 6,590 6,033 Adjustments in respect of prior years 256 554 – – 256 554 Overseas tax Current tax 194 261 – – 194 261 Adjustments in respect of prior years – – – – – – 7,040 7,465 – (617) 7,040 6,848 United Kingdom deferred tax Current year 365 1,140 – – 365 1,140 Adjustments in respect of prior years (108) (216) – 202 (108) (14) 7,297 8,389 – (415) 7,297 7,974

United Kingdom corporation tax is calculated at 23.5% (2012: 25%) of the estimated assessable taxable profit for the period. The Finance Act 2012 received Royal Assent on 17 July 2012 and reduced the corporation tax rate to 23% from 1 April 2013 (24% applied from 1 April 2012). Taxation for other jurisdictions is calculated at the relevant prevailing rates in the respective jurisdictions.

89 Notes to the Financial Statements (continued)

11. Taxation (continued) The charge for the year for continuing operations can be reconciled to the profit per the income statement as follows:

2013 2012 52 weeks 52 weeks £’000 £’000 Profit before tax on continuing operations 28,571 29,883 Tax at the UK corporation tax rate of 23.5% (2012: 25%) 6,714 7,471 Tax effect of: Income not taxable in determining taxable profit (208) – Expenses that are not deductible in determining taxable profit 954 755 Prior year tax (57) 141 Lower rates in subsidiaries (275) (105) Exempt dividend income (36) (70) Change in tax rate on deferred tax 205 197 Tax expense for the period 7,297 8,389 Effective tax rate for the year 26% 28% 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 £633,000 (2012: £167,000 credited) has been debited to other comprehensive income, this is attributable to the reduction in the Corporation Tax rate and deferred tax relating to the actuarial loss in the defined benefit pension scheme amounting to £443,000 (2012: £1,164,000 credited) has been credited to other comprehensive income. Deferred tax on share-based payments of £316,000 (2012: £96,000 credited) has been credited to profit and loss reserves.

12. Profit attributable to equity shareholders of the Parent 2013 2012 52 weeks 52 weeks £’000 £’000 Profit after taxation dealt with in the accounts of the Company 19,721 16,332

13. Discontinued operations The disposal of the Corporate Advisory and Broking division was completed on 1 February 2012. At this date, the Group received a 14% preferred interest in N+1 Brewin LLP. In July 2012, N+1 Brewin LLP merged with Singer Capital Markets Limited, the Group’s holding in the new entity, NPLUS1 Singer Limited, was 5.6%. This holding was valued at £nil at 30 September 2012; the holding has now been sold for £885,472 (see note 19). The Corporate Advisory and Broking Division represented a reportable segment of the Group until its disposal and the effect of the discontinued operation on segment results is disclosed in note 6. The results of the discontinued operations in the consolidated income statement were as follows:

2013 2012 52 weeks 52 weeks £’000 £’000 Revenue – 1,235 Expenses – (3,599) Operating loss – (2,364) Costs of separation – (1,143) Loss before tax – (3,507) Attributable tax – 415 Loss attributable to discontinued operations (attributable to the owners of the Company) – (3,092)

During the year the division contributed a net cash outflow of £nil (2012: £3.5m outflow) to the Group’s net operating cash flows.

90 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 14. Dividends 2013 2012 52 weeks 52 weeks £’000 £’000 Amounts recognised as distributions to equity shareholders in the period: 2011/2012 Final dividend paid 8 April 2013, 3.6p per share (2012: 3.55p per share) 8,755 8,412 2012/2013 Interim dividend paid 28 June 2013, 3.55p per share (2012: 3.55p per share) 9,322 8,475 18,077 16,887

Proposed final dividend for the 52 weeks ended 29 September 2013 of 5.05p (2012: 3.6p) per share based on shares in issue at 1 December 2013 (30 November 2012) 13,290 8,599

The proposed final dividend for the 52 week period ended 29 September 2013 of 5.05p 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 8,401,931 number of ordinary shares representing 3.08% 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:

2013 2012 ’000 ’000 Number of shares Basic Weighted average number of shares in issue in the period 250,391 236,921 Diluted Weighted average number of options outstanding for the period 12,211 7,996 Estimated weighted average number of shares earned under deferred consideration arrangements 3,434 6,374 Diluted weighted average number of options and shares for the period 266,036 251,291

Earnings attributable to ordinary shareholders Financial Statements 2013 2012 Continuing operations £’000 £’000 Profit for the period from continuing operations 21,274 21,494 Disposal of available-for-sale investment (885) – Redundancy costs 4,795 570 Additional FSCS levy 1,107 553 Onerous contracts provision 6,232 – Amortisation of intangible assets – client relationships 12,520 11,871 less tax effect of above (5,586) (3,249) Adjusted basic profit for the period and attributable earnings excluding redundancy costs, additional FSCS levy, onerous contracts provision, amortisation of client relationships and disposal of available-for-sale investment 39,457 31,239

91 Notes to the Financial Statements (continued)

15. Earnings per share (continued)

2013 2012 £’000 £’000 Profit for the period from continuing operations 21,274 21,494 Finance costs of deferred consideration (note a) 142 115 less tax (33) (29) Adjusted fully diluted profit for the period and attributable earnings 21,383 21,580 Disposal of available-for-sale investment (885) – Redundancy costs 4,795 570 Additional FSCS levy 1,107 553 Onerous contracts provision 6,232 – Amortisation of intangible assets – client relationships 12,520 11,871 less tax effect of above (5,586) (3,249) Adjusted basic profit for the period and attributable earnings excluding redundancy costs, additional FSCS levy, onerous contracts provision, amortisation of client relationships and disposal of available-for-sale investment 39,566 31,325

From continuing operations Basic 8.5p 9.1p Diluted 8.0p 8.6p

From continuing operations excluding redundancy costs, additional FSCS levy, onerous contracts provision, amortisation of client relationships and disposal of available-for-sale investment

Basic 15.8p 13.2p Diluted 14.9p 12.5p

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 2013 2012 Continuing and discontinued operations £’000 £’000 Profit for the period 21,274 18,402 Disposal of available-for-sale investment (885) – Redundancy costs 4,795 617 Additional FSCS levy 1,107 553 Onerous contracts provision 6,232 – Amortisation of intangible assets – client relationships 12,520 11,871 less tax effect of above (5,586) (3,260) Adjusted basic profit for the period and attributable earnings excluding redundancy costs, additional FSCS levy, onerous contracts provision, amortisation of client relationships and disposal of available-for-sale investment 39,457 28,183

92 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Earnings attributable to ordinary shareholders 2013 2012 Continuing and discontinued operations £’000 £’000 Profit for the period 21,274 18,402 Finance costs of deferred consideration (note a above) 142 115 less tax (33) (29) Adjusted fully diluted profit for the period and attributable earnings 21,383 18,488 Disposal of available-for-sale investment (885) – Redundancy costs 4,795 617 Additional FSCS levy 1,107 553 Onerous contracts provision 6,232 – Amortisation of intangible assets – client relationships 12,520 11,871 less tax effect of above (5,586) (3,260) Adjusted basic profit for the period and attributable earnings excluding redundancy costs, additional FSCS levy, onerous contracts provision, amortisation of client relationships and disposal of available-for-sale investment 39,566 28,269

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 8.5p 7.8p Diluted 8.0p 7.4p

From continuing and discontinued operations excluding redundancy costs, additional FSCS levy, onerous contracts provision, amortisation of client relationships and disposal of available-for-sale investment Basic 15.8p 11.9p Diluted 14.9p 11.2p

From discontinued operations

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

Basic 0.0p (1.3p)

Diluted 0.0p (1.2p) Financial Statements

93 Notes to the Financial Statements (continued)

16. Intangible assets Group Software Client development Purchased Goodwill relationships costs software Total £’000 £’000 £’000 £’000 £’000 Cost At 30 September 2011 48,637 90,485 1,134 13,083 153,339 Additions – 7,665 474 15,882 24,021 Disposals – – – (90) (90) Revaluation of shares to be issued and deferred purchase consideration in respect of acquisitions in prior periods (note 25) – (3,460) – – (3,460) At 30 September 2012 48,637 94,690 1,608 28,875 173,810 Additions – 4,616 1,053^^ 15,235^ 20,904 Disposals – – – (156) (156) Exchange differences – 8 – – 8 Revaluation of shares to be issued and deferred purchase consideration in respect of acquisitions in prior periods (note 25) – 1,264 – – 1,264 At 29 September 2013 48,637 100,578 2,661 43,954 195,830

Accumulated amortisation and impairment At 30 September 2011 – 31,606 458 5,470 37,534 Amortisation charge for the period – 11,871 304 3,259 15,434 Eliminated on disposal – – – (88) (88) Impairment losses for the period – – – – – At 30 September 2012 – 43,477 762 8,641 52,880 Amortisation charge for the period – 12,520 265 2,756 15,541 Eliminated on disposal – – – (39) (39) Exchange differences – – – – – Impairment losses for the period – – – – – At 29 September 2013 – 55,997 1,027 11,358 68,382 ^£15m of purchased software acquired in the period and ^^£1m of software development costs, relate to an asset which is under development and not yet in use.

There have been no impairment losses to client relationships recognised in the period (2012: £nil).

Net book value At 29 September 2013 48,637 44,581 1,634 32,596 127,448 At 30 September 2012 48,637 51,213 846 20,234 120,930 At 30 September 2011 48,637 58,879 676 7,613 115,805

94 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Client relationship additions are made up as follows:

2013 2012 £’000 £’000 Cash paid for additions in period 1,842 4,826 Deferred purchase liability 26 409 Value of shares to be issued* 189 2,213 2,057 7,448 Cash paid for businesses or client relationships acquired in previous periods 1,642 2,052 Shares issued in period 5,868 7,586 Other additions 1,768 1,112 Utilisation of provisions for deferred purchase liability and shares to be issued (note 25) (6,719) (10,533) Adjustments to prior year acquisitions 2,559 217 Total additions 4,616 7,665

* The number of shares issuable is determined by the share price at the date of issue. If the shares had been issued at the end of the period the number of shares issued would have been 71,321 based on the closing share price as at 29 September 2013 (2012: 1,317,262) ordinary 1 pence shares.

Analysis of goodwill and client relationships

Client Goodwill relationships Total £’000 £’000 £’000 Carrying amount at period end South East investment management team 9,987 – 9,987 Midland investment management team 1 5,153 – 5,153 Midland investment management team 2** – 2,052 2,052 Midland investment management team 3 5,289 – 5,289 Midland investment management team 4 – 2,194 2,194 Tilman Brewin Dolphin Limited* – 14,805 14,805 Other investment management teams ~ 28,208 25,530 53,738 48,637 44,581 93,218

* Amortisation period remaining 12 years 10 months. ** Amortisation period remaining 2 years. ~ None of the constituent parts of the goodwill or client relationships relating to the other investment management teams is individually significant in comparison to the total value of goodwill or client relationships respectively. Financial Statements Basis of valuation, key assumptions and sensitivity for impairment testing of goodwill The key assumption is the value of the funds under management which is determined based on a percentage of funds under management with reference to recent observable market transactions, discretionary funds are valued at 3% and advisory funds at 1%. Sensitivity analysis of the key assumptions A 10bp absolute change in the value of funds under management used for the purpose of impairment testing impacts the valuation of the CGUs collectively by +/- 4.2% or +/- £19m movement on the estimated value of funds under management of £445m of the CGUs which have goodwill balances as at 29 September 2013.

95 Notes to the Financial Statements (continued)

17. Property, plant and equipment Group Leasehold Office Motor Computer Improvements Equipment Vehicles Equipment Total £’000 £’000 £’000 £’000 £’000 Cost At 30 September 2011 10,916 11,131 35 73,280 95,362 Additions 1,568 2,020 – 3,824 7,412 Exchange differences (15) (38) (3) – (56) Disposals (140) (296) – (457) (893) At 30 September 2012 12,329 12,817 32 76,647 101,825 Additions 2,042 1,212 – 1,267* 4,521 Exchange differences 9 25 2 – 36 Disposals (1,693) (373) – (143) (2,209) At 29 September 2013 12,687 13,681 34 77,771 104,173 Depreciation At 30 September 2011 5,529 7,839 1 66,124 79,493 Charge for the period 1,496 1,643 7 4,068 7,214 Exchange differences (14) (31) – – (45) Eliminated on disposal (93) (270) – (425) (788) At 30 September 2012 6,918 9,181 8 69,767 85,874 Charge for the period 1,459 1,545 6 2,559 5,569 Exchange differences 8 20 – – 28 Eliminated on disposal (1,155) (318) – (145) (1,618) At 29 September 2013 7,230 10,428 14 72,181 89,853 Net book value At 29 September 2013 5,457 3,253 20 5,590 14,320 At 30 September 2012 5,411 3,636 24 6,880 15,951 At 30 September 2011 5,387 3,292 34 7,156 15,869

* £0.8m relates to hardware acquired in the period, where the asset is not yet in use.

96 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 18. Subsidiaries The following are the Group’s principal subsidiary undertakings, all of which are owned 100% directly or indirectly by the Group and are included in the consolidated financial statements:

Name of Subsidiary Activity Country of registration Class of share capital BDS Nominees Limited Nominee Company England & Wales Ordinary Brewin 1762 Nominees Limited Nominee Company England & Wales Ordinary Brewin Dolphin MP Investment Manager England & Wales A Ordinary / B Ordinary Brewin Nominees Limited Nominee Company England & Wales Ordinary Brewin Dolphin Limited Investment Manager England & Wales Ordinary Four Yards Nominees Limited Nominee Company England & Wales Ordinary Giltspur Nominees Limited Nominee Company England & Wales Ordinary Smittco Nominees Limited Nominee Company England & Wales Ordinary North Castle Street (Nominees) Limited Nominee Company Scotland Ordinary Tilman Brewin Dolphin Limited Investment Manager Republic of Ireland Ordinary

A complete list of the Group’s subsidiaries will be included in the Group’s annual return to Companies House.

Company 2013 2012 £’000 £’000 At start of period 186,194 168,953 Change in investment in Brewin Dolphin Limited 924 14,481 Investment in Tilman Brewin Dolphin Limited 490 1,589 Capital contribution to Brewin Dolphin Limited re share-based payments 4,091 1,171 At end of period 191,699 186,194 Financial Statements

97 Notes to the Financial Statements (continued)

19. Investments Available-for-sale investments Group Listed Unlisted investments investments Total £’000 £’000 £’000 At 30 September 2011 87 6,000 6,087 Impairment recognised in the income statement (74) – (74) At 30 September 2012 13 6,000 6,013 Impairment recognised in the income statement (13) – (13) Net gain from changes in fair value recognised in equity – 4,000 4,000 At 29 September 2013 – 10,000 10,000

The listed available-for-sale investment is in PLUS Markets Group PLC and was a strategic investment designed to reduce the then monopoly of the London Stock Exchange, it has a current market value of £ nil (2012: £ nil). The unlisted available-for-sale investment in Euroclear plc is as a result of a £0.4m strategic investment in Crest, the London based settlement system. Crest was taken over by Euroclear plc and the resultant stake in Euroclear plc was 0.52% of its share capital or 19,899 ordinary shares. As at 29 September 2013, the Directors updated their valuation of the Group’s holding in Euroclear plc; the valuation is £10 million (2012: £6 million). This valuation takes into account a number of different valuation methods including dividend yield. The Group’s 5.6% holding in NPLUS1 Singer Ltd (see note 13) was disposed of during the 52 week period ended 29 September 2013 (2012: £ nil, on the basis that no fair value was determinable at the period end).

Trading investments Listed Unlisted Group investments investments Total £’000 £’000 £’000 Fair value At 30 September 2012 759 – 759 At 29 September 2013 872 – 872

Investments are measured at fair value which is determined directly by reference to published prices in an active market where available. The trading investments are held in an unregulated subsidiary, Brewin Dolphin MP, whose sole objective is to provide seed capital to the model portfolios managed under an investment mandate by Brewin Dolphin Limited.

98 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 20. Trade and other receivables Group 2013 2012 £’000 £’000 Non-current: other receivables Loans – see (i) below 1,353 2,215 1,353 2,215

Current: trade and other receivables Trade debtors 199,938 167,700 Other debtors 1,076 5,113 Prepayments and accrued income 57,834 54,858 258,848 227,671

(i) £1,353,000 (2012: £2,215,000) represents loans to staff. The Directors believe that these balances are fully recoverable.

Company 2013 2012 Non-current: other receivables £’000 £’000 Loans 319 420 319 420

Current: trade and other receivables Prepayments and accrued income 23 17 Amounts due from subsidiary undertakings 44,544 209 44,567 226

The Directors consider that the carrying amount of the trade and other receivables approximates to their fair value. Any trade debtor in relation to client balances that are older than ninety days are provided for unless collateral is held. Trade debtors relate to either market or client transactions and are considered to be past due once the date for settlement has passed. The date for settlement is determined when the trade is booked. It is expected that some transactions may become past due in the normal course of business. Fees owed by clients are considered to be past due when they remain unpaid after 30 days after the relevant billing date. The maximum exposure to credit risk is the carrying

value as above. Financial Statements

Ageing of past due but not impaired trade debtors 2013 2012 £’000 £’000 Not past due 193,328 162,846 Up to 15 days past due 5,086 3,203 16 to 30 days past due 432 428 31 to 45 days past due 202 163 More than 45 days past due 724 940 199,772 167,580

Individually impaired trade debtors Individually impaired trade debtors 356 321 Provision for doubtful debts (190) (201) 166 120

Trade debtors 199,938 167,700

Movements in provision for doubtful debts At start of period 201 1,021 Net release to the income statement (11) (206) Doubtful debts written off – (614) At end of period 190 201

No other financial assets of the Group or the Company, other than doubtful debts, are impaired. 99 Notes to the Financial Statements (continued)

21. Deferred tax asset / (liability) The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the current and prior reporting period:

Other short- Retirement Share- Intangible Capital term timing benefit based asset allowances Revaluation differences obligation payments amortisation Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 Group At 30 September 2011 2,622 (1,447) 3,176 1,847 134 (5,773) 559 Credit/(charge) in the period to the income statement (316) – (5) (768) 107 (144) (1,126) Credit/(charge) in the period to the statement of comprehensive income – 167 – 1,164 96 – 1,427 At 30 September 2012 2,306 (1,280) 3,171 2,243 337 (5,917) 860 Credit/(charge) in the period to the income statement (455) – 851 (851) 526 (328) (257) Credit/(charge) in the period to the statement of comprehensive income – (633) – 443 259 – 69 At 29 September 2013 1,851 (1,913) 4,022 1,835 1,122 (6,245) 672

22. Cash and cash equivalents 2013 2012 £’000 £’000 Group Firm’s cash 116,686 48,003 Client settlement cash 20,301 23,824 136,987 71,827

Company Firm’s cash 136 829 136 829

Client settlement cash is held in segregated client accounts and is not available for use in the business. Cash and cash equivalents comprises cash at banks. The carrying amount of these assets is approximately equal to their fair value. At the balance sheet date there were also deposits for clients, not included in the consolidated balance sheet, which were held in segregated client bank accounts amounting to £1.46 billion (2012: £1.43 billion).

23. Bank overdrafts 2013 2012 Group £’000 £’000 Bank overdrafts 3,153 243 3,153 243

Bank overdrafts are unsecured and repayable on demand.

100 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 24. Trade and other payables

Current 2013 2012 £’000 £’000 Group Trade creditors 214,923 178,508 Other creditors 8,764 17,301 Other taxes and social security 8,070 6,346 Accruals and deferred income 57,653 45,540 Deferred purchase consideration (note 25) 474 860 289,884 248,555

Company Other creditors 16 16 Accruals and deferred income 3,319 5,259 Amounts payable to subsidiary undertakings 7,336 7,336 10,671 12,611

Trade creditors relate to either market or client transactions; the date for settlement is determined when the trade is booked. Other trade and other payable balances principally comprise amounts outstanding for ongoing costs. The Directors consider that the carrying amount of trade and other payables approximates to their fair value. Financial Statements

101 Notes to the Financial Statements (continued)

25. Shares to be issued including premium and other deferred purchase liabilities The Group acquires investment businesses and teams of investment managers, bringing with them funds under management (the latter classified as the intangible asset client relationships) on deferred purchase terms based on the value of income introduced over, normally, a three year period. The payment is normally made in ordinary shares and these shares typically have to be held for a further three years. At the discretion of the Board these shares can be purchased in the market rather than issued. The estimated likely cost of these shares is reassessed annually, see notes 3(s) and 4. At the period end there was a net upward assessment of £1.3m (2012: net downward £3.5m). These adjustments are inevitably subjective and dependent on events, influenced by market conditions. The other side of the liability is recorded in intangible assets-client relationships (see note 16). Each individual transaction has a cap as to the maximum value that could be paid out. The value of the cap is always set at a value substantially above what it is expected will be paid out. The total value of these caps is £9.5m (2012: £13.5m) for shares to be issued within one year, £59.2m (2012: £55.4m) for shares to be issued from one to five years. There is £ nil (2012: £10.7m) of further potential expenditure contracted for but not provided in the accounts. In the event of the Group being acquired by a third party, provisions exist to renegotiate the deferred purchase consideration into the shares of the acquiring entity, or for the deferred settlement period to be truncated.

As at 29 September 2013 Shares to be Deferred issued inc. Purchase premium Consideration Total (Group & Company) (Group only) 2013 2013 2013 £’000 £’000 £’000 Deferred consideration relating to acquisitions Current liability Payments relating to 4 cash generating units 3,075 474 3,549 3,075 474* 3,549

Non-current liability Payments relating to 3 cash generating units payable in 2014/15 4,255 139 4,394 Payments relating to 8 cash generating units payable in 2015/16 7,581 1,046 8,627 11,836 1,185 13,021

Total current and non-current liability 14,911 1,659 16,570

Expenditure contracted for but not provided in the accounts – – –

Reconciliation of movement in total of current and non-current liabilities Balance as at 30 September 2012 19,276 2,385 21,661 On acquisitions in the period 189 26 215 Adjustment to prior year acquisitions (see notes 3(s) and 16) 1,162 102 1,264 Unwind of discount charged to the income statement 142 7 149 Utilised in period (5,858) (861) (6,719) Balance as at 29 September 2013 14,911 1,659 16,570

* Current liability for Deferred Purchase Consideration is included in the Consolidated Balance Sheet within Trade and Other Payables.

102 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 As at 30 September 2012 Shares to be Deferred issued inc. Purchase premium Consideration Total (Group & Company) (Group only) 2012 2012 2012 £’000 £’000 £’000

Deferred consideration relating to acquisitions Current liability Payments relating to 8 cash generating units 5,858 860 6,718 5,858 860* 6,718

Non-current liability Payments relating to 4 cash generating units payable in 2013/14 2,254 365 2,619 Payments relating to 3 cash generating units payable in 2014/15 4,036 176 4,212 Payments relating to 11 cash generating units payable in 2015/16 7,128 984 8,112 13,418 1,525 14,943

Total current and non-current liability 19,276 2,385 21,661

Expenditure contracted for but not provided in the accounts Due after more than one year 2016/17 1,038 – 1,038

Reconciliation of movement in total of current and non-current liabilities Balance as at 30 September 2011 29,381 3,459 32,840 On acquisitions in the period 2,213 409 2,622 Adjustment to prior year acquisitions (see notes 3(s) and 16) (3,243) (217) (3,460) Unwind of discount charged to the income statement 182 10 192 Utilised in period (9,257) (1,276) (10,533) Balance as at 30 September 2012 19,276 2,385 21,661

26. Financial instruments and risk management Overview

This note presents information about the Group’s exposure to each of the risks below, the Group’s policy and procedures Financial Statements for measuring and managing risk and the Group’s management of capital. Further quantitative disclosures are included throughout these consolidated financial statements. The Group has exposure to the following risks from its use of financial instruments: • market risk; • credit risk; • liquidity risk; and • operational risk. Risk Management The Board of Directors have overall responsibility for establishing and overseeing the Group’s risk management framework and risk appetite. The Board have established a clear relationship between the Group’s strategic objectives and the level of capital which the Board are prepared to place at risk through a risk appetite statement. The risk appetite statement sets out the type and level of risk the Group is prepared to accept in pursuit of its objectives. The Board reviews the statement on at least an annual basis to ensure the document continues to reflect the Board’s appetite for risk within the context of the environment the Group operates within. The Group’s Board Risk Committees provide oversight of the adequacy of the Group’s risk management framework based on the risks to which the Group is exposed. They also monitor how management comply with the Group’s risk management policies and procedures. They are assisted in the discharge of this duty by the Group’s Risk & Regulation function which has responsibility for monitoring the overall risk environment of the Group.

103 Notes to the Financial Statements (continued)

26. Financial instruments and risk management (continued) The Group’s Audit Committee is responsible for overseeing the financial statements and working closely with the Board Risk Committee, for both review and oversight of internal controls. The Audit Committee is assisted in the discharge of its obligations by Internal Audit who undertake periodic and ad-hoc reviews on the effectiveness of risk controls and compliance with risk management policies. The Group’s risk management policies are intended to ensure that risks are identified, evaluated and subject to ongoing monitoring and mitigation (where appropriate). The risk policies also serve to set the appropriate controls, the adequacy and effectiveness of which is also subject to ongoing testing and review. The aim is to promote a robust risk culture with employees across the Group understanding their role and obligations under the framework. Capital risk management The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern. The capital structure of the Group and Company consists of issued share capital, reserves and retained earnings as disclosed in the Consolidated and Company Statement of Changes in Equity. The Group conducts an Internal Capital Adequacy Assessment Process (“ICAAP”), as required by the Financial Conduct Authority (“FCA”) for establishing the amount of regulatory capital to be held by the Group. There are two regulated entities in the Group: Brewin Dolphin Limited (“BDL”) regulated by the FCA and Tilman Brewin Dolphin Limited regulated by the Central Bank of Ireland. The Pillar II assessment of the ICAAP is the Board of Directors’ opinion of the level of capital the Group should hold to support the risks to which the Group is exposed, be they internal or external in origin. This takes into account the Group’s Principal Risk Register which is updated on a bi-annual basis. The ICAAP is kept updated throughout the year to take account of changes to the Group’s Principal Risks and for any material changes to strategy or business plans. The ICAAP is discussed and approved at a Brewin Dolphin Holdings PLC Board meeting at least annually. Capital adequacy is monitored daily by management. The Group uses the simplified approach to Credit Risk to calculate Pillar 1 requirements. The Group complied with the FCA’s regulatory requirements throughout the period. The regulatory capital resources of the Group calculated in accordance with FCA definitions were as follows:

29 September 30 September 2013 2012 Tier 1 capital resources £’000 £’000 Ordinary share capital 2,712 2,469 Share premium account 133,341 124,271 Own shares held (12,734) (12,569) Retained earnings 29,294 21,331 Merger reserve 61,380 22,950 Shares to be issued 14,911 19,276 228,904 177,728 Deduction – Intangible assets (127,448) (120,930) 101,456 56,798

Tier 2 capital resources Revaluation reserve 7,652 4,285 Deductions – – 7,652 4,285

Tier 1 plus tier 2 capital resources 109,108 61,083 Deduction – Material holdings – – Total capital before deductions 109,108 61,083 Deductions from total capital (380) (452) Total capital resources after deductions 108,728 60,631

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

104 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Significant accounting policies Details of the significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each financial asset and financial liability, are disclosed in note 3 to the financial statements. Categories of financial instruments Group Carrying value 2013 2012 £’000 £’000 Financial assets Fair value through profit and loss – held for trading 872 759 Loans and receivables (including cash and trade receivables) 386,098 292,939 Available-for-sale financial assets 10,000 6,013 396,970 299,711

Financial liabilities Amortised cost 306,076 267,382 306,076 267,382

Company Carrying value 2013 2012 £’000 £’000 Financial assets Loans and receivables (including cash and trade receivables) 45,022 1,475 45,022 1,475

Financial liabilities

Amortised cost 22,248 26,614 22,248 26,614

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 Financial Statements 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 872 – – 872 Available-for-sale financial assets Quoted equities – – – - Unquoted equities – – 10,000 10,000 Total 872 – 10,000 10,872

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

105 Notes to the Financial Statements (continued)

26. Financial instruments and risk management (continued) Reconciliation of Level 3 fair value measurement of financial assets: Available-for-sale Unquoted equities £’000 Balance at 30 September 2012 6,000 Total gains or losses: in other comprehensive income 4,000 Balance at 29 September 2013 10,000

The table above only includes financial assets. There were no financial liabilities subsequently measured at fair value on the Level 3 fair value measurement basis. I. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of the Group’s market risk management is to both control and manage exposure within the Group’s risk appetite whilst accepting the inherent risk of market fluctuations. The Group undertakes investment management and stockbroking activities on an agency basis on behalf of its clients in the UK and Republic of Ireland. The Group does not hold financial instruments as principal with the exception of the trading investments held by Brewin Dolphin MP (see note 19) and all trades are matched in the market. The Group deals in foreign currencies on a matched basis on behalf of clients, limiting foreign exchange exposure. The total net foreign exchange exposure resulting from income yet to be converted to sterling at the year end was a debtor of £119,000 (2012: £421,000 debtor). At the period end Tilman Brewin Dolphin Limited had net assets of £4.0m (2012: £2.8m) denominated in its local currency (Euros). The Group does not hold any derivatives (2012: none). There has been no change to the Group’s exposure to market risks or the manner in which it manages and measures the risk during the period. Equity price risk The Group is exposed to equity risk arising from its available-for-sale investments and those held-for-trading. Equity investments designated as available-for-sale are held for strategic purposes rather than trading purposes and the Group does not actively trade in these investments. Equity price sensitivity analysis The sensitivity analyses below have been determined based on the exposure to equity price risk at the reporting date. If equity prices had been 5% higher/lower: • profit for the 52 week period ended 29 September 2013 would have been £44,000 higher/lower (2012: £39,000 higher/lower) due to changes in the value of held-for-trading investment; and • other equity reserves as at 29 September 2013 would increase/decrease by £500,000 (2012: increase/decrease by £301,000/£300,000) for the Group as a result of the changes in fair value of available-for-sale investments The Group’s sensitivity to equity prices has not changed significantly from the prior period. Interest rate risk The Group is exposed to interest rate risk in respect of the Group’s cash and in respect of client deposits. The latter arises because the interest rate paid to its clients on their deposits is linked to the base rate of the respective central bank. The Group holds client deposits on demand (variable interest rate). At the end of the period a 1% increase in base rate would have increased profitability by £722,000 (2012: £328,000).

106 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 II. Credit risk Credit risk refers to the risk that a client or other counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group’s exposure to credit risk arises principally from the settlement of client and market transactions and cash deposited at banks. The Group uses the simplified approach to calculate credit risk as defined by the FCA. Exposure to credit risk is spread over a large number of counterparties and clients and with collateral held principally in Group nominee companies which helps to mitigate credit risk. The collateral held consists of equity and gilts quoted on recognised exchanges plus cash. Furthermore, all transactions are executed on a delivery versus payment (“DVP”) basis or current settlement basis. Consequently, no residual maturity analysis is presented. The Group has no significant concentration of credit risk with the exception of cash where the majority is spread across three major banks. The Group undertakes traded options as part of its service to clients: this is an insignificant part of the Group’s business. This business is transacted as principal. As per the LIFFE rules, all such transactions are always on a matched basis and clients are required to pledge collateral if they hold option positions, which are monitored on a daily basis. From 1 July 2013, the service was withdrawn for new clients. Maximum exposure The maximum exposure to credit risk at the end of the reporting period is equal to the balance sheet figure. Credit exposure Credit exposure in relation to both client and market transactions is monitored daily. The Group’s exposure to large trades is limited with an average bargain size in the current period of £12,200; there are additional controls for high value trades. Impaired assets The total gross amount of individually impaired assets in relation to trade receivables at the period end was £356,000 (2012: £321,000). Collateral valued at fair value by the Group in relation to these impaired assets was £166,000 (2012: £120,000). This collateral is stock held in the clients’ account which per our client terms and conditions can be sold to meet any unpaid liabilities falling due. The net difference has been provided as a doubtful debt (see note 20). Note 20 also details amounts past due but not impaired. Credit quality Financial assets that are neither past due nor impaired in respect of trade receivables relate mainly to bonds, equity and gilt trades quoted on a recognised exchange. These are matched in the market and are either traded on a cash against documents basis or against a client’s portfolio, in respect of which any one trade would normally be a small percentage of the client’s collateral held in the Group nominee. At the period end no financial assets that would otherwise be past due or impaired had been renegotiated (2012: none). Loans to employees are repayable over 5 to 10 years (see note 20). The credit risk on liquid funds, cash and cash equivalents is limited due to deposits being held at three major banks with Financial Statements minimum credit ratings of “A” assigned by international credit rating agencies. Deposits are managed by the Finance Department. 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.

107 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 29 September 2013, the Group had access to an unsecured overdraft facility of £15 million (2012: £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 Finance and Credit Control Departments. 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 29 September 2013 Up to 1 month to 3 months 1 to 5 Over 1 month 3 months to 1 year years 5 years Total £’000 £’000 £’000 £’000 £’000 £’000 Financial liabilities Amortised cost 234,737 27,114 25,551 18,674 – 306,076 234,737 27,114 25,551 18,674 – 306,076

As at 30 September 2012 Up to 1 month to 3 months 1 to 5 Over 1 month 3 months to 1 year years 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

Company As at 29 September 2013 Up to 1 month to 3 months 1 to 5 Over 1 month 3 months to 1 year years 5 years Total £’000 £’000 £’000 £’000 £’000 £’000 Financial liabilities Amortised cost 7,337 2,109 966 11,836 – 22,248 7,337 2,109 966 11,836 – 22,248

As at 30 September 2012 Up to 1 month to 3 months 1 to 5 Over 1 month 3 months to 1 year years 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

108 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 IV. Operational risk Operational Risk is the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events. This includes legal and regulatory risk, which is the risk of loss resulting from failure to comply with laws as well as prudent ethical standards and contractual obligations. The Group’s approach to managing operational risk is to identify, assess, mitigate and monitor operational risks in a way which balances commercial and stakeholder interests. In pursuit of that aim, the Group has followed industry good practice for the risk management framework through the adoption of the ‘three lines of defence’ model. The Board believes this approach best serves the interests of Brewin Dolphin’s stakeholders by ensuring accountability of management within the business and the proportionate allocation of resource within the oversight and control functions. This model ensures clear responsibilities by apportioning specific duties to each of the three ‘lines’ and thus each line plays an important role in ensuring effective risk management. Operational risks are monitored and escalated by way of reports in accordance with the governance structure under the framework. Information disclosure under Pillar 3 of the Capital Requirements Directive will be published on the Group’s website before 31 December 2013 at www.brewin.co.uk.

27. Retirement benefit obligation The Group operates a registered Defined Contribution Scheme (the Brewin Dolphin Senior Staff Pension Fund) and a registered Defined Benefit Scheme (the Brewin Dolphin Limited RBS) in the UK which both offer pensions in retirement and death benefits to members. The disclosures provided are in respect of the Defined Benefit Scheme only. Pension benefits are related to the members’ final salary at retirement and their length of service. Since 1 April 2003 the Scheme has been closed to new members. Members under 55 at 1 April 2004 ceased to accrue further service in the Scheme from that date. Contributions to the Scheme for the year beginning 30 September 2013 are expected to be £3.0m plus the contributions for those members still accruing service. The Group has opted to recognise all actuarial gains and losses immediately via Other Comprehensive Income. A full actuarial valuation of the scheme was carried out as at 31 December 2011 and has been updated to 29 September 2013 by a qualified independent actuary. The major assumptions used by the actuary were (in nominal terms) as follows: As at As at 29 September 30 September 2013 2012 Discount rate 4.40% 4.50% RPI Inflation assumption 3.20% 2.90% CPI Inflation assumption 2.20% 1.90% Rate of increase in salaries 3.20% 2.90% Financial Statements LPI Pension Increases 3.10% 2.90%

Average assumed life expectancies for members on retirement at age 65. Retiring today Males 88.8 years 88.7 years Females 89.0 years 89.9 years Retiring in 20 years time Males 90.1 years 90.0 years Females 91.5 years 91.4 years

In order to determine the expected return on Scheme assets for the year begining 1 October 2013, it is assumed that the returns available on equities will exceed those available from gilts by 3.5% per annum. This is 1.0% per annum greater than the out-performance allowance used for the funding valuation. The assumed returns avaliable on bonds are 0.5% above gilts.

109 Notes to the Financial Statements (continued)

27. Retirement benefit obligation (continued) The assets in the scheme and the expected rates of return were: Long-term Long-term rate of return Value at rate of return Value at expected at 29 September expected at 30 September 29 September 2013 30 September 2012 2013 £’000 2012 £’000 Equities 6.90% 35,363 6.40% 28,918 Bonds 3.90% 24,440 3.40% 30,974 Other 0.50% 6,693 0.50% 953 Fair value of scheme assets 66,496 60,845

The actual return on assets over the period was: 5,049 5,261

Present value of funded obligation: Funded plans 75,673 70,599 Fair value of scheme assets 66,496 60,845 Deficit in funded scheme (9,177) (9,754)

Present value of unfunded obligations – – Unrecognised actuarial gains (losses) – – Adjustment in respect of asset ceiling and minimum funding requirement – – Net liability in balance sheet 9,177 9,754

Reconciliation of opening and closing balances of the present value of the defined benefit obligation 2013 2012 £’000 £’000 Benefit obligation at beginning of period 70,599 61,501 Service cost 100 164 Interest cost 3,124 3,092 Contributions by scheme participants 49 101 Actuarial loss 4,343 7,813 Benefits paid (2,542) (2,072) Benefit obligation at end of period 75,673 70,599

Reconciliation of opening and closing balances of the fair value of plan assets Fair value of plan assets at beginning of period 60,845 54,400 Expected return on plan assets 2,923 2,511 Actuarial gain 2,126 2,750 Contributions by employers 3,095 3,155 Contributions by scheme participants 49 101 Benefits paid (2,542) (2,072) Fair value of scheme assets at end of year 66,496 60,845

The amounts recognised in the income statement are: Current service cost 100 164 Interest on obligation 3,124 3,092 Expected return on scheme assets (2,923) (2,511) Total expense 301 745

Actuarial (losses)/gains to be shown in Statement of Comprehensive Income Actuarial (losses)/gains (2,217) (5,063) (2,217) (5,063) Cumulative losses recognised in Statement of Comprehensive Income (22,821) (20,604)

110 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 History of scheme assets, obligations and experience adjustments As at As at As at As at As at 29/09/2013 30/09/2012 30/09/2011 26/09/2010 27/09/2009 £’000 £’000 £’000 £’000 £’000 Present value of defined benefit obligation 75,673 70,599 61,501 61,737 55,849 Fair value of scheme assets 66,496 60,845 54,400 49,239 39,596 Deficit in the scheme (9,177) (9,754) (7,101) (12,498) (16,253)

Total actuarial gains and losses arising on scheme liabilities 4,343 7,813 (2,165) 3,626 9,114 Total actuarial gains and losses as a percentage of scheme liabilities 6% 11% -4% 6% 16%

Experience adjustments arising on scheme liabilities (75) (454) 85 (1,718) 273 Experience adjustments as a percentage of scheme liabilities 0% -1% 0% -3% 0%

Changes in assumptions underlying the present value of the liabilities 4,418 8,267 (2,250) 5,344 8,841 Changes in assumptions as a percentage of scheme liabilities 6% 12% -4% 9% 16%

Experience adjustments arising on scheme assets 2,126 2,750 600 1,748 (442) Experience adjustments as a percentage of scheme assets 3% 5% 1% 4% -1%

28. Called up share capital Group and Company 2013 2012 2013 2012 No. No. £’000 £’000 Authorised: Ordinary shares of 1p each 500,000,000 500,000,000 5,000 5,000

Ordinary shares of 1p each Allotted, issued and fully paid: 271,194,965 246,962,243 2,712 2,469

Allotted, issued Dec 2005 at 157p, nil paid last Financial Statements subscription date Dec 2012 – 142,985 – – Allotted, issued Dec 2006 at 184.5p, nil paid last subscription date Dec 2013 205,960 341,460 – – Allotted, issued June 2007 at 217.5p, nil paid last subscription date June 2014 300,770 399,166 – – Allotted, issued Dec 2007 at 162.5p, nil paid last subscription date Dec 2014 396,570 563,013 – – Allotted, issued July 2008 at 104p, nil paid last subscription date June 2015 485,560 639,402 – – Allotted, issued Dec 2008 at 108.6p, nil paid last subscription date Dec 2015 220,992 310,072 – – 272,804,817 249,358,341 2,712 2,469

111 Notes to the Financial Statements (continued)

28. Called up share capital (continued) During the period the following shares were issued:

Called up Share No. of Exercise/ share premium No. of Fully Nil Paid Issue Price capital account Total Date Paid Shares Shares (pence) £’000 £’000 £’000 At 30 September 2012 246,962,243 2,396,098 2,469 124,271 126,740 Issue of options Various 1,364,741 – 37.5p–217.5p 14 2,095 2,109 Nil paid shares now paid up Various 786,246 (786,246) 104.0p–217.5p 8 1,208 1,216 Settlement of deferred consideration 6 Dec 2012 3,079,997 – 190.5p 31 5,837 5,868 Placing 29 May 2013 19,001,738 – 210.0p 190 – 190 Cost of issue of shares Various – – – – (70) (70) At 29 September 2013 271,194,965 1,609,852 2,712 133,341 136,053

The share premium of £38.4m on the shares issued for the placing on 29 May 2013 has been credited to the Merger Reserve.

The following options have been granted and remain outstanding : 2013 2012 Exercise price Grant date No. No. Approved share option 37.5p December 2002 – 6,250 Approved share option 81.3p December 2003 129,944 193,772 Approved share option 98p December 2004 81,391 169,152 Approved share option 145p December 2005 225,233 431,233 Unapproved share option # 157p December 2005 – 229,285 Unapproved share option # 179.8p May 2006 16,689 16,689 Approved share option 175.25p November 2006 376,186 721,482 Unapproved share option # 184.5p December 2006 336,040 346,880 Unapproved share option # 217.5p June 2007 393,063 429,842 Approved share option 168p November 2007 241,087 680,620 Unapproved share option # 162.5p December 2007 550,707 584,550 Unapproved share option # 104p July 2008 706,708 740,361 Approved share option 103.5p November 2008 581,778 627,176 Unapproved share option # 108.6p December 2008 322,280 331,488 Approved share option 165.7p December 2009 715,591 751,014 Deferred Profit Share Plan* Nil December 2010 3,211,011 3,312,326 Approved share option 148p December 2010 339,478 362,728 Approved share option 131.3p December 2011 84,500 91,750 Deferred Profit Share Plan* Nil December 2011 4,339,998 4,459,600 Deferred Profit Share Plan Nil December 2012 2,729,301 – Total options outstanding 15,380,985 14,486,198

# Under the Senior Employee Matching Share Purchase Scheme. Certain options lapsed during the year on personnel leaving the Group. * These options do not count towards dilution limits because the shares have been purchased in the market by the Brewin Dolphin Holdings PLC Share Ownership Trust.

112 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 The rights and obligations attached to the ordinary shares of 1 pence each in the Company are as follows: • In terms of voting every member who is present in person or by proxy at a general meeting of the Company shall have one vote on a show of hands and one vote for every share held on a poll. • As regards dividends, all shares in issue at the period end rank pari passu for dividends. Shareholders shall be entitled to receive dividends following declaration by the Company. Dividends are not payable in respect of the 1,609,852 (2012: 2,396,098) nil paid shares held by the Trustees in Brewin Dolphin Holdings PLC Employee Share Ownership Trust (the “Trust”). • Employees are restricted from any transfer of shares of the Company that would result in a change in beneficial holding during the period between the end of the Group’s financial year end each year and the date on which the Group announces its preliminary final results. This restriction also applies during the period between the end of the Group’s financial half year and the announcement of the Group’s half year results. Further restrictions may apply under the Disclosure and Transparency rules of the Financial Services Authority in respect of certain employees. • There are no special rights for the ordinary shares in relation to control of the Company. On a change of control, the following criteria will apply: • Approved Share Option Schemes: under the 1994 scheme options can be exercised within three months of such control being obtained; they will automatically lapse at the end of the period. Under the 2004 approved scheme options can be exercised within 30 days of control being obtained. The options will lapse after six months. • 2002 Senior Employee Matching Share Scheme: options can be exercised within six months of the takeover, after such period the options will lapse. • Deferred Profit Share Plan: A replacement award could be made over shares in the acquiring Company, otherwise the shares will vest in full and can be exercised within six months of control being obtained. • Share Incentive Plan: No Matching Shares shall be forfeited as a consequence of a change of control. • Equity Award Plan: Awards will vest upon change of control and can be exercised within one month of the takeover, after such period the options will lapse. All nil paid shares are held in the Trust up until they become fully paid shares. Nil paid shares were issued as part of the Senior Employee Matching Share Purchase Scheme, details of which are set out on page 58 of the Directors Remuneration Report and also note 30. The issue of nil paid shares to the Trust does not reduce shareholders’ funds as the individuals subscribe at the market value on the day of issue.

29. Own shares

£’000 Financial Statements Balance at 30 September 2012 12,569 Acquired in the period 157 Value of shares to be acquired 8 Balance at 29 September 2013 12,734

The own shares reserve represents the matching shares purchased in the market and held by the Brewin Dolphin Share Incentive Plan and shares purchased by the Brewin Dolphin Holdings PLC Employee Share Ownership Trust. The number of ordinary shares held by the Brewin Dolphin Share Incentive Plan at 29 September 2013 was 374,287 (2012: 314,920), a further 2,917 shares were purchased on 7 October 2013 which represents £8,000 of the value of shares to be acquired at the end of the period. The number of ordinary shares held by the Brewin Dolphin Holdings PLC Employee Share Ownership Trust at 29 September 2013 was 8,401,931 (2012: 8,117,309).

113 Notes to the Financial Statements (continued)

30. Share-based payments Equity-settled share option schemes The Group has a number of share incentive plans for the granting of non-transferable options to employees. The details of the plans are as follows:

Scheme Vesting Period Exercisable Expiry Date 2004 Approved Share Option Plan The mid market average on the After the third anniversary of 5 to 10 years from The tenth anniversary 3 dealing days immediately preceding the date of grant provided date of grant of the date of grant date of grant the performance condition has been met with an opportunity for retesting after one further year

1994 Approved Executive Share Option Scheme The mid market average on the From the fifth anniversary of 5 to 10 years from The tenth anniversary 3 dealing days immediately preceding the date of grant subject to date of grant of the date of grant date of grant the performance conditions being met

2002 Senior Employee Matching Share Purchase Scheme The average closing mid market price Matching Option: From the 4 to 7 years from The seventh on the 3 dealing days immediately fourth anniversary of the date date of grant anniversary preceding date of grant of grant, upon the payment of the date of grant in full for the Purchased Shares to which the Matching Option relates and subject to satisfaction of a performance condition determined prior to the date of grant

Details of the share options outstanding during the period ended 29 September 2013 are as follows:

2002 Senior Weighted Weighted Employee Weighted 1994 Average 2004 Average Matching Average Approved Exercise Approved Exercise Share Exercise Option Price Option Price Purchase Price Scheme (pence) Scheme (pence) Scheme (pence) Outstanding at the beginning of the period 200,022 79.93 3,852,094 150.90 2,662,406 152.02 Granted during the period – – – – – – Forfeited during the period – – (66,923) 141.46 (188,552) 159.68 Exercised during the period (70,078) 77.39 (1,123,238) 159.33 (165,056) 157.77 Expired during the period – – – – – – Outstanding at the end of the period 129,944 81.30 2,661,933 147.59 2,308,798 150.99 Exercisable at the end of the period 129,944 81.30 940,586 159.80 – –

The table above and the one following exclude all options issued prior to November 2002.

114 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Details of the share options outstanding during the period ended 30 September 2012 were as follows:

2002 Senior Weighted Weighted Employee Weighted 1994 Average 2004 Average Matching Average Approved Exercise Approved Exercise Share Exercise Option Price Option Price Purchase Price Scheme (pence) Scheme (pence) Scheme (pence) Outstanding at the beginning of the period 387,842 65.03 4,117,615 150.89 3,513,646 146.96 Granted during the period – – 94,250 132.00 – – Forfeited during the period (17,000) 58.11 (256,262) 160.31 (725,400) 135.95 Exercised during the period (170,820) 48.27 (103,509) 109.85 (125,840) 103.30 Expired during the period – – – – – – Outstanding at the end of the period 200,022 79.93 3,852,094 150.90 2,662,406 152.02 Exercisable at the end of the period 200,022 79.93 1,338,556 155.80 168,779 157.00

The weighted average share price at the date of exercise for share options exercised during the period was 219p (2012: 148p). The options outstanding at 29 September 2013 had a weighted average exercise price of 146p (2012: 148p), and a weighted average remaining contractual life of 0.47 years (2012: 0.76 years). During the 52 week period ended 29 September 2013 there were no options granted. The inputs into the Black-Scholes model used for the purposes of determining fair value of options were as follows:

2002 Senior Employee 1994 2004 Matching Approved Approved Share Option Option Purchase Scheme Scheme Scheme Weighted average share price 59.40 147.02 136.01 Weighted average exercise price 59.40 146.06 135.63 Expected volatility 52% 38% 38% Expected life (yrs) 5.00 5.00 4.00 Risk free rate 4.5% 3.6% 4.6% Expected dividend yield 1.2% 4.2% 3.9%

Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous year. Financial Statements Other share based payment plans Share Incentive Plan (“SIP”) The Group has a Share Incentive Plan (“SIP). Employees may use funds from their gross salary up to a maximum of 10% of their gross salary in regular monthly payments (being not less than £10 and not greater than £125) to acquire ordinary shares in the Company (“Partnership Shares”). Partnership Shares are acquired monthly. For every Partnership Share purchased, the employee receives one matching share up to the value of £20. All shares to date awarded under this scheme have been purchased in the market monthly; it is the intention of the Directors to continue this policy in the year to September 2013. Deferred Profit Share Plan (“DPSP”) The DPSP provides for eligible employees to be required or invited to defer some or all of their annual profit share entitlement into an award over ordinary shares (an “Award”). Under the DPSP there is currently a mandatory deferral of 33% of any profit share in excess of £50,000 for a period of three years and additional deferral requirements for Executive Directors which are set out in the Remuneration Report. Employees can elect to voluntarily defer profit share into the plan. Awards are generally in the form of nil cost options to acquire ordinary shares, although at the discretion of the Committee they may also take the form of a conditional right to receive ordinary shares. Awards in the form of mandatory deferrals made to the employees who leave the Group at any time prior to vesting lapse unless the employee leaves as a result of good leaver provisions. It is the intention of the Board to recommend our Trustees to purchase the shares in the market for any shares awarded under this scheme in order to avoid dilution.

115 Notes to the Financial Statements (continued)

30. Share-based payments (continued) Equity Award Plan (“EAP”) The Equity Award Plan is a discretionary arrangement under which contingent share awards can be made to selected employees within the Group below Board level, for example to reward exceptional performance on behalf of the Group or in certain circumstances to aid key staff retention. Awards will normally vest three years after grant subject to continued service provisions. Awards will only be capable of being satisfied with existing shares sourced via the Company’s employee benefit trust. No newly issued shares and/or treasury shares can be used under the EAP. Only non-director employees are eligible for selection to participate in the plan. The Group recognised total expenses in the period of £6,135,000 (2012: £3,852,000) related to equity-settled share‑based payment transactions.

31. Operating lease arrangements The Group recognised operating leases payments as an expense in the year as follows: 2013 2012 Land and Hire of Land and Hire of buildings equipment buildings equipment £’000 £’000 £’000 £’000 Lease payments 8,167 753 6,869 1,822 8,167 753 6,869 1,822

At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non‑cancellable operating leases, which fall due as follows: 2013 2012 Land and Hire of Land and Hire of buildings equipment buildings equipment £’000 £’000 £’000 £’000 Amounts payable under operating leases: Within one year 8,380 267 8,436 587 In the second to fifth years inclusive 30,750 133 31,476 311 After five years 51,387 – 58,772 – 90,517 400 98,684 898

The Group had significant operating lease arrangements with respect to the premises it occupies, computer hardware and office equipment including photocopiers and franking machines.

32. Capital commitments 2013 2012 £’000 £’000 Expenditure contracted for but not provided in these accounts 9,223 14,437 Expenditure authorised by the directors but not contracted for 8,250 5,705

Details of the major component of Capital Commitments are contained in the Strategic Report.

116 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 33. Provisions Sundry claims and associated Onerous costs contracts Total £’000 £’000 £’000 At start of period 1,887 – 1,887 Additions 1,886 6,232 8,118 Utilisation of provision (448) (797) (1,245) Unwinding of discount – 18 18 Unused amounts reversed during the period (1,113) – (1,113) At end of period 2,212 5,453 7,665

Provisions Included in current liabilities 2,212 2,193 4,405 Included in non-current liabilities – 3,260 3,260 2,212 5,453 7,665

The timing of settlements of sundry claims and associated costs cannot be accurately forecast; settlement of £nil (2012: £nil) has been made since the balance sheet date. £5m of the onerous lease provision is in respect of surplus office space which the Group may not be able to sublet in the short term. In relation to onerous lease contracts, the maximum exposure is the current estimated amount that the Group would have to pay to meet the future obligations under these lease contracts, which is approximately £23 million as at 29 September 2013. Financial Statements

117 Notes to the Financial Statements (continued)

34. Notes to the cash flow statement 52 weeks to 52 weeks to 29 September 30 September 2013 2012 £’000 £’000 Group Operating profit from continuing operations 26,632 29,099 Loss for the period from discontinued operations (note 13) – (3,507) Adjustments for: Depreciation of property, plant and equipment 5,569 7,214 Amortisation of intangible assets – client relationships 12,520 11,871 Amortisation of intangible assets – software 3,021 3,563 Loss on disposal of property, plant and equipment 591 105 Loss on disposal of intangible asset – purchased software 117 – Retirement benefit obligation (2,995) (2,991) Share-based payment expense 6,135 3,852 Own shares disposed of on exercise of options – (8) Translation adjustments 147 (196) Interest income 1,016 1,383 Interest expense (17) (30) Operating cash flows before movements in working capital 52,736 50,355 Increase/(decrease) in payables 44,471 (24,375) (Increase)/decrease in receivables and trading investments (30,431) 14,910 Cash generated by operating activities 66,776 40,890 Tax paid (6,260) (5,911) Net cash inflow from operating activities 60,516 34,979

Company Operating profit 19,721 16,332 Adjustments for: Unwind of discount of shares to be issued 27 34 Operating cash flows before movements in working capital 19,748 16,366 (Increase)/decrease in receivables (44,239) 1,654 Cash generated by operating activities (24,491) 18,020 Tax paid – – Net cash (outflow)/inflow from operating activities (24,491) 18,020

118 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 35. 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 Amounts owed to related parties related parties 2013 2012 2013 2012 £’000 £’000 £’000 £’000 Bell Lawrie White & Co. Limited – – 2,436 2,436 Brewin Dolphin Limited 44,544 209 – – Tilman Brewin Dolphin Limited – – – – Stocktrade Broking Limited – – 4,900 4,900 44,544 209 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 £20m (2012: £17m) from 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. Financial Statements

119 Five Year Record – continuing operations

2013 2012 2011 2010 2009 £’000 £’000 £’000 £’000 £’000 Continuing operations Revenue 271,954 253,112 248,375 224,013 178,944 Other operating income 11,724 16,419 15,638 15,999 25,071 Total income 283,678 269,531 264,013 240,012 204,015

Staff costs (148,974) (133,242) (126,456) (113,817) (98,947) Other operating costs (83,418) (94,196) (98,409) (87,326) (74,712) Exceptional items Additional FSCS levy (1,107) (553) (6,058) (595) – Redundancy costs (4,795) (570) (1,008) (135) (3,393) Onerous contracts provision (6,232) – – – – Acquisition of subsidiary – – (228) – – Contract renewal payments – – – (2,090) – Amortisation of intangible assets – client relationships (12,520) (11,871) (10,486) (6,349) (6,566) Operating expenses (257,046) (240,432) (242,645) (210,312) (183,618)

Profit on ordinary activities excluding exceptional items and amortisation of intangible assets – client relationships 51,286 42,093 39,148 38,869 30,356 Intangible asset client relationship amortisation (12,520) (11,871) (10,486) (6,349) (6,566) One-off items listed above (12,134) (1,123) (7,294) (2,820) (3,393)

Operating profit 26,632 29,099 21,368 29,700 20,397 Net finance income 1,939 784 494 345 1,467 Profit before tax 28,571 29,883 21,862 30,045 21,864 Tax (7,297) (8,389) (6,884) (9,447) (6,383) Profit attributable to equity shareholders of the parent from continuing operations 21,274 21,494 14,978 20,598 15,481

Dividend per share 8.6p 7.15p 7.1p 7.1p 7.1p

Earnings per share From continuing operations before amortisation of client relationships and one off items listed above. Basic 15.8p 13.2p 12.4p 12.2p 10.8p Diluted 14.9p 12.5p 11.7p 12.0p 10.6p

120 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Shareholders at 11 November 2013

There were changes in Directors’ shareholdings between 29 September 2013 and 11 November 2013; the changes were in relation to the Brewin Dolphin Share Incentive Plan.

Number of ordinary shares#, shares to % Voting be issued equity after %Voting (see note 25) exercise Number of equity prior to and options of options ordinary shares# exercise of options Directors Angela Knight 2,583 2,583 Sir Stephen Lamport 4,950 4,950 Simon Miller 50,000 50,000 Michael Williams 1,094,893 969,477 Jock Worsley 18,000 18,000 Andrew Westenberger – – David Nicol 58,000 58,000 Stephen Ford 538,985 195,111 1,767,411 0.6% 1,298,121 0.5%

Other employees of the Group 64,042,221 21.8% 49,130,526 18.0% Shares to be issued (see note 25)* 5,396,670 1.8% – – Employee Ownership 71,206,302 24.2% 50,428,647 18.5%

Institutions Kames Capital 25,663,364 8.8% 25,663,364 9.4% FIL Investment International 21,700,531 7.4% 21,700,531 8.0% Royal London Asset Mgt 13,612,865 4.7% 13,612,865 5.0% Aberforth Partners 13,242,314 4.5% 13,242,314 4.9% Norges Bank Investment Mgt 9,868,695 3.4% 9,868,695 3.6% Legal & General Investment Mgt 8,518,061 2.9% 8,518,061 3.1% JPMorgan Asset Mgt 6,080,120 2.1% 6,080,120 2.2% Unicorn Asset Mgt 5,954,104 2.0% 5,954,104 2.2% Aviva Investors 5,490,771 1.9% 5,490,771 2.0% Other 112,280,506 38.1% 112,280,506 41.1% Total 293,617,633 100.0% 272,839,978 100.0%

*Shares to be issued are esimated using the share price as at 11 November 2013 #Nil paid, fully paid and shares held in the SIP

At 29 September 2013 the Company’s share price was 265p (2012: 168p). The highest price in the period was 283p and the lowest 168p.

Information Information Other

121 Appendix – Calculation of KPIs

Revenue Growth 1. Discretionary FUM inflows are calculated from the Group’s client database. The growth of 6% (see page 13) net inflows is derived from the total new client accounts opened, closed or transferred between services categories during the year. This figure totals £1.1bn over the opening discretionary fund value £18.2bn, showing an increase of 6%. 2. Discretionary service yield and managed advisory service yield shows the core commission and fee income over the average funds for the year for each service type. Core Discretionary Income in 2013: £192.7m (2012: £156.3) average FUM £20.03bn (2012: £17.2bn), core Advisory Managed Income 2013: £27.5m (2012: £23.3m) average FUM £4.9bn (2012: £5.1bn) resulting in a 91-96 bps yield for Discretionary and 46-56 bps for Advisory Managed. 3. Revenue Growth of 9% is the Total Income increase from £260.4m in 2012 to £283.7m in 2013 (see financial highlights page).

Improved Efficiency 4. Adjusted PBT margin is calculated by taking the adjusted profit before tax (adjusted for redundancy costs, additional FSCS levy, onerous contracts provision, amortisation of client relationships and disposal of available-for- sale asset) of £ 52.3m in 2013 (2012: £42.9m) over the Total Income of £283.7m (2012: £260.4m). 5. Discretionary income per CF30; the total registered CF30’s (Investment Managers and Financial Planners) for the Group is 521 (2012: 553) employees, total discretionary income is stated as £192.7m (2012: £156.3m) showing an income per adviser increase from £283k-£369k. 6. Percentage of managed FUM in discretionary service from 70-76% is calculated by using the total discretionary managed funds £21.3bn (2012: £18.2bn) over the total managed/advised funds for the Group £28.2bn (2012: £25.9bn) (see page 13). 7. Discretionary FUM per CF30 is based on the number of CF30’s as per point 5 above over the total of discretionary managed funds as per point 6 above £41m (2012: £33m). 8. The support staff to CF30 ratio of 2.5 to 1 is derived by taking all other non CF30 staff totalling 1297 employees (excluding stocktrade) to the 521 CF30 registered staff.

9. Average client portfolio size is calculated by dividing the number of clients by the total managed funds.

Capital Sufficiency 10. The Solvency ratio is calculated by using our Regulatory Capital equity over the assessment of capital requirement see note 26.

Dividend Growth 11. The Group’s dividend pay-out is calculated by using the total dividend for the year over the diluted earnings per share 14.9p (2012; 12.5p). The dividend for the year including the proposed final dividend of 5.05p is 8.6p (2012: 7.15p) giving a 58% dividend pay-out. 12. Adjusted earnings per share growth rate of 19% shows the increase in diluted earnings per share of 14.9p (2012: 12.5p) (see financial highlights page) 13. Dividend growth the total dividend paid by the Group in 2013 is 8.6p (2012: 7.15p) this shows a 20% growth rate for dividends paid.

122 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Directors, Secretary and Officers

Directors (including Committee Membership)

Chairman Committees

Simon Miller Non-Executive Chairman (n) (r)

Executive Directors

David Nicol, Chartered FCSI, CA Chief Executive (n) Andrew Westenberger, FCA Finance Director Stephen Ford, FSI, CAIA Head of Investment Management Michael Williams, FCSI

Non-Executive Directors Committees

Ian Dewar, FCA, MA (Cantab) (a) Angela Knight, CBE (a) (n) (r) (rk) Sir Stephen Lamport, KCVO, DL (a) (n) (r) (rk) Francis (Jock) Worsley, OBE, FCA (a) (n) (r) (rk)

(a) Member of the Audit Committee; (n) Member of the Nomination Committee; (r) Member of the Remuneration Committee; (rk) Member of Risk Committee.

Secretary Louise Meads, ACIS Company Registration Number 2685806 (England and Wales) Registered Office 12 Smithfield Street London EC1A 9BD Telephone: 020 7248 4400 (UK only) + 44 20 7248 4400 (International) Websites: www.brewin.co.uk www.stocktrade.co.uk

Officers and Advisers Registrars Principal Bankers Equiniti Limited Bank of Scotland PO Box 4630 Pentland House (2nd Floor) Aspect House 8 Lochside Avenue Spencer Road, Lancing Edinburgh EH12 9DJ West Sussex, BN99 6DA Solicitors Auditor Lawrence Graham LLP Deloitte LLP 4 More London Riverside Hill House London 1 Little New Street SE1 2AU London EC4A 3TR Financial Adviser and Joint Stockbrokers Joint Stockbrokers: Royal Bank of Canada Europe Ltd Canaccord Genuity Limited Thames Court 88 Wood Street One Queenhithe London Information Information Other London EC2V 7QR EC4V 4DE

123 Branch Address List

Aberdeen Chester Ipswich Manchester Plymouth 2nd Floor Liverpool House Felaw Maltings 1 The Avenue Ashleigh Court Blenheim House Lower Bridge Street 44 Felaw Street Spinningfields Square Ashleigh Way Fountainhall Road Chester Ipswich Manchester Langage Business Park Aberdeen AB15 4DT CH1 1RS Suffolk IP2 8SJ M3 3AP Plymouth PL7 5JX T 01224 267 900 T 01244 353 900 T 020 3201 3113 T 0161 839 4222 T 01752 334 650 F 01224 267 901 F 01244 353 900 F 0161 832 9092 F 01752 334 651

Belfast Dorchester Jersey Marlborough Reigate 6th Floor Hamilton House 2nd Floor, Kingsgate House Woodstock Court 45 London Road Waterfront Plaza 6 Nantillo Street 55 The Esplanade Blenheim Rd Reigate 8 Laganbank Road Poundbury, Dorchester St Helier Marlborough Surrey Belfast BT1 3LY Dorset DT1 3WN Jersey JE2 3QB Wiltshire SN8 4AN RH2 9PY T 028 9044 6000 T 01305 215 770 T 01534 703 000 T 01672 519 600 T 01737 223 722 F 028 9044 6001 F 01305 215 771 F 01534 731 910 F 01672 515 550 F 01737 224 848

Birmingham Dundee Leeds Newcastle Shrewsbury 9 Colmore Row 31-32 City Quay 34 Lisbon Street Time Central Mutual House, Sitka Drive, Birmingham Camperdown Street Leeds Gallowgate Shrewsbury Business Park B3 2BJ Dundee LS1 4LX Newcastle upon Tyne Shrewsbury, Shropshire DD1 3JA NE1 4SR SY2 6LG T 0121 710 3500 T 01382 317 200 T 0113 245 9341 T 0191 279 7300 T 01743 284 230 F 0121 212 0011 F 01382 317 201 F 0113 243 5666 F 0191 279 7301 F 01743 284 231

Brighton Edinburgh Leicester Norwich Taunton Invicta House Sixth Floor Two Colton Square Jacquard House 2nd Floor Ashford Court Trafalgar Place Atria One Leicester Old Bank of England Court Blackbrook Business Park Brighton 144 Morrison Street LE1 1QF Queen Street Blackbrook Park Avenue BN1 4ZG Edinburgh EH3 8EX Norwich NR2 4SX Taunton, Somerset TA1 2PX T 01273 667 220 T 0131 225 2566 T 01162 420 700 T 01603 767 776 T 01823 445 750 F 01273 667 221 F 0131 225 3134 F 01162 536 585 F 01603 767 476 F 01823 445 751

Bristol Exeter Lincoln Nottingham Truro 4th Floor Vantage Point Olympic House 1st Floor, Waterfront House CMA House The Paragon Woodwater Park Doddington Road Waterfront Plaza Newham Road Counterslip Pynes Hill, Exeter Lincoln 35 Station Street Newham Bristol BS1 6BX Devon EX2 5FD LN6 3SE Nottingham NG2 3DQ Truro TR1 2SU T 0117 968 9500 T 01392 440 450 T 01522 503 000 T 0115 852 5580 T 01872 265 610 F 0117 968 9501 F 01392 440 451 F 01522 503 050 F 0115 852 5581 F 01872 265 611

Cardiff Glasgow London Oxford York 2nd Floor 48 St Vincent Street 12 Smithfield Street 4 King Edward Street Apollo House 5 Callaghan Square Glasgow London Oxford Eboracum Way Cardiff G2 5TS EC1A 9BD OX1 4HS York CF10 5BT YO31 7RE T 02920 340 100 T 0141 221 7733 T 020 7248 4400 T 01865 255 750 T 01904 435 600 F 02920 344 999 F 0141 314 8142 F 020 3201 3001 F 01865 255 751 F 01904 435 601

Cheltenham Guernsey Lymington Penrith 2nd Floor 1st Floor West Barn 1 Mason Court, Gillan Way St James House 10 Lefebvre Street Efford Park Penrith 40 Business Park St James’ Square St Peter Port Milford Road Penrith, Cumbria Cheltenham GL50 3PR Guernsey GY1 2PE Lymington SO41 0JD CA11 9GR T 01242 577 677 T 01481 736 682 T 01590 687 920 T 01768 861 710 F 01242 586 822 F 01481 729 910 F 01590 687 949 F 01768 861 711

The paper used in this report is made from 50% recycled post-consumer waste. Both mill and printer are FSC Certified, our printer is also “Carbon Neutral” accredited.

124 Brewin Dolphin Holdings PLC Annual Report and Accounts 2013 Brewin Dolphin provides a range of investment management, financial advice and execution only services in the UK and Eire.

David Nicol, Chief Executive

Brewin Dolphin Holdings PLC, 12 Smithfield Street, London EC1A 9BD T 020 7246 1000 F 020 3201 3001 W brewin.co.uk E [email protected]