Brewin Dolphin Holdings PLC Holdings Dolphin Brewin Annual Report and Accounts 2015 Brewin Dolphin Holdings PLC Annual Report and Accounts 2015 Contents Overview 34 Corporate Responsibility 82 Directors’ Responsibilities 96 Consolidated Cash 02 Highlights 40 Resources and Relationships 83 Independent Auditor’s Report Flow Statement 04 Chairman’s Statement 97 Company Cash Flow Statement Governance Financial Statements 98 Notes to the Financial Strategic Report 44 Chairman’s Introduction 90 Consolidated Income Statement Statements 08 Business Overview to Governance 91 Consolidated Statement of 10 Business Model 46 Directors and their Biographies Comprehensive Income Additional Information 12 Market Environment 48 Corporate Governance Report 92 Consolidated Balance Sheet 148 Five Year Record Continuing 14 Our Strategy 53 Board Risk Committee Report 93 Consolidated Statement of Operations (unaudited) 16 Chief Executive’s Statement 56 Audit Committee Report Changes in Equity 149 Appendix – Calculation of KPIs 20 Measuring Our Performance 62 Nomination Committee Report 94 Company Balance Sheet 150 Glossary 23 Results 64 Directors’ Remuneration Report 95 Company Statement of Changes 151 Shareholder Information 30 Principal Risks and Uncertainties 80 Other Statutory Information in Equity 152 Branch Address List Brewin Dolphin Holdings PLC Annual Report and Accounts 2015 Overview Brewin Dolphin provides a range of investment management and financial advice services in the Strategic Report United Kingdom, Channel Islands and the Republic of Ireland. Governance Financial Statements Our vision is to become the UK’s leading provider of personalised wealth and investment management services, delivering rewarding careers Additional Information and sustainable shareholder returns. For more information visit our website: www.brewin.co.uk 01 Brewin Dolphin Holdings PLC Annual Report and Accounts 2015 HIGHLIGHTS1 Total income Adjusted2 profit before tax (PBT) £280.8m £283.7m £62.2m £274.8m £58.4m £283.7m £50.8m £62.2m 2013 2014 2015 2013 2014 2015 Adjusted2 PBT margin Adjusted2 earnings per share – diluted3,4 21.9% 17.1p 20.8% 16.0p 18.5% 21.9% 14.4p 17.1p 2013 2014 2015 2013 2014 2015 Statutory profit before tax 3 Earnings per share – diluted3,4 £61.0m £61.0m 17.1p 17.1p £48.3m 7.6p £6.8m 1.9p 2013 2014 2015 2013 2014 2015 1 Continuing operations. 2 These figures have been adjusted to exclude redundancy costs, additional FSCS levy, onerous contracts provision, amortisation of client relationships, impairment of intangible assets – software, licence provision and disposal of available-for-sale investment. 3 Restated see notes 2 and 37. 4 See note 15. 02 Brewin Dolphin Holdings PLC Annual Report and Accounts 2015 Overview Discretionary FUM Cash £24.0bn £24.8bn £149.8m £135.1m £21.3bn £24.8bn £149.8m £113.5m Strategic Report 2013 2014 2015 2013 2014 2015 Governance Dividend payout ratio Full year dividend Financial Statements 70% 12.0p 62% 60% 70% 9.9p 12.0p 8.6p Additional Information 2013 2014 2015 2013 2014 2015 Progress on growth strategy: • Strong growth in discretionary FUM led by continued success • Implemented enhanced client advice process of intermediaries business • Office consolidation completed – larger teams, more efficient • Benefits of integrated advice demonstrated by 21% growth in portfolio management financial planning income • Launched lower cost investment solutions • Announced a clear strategy to deliver continued growth • Sale of Stocktrade – business focused on core wealth and in direct private client business based on detailed market investment management segmentation analysis 03 Brewin Dolphin Holdings PLC Annual Report and Accounts 2015 CHAIRMAN’S STATEMENT Dear Shareholder, This has been another year of solid achievement, once again demonstrating the strength of the business. We continually strive to be a more efficient client focused business that is responsive to a changing market and client needs. Overview Over the past two and a half years, management have successfully taken steps to strengthen and enable the Group to drive sustainable growth and to focus on creating value for shareholders. The Board views wealth management as an attractive part of the financial services sector. The sector continues to change in response to a variety of pressures, including consumer preferences, regulation, pricing and technology and it is therefore important that the business is capable of adapting to changing circumstances. The Board believes that, with a network of expert Investment Managers and Financial Planners, the Group is well positioned to prosper in the current emerging environment. Progress The Group has had a good year. Its performance and its resilience mean that it is well equipped to operate in the dynamic Biographies of each Director are regulatory and competitive environment. Against a backdrop shown on pages 46 and 47 of market volatility and industry change, I believe that David Nicol and his team have made good progress in equipping the business for future growth. This work is now substantially complete and the growth of the business is an important objective for the current year. Brewin Dolphin has many talented people working within the organisation and ensuring that we have the right skills and talent will be a critical part of this process. Our strategy is to focus on the core business of discretionary Dividend history: wealth management. To this end the Group’s stake in Euroclear plc, the largest settlement system for securities pence per share 12.00p transactions, was sold for £10.2 million during the year, and 8.25p the sale of Stocktrade, the Group’s Execution Only division, 9.90p to Alliance Trust Savings Limited for £14.0 million, has been 8.60p 6.25p announced. It is expected that the sale of Stocktrade will 5.05p complete in 2016. 7.15p 3.60p 3.55p 3.55p 3.65p 3.75p 2012 2013 2014 2015 04 Brewin Dolphin Holdings PLC Annual Report and Accounts 2015 Overview Strategic Report Governance Governance Shareholders The Board has the right balance of skills and experience to We aim to maintain an effective and regular dialogue with our set the tone of the business and to challenge and support the shareholders. The views of our shareholders are welcome and Executive management team. help shape our decision making. Kath Cates joined the Board in December 2014. She has The Board is proposing a final dividend of 8.25p per share, to brought with her a wealth of experience in risk and operational be paid on 11 March 2016 to shareholders on the register on Financial Statements matters and has recently become the Chairman of the Board 19 February 2016. As a Board we aim to pay out between 60% Risk Committee replacing Angela Knight, who has performed the and 80% of earnings and this year the figure amounts to 70%, task with dedication and skill in the past three years. an increase on the 62% we paid last year. This will bring the total dividend for the period to 12.0p per share (2014: 9.9p), In addition to their principal role as an independent Director, each demonstrating confidence in the Group’s growth prospects Non-Executive Director has a specific role within the Group. and outlook. Additional Information Angela Knight is the Senior Independent Director, Ian Dewar is Chairman of the Audit Committee, Paul Wilson is Chairman of This year’s AGM will be held at 11.30am on 5 February 2016 at the Remuneration Committee, and Kath Cates is Chairman of the Lincoln Centre, 18 Lincoln’s Inn Fields, London WC2A 3ED. the Board Risk Committee. Caroline Taylor is the Chairman of If you are unable to attend and wish to raise an issue, please do the new Corporate Responsibility Committee, which although write to me and I will ensure you receive a timely answer. not a committee of the Board, is of increasing importance. Their respective roles provide them and the Board with added insight into the workings of the business. The Committees they serve on undertake considerable work and are integral to the smooth running of the business. Simon Miller Chairman Our people 1 December 2015 Our success lies in the hands of around 1,900 individuals who work at Brewin Dolphin. On behalf of the Board I would like to thank them all for their hard work and commitment over the course of what has been a demanding year. The Board is conscious that these people are the Group’s greatest asset and it must ensure that it focuses on retaining and developing a deep pool of diversified talent. Our employees and our offices have long had a commitment to charitable activities. Being responsible and doing the right thing is an integral part of the Brewin Dolphin culture. In this context, during the course of the last 12 months, we have relaunched our corporate responsibility programme with the objective of building on the existing practices and further embedding them across the Group. 05 Brewin Dolphin Holdings PLC Annual Report and Accounts 2015 06 Brewin Dolphin Holdings PLC Annual Report and Accounts 2015 Overview STRATEGIC REPORT Strategic Report In this section 08 Business Overview 10 Business Model 12 Market Environment 14 Our Strategy 16 Chief Executive’s Statement 20 Measuring Our Performance 23 Results Governance 30 Principal Risks and Uncertainties 34 Corporate Responsibility 40 Resources and Relationships Financial Statements Additional Information 07 Brewin Dolphin Holdings PLC Annual Report and Accounts 2015 BUSINESS OVERVIEW Brewin Dolphin is a leading provider of wealth management in the United Kingdom, Channel Islands and the Republic of Ireland. Who we are Where we are Brewin Dolphin Holdings PLC is listed on the London Stock Local presence and proximity to our clients are key to our Exchange and is a member of the FTSE 250 index. business and help us to maintain a high level of personalised service, which we provide via 27 offices.