Acquisition of Tilman Asset Management

31 May 2011 - Embargoed for release 7am

Brewin Dolphin Holdings PLC (the "Group" or "Brewin Dolphin")

Acquisition of Tilman Asset Management ("Tilman")

Highlights

Acquisition

The Group is pleased to announce that it signed a Purchase Agreement (the "Agreement") on 27 May 2011 to acquire Tilman. Completion is subject to a number of conditions, including regulatory approval.

The initial consideration of €20.81 million (£18.3 million) was calculated on a P/E of 11.5 on Tilman's profits to 31 March 2011, plus surplus net assets above the regulatory requirement, being €5.81 million (£5.1 million). 

The final consideration payment will be subject to the performance of Tilman and capped at €15 million (£13.2 million). It will be based on an 11.5 P/E on Tilman's profits for the year to September 2014 less €15 million, the initial consideration excluding net assets.

The entire consideration is payable in Brewin Dolphin Holdings PLC ordinary 1p shares ("shares")2. The shares for both tranches will be issued at the average mid market value of the shares for the three days prior to the issue and the new shares will rank pari passu with existing shares.

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1 The consideration will increase at a rate of €75,000 per month from 1st May 2011 until completion.

2 except in very limited circumstances where there is the option for the consideration to be partially satisfied in cash.

Information on Tilman

Tilman is a private limited company based in Dublin, Ireland and was founded in 1995 by its main shareholder Ray Tilson. Tilman's principal activity is discretionary, private client, fund management very similar to that of the Group. As at 30 April 2011, it had funds under management of approximately €917 million (£807million). Approximately, 70% of these funds are managed on a discretionary basis and less than 10% of these are dependent on the Irish market, being largely invested internationally. The initial consideration, excluding surplus cash, represents a cost of 1.7% of funds acquired.

Tilman has six Investment Managers and ten support staff all of whom will continue to be employed by Tilman, which from completion will be renamed Tilman Brewin Dolphin Limited. Ray Tilson will remain managing director of Tilman Brewin Dolphin.

Tilman's gross assets at 31 March 2011 were €7.6 million (£6.7 million) with net assets of €6.6 million (£5.8 million). Its annual turnover to 31 March 2011 was €5.4 million (£4.8 million) with a profit before tax of €1.5 million (£1.3 million). Profit after tax was €1.3 million (£1.1 million).

Lock in arrangements

Ray Tilson owns 61% of Tilman and total management holdings amount to 75.5%. Certain Tilman shareholders including management have agreed to lock in arrangements whereby 50% of the Brewin Dolphin shares received by them as initial consideration will be held in a Group nominee for two years from completion, subject to "good leaver/bad leaver" conditions. Similarly, 50% of any shares awarded to management under the final consideration have to be held until 31 December 2016 with "good leaver/bad leaver" conditions.

The opportunity

It has been the Board's long held view that there is a strong demand in Ireland for the services that Brewin Dolphin can offer. Recent events in Ireland have only made this opportunity greater with many clients moving from banks and other institutions which were dominant in our field. The acquisition of Tilman offers a particularly good opportunity for Brewin Dolphin to address this demand. It is the Board's expectation that the Group will be able to grow this business both in terms of Investment Managers and funds under management. Even without this expected growth the acquisition will be broadly neutral in the first year in terms of earnings per share. Post 2014, it is expected that there will be significant synergies from systems integrations.

Jamie Matheson, the Executive Chairman of the Group, said "We have known Ray Tilson, Matt Minch and Conor Grimley, all of whom will be directors of Tilman Brewin Dolphin, for a long time. In our opinion, their business is one of the best in Ireland, with a close affinity to ours. They, like us, believe in complete integrity, fair treatment of their clients and offering a bespoke service which adds value through personal contact. We are very excited about the prospect of capitalising on what we perceive as a big opportunity in Ireland".

Ray Tilson, Manager Director, Tilman said "We are delighted to be joining forces with Brewin Dolphin to create what we believe will be one of the top investment management companies in Ireland both in terms of quality of service and security of client assets. We believe it to be an excellent deal for both our shareholders and employees, while also allowing us to draw on the very considerable resources of Brewin Dolphin to enhance even further the level of service we provide to our clients. This represents an exciting new chapter in the history of our firm and we look forward to working closely with our colleagues in Brewin Dolphin in the months and years ahead. It also represents a statement of confidence by Brewin Dolphin in the future of Ireland's economy and of its ongoing attractiveness as a business location."

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Notes for editors:

The Brewin Dolphin Group manages £25 billion of funds for over 130,000 private clients and of this over £15 billion is on a discretionary basis. BD has 41 offices throughout the UK and Channel Islands.

Brewin Dolphin Limited ("BD") is the principal operating company of Brewin Dolphin Holdings PLC. BD is authorised and regulated by the Financial Services Authority and is a member of the London Stock Exchange.

The Group provides a complete investment management and financial planning service for private investors, charities and pension funds.

In 2011 Brewin Dolphin won the Best Wealth Manager for Alternative Investments in the Investor's Chronicle Wealth Management Awards and in 2010 won Citywire's Large Firm Adviser Choice Award and the Research department won the Investment Week Award for best discretionary research.