Extracts from Annual Report & Accounts

Brewin Dolphin Holdings PLC

(the "Company")

17 January 2011

Extracts from the Company's Annual Report & Accounts for the period to 26 September 2010

The following represents extracts from the Company's Annual Report & Accounts for the period to 26 September 2010. The full Annual Report and Accounts can be accessed via the Company's website at www.brewin.co.uk. Copies are in the process of being posted to shareholders.

Annual Report Page 3

highlights

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Business Review: Executive Chairman's Statement

By comparison with recent years financial markets proved relatively stable over the year to 26 September 2010. In this environment Brewin Dolphin continued to make steady progress.

Total income for the year was £250.9 million, up 18% on last year. Pre tax profit excluding redundancy costs, contract renewal payments and the amortisation of client relationships was £40.2 million, up 25% on last year. Pre tax profit was up 43% at £31.4 million. This improved performance was achieved despite a material rise in the costs of regulation. We do not at this stage expect a rise of such magnitude in the current year. In the meantime, it is your Board's intention to seek out means whereby some of these cost rises may be mitigated.

Investment Management

It was another year of useful progress for our Investment Management business which represented 96% of Group turnover. The Division proved resilient in the turbulent market conditions seen in the 2009 financial year and has made material progress in more recent steadier times. While we do not take this for granted, we are conscious that this gives our clients added confidence in our approach. We continue to believe strongly in the merits of long term equity investment with proper recognition of the value of dividends.

The Division's income rose by 18% during the period and profits excluding redundancy costs, contract renewal payments and the amortisation of client relationships by 25%. Total Funds under Management increased from £20.5 billion to £23.2 billion, a 13% increase largely reflecting a rise of 19% in discretionary funds. During the same period the FTSE 100 index rose by 10% and the FTSE APCIMS Private Investor Series Balanced Portfolio by 8%. While the dramatic influx in new Investment Managers and Financial Planners of three years ago was exceptional we continue to enjoy a steady flow of newcomers to the firm.

As I have said before, our network of offices is now of a size to give us comprehensive coverage of most of the UK, and is therefore unlikely to be expanded significantly. We opened one new branch during the year in Shrewsbury and we were joined by new Investment Managers in other offices, in line with your Board's declared policy of further strengthening our existing network.

It remains a Board priority to continue to develop improved operational systems and to deepen our services to clients. By way of example we have in recent weeks successfully launched a new on-line valuation and reporting service, as promised in our Interim Report in May.

Corporate Advisory & Broking

After achieving a profit last year against a quite torrid background, our Corporate Advisory & Broking division was able to return an operating profit of £1.5m this year. This is all the more satisfactory given that the level of corporate activity throughout the year was consistently lower than had been expected.

Dividend

The Board is proposing a final dividend of 3.55p per share to be approved at the AGM in February 2011 and paid on 5 April 2011. This will bring the total dividend for the period to 7.1p in line with the dividend paid last year.

Regulation

Your Board believes that the impact of regulation upon the business is unlikely to reduce in the foreseeable future. It is our view that we have a duty to participate fully in any forums that can influence the shape of future regulation. In particular we remain concerned about the "one size fits all" approach which is more appropriate to businesses that merely sell financial products rather than businesses like ours whose principal activity is providing advice and service to our clients.

Board Changes

There has been one change to the composition of the Board during the year with the appointment of Henry Algeo in July. He is the Regional Managing Director for Scotland and the North West and brings to the Board a wealth of experience both in practice and operations. Our Deputy Chairman and Senior Independent Non Executive Director, Nick Hood has indicated his intention to retire from the Board at our AGM in February 2012.

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Strategy

It remains your Board's strategy to continue to grow the business for the benefit of our shareholders by maintaining the quality and increasing the depth of our service to our clients. I do not anticipate any material changes to the structure of our UK network but we will pursue all suitable opportunities to strengthen it further. This will be done in conjunction with the promotion of our single Brewin Dolphin brand, which was adopted groupwide in March 2009. A number of new initiatives were undertaken during the year, and in particular I would like to highlight our sponsorship of the Motor Neurone Disease garden at this year's Chelsea Flower Show. We were delighted that the garden enjoyed a visit from Her Majesty The Queen.

Outlook

This year's results reflect the hard work of our people and the very significant support of our clients. Our growth plans continue to be built around an unstinting focus on high levels of service and the ability to attract new clients that this reputation provides. It would be foolhardy to rule out further unforeseen market events, but it would appear that there is a growing realisation that prudent financial management and the merits of equity over debt finance are a fundamental key to economic growth. In particular we believe that this view is strongly held in the UK and this leads us to look to the future with optimism.

Jamie Matheson

30 November 2010

Annual Report Page 6

Business Review: Investment Management

It is very encouraging to report another record year for the Investment Management Division in what has been a good year for global stock markets.

Investment Management has seen its total income grow by 18% to £240m in 2010 and operating profits excluding redundancy costs, contract renewal expense and amortisation of client relationships rose by 25% to £38.3m.

This is analysed as follows:

Income comprises:

Split of income between discretionary and advisory portfolio management:

Fees, interest and other recurring income have increased by 24% (2009: 4%) to 57% of total revenue (2009: 54%) whilst commission increased by 10% (2009: 7%). The trend towards Discretionary Management persists and the level of recurring income continues to grow.

Funds under Management ("FUM")

Total funds under our Discretionary Management were £14.0 billion at the year end against £11.8 billion last year, a rise of 18.6%. Funds under Advisory Management were £9.2 billion, a rise of 5.7% over the year, giving total funds under management of £23.2 billion, an overall increase of 13.2%. I am very pleased to report an inflow of new FUM of £2.3 billion of which 70% was under discretionary mandates.

During the period the FTSE 100 Share Index and the FTSE APCIMS Private Investor Series Balanced Portfolio Index increased by 10.2% and 7.7% respectively.

The Business

During the year we have added four new Investment Management teams to the Group. The largest team consists of eleven Divisional Directors and staff who joined us in Shrewsbury, where we have opened a new branch. Our offices in Guernsey, Reigate, Stoke and Taunton have all relocated to new larger premises.

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We currently have a total of 657 FSA Approved Persons of which 628 are FSA Registered CF30 Client Executives and Investment Managers around the country. We thank them all and their support staff for their dedication to their clients and their considerable contributions to the business over the last year.

The Retail Distribution Review ("RDR"), expected to be implemented at the end of 2012, will require all investmentadvisers throughout the industry to achieve minimum professional qualifications and this is a measure we support. The majority of our Investment Managers are already qualified well above these minimum levels and we have implemented a training programme to ensure that all our client executives surpass these minimum requirements by 2012.

Other aspects of the RDR are still to be confirmed and we remain in discussion with Regulators and Parliamentarians about particular details. There is little doubt that the measure as a whole will again change the way we do business and add to our cost burden.

We have seen considerable successes flowing from our Business Development department's efforts. The team which introduces Brewin Dolphin services to Independent Financial Advisers ("IFAs") and other professional intermediaries around the UK, is now well established and has introduced over £380 million of new business in the year, a 55% increase on last year. We are also delighted to report that we have won Citywire's Advisers Choice Award for the best Large Wealth Management Firm, as voted for by professional intermediaries.

During the year, we embarked on our first national advertising campaign to raise our brand awareness following our move to one name in March 2009. The analysis of the campaign shows that it was successful. It also brought in new business leads.

A new website was launched, in 2010 each branch having its own micro site giving details and biographies of the Investment Managers and other news and events in each area. We have also just launched a new and improved on-line valuation and reporting service and it is our intention to increase further electronic contact and functionality for our clients in the coming year.

Our team of research analysts has grown during the period and their services for our Investment Managers and other professional advisers have developed considerably. We were delighted that this team won the Investment Week Award for Best Discretionary Research in 2010.

Recognising the increasing requirements of Trustees of charitable funds, we have strengthened our specialist team of charity advisers and now have 18 Investment Managers throughout the U.K. We manage over £1.7 billion of charitable funds and were included in the UK Top Ten charity fund managers in Charity Finance's 2010 Annual Survey.

Our business model, where qualified Investment Managers give personal advice and bespoke portfolio management to private investors and trustees, face to face and wherever they are, continues to be successful and is attracting record amounts of new business to the Group. We are determined not to be thwarted by increasing amounts of regulation and to be able to continue to provide these levels of service to our clients.

David McCorkell

Executive Director

Head of Investment Management

Annual Report Page 8

Business Review: Corporate Advisory & BRoking

The last financial year for the Division has continued to be characterised by difficult trading conditions in capital markets. Despite this, we are pleased to report that the Division's contribution to the Group improved from the low base of the previous year. This maintains our track record of unbroken profits.

Total income and operating profits excluding redundancy costs and contract renewal payments increased by 31% and 20 times respectively.

This is analysed as follows:

Our Sales, Trading and Research teams performed well in a very competitive market place, due to their continued commitment to identifying and transacting value-added investment ideas for our institutional fund manager clients.

Despite low levels of equity fundraising activity, the Corporate Advisory and Broking team delivered a similarly robust performance during the period. The team adapted well to the difficult conditions and delivered over 70% of corporate income from Merger and Acquisition activity and other services such as Debt Advisory.

We currently have 91 corporate clients. This number is unchanged from the previous year, despite a number of clients having been taken over or delisting in the period.

Of these clients, 48 are quoted on the Official List with an average market capitalisation of £241m and 37 on AIM with an average market capitalisation of £44m. The balance comprises a small number of private companies.

Encouragingly, there appears to have been a general recovery in confidence in capital markets over the last month or so. Whilst it is still early days, we are as a team cautiously optimistic that this may provide a platform for a sustained recovery and a return to more favourableconditions.

Graeme Summers

Director of Brewin Dolphin Limited

Head of Corporate Advisory & Broking

Annual Report Page 9

Business Review: Aims, Strategy And Objectives

The Brewin Dolphin Vision

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

Mission

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

Objectives

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Business Review: Key Performance Indicators ("KPIS")

The main KPIs used by management are:

Measurement of KPIs

Detailed team performance was strong with operating profit up 30%.

This year has seen a slight fall in returns, we predict this will continue in to 2011.

A return to 2008 levels with the improvement in income due to market movement and organic growth.

Overhead and business support costs remain disappointingly high, arising largely from the increased cost of regulation eating into revenue gains.

Business facing staff losses were 8% in 2010 (2009: 9%) with gains of 14% (2009: 8%).

Targets

On the Investment Management side of the business the principal target is to grow discretionary funds by 5% p.a. above market movement shown by the FTSE 100 index. This year we have exceeded the market by 8% (2009: 16%).

On the Corporate Advisory & Broking side the main aims are to increase the average size of the mandate and grow recurring income. In the difficult economic environment we have suffered over the last two years, these targets have not been met. Retainers in the year decreased by a further 9%, following a 9% fall in 2009.

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Business Review: Finance

The Group

The Brewin Dolphin Group has one principal operating company, Brewin Dolphin Limited ("BDL"), which is regulated by the Financial Services Authority ("FSA"). BDL's main business is that of an Investment Manager with a Corporate Advisory & Broking division.

Competition and Markets

BDL is one of the UK's largest independent Investment Managers with a small Corporate Advisory & Broking arm. The investment management market is a growing sector, competition is relatively fragmented and price competition is low.

Results for 2010 Financial Year

The performance in the period is set out below:

We have outperformed the market movement as shown above with operating profit (excluding redundancy costs, contract renewal payments and amortisation of client relationships) up 30%. Diluted earnings per share, after taking into account the December 2009 placing, on a similar basis, are up 16%.

Profit before tax shows a 43% increase and standard diluted earnings per share are up 32%.

Contract Renewal Payments and Deferred Profit Share Plan

Once every ten years, the Group updates its employment contracts to take account of changes in employment law and remuneration practices. All staff received new contracts in December 2009 and these have been signed and returned by 99.8% of staff.

In addition, this year contracts include a new provision for business facing staff that 1/3 of profit share above £50,000 has to be paid in deferred shares under the new deferred profit share plan (see Directors' Remuneration Report). These shares have to be held for a minimum of three years and will be forfeited if an employee moves to a competitor in the three year period.

This scheme is designed to strengthen share ownership by the Group. The Directors believe that these new contracts combined with greater share ownership will strengthen the Group in the interest of shareholders. This year 172 staff have been awarded such shares to the value of £4.2m and a further 22 staff have voluntarily taken an extra part of their profit share in deferred shares to the value of £1.0m.

While the Directors have the ability to meet the Group's liability by issuing new ordinary shares at the end of the three year period, it is currently the intention to recommend to our Trustees to buy the shares in the market to avoid dilution.

Available for Sale Investments

This year the Group found it necessary to write down such investments.

Our investment in PLUS Markets Group PLC has been written down to its fair value of £114,000, with a resulting charge to profit in the year of £495,000. The original investment in PLUS Markets Group PLC was strategic and designed to reduce the then monopoly of the London Stock Exchange. In this it was a success but now there is intense competition in this market and the value of PLUS Markets Group PLC itself has fallen.

The investment in Euroclear plc came to us via a £431,000 strategic investment in Crest, the London based settlement system. Crest was taken over by Euroclear and our resultant stake in Euroclear is 0.52% of its share capital. In 2005, with the introduction of IFRS, we valued Euroclear, based largely on our share of its net assets, at £8.5m and over the years, on this basis tempered by dividend yield, our valuation was increased to £10m. At the time of Euroclear's last accounts in December 2009 our

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share of net assets was £14m. However, Euroclear recorded a loss in 2009 and cut its dividend from €20.49 per share to €11.46. After taking internal professional advice, it was felt appropriate to value Euroclear on a dividend yield basis and therefore the investment has been valued at £6m representing a £4m reduction in fair value which has been taken through the revaluation reserve.

Pension Fund

The actuarial loss on the pension fund this year was £1.9 million (2009: £9.5 million). Under IAS19, large annual fluctuations will occur. If long term interest rates increase this loss should reverse. This year, the Group has agreed to make additional pension contributions of £3 million per annum with the aim of paying the deficit off over the next 8 years.

Profit Dynamics

The Group has substantial operational gearing arising from its fixed cost base, mitigated by geared profit share. It is estimated that the Group would break even after measured cost reductions, other things being equal, at an index level of 2,500 (2009: 2,500).

Resources available to the Group

The Group's main resource is its staff: Investment Managers; Corporate Advisory & Broking staff; and support staff including research staff (see note 7 to the financial statements) located in 41 offices around the U.K.

Investment Management is broken down into small profit centres (149 teams, (2009:143)) for profit share purposes. Normally the senior members of each team have a shareholding in the Group, which is material to them, so that the long-term interest of the Group is more important than any one year's profit share. Individual team figures, both as to profit and return on funds, are reported in the Group Management Accounts. It is an absolute rule that a loss in one profit centre does not impinge on other centres, although such losses do reduce Group Management's profit share.

The Corporate Advisory & Broking division is organised into one profit centre located across five sites.

Significant Relationships

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

Corporate Responsibility

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

Dividend

The Board has maintained the total dividend for the period at 7.1p per ordinary share (2009: 7.1p).

Cash Flow and Capital Expenditure

2010 saw a net cash inflow of £21.9m (2009: £8.2m net cash outflow). There was a £45.1m (2009: £37.4m) inflow of funds from operating activities. £8.3m (2009: £6.3m) of cash was spent on acquiring teams of Investment Managers and their client relationships, and £13.6m (2009: £9.5m) on computer software and other, mainly computer related, fixed assets. Dividends paid in the period came to £16.0m (2009: £15.0m).

In December 2009 £14.3m was raised by a placing of 10,590,764 of the Company's ordinary shares (see Directors' Report page 18).

In March 2010 £4m was paid into the staff pension fund as part of an agreed deficit reduction plan.

Capital Structure, Treasury Policy, Liquidity and Capital Requirement

At 26 September 2010 the Group had net assets of £141.6m (2009: £118.2m). Net assets excluding intangible assets and shares to be issued of £65m (2009: £51m) broadly represent the Group's capital for regulatory purposes. These net assets were largely represented by net cash and cash equivalents of £87m (2009: £65m), including £25m (2009: £26m) of client settlement money. The Group, has an agreed overdraft facility of £15m (2009: £15m). At the period end the Group had a surplus of net assets for regulatory capital adequacy purposes of £24.3m (2009: £11m). This will reduce by £5m when shares are purchased under the Deferred Profit Share Plan in December (see Directors' Remuneration Report).

Our policy is to hold our clients' and Group's money only at major UK clearers. Our client money is ring fenced under the FSA's client money rules.

Client stock is also ring fenced in our nominee companies. Stock is settled via the Crest System which is owned by Euroclear, not withstanding our comments above, a highly rated bank, and, in the case of foreign stock, the Bank of New York.

Market risk, foreign currency risk, liquidity risk, interest rate risk, and credit risk are small and set out in detail in note 25 to the financial statements.

Post Balance Sheet Events

There have been no material post balance sheet events.

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Business Review: Finance (continued)

Accounting Policies

There were no changes in accounting policies during the year.

Going Concern

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

The Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and its exposure to credit risk and liquidity risk are described in note 25 to the financial statements.

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

Robin Bayford

Finance Director

30 November 2010

Business Review: Cautionary Statement 

This review has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for these strategies to succeed. It should not be relied on by any other party for any other purpose. The review contains forward looking statements these statements are made by the Directors in good faith based on information available to them up to the time of the approval of these reports and should be treated with caution due to inherent uncertainties associated with such statements. The Directors, in preparing this Business Review have complied with s417 of the Companies Act 2006.

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Business Review: Risks and Uncertainties

Risks to the business are reviewed and monitored by the Investment Management Risk and Controls Committee and the Corporate Advisory and Broking Risks and Controls Committee; they are formally reviewed by the Board twice a year. The Group's risk management policies and procedures are also discussed in the Corporate Governance Statement and financial risks and risk management form part of note 25 to the financial statements. The principal risk to the business remains adverse movements in the market in the short term.

At the Board meeting in October 2010 the following major financial and non financial risks were identified or reconfirmed:

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Internal Control and Risk Management

The Board undertakes a full review of all aspects of the Group's business, identifies the main risks to the business and identifies the key controls to counter these risks. Day-to-day review and monitoring has been delegated to the Investment Management Risk and Controls Committee ("IMRCC") and Corporate Advisory & Broking Risk and Controls Committee ("CABRCC") of Brewin Dolphin Limited, the activities of which include overseeing and

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reviewing the controls, monitoring and reporting frameworks and related procedures for risk management. The IMRCC committee meets weekly, and the CABRCC monthly.

The Regulation & Risk department and Internal Audit carry out regular reviews. During the year, a Business Continuity Manager was appointed and has been undertaking a thorough review of business continuity across the business, this process is ongoing. Full details of the risks considered by the Board are set out in the Business Review: Finance on page 12.

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

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Directors' Responsibilities

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

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

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

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

Directors' Responsibility Statement

We confirm that to the best of our knowledge:

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

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

By order of the Board

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Independent Auditors' Report

Independent Auditors' Report to the members of Brewin Dolphin Holdings PLC

We have audited the financial statements of Brewin Dolphin Holdings PLC for the 52 week period ended 26 September 2010 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Statement of Changes in Equity, the Company Balance Sheet, the Company Statement of Changes in Equity, the Company Statement of Comprehensive Income, the Consolidated and Company Cash Flow Statements and the related notes 1 to 34. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

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 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 (APB's) Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group's and the parent company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements.

Opinion on financial statements

In our opinion:

Separate opinion in relation to IFRSs as issued by the IASB

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

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

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

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

Under the Listing Rules we are required to review:

Simon Hardy (Senior Statutory Auditor)

for and on behalf of Deloitte LLP

Chartered Accountants and Statutory Auditors

London, United Kingdom

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CONSOLIDATED INCOME STATEMENT

52 Week period ended 26 September 2010

Consolidated Statement of Comprehensive Income

52 Week period ended 26 September 2010

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CONSOLIDATED balance sheet

As at 26 September 2010

Approved by the Board of Directors and authorised for issue on 30 November 2010

Signed on its behalf by

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CONSOLIDATED statement of changes in equity

52 Week period ended 26 September 2010

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COMPANY BALANCE SHEET

As at 26 September 2010

Approved by the Board of Directors and authorised for issue on 30 November 2010

Signed on its behalf by

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company statement of changes in equity

52 Week period ended 26 September 2010

Company Statement of Comprehensive Income

52 Week period ended 26 September 2010

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consolidated cash flow statement

52 Week period ended 26 September 2010

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

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company cash flow statement

52 Week period ended 26 September 2010

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Notes to the Financial Statements

1. General information

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

2. Adoption of new and revised standards

In the current year, the following new and revised Standards and Interpretations have been adopted and may have affected the amounts reported in these financial statements.

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

Adoption of these Standards and Interpretations is not expected to have a material impact on the financial statements of the Group.

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3. Significant accounting policies

a. Basis of accounting

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

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

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

b. Going concern

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

c. Basis of consolidation

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

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

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

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 income statement. The amount of the profit for the financial period dealt with in the financial statements of the Company is disclosed in note 12 to the financial statements.

d. 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 held on the financial statements of the Group.

e. Foreign currencies

The Group's functional currency is Sterling. Foreign currency monetary assets and liabilities have been translated into Sterling at the exchange rates ruling at the balance sheet date. Non-monetary assets and liabilities 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.

Transactions during the period have been translated into Sterling at the rates ruling at the time the transactions were executed.

All exchange differences are reflected in the income statement, except for any exchange differences arising on any non-monetary assets and liabilities where the changes in fair value are recognised directly in equity.

f. Revenue recognition

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

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

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

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

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

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Notes to the Financial Statements (continued)

g. Operating profit

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

h. 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".

i. Cash and cash equivalents

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

j. Leases

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

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

k. Share-based payments

The Group has applied the requirements of IFRS 2 "Share-based payments". In accordance with IFRS 1, IFRS 2 has been applied to all grants of equity instruments made after 7 November 2002 that were unvested as of 1 January 2005.

The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value of the equity instruments at the date of grant. 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.

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.

l. Taxation

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

Current tax

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

Deferred tax

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

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

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

m. Intangible assets

i) Goodwill

Goodwill represents the excess of the cost of acquisition over the Group's interest in the fair value 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 profit and loss and is not reversed.

Elements of the total cost 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 value of goodwill balances. Such deferred or contingent consideration may be settled in shares (see note 3s). This policy relates to acquisitions to date which are accounted for under IFRS 3(2004). It is noted that future acquisitions will be accounted for under IFRS 3(2008), and per the requirements of this standard revisions for contingent consideration for goodwill will be accounted for as an expense through the income statement.

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m. Intangible assets (continued)

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

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

ii) Client relationships

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

When separate payments are made to acquire funds under management by adding teams of investment managers, elements of the total consideration may be deferred or contingent. In such cases the cost of the recognised client relationships includes the Company's best estimate of the future consideration likely to be made, discounted to present value using a pre-tax discount rate that reflects current market assessments of the time value of money, and is revised at each balance sheet date. Such deferred or contingent consideration may be settled in shares (see note 3(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 years on a straight line basis from the date the software comes into use. Computer software developed internally is separately identified and recognised as an intangible asset if it is part of a specifically authorised project which will give probable future economic benefits over a period of not less than four years, and is amortised over four years on a straight line basis from the date the software comes into use.

n. 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 instalmentsto write off the cost less estimated residual values of tangible fixed assets over their estimated useful lives as follows:

o. Financial instruments

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

p. Financial assets

Investments 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 investment within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.

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

Financial assets at FVTPL

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

Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporate any dividends or interest earned on the financial asset. Their value is determined in the manner described in note 18.

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Notes to the Financial Statements (continued)

p. Financial assets (continued)

Available-for-sale financial assets

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 18. Gains and losses are recognised directly in equity 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 included in the profit or loss account.

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

Loans and receivables

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

Impairment of financial assets

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

q. 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.

r. Financial liabilities and equity

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

Equity instruments

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

Financial liabilities

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

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

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.

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t. Retirement benefit costs (continued)

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. 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.

v. Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the directors' best estimate of the expenditure required to settle the obligation at the balance sheet date and are discounted to present value where the effect is material.

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

4. Critical accounting judgements and key sources of estimation uncertainty

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

Retirement benefit obligation

In conjunction with the Group's Actuary, the Group makes estimates about a range of long term trends, including life expectancy. These estimates are governed by the rules set out in IAS 19 Employee Benefits which inevitably lead to significant swings in the pension deficit from year to year, as long term interest rates change and short term market movements affect asset valuations. The detailed assumptions are set out in note 26.

Shares to be issued including premium and deferred purchase consideration

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

Impairment of goodwill and client relationships

For the purposes of impairment testing, the Group values goodwill and client relationships based on the valuation of individual units making up the relevant intangible asset. For an investment management business this is normally based on the value of funds under management at the period end; the percentages of funds being used depending on values attributed in recent public transactions for the purchase of advisory and discretionary funds. A price earnings basis is used where more appropriate.

Valuation of investment in Euroclear plc

The fair valuation of the Group's investment in Euroclear plc is based upon dividend yield and the prices of similar quoted companies.

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6. Segmental information

For management purposes, the Group is divided into two business streams: Investment Management and Corporate Advisory & Broking (formerly Investment Banking). These form the reportable segments of the Group.

All operations are carried out in the United Kingdom and the Channel Islands. All segment income relates to external clients.

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9. Finance income and finance costs

10. Other gains and losses

11. Taxation

United Kingdom corporation tax is calculated at 28% (2009: 28%) of the estimated assessable taxable profit for the period.

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

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11. Taxation (continued)

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

In addition to the amount charged to the income statement, deferred tax relating to the revaluation of the Group's available-for-sale investments amounting to £1,177,000 (2009: £4,000) has been credited directly to equity and deferred tax relating to the actuarial loss in the defined benefit pension scheme amounting to £507,000 (2009: £2,676,000) has been credited directly to equity. Deferred tax on share-based payments of £145,000 (2009: £75,000) has been credited directly to equity.

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13. Dividends

The proposed final dividend for the 52 week period ended 26 September 2010 of 3.55p per share is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

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14. Earnings per share

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

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25. Financial instruments and risk management

Overview

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

● market risk;

● credit risk;

● liquidity risk; and

● operational risk.

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

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

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

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25. Financial instruments and risk management (continued)

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

Capital risk management

The capital structure of the Group and Company consists of issued share capital, reserves and retained earnings as disclosed in the Consolidated Statement of Changes in Equity.

The Group has an Internal Capital Adequacy Assessment Process ("ICAAP"), as required by the Financial Services Authority ("FSA") for establishing the amount of regulatory capital to be held by the Group; Brewin Dolphin Limited ("BDL") is the only regulated entity within the Group.

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

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

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