Interim Management Report

This announcement contains inside information for the purposes of the Market Abuse Regulation (596/2014/EU).

13 May 2021

Brewin Dolphin Holdings PLC

Interim Management Report

For the Half Year Ended 31 March 2021

Record discretionary fund inflows in Q2 and strong market performance, contributed to H1 income growth of 13.7%.

Robin Beer, Chief Executive Officer, said: 

"In the first half of 2021 we delivered an excellent set of results driven by record fund inflows in Q2 and the outperformance of our clients' investments during a strong market recovery. Our broad range of propositions and distribution channels has enabled us to reach a wider demographic of people and support those clients who have been able to accumulate higher levels of savings over the last year. The consistency of our inflow performance throughout the pandemic demonstrates we have a resilient business model, a trusted brand and our advice-focused strategy is the right one. The implementation of our custody and settlement system in the Autumn remains on track, which will enable greater efficiencies and support our growth ambitions. Our strong financial momentum and the good progress made on our strategic priorities in the first half of the year gives me confidence for the remainder of the year."

Highlights

Financial

- Total funds increased by 10.5% to £52.6bn (FY 2020: £47.6bn). Total discretionary funds were up 10.9% to £45.7bn (FY 2020: £41.2bn) supported by positive net flows and strong discretionary investment performance of 9.5% (MSCI PIMFA Private Investor Balanced Index: 8.7%).

- Total discretionary net flows of £0.6bn (annualised growth rate of 2.9%), with gross inflows of £1.6bn (H1 2020: £1.5bn) demonstrating the value of our trusted advice, high client satisfaction and broad range of propositions.

o Record total discretionary fund inflows in Q2 of £1bn, with Q2 net flows of £0.5bn, annualised growth rate of 4.5%.

o MPS H1 net flows of £0.4bn (annualised growth rate 18.2%), including c.£140m from our recently launched Voyager funds.

o Retention rates of our Direct clients increased to 98% in H1 2021 (FY 2020: 97%).

- Total income increased by 13.7% to £199.9m (H1 2020: £175.8m), driven by strong market performance and elevated levels of commissions.

o Discretionary commission income was 14.8% higher at £38.7m (H1 2020: £33.7m).

o Financial planning income grew 16.5% to £19.1m (H1 2020: £16.4m); driven by higher market levels and continued demand for our advice-focused services.

- Adjusted PBT1 margin of 23.5% (H1 2020: 20.8%), driven by strong income growth and cost savings of £4.1m associated with COVID-19 restrictions.

- Strong cash balance of £145.8m (H1 2020: £144.1m) and capital adequacy ratio of 210%.

- Interim dividend per share up 5% to 4.6p (H1 2020: 4.4p).

1. Adjusted items are amortisation of client relationships and brand - £5.6m (H1 2020: £5.4m), defined benefit pension scheme past service costs - £0.4m (H1 2020: £nil), acquisition costs - £nil (H1 2020: £2.3 m), other gains and losses £0.3m (H1 2020: £nil), incentivisation awards £0.6m (H1 2020: £0.6m) and onerous contracts - £(0.02)m (H1 2020: £(0.04)m).

2. See note 7.

3. See Annual Report and Accounts 2020 page 29 for explanation of adjusted profit before tax and why the adjusted measures have been chosen.

Delivering on our strategic priorities

- The custody and settlement system ('Avaloq') on track to go live in the Autumn.

- Continued innovation with the launch of new ESG solutions; '1762 Responsible Progress' through 1762 from Brewin Dolphin and 'Sustainable MPS' for the intermediaries market.

- Launched new BPS client onboarding journey; doubled conversion rates to 40% and new clients in Q2 up 74% year on year.

- Expanded our distribution channels; Voyager funds have increased our platform coverage from 15 to 23.

Outlook

- Strong first half year performance, increased confidence in full year outlook.

- Commission income expected to reduce in H2.

- Operating costs expected to increase in H2 due to the holiday accrual reversal more than offset by reduced cost savings associated to COVID-19 restrictions and the FSCS levy which was £4.8m in FY 2020.

- No change to our opex guidance of mid-single digit growth and full year capex guidance of around £30m.

- Change in Avaloq FY21 capex guidance from c.£19m to c.£24m.

Declaration of Interim Dividend

The Board declares an interim dividend of 4.6p per share. The interim dividend is payable on 11 June 2021 to shareholders on the register at the close of business on 21 May 2021 with an ex-dividend date of 20 May 2021.

For further information:

Brewin Dolphin Holdings PLC

Carla Bloom, Head of Investor Relations

Tel: +44 (0)20 7248 4400

[email protected]

Camarco

Ben Woodford / Geoffrey Pelham-Lane

Tel: +44 (0) 799 065 3341 / +44 (0) 773 312 4226

The Interim Results presentation will be held at 9.00am on 13 May 2021 and available to watch via an audio webcast. The audio

link can be found on the corporate website (www.brewin.co.uk/group/investor-relations). Investors and analysts are also able to

dial in to the call using UK & International: +44 (0) 33 0551 0200 or UK toll-free: 0808 109 0700

LEI: 213800PS7FS5UYOWAC49

NOTES TO EDITORS:

About Brewin Dolphin:

Brewin Dolphin is one of the UK and Ireland's leading independent providers of discretionary wealth management. We continue to focus on discretionary investment management, and we manage £45.7 billion of funds on a discretionary basis. In line with the premium we place on personal relationships, we have built a network of offices across the UK, Channel Islands and the Republic of Ireland, staffed by qualified investment managers and financial planners. We are committed to the most exacting standards of client service, with long-term thinking and absolute focus on our clients' needs at the core.

Interim Management Report

To the members of Brewin Dolphin Holdings PLC

First half review

H1 business and operational review

We have made good progress on our strategic priorities which we outlined in our strategy update in November last year.

1. Innovating our propositions

Being a responsible business is firmly embedded within our organisation. One of our key sustainability pillars is about responsible investment, ensuring we can offer our clients the right investment choice. We have made a significant amount of progress in our approach to responsible investment and successfully launched our first ESG solution through our 1762 from Brewin Dolphin proposition. "1762 Responsible Progress" is a modelled portfolio with an ethically biased approach. In April 2021, we launched a sustainable MPS for the intermediaries market. Market trends suggest the demand for ESG solutions will only increase and these solutions will allow us to capture an ever-growing segment in the market.

Our half year results have demonstrated the benefit of continued innovation, as we saw £0.9bn of fund inflows through our indirect business, of which £0.4bn was through our MPS solution. In October 2020, we launched our Voyager fund range, part of our MPS solution, which has seen strong early momentum and at the end of the half year period it had just under £140m of funds.

2. Accelerate our digital agenda

We launched a new BPS user-experience in late 2020, which has significantly improved our client onboarding process. Client conversion rates have almost doubled to around 40% and we saw strong growth in fund inflows, up 63% year on year. New accounts in Q2 were up 74% to 888 (Q2 2020: 510) and we now have 7,200 accounts on our BPS platform. The average age of our BPS clients (excluding JISAs and Trusts) over the last 6 months was 44 which is 20 years younger than our average age of our Core and 1762 clients. These early signs of improved performance demonstrate that progress in our digital investments keeps us relevant and supports our growth ambitions.

For intermediaries, we continue to roll out our new 'Client Valuation Data Service' designed to deliver automated client valuations. We are now piloting a digital onboarding solution, which we will launch later this year. This will be the final digitally enabled process, which means IFAs end-to-end journey with Brewin will be paperless.

3. Investment in technology

Our focus has shifted to the final stages of Avaloq's implementation and beyond, as we plan for rehearsals, migration and the ongoing support required as we embed the system and processes into the organisation. In the first half of FY 2021 we spent £12.3m on the implementation of Avaloq, which takes the total capex spend to date to £38.8m. We have updated our FY 2021 capex guidance for Avaloq to c.£24m from c.£19m as we work through the final complexities of the systems integration, including the automated interfaces with Client Engage and eXimius. We remain on track for an Autumn delivery when we expect the system to go live. We are taking a prudent approach with the embedding of the system and will phase the deployment of its full functionality once Avaloq is live within Brewin's technology environment. We continue to identify the relevant operational efficiencies which will support improved capacity and capability, better client data and cost savings as we drive scale.

4. Expanding our distribution channels

Prior to launching our Voyager fund range, our intermediaries could access Brewin's MPS solution on 15 platforms. The launch of our Voyager fund range gives IFAs even more choice and has increased their access to 23 platforms and increases our market opportunity by around £200bn.

We have made good progress in the growth of our B2B partnerships. We have secured just over 20 corporate partnerships across the UK to help their employees with their financial wellbeing, through one-on-one interactions or via webinars. The corporates range from boutiques with around 40 employees to large scale with over 10,000 employees. We have benefited from the shift to pure digital communications over the last year, reaching a far wider audience. Since our launch in October 2020, we have presented over 60 seminars to over 1,800 attendees.

Almost a year after the systems integration of Investec Ireland's Wealth & Investment business, Brewin Dolphin Ireland is now one of the largest discretionary wealth managers in Ireland, which positions us well as a scaled player to take market share. Brewin Dolphin Ireland has continued to gain momentum despite COVID-19, and at the end of the first half had grown total funds by 12.0% to €5.6bn (FY 2020: €5.0bn), with discretionary funds up 19.5% to €3.3bn. Discretionary net flows in the half were €0.1bn with an annualised growth rate of 7.4%. Income grew 22.3% to £13.7m (H1 2020: £11.2m), on a normalised basis it grew c.10% year on year. The market opportunities in Ireland are significant: with strong relative economic performance and wealth creation leading to increased demand for wealth management and investment services; the opportunity post Brexit to serve non-UK domiciled EU based clients; and it remains well positioned in light of recent market disruption.

Outlook

Whilst the impact of COVID-19 will continue to create economic and market uncertainty, the successful vaccine programme in the UK and US has accelerated market recovery and consumer confidence. A year of social distance restrictions has enabled some households to accumulate savings and they are looking for ways to safeguard their finances, for what is still an uncertain outlook. Our consistent performance over the last year through a pandemic gives me confidence that our business model is resilient, and our advice-focused strategy is the right one. In times of uncertainty, our trusted brand is even more valuable. Our strong balance sheet and good cash generation give our clients confidence in our long-term sustainability. The continued investment in our technology and infrastructure will give us the ability to adapt to changing environments, keep us relevant with clients and enable us to capture cost efficiencies. We are confident as the lockdown restrictions ease, we are well placed to capture the market growth with our broad range of propositions and multiple distribution channels.

H1 financial results and performance

Profit before tax and adjusted items of £47.0m was 28.8% higher than the first six months last year (H1 2020: £36.5m) driven by strong income growth and ongoing cost savings related to the impact of COVID-19.

Statutory profit before tax for the period was higher than last year at £40.7m (H1 2020: £28.2m). The decrease in adjusted items is driven by the non-recurring acquisition costs last year of £2.3m related to the integration of Investec Capital & Investments (Ireland) Limited.

1. Adjusted items are amortisation of client relationships and brand - £5.6m (H1 2020: £5.4m), defined benefit pension scheme past service costs - £0.4m (H1 2020: £nil), acquisition costs - £nil (H1 2020: £2.3 m), other gains and losses £0.3m (H1 2020: £nil), incentivisation awards £0.6m (H1 2020: £0.6m) and onerous contracts - £(0.02)m (H1 2020: £(0.04)m).

2. See note 7.

3. See Annual Report and Accounts 2020 page 29 for explanation of adjusted profit before tax and why the adjusted measures have been chosen.

Funds

Total funds were up 10.5% to £52.6bn in the first half (H1 2020: £41.4bn, FY 2020: £47.6bn). The movement was driven by strong total net fund flows of £0.8bn (H1 2020: £0.6bn, H2 2020: £0.5bn) and elevated investment performance of £4.2bn due to market recovery. Total discretionary investment performance of 9.5% outperformed the MSCI PIMFA Private Investor Balanced Index of 8.7%.

Total funds by service category

Funds flow by service category for H1 20211

Funds flow by service category for Q2 20211

1. The funds figures are rounded to one decimal place and therefore may not always cast.

2. Internal transfers for execution only, include discretionary fund pending exits

Total discretionary funds were £45.7bn at 31 March 2021 (H1 2020: £35.7bn, FY 2020: £41.2bn) with net fund flows of £0.6bn (H1 2020: £0.5bn), representing an annualised growth rate of 2.9%. We had a strong second quarter with total discretionary net flows of £0.5bn, representing an annualised growth rate of 4.5%. Our broad range of propositions and solutions, through our direct and indirect channels, supported our inflows performance of £1.6bn in the half, alongside our trusted brand and high retention rates. Direct client retention rates increased to 98% in H1 2021, up from 97% over the last 2 years. Investment performance was £3.9bn with the majority occurring in the first quarter in line with the market recovery.

Direct discretionary net flows were £0.1bn in the period (H1 2020: £0.0bn). Gross inflows were strong at £0.7bn (H1 2020: £0.7bn) and we saw a reduction in outflows from prior periods to £0.3bn (H1 2020: £0.5bn H2 2020: £0.4bn).

Indirect discretionary net flows remained stable at £0.5bn (H1 2020: £0.5bn) with 80% of net flows coming from MPS and the recently launched Voyager funds which has grown to around £140m since its launch in October 2020. MPS funds are now over £5bn.

Income

Income increased 13.7% to £199.9m compared to the same period last year (H1 2020: £175.8m). Income was higher in the second quarter due to elevated commission levels and strong market performance.

Total discretionary income increased by 13.4% to £169.5m (H1 2020: £149.5m), following strong growth in the second quarter across both direct and indirect businesses. Private client commission levels were up 18.3% on the same period last year, as a result of market recovery, asset reallocation and portfolio rebalancing.

Financial planning income grew 16.5% to £19.1m (H1 2020: £16.4m) driven by higher market levels and continued growth in demand for our advice-focused services including 1762 from Brewin Dolphin proposition.

Advisory income was up £0.5m to £2.7m, with majority of the growth coming from 6 months performance of Brewin Dolphin Capital & Investments (Ireland) Limited ('BDCIIL') compared to 5 months in the prior period.

Other income of £1.7m is up £0.4m in the period, and consists of interest, expert witness report writing income and rental income. This is driven primarily by the increase in expert witness report writing income generated by Mathieson Consulting and contributed £0.8m of other income (H1 2020: £0.5m).

Total discretionary margin decreased to 74.8bps (H1 2020: 77.9bps). Commission margin was lower at 17.1bps (H1 2020: 17.6bps) due to fund growth being higher than commission income growth. Direct discretionary fee margin decreased to 60.4bps (H1 2020: 62.1bps) largely driven by natural tiering in the pricing on client portfolios as the market recovered 19.7% from an unprecedented fall in H1 20 due to COVID-19. Intermediaries margin decreased to 66.0bps (H1 2020: 69.9bps) mainly due to the tiering effect as intermediaries client portfolios grow on our platforms. 

Operating costs

1. Adjusted items are amortisation of client relationships and brand, defined benefit pension scheme past service costs, other gains and losses, incentivisation awards and onerous contracts.

Total operating costs before adjusted items were 9.7% higher at £152.0m (H1 2020: £138.6m), predominantly driven by increased variable staff costs.

Fixed costs increased by £3.8m to £114.3m (H1 2020: £110.5m). Staff costs grew 5.8% to £74.3m with £2.1m increase in planned hires to support our strategy and strong growth, and a £1.6m increase in our holiday accrual provision due to employees not being able to take holidays given the recent travel restrictions. Excluding the holiday accrual provision, staff costs grew 3.5%. Non-staff costs benefited from £4.1m of costs savings associated to lower travel, entertainment and marketing due to lockdown restrictions. These savings were offset by depreciation costs of £2.0m, of which £1.2m was related to our Client Engage platform which went live in the summer last year, increased BDCIIL costs of £1.3m relating to one additional month in the period and technology costs associated to the migration of systems.

Variable staff costs of £37.7m (H1 2020: £28.1m), most of which is related to the discretionary profit share, is higher driven by the increase in income and profit growth. Variable staff costs are provided for on an accrual basis and are based on the first half financial performance, the impact of higher numbers of eligible staff and the historical cost of share-based awards.

Adjusted items in the period were £6.3m (H1 2020: £8.3m) and is predominantly comprised of the amortisation of intangible client relationships of £5.6m, similar to last year. The defined benefit pension scheme past service costs of £0.4m (H1 2020: £nil) is more than offset by the non-recurring acquisition costs which were incurred last year of £2.3m.

Our operating cost guidance of mid-single digit growth remains on track. The holiday accrual associated to the first half of the year will reduce in the second half of the year. We expect non-staff costs to increase in the second half as we incur the FSCS levy and lockdown restrictions ease, which we anticipate will increase travel, entertainment and marketing costs.

Capital expenditure

We have continued to make progress on our strategic system and technology projects. Total capital expenditure in H1 2021 was £15.2m of which £12.3m was on our custody and settlement system. Our total capex spend to date on the custody and settlement system is £38.8m. Other capex in the period included £1.8m on enhancing our client user-experience, £0.8m on property improvements and the remaining £0.3m on IT hardware.

There is no change to our full year capex guidance of around £30m. Within our capex guidance we expect that the custody and settlement system will be higher at c.£24m than our original guidance of c.£19m for the year, as we require more resources to help with the final complexities of the project and de-risk its delivery. The custody and settlement system remains on track to complete in the Autumn.

As we enter the final stages of the custody and settlement project, we foresee some ongoing support costs associated with the embedding of the systems and processes, which will fall into 2022. We are taking a prudent approach on the embedding of the system and will phase the deployment of functionality once Avaloq is live within Brewin's technology environment in the Autumn. We will update the market in November with these details as well as the cost savings we expect to capture from our new technology architecture.

Amortisation for both our Client Engage and custody and settlement system will increase operating costs by around £6-7m a year. We will recognise a full year of amortisation in FY 2021 of around £2m for our Client Engage platform. Once our custody and settlement system is implemented in the Autumn, we anticipate amortisation of around £5m per annum.

Net finance costs

Finance income of £0.2m was lower than H1 2020 of £0.6m due to lower interest rates. Finance costs were £1.1m (H1 2020: £1.3m) primarily related to our finance leases.

Tax

The Group's effective corporation tax rate at 19.6% (H1 2020: 23.9%) is higher than the UK statutory rate of 19%, as a result of the net effect of disallowable expenses and tax credits for share-based payments. Our effective tax rate is lower than prior year mainly due to the increase in tax credits for share based payments as the share price recovered.

Cash and capital

The Group's financial position remains very strong with total net assets of £328.6m and cash balances at period end of £145.8m (H1 2020: £144.1m).

As at 31 March 2021 the Group had regulatory capital resources of £151.7m. The Group's main regulated entities are governed by both the FCA and CBI. Each regulator's rules determine the calculation of regulatory capital resources and regulatory capital requirements which then establishes the overall Group's capital adequacy. As required under FCA and CBI rules, we perform an Internal Capital Adequacy Assessment Process ('ICAAP') which includes performing a range of stress tests to determine the appropriate level of regulatory capital that the Group needs to hold. Our capital resources represent 210% of the FCA requirement. This is substantially above our risk appetite of 150%.

Dividend

The Group's dividend policy is to grow dividends in line with adjusted earnings, with a target pay out ratio of between 60% to 80% of annual adjusted diluted earnings per share. The Board has decided to increase the interim dividend by 5% to 4.6 pence per share (2020 interim: 4.4 pence per share) to reflect the performance of the business in the first half of 2021.

Looking ahead to the final dividend, the Board will continue to maintain the Group's dividend policy and will recognise the business performance in the second half of the year, when setting the final dividend.

The dividend will be payable on 11 June 2021 to shareholders on the register on the close of business on 21 May 2021 with an ex-dividend date of 20 May 2021.

Going concern

As stated in note 2 to the condensed consolidated set of interim financial statements, the Directors believe that the Group is well placed to manage its business risks successfully. The Group's forecasts and projections, (see note 2(i) for detail) and stressed events that the Group is required to assess demonstrate that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Directors continue to adopt a going concern basis for the preparation of the condensed consolidated interim financial statements. In forming their view, the Directors have considered the Group's prospects for a period exceeding twelve months from the date the condensed consolidated interim financial statements are approved.

Principal risks and uncertainties

The Directors consider that the nature of the principal risks and uncertainties which may have a material effect on the Group's performance during the remainder of its financial year remain unchanged from those identified on pages 47 and 48 of the Group's 2020 Annual Report and Accounts available on our website www.brewin.co.uk.

Board changes

There were a number of changes made to the Board during the period. Simonetta Rigo resigned with effect from 13 November 2020 and Kath Cates stepped down at the AGM on 5 February 2021. Toby Strauss succeeded Simon Miller as Chairman with effect from 5 February 2021. Charlie Ferry, Managing Director of Wealth and Investment at Brewin Dolphin was appointed as an Executive Director on 17 March 2021 and Pars Purewal was appointed as a Non-Executive Director on 12 May 2021.

Robin Beer

Chief Executive

12 May 2021

Condensed Consolidated Income Statement

for the six months ended 31 March 2021

Condensed Consolidated Statement of Comprehensive Income

for the six months ended 31 March 2021

Condensed Consolidated Balance Sheet

as at 31 March 2021

Condensed Consolidated Statement of Changes in Equity

for the six months ended 31 March 2021

1. A cumulative debit of £1,912k has been recognised in the profit and loss account reserve as at 31 March 2021 for exchange differences on translation of foreign operations (30 September 2020: £1,164k credit, 31 March 2020: £68k debit and 30 September 2019: £81k debit).

Condensed Consolidated Cash Flow Statement

for the six months ended 31 March 2021

Notes to the Condensed Consolidated Set of Financial Statements

1. General information

Brewin Dolphin Holdings PLC (the 'Company') is a public limited company incorporated in the United Kingdom. The shares of the Company are listed on the London Stock Exchange. The address of its registered office is 12 Smithfield Street, London, EC1A 9BD. This Interim Financial Report of Brewin Dolphin Holdings PLC and its subsidiaries (collectively, 'the Group') was approved for issue by its directors on 12 May 2021.

A copy of this Interim Financial Report including the Condensed Consolidated Financial Statements for the period ended 31 March 2021 is available at the Company's registered office and on the Company's investor relations website (www.brewin.co.uk).

The comparative information for the period ended 30 September 2020 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that period has been delivered to the Registrar of Companies. The auditor reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

2. Basis of preparation

The condensed consolidated set of financial statements included in this Interim Financial Report has been prepared in accordance with both International Accounting Standards in conformity with the requirements of Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union ('IFRS'). The Interim Financial Report has been prepared in accordance with the Disclosure and Transparency Rules ('DTR') of the Financial Conduct Authority.

The condensed consolidated set of financial statements included in this Interim Financial Report for the six months ended 31 March 2021 should be read in conjunction with the annual audited financial statements of Brewin Dolphin Holdings PLC for the year ended 30 September 2020.

The 2020 annual financial statements of Brewin Dolphin Holdings PLC were prepared in accordance with IFRS.

The foreign operations have been translated into the functional currency at a spot rate of €/£1.1739 for the Balance Sheet at 31 March 2021 (31 March 2020 €/£1.1301 and 30 September 2020: €/£1.1025) and the average exchange rate of €/£1.1332 for the Income Statement items for the period ending 31 March 2021 (31 March 2020 €/£1.166 and 30 September 2020: €/£1.141).

(i) Going concern

The Directors have, at the time of approving the financial statements, a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, a period of not less than 12 months from the date of this report. Thus, they continue to adopt the going concern basis of accounting in preparing the condensed consolidated financial statements.

To form the view that the condensed consolidated financial statements should continue to be prepared on a going concern basis, the Directors have assessed the outlook of the Group by considering:

i. the Group's Medium-Term Plan ('MTP'), the MTP is a comprehensive multi-year business plan forecasting costs and revenues across all operations and branches; and

ii. the performance of a range of stress tests including reverse stress tests that are used as part of the Internal Capital Adequacy Assessment Process ('ICAAP') to assess the Group's ability to withstand a market-wide stress.

The stress tests enable the modelling of the impact of a variety of external and internal events on the MTP; identify the potential impact of stress events on the Group's income, costs, cash flow and capital; and enable the Directors to assess management's ability to implement effective management actions that may be taken to mitigate the impact of the stress events. The reverse stress tests have considered severe scenarios and actions and allow the Directors to assess scenarios and circumstances that would render the Group's business model unviable. The tests demonstrated that the Group has adequate resources, including cash, to continue in operational existence for the foreseeable future.

(ii) Impairment considerations

At each balance sheet date, the Group reviews the carrying amounts of its 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).

The Group has performed a detailed assessment of whether there were any indicators that any of its assets may be impaired at the reporting period end. External sources of information, as well as internal information such as financial performance, were considered in assessing whether there were indicators of impairment including performance of the assets compared to the MTP for the Bath CGU which was the most sensitive to the value in use ('VIU') assumptions, in the impairment exercise disclosed in the Group's 2020 Annual Report and Accounts. The MTP was used to derive cashflows for the VIU calculation for the CGUs.

The COVID-19 pandemic is no longer considered an indicator of impairment by management. The pandemic has been a feature of the economic environment for over a year and has had a limited impact on the Group's financial results and position.

The assessment did not identify any indicators of impairment for the assets held by the Group - see note 9 for further details.

(iii) Significant accounting policies and use of estimates and judgements

The same accounting policies, presentation and methods of computation are followed in the condensed consolidated set of financial statements as applied in the Group's latest annual audited financial statements for the year ended 30 September 2020.

The preparation of interim condensed consolidated financial statements in compliance with IAS 34 requires the use of certain critical accounting judgements and key sources of estimation uncertainty. It also requires the exercise of judgement in applying the Group's accounting policies. There have been no material revisions to the nature and the assumptions used in estimating amounts reported in the annual audited financial statements of Brewin Dolphin Holdings PLC for the year ended 30 September 2020. However, for the six months to 31 March 2021, the following critical accounting judgements and key sources of estimation uncertainty disclosed in the financial statements of Brewin Dolphin Holdings PLC for the year ended 30 September 2020 are no longer applicable:

a. Critical accounting judgement

-Leases - determining the lease term

b. Key source of estimation uncertainty

- Acquisitions

- Leases - determination of the appropriate rate to discount the lease payments

3. Income

The following table presents revenue disaggregated by service and timing of revenue recognition:

1. Services transferred at a point in time.

2. Brewin Portfolio Service.

Contract balances

The Group does not have contract assets. There are no incremental costs of obtaining a contract, and no contracts whereby revenue is conditional on the fulfilment of a contingent event.

Contract liabilities

Contract liabilities relate to the advance consideration received from customers for services still to be delivered. The Group derecognises contract liabilities (and recognises revenue) when it transfers services and satisfies its performance obligations.

Unsatisfied performance obligations

The Group does not have material unsatisfied (or partially unsatisfied) performance obligations at the reporting date, as the majority of the Group's performance obligations are satisfied equally over time.

4. Segmental information

The Group provides a wide range of wealth management services in the United Kingdom ('UK'), Channel Islands ('CI') and the Republic of Ireland ('ROI'). The Group's Executive Committee has been determined to be the chief operating decision maker for the purposes of making decisions regarding the allocation of resources and assessing the performance of the identified segments.

For management reporting purposes the Group currently has a single operating segment: the Wealth Management business. This forms the reportable segment of the Group for the period and consequently, the Group's Consolidated Income Statement and Consolidated Balance Sheet are monitored by the Group's Executive Committee. The accounting policies of the operating segment are the same as those of the Group. All segmental income relates to external clients.

For the six month period ended 31 March 2021

Segmental income statement

Segmental balance sheet

For the period ended 31 March 2020

Segmental income statement

Segmental balance sheet

1. Amortisation of intangible assets - client relationships and brand and acquisition costs have been represented with £877k and £861k transferred from the UK and CI business respectively, to the ROI business.

2. The Group acquired BDCIIL on 31 October 2019 - see note 18 for further details.

For the year ended 30 September 2020

Segmental income statement

1. The Group acquired BDCIIL on 31 October 2019 - see note 18 for further details.

Segmental balance sheet

5. Finance income and finance costs

6. Taxation

The Group calculates the period income tax expense using the tax rate that would be applicable to the expected total annual earnings.

On 11 March 2021, Finance (No.2) Bill 2019-21 ('Finance Bill') was published and incorporates legislation on certain new measures announced at Budget 2021. It includes the measure announced to increase the corporation tax rate from 19% to 25% from 1 April 2023. Since the Finance Bill is not substantively enacted at 31 March 2021, this measure is not reflected in the tax charge or net deferred tax for the interim period.

Net deferred tax liability

7. Earnings per share

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

1. The dilutive shares used for this measure differ from that used for statutory dilutive earnings per share; the future value of service costs attributable to employee share options is ignored and contingently issuable shares for Long-term Incentive Plan ('LTIP') options are assumed to fully vest. The Directors have selected this measure as it represents the underlying effective dilution by offsetting the impact to the calculation of basic shares of the purchase of shares by the Employee Share Ownership Trust ('ESOT') to satisfy options.

2. Excluding onerous contracts costs, amortisation of client relationships and brand, acquisition costs, other gains and losses, incentivisation awards and defined benefit pension scheme past service costs.

8. Dividends

An interim dividend of 4.6p per share was declared by the Board on 12 May 2021 and has not been included as a liability as at 31 March 2021. This interim dividend will be paid on 11 June 2021 to shareholders on the register at the close of business on 21 May 2021 with an ex-dividend date of 20 May 2021.

9. Intangible assets

Goodwill and client relationships impairment testing

The tables below show the goodwill allocated to groups of cash-generating units ('CGUs') and the significant client relationship assets:

1. Amortisation period remaining 5 years 4 months.

2. Amortisation period remaining 8 years 7 months.

3. Amortisation period remaining 3 years 1 months.

4. Amortisation period remaining 8 years 4 months.

5. 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.

In accordance with IFRS, the Group performs impairment testing for goodwill on an annual basis or more frequently when there are impairment indicators. Client relationships and brand intangible assets are reviewed for indicators of impairment at each reporting date.

The Group has reviewed goodwill, client relationships and brand intangible assets as at 31 March 2021. The review determined that there were no indicators of impairment present, see note 2 (ii) for further detail.

10. Property, plant and equipment

11. Right of use assets

12. Defined benefit pension scheme

The main financial assumptions used in calculating the Group's defined benefit pension scheme are as follows:

The value of the defined benefit pension liability as at 31 March 2021 was estimated in accordance with International Accounting Standard 19 by a qualified independent actuary. The latest full actuarial funding valuation was carried out as at 31 December 2017 and the 31 December 2020 actuarial funding valuation is underway.

For further details see note 18 to the 2020 Group Annual Report and Accounts as this includes the main risks to which the Group is exposed in relation to the pension scheme. The assets in the Scheme were:

Over the six-month period to 31 March 2021, the Trustees of the Scheme have further de-risked its investment strategy. The investment strategy reflects the Scheme's liability profile and the Trustees' and Group's attitude to risk. The Scheme's investment strategy has moved from being to invest in 30% in higher return seeking assets - "assets on risk" (e.g. equities, high yielding bonds etc.), 50% in gilts and other matching assets and 20% in a cashflow generating corporate bond to 20%, 60% and 20% respectively.

Over the six months to 31 March 2021, gilt yields experienced a significant increase which led to a significant decrease in the value of the liabilities and a corresponding decrease to the asset values. Over the period December 2020 and March 2021, the assets and liabilities on the low-risk basis have fallen by c. £9m due to changes in the gilt yields which has been offset a little by the assets on risk.

Net asset recognised on the Balance Sheet:

Reconciliation of opening and closing balances of the present value of the defined benefit obligation:

1. The past service cost relates to the equalisation of the Guaranteed Minimum Pensions ("GMP"). This cost has been incurred following the judgment in November 2020 in relation to the Lloyds Bank GMP equalisation case confirming that pension scheme trustees are responsible for equalising GMP benefits that have already been transferred out of Defined Benefit schemes.

Reconciliation of opening and closing balances of the fair value of plan assets:

The amounts recognised in the Income Statement are:

Remeasurements of the net defined benefit asset included in Other Comprehensive Income ('OCI'):

Sensitivity

It should be noted that the methodology and assumptions prescribed for the purposes of IAS 19 mean that the disclosures will be inherently volatile, varying greatly according to investment market conditions at each accounting date.

A sensitivity analysis of the principal assumptions used to measure the Scheme liabilities and assets are set out below. The duration of the pension scheme liabilities is in the region of 18 years.

Scheme liabilities

Scheme assets

13. Financial instruments

Financial assets at fair value through other comprehensive income ('FVTOCI')

Level 3

Financial assets at fair value through profit and loss ('FVTPL')

Level 1

The fair value of financial assets at FVTPL is determined directly by reference to published prices in an active market where available. They 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. During October 2020, £2.2 million was added to the seed capital, to launch the Group's Voyager fund range.

Fair value measurement recognised on the Balance Sheet

The table below provides an analysis of the fair value measurement of financial instruments which are grouped into Levels 1 to 3 of the fair value hierarchy based on the degree to which the fair value is observable:

- Level 1 quoted prices (unadjusted) in active markets for identical assets or liabilities;

- Level 2 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