Interim Results
RATHBONE BROTHERS PLC
9 September 1999
Strong growth continues at Rathbones
Rathbone Brothers Plc (Rathbones), which now has over £4.5
billion of investors funds under discretionary management,
announces interim results for the six months ended 30 June
1999 (Six months to 30 June 1998). The highlights are:
* Interim pre-tax profit increased by 27% to £11.6m (£9.1m)
* Earnings per share increased by 14% to 23.20p (20.39p)
* Interim dividend raised by 14% to 8.0p net (7.0p net)
* Discretionary funds under management up by 12% to over
£4.5bn
Interim pre-tax profit and Earnings per share are stated
before goodwill amortisation
Commenting on these record interim results, Micky Ingall,
Chairman, said: 'Further progress has been made in
streamlining our main investment management systems and the
integration of the investment management companies into one
entity, Rathbone Investment Management Limited. It is
planned that this will be completed in the first half of
2000.
'Rathbones has demonstrated its ability to grow profits and
earnings substantially from the existing business base and we
look forward to a satisfactory outcome for 1999 as a whole'
For further information please contact:
Micky Ingall, Chairman
Mark Powell, Group Managing Director
Rathbone Brothers Plc
Tel: 0171 399 0000
Hamish McFall / Tony Rose
Tavistock Communications
Tel: 0171 600 2288
Chairman's Statement
I am pleased to report that by comparison with last year,
profit before tax and goodwill amortisation for the first six
months of 1999 rose 27% to £11.6 million. Also, earnings per
share before goodwill amortisation has risen 14% to 23.20p per
share. The interim dividend is increased by 14% to 8p payable
on 12th October 1999.
We have continued to attract new investment management clients
and funds under full discretionary investment management have
grown during the period to over £4.5 billion (December 1998 -
£4 billion). This is a very satisfactory result bearing in
mind that no acquisitions took place during the period and the
main UK indices recorded more modest gains than in recent
years.
Further progress has been made in streamlining our main
investment management systems and the integration of the
investment management companies into one entity, Rathbone
Investment Management Limited, should be completed in the
first half of 2000.
The trust activities have continued to make good progress and,
in particular, Curzon Secretaries & Trustees Limited based in
Jersey, which was acquired in December 1998 has fully lived up
to expectations and is being successfully integrated.
All our computer systems, apart from minor aspects for which
solutions are in hand, and other business facilities have been
successfully tested for year 2000 compliance. Rigorous
enquiries have been made of all third party suppliers to the
effect that they also are compliant. We have undertaken a
comprehensive business continuity survey to review the
potential impact of the Millennium and we are confident that
the Group is well equipped to withstand any problems which may
occur.
Your Company has demonstrated its ability to grow profits and
earnings substantially from the existing business base and we
look forward to a satisfactory outcome for 1999 as a whole.
Micky Ingall
Chairman
8th September 1999
Unaudited consolidated profit and loss account
For six months ended 30th June 1999
Six months Six months Year ended
ended ended
30th June 30th June 31st December
1999 1998 1998
Unaudited Unaudited Audited
Restated Restated
(Note 3) (Note 3)
£'000 £'000 £'000
Turnover 36,307 30,518 61,982
Operating costs (25,059) (21,461) (43,993)
Operating Profit before goodwill
amortisation 11,617 9,097 18,063
Goodwill amortisation (369) (40) (74)
Operating profit being profit on
ordinary activities before 11,248 9,057 17,989
taxation
Tax on profit on ordinary (3,543) (2,943) (5,766)
activities
-------- -------- --------
Profit for the period attributable
to shareholders 7,705 6,114 12,223
Dividends (2,786) (2,206) (6,304)
-------- -------- --------
Retained profit for the period 4,919 3,908 5,919
-------- -------- --------
Basic Earnings per ordinary share
before goodwill amortisation 23.20p 20.39p 39.55p
after goodwill amortisation 22.47p 20.25p 39.31p
Diluted earnings per share
before goodwill amortisation 22.94p 19.49p 37.24p
after goodwill amortisation 22.21p 19.37p 37.02p
Unaudited consolidated balance sheet
30th June 1999
30th June 30th June 31st December
1999 1998 1998
Unaudited Unaudited Audited
Restated Restated
(Note 3) (Note 3)
£'000 £'000 £'000
Fixed assets
Intangible assets 14,120 1,567 14,423
Tangible assets 6,753 7,227 6,791
Investments 65 65 65
-------- -------- --------
20,938 8,859 21,279
-------- -------- --------
Current assets
Work in progress 469 401 402
Debtors 56,679 55,174 44,985
Investments 104,791 88,634 109,618
Cash and short term deposits 33,222 39,716 33,434
-------- -------- --------
195,161 183,925 188,439
Creditors: amounts falling due
within one year (163,833) (160,963) (162,542)
-------- -------- --------
Net current assets 31,328 22,962 25,897
-------- -------- --------
Total assets less current
liabilities 52,266 31,821 47,176
Creditors: amounts falling
due after more than one year (206) (73) (449)
Provision for liabilities
and charges (3,630) (983) (6,314)
-------- -------- --------
Net assets 48,430 30,765 40,413
-------- -------- --------
Capital and reserves
Called up share capital 1,732 1,576 1,648
Share premium account 13,411 5,279 10,326
Other reserves 5,332 3,073 5,414
Profit and loss account 27,955 20,837 23,025
-------- -------- --------
Equity shareholders' funds 48,430 30,765 40,413
-------- -------- --------
Approved by the Board on 8th September 1999
Consolidated cash flow statement
For the six months ended 30th June 1999
Six months Six months Year ended
ended ended
30th June 30th June 31st December
1999 1998 1998
Unaudited Unaudited Audited
Restated Restated
(Note 3) (Note 3)
£'000 £'000 £'000
Net cash inflow from
operating activities 4,329 9,012 16,736
-------- -------- --------
Taxation
- Corporation tax including (95) (495) (3,793)
ACT
- Overseas tax (250) (54) (107)
-------- -------- --------
(345) (549) (3,900)
Capital expenditure
- Purchase of tangible fixed (1,526) (1,255) (2,911)
assets
- Sale of tangible fixed 72 50 1,428
assets
-------- -------- --------
Net cash outflow for capital
expenditure (1,454) (1,205) (1,483)
Acquisition and disposals
- Acquisition of subsidiaries (89) (1,109) (1,300)
- Net cash acquired with
subsidiary - 602 629
undertakings
-------- -------- --------
Net cash outflow for (89) (507) (671)
acquisitions
Equity dividends paid (4,115) (2,674) (4,880)
-------- -------- --------
Cash (outflow)/inflow before
financing (1,674) 4,077 5,802
-------- -------- --------
Financing
- Issue of shares 460 933 1,029
- Repayment of secured loan - - (1,500)
- Capital element of finance
lease (15) (15) (31)
rental payments
-------- -------- --------
Net cash inflow/(outflow)
from financing 445 918 (502)
-------- -------- --------
(Decrease)/Increase in cash
in the period (1,229) 4,995 5,300
-------- -------- --------
Notes to the Interim Accounts
For the six months ended 30th June 1998
1. Basis of preparation
The unaudited interim financial information, which has been
approved by the Board of Directors, has been prepared on the
basis of accounting policies set out in the Group's accounts
for the year ended 31st December 1998 except for the change
to the basis of consolidation. The comparative balance
sheet figures as at 31st December 1998 are not the Group's
statutory accounts for that financial year but have been
derived from them expect for the restatements described in
note 3 below. Those accounts have been reported on by the
Group's former auditors and delivered to the registrar of
companies. The report of the auditors was unqualified and
did not contain a statement under section 237 (2) or (3) of
the Companies Act 1985.
2. Basis of Consolidation
The consolidation accounts are based on the accounts of
Rathbone Brothers Plc, its subsidiary undertakings and its
quasi subsidiary made up to 30th June. The consolidated
profit and loss account includes the results of subsidiary
undertakings acquired during the period from the effective
date of acquisition.
3. Quasi Subsidiary
The consolidated profit and loss account and balance sheet
have been restated for the periods ended 30th June 1998 and
31st December 1998 to include Rathbone International Finance
BV, a quasi subsidiary from 1st January1998. The quasi
subsidiary provides back to back loan facilities for
Rathbone's clients. The inclusion of this quasi subsidiary
has no impact on the results or net assets of the Group but
increases current assets and current liabilities by
£8,134,000 at 30th June 1998 and £9,403,000 at 31st December
1998 and turnover and operating costs by £198,000 for the
six month period to 30th June 1998 and £436,000 for the year
to 31st December 1998.
4. Goodwill
Purchased goodwill arising on consolidation in respect of
acquisitions before 1st January 1998, when FRS 10 Goodwill
and intangible assets was adopted, was written off to
reserves in the year of acquisition.
Purchased goodwill (representing the excess of the fair
value of the consideration given over the fair value of the
separable net assets acquired) arising on consolidation in
respect of acquisitions since 1st January 1998 is
capitalised. Positive goodwill is amortised to nil by equal
annual installments over its estimated useful life, normally
20 years. Such goodwill is subject to periodic review for
impairment in accordance with FRS 11: Impairment of
tangible fixed assets and goodwill.
5. Turnover
All amounts derive from continuing activities.
6. Taxation
The interim taxation charge is calculated by applying the
Directors' best estimate of the effective annual corporation
tax rate (31.5% (1998: 32.5%)) to the profit for the period.
7. Earnings per ordinary share
The calculation of basic earnings per share is based on
profit after taxation, before dividends,
for each period and 34,296,278 ordinary shares at 30th June
1999, 31,091,573 ordinary shares at 31st December 1998, and
30,182,134 ordinary shares at 30th June 1998, where this is
the weighted average number of ordinary shares in issue
during the relevant period.
Diluted earnings per share is the basic earnings per share,
adjusted for the effect of contingently issuable shares in
relation to deferred consideration for the acquisition of
subsidiary undertakings and employee share options remaining
capable of exercise weighted for the relevant periods.
Six months Six months Year ended
ended ended
30th June 30th June 31st December
1999 1998 1998
Weighted average number of
ordinary shares in issue
during the period. 34,296,278 30,182,134 31,091,573
Effect of ordinary share 396,310 396,327 408,346
options.
Weighted average numbers
Of contingently issuable
ordinary shares during the
period. - 989,995 1,519,754
-------- -------- --------
Diluted ordinary shares 34,692,588 31,568,456 33,019,673
-------- -------- --------
8. Dividend per share
The directors have declared an interim dividend of 8p net
per share amounting to £2,786,000 payable on 12th October
1999 to shareholders on the register at the close of
business on 17th September 1999.
9. Year 2000 Costs
IT projects and staff costs contain an element of year 2000
costs but these have not been separately identified as they
are not considered material. It is not expected that there
will be any further year 2000 costs of a material amount
during the year.
10. Segmental information
Turnover Profit before taxation
Six Six Year Six Six Year
Months Months ended Months Months Ended
ended ended Ended ended
30th 30th 31st 30th 30th 31st
June June Dec. June June Dec.
1999 1998 1998 1999 1998 1998
Restated Restated
(Note 3) (Note 3)
£'000 £'000 £'000 £'000 £'000 £'000
By class of business:
Investment management 27,209 23,354 47,758 8,619 7,505 14,827
Banking 3,949 3,839 6,941 816 695 1,237
Trust services 5,149 3,325 7,283 1,813 857 1,925
------ ------- ------- ------ ------ -------
36,307 30,518 61,982 11,248 9,057 17,989
------ ------- ------- ------ ------ -------
By geographical
segment:
United Kingdom 32,431 27,999 57,038 10,472 8,364 16,606
Europe 2,867 1,543 3,154 498 391 736
The Americas 1,009 976 1,790 278 302 647
------ ------- ------- ------ ------ -------
36,307 30,518 61,982 11,248 9,057 17,989
------ ------- ------- ------ ------ -------
Net Assets
Six months ended Six months ended Year ended
30th June 30th June 31st
1999 1998 December
1998
£'000 £'000 £'000
By class of business:
Investment management 25,029 15,813 21,551
Banking 9,147 9,414 9,555
Trust services 14,254 5,538 9,307
------- ------- -------
48,430 30,765 40,413
------- ------- -------
By geographical segment:
United Kingdom 31,298 25,809 34,724
Europe 13,688 2,216 2,674
The Americas 3,444 2,740 3,015
------- ------- -------
48,430 30,765 40,413
------- ------- -------
11. Consolidated Cash Flow Statement
Six months Six months Year ended
ended ended
30th June 30th June 31st
1999 1998 December
1998
Restated Restated
(Note 3) (Note 3)
Reconciliation of operating
profit to net cash inflow
from £'000 £'000 £'000
operating activities
Operating profit 11,248 9,057 17,989
Profit on disposal of fixed
assets (54) (35) (157)
Depreciation charges 1,538 1,055 1,884
Exchange adjustments 19 - (16)
Amortisation of goodwill 369 40 74
Increase in debtors (11,694) (20,764) (10,789)
Increase in work in progress (67) (154) (155)
Increase in creditors 14 39,635 45,862
Decrease/(Increase) in time
deposits 2,956 (19,743) (38,014)
(Increase)/Decrease in
investments held for trading - (79) 58
------- ------- -------
Net cash inflow from
operating activities 4,329 9,012 16,736
------- ------- -------
Six months Six months Year ended
ended ended
30th June 30th June 31st December
1999 1998 1998
Restated Restated
(Note 3) (Note 3)
Reconciliation of net cash £'000 £'000 £'000
flow to movement in net
funds
(Decrease)/Increase in cash
for the period (1,229) 4,995 5,300
Exchange movements 179 (80) (33)
Finance charges on leases (3) (5) (10)
Change in net debt
resulting 15 15 31
from cash flows
------- ------- -------
Movements in net funds in
the period (1,038) 4,925 5,288
Net funds at the beginning
of period 24,845 19,557 19,557
------- ------- -------
Net funds at end of period 23,807 24,482 24,845
------- ------- -------
12. Interim report
The interim report will today be sent to registered
shareholders. Further copies will be available to the
public from the Company's registered office: 159 New Bond
Street, London W1Y 9PA.
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