Interim Results
Rathbone Brothers PLC
26 July 2007
26 July 2007
Rathbone Brothers Plc
Interim results for the 6 months to 30 June 2007
Rathbones announces record interim results
Rathbone Brothers Plc, a leading provider of discretionary fund management and
wealth management services for private investors and trustees, announces its
interim results for the half year ended 30 June 2007.
Highlights:
• Operating income increased by 15.1% to £75.6 million (30 June 2006:
£65.7 million).
• Profit before tax for the first half of the year was £25.9 million
(30 June 2006: £22.3 million including profit of £1.9 million for a part
disposal of the Company's holding of the London Stock Exchange Plc).
• Underlying profit before tax, which excludes gains from London Stock Exchange
Plc shares, for the first half of the year was £25.9 million - an increase of
27.0% (30 June 2006: £20.4 million).
• Basic earnings per share rose by 15.0% to 44.4p (30 June 2006: 38.6p) with
underlying basic earnings up 25.8% from 35.3p.
• Interim dividend per share is increased by 18.5% to 16.0p (2006: 13.5p) and
is payable on 10 October 2007.
• Total funds under management increased by 9.0% over the six months to
30 June 2007 to £13.3 billion compared with an increase in the FTSE/APCIMS
Balanced Index of 3.0% over the same period.
• Funds managed by Rathbone Unit Trust Management increased by 10.5% over the
period to £2.1 billion as at 30 June 2007.
Mark Powell, chairman of Rathbone Brothers Plc, commented:
'All parts of Rathbones have continued to attract inflows of new client funds.
Within Rathbone Investment Management the underlying annualised rate of net
organic growth during the period was 7.8% and in Rathbone Unit Trust Management
it was 21.0%. These encouraging figures reflect continued emphasis on marketing
in general and in particular our developing involvement with the investment
management of funds held in self-invested personal pensions (SIPPs) offered by a
variety of providers.
'We continue to experience encouraging levels of enquiry throughout the business
and subject to there being no significant deterioration in world markets,
Rathbones remains confident of the future.'
For further information contact:
Rathbone Brothers Plc 020 7399 0000
Mark Powell, Chairman
Andy Pomfret, Chief Executive
Emily Morris, Marketing Director
Smithfield
Reg Hoare/Miranda Good 020 7360 4900
Notes for editors:
Rathbone Brothers Plc
Rathbone Brothers Plc specialises in providing, through its subsidiaries,
personalised investment management and wealth management services for private
investors and trustees, including discretionary fund management, unit trusts,
tax planning, trust and company management, pension and banking services. It
manages £13.3 billion of funds, including £2.1 billion managed by Rathbone Unit
Trust Management Limited (as at 30 June 2007).
Chairman's statement
The six months ended 30 June 2007 has seen Rathbones again produce record
results.
Profits before tax for the first half of the year were £25.9 million, compared
with £22.3 million for the same period in 2006. Figures for the first half of
2006 included profits of £1.9 million for a part disposal of the Company's
holding of the London Stock Exchange Plc and excluding this, underlying profits
were up 27.0% from £20.4 million. Full year reported profits for 2006 were £44.7
million.
Similarly, reported basic earnings per share rose to 44.4p, compared with 38.6p
in the first half of 2006 (an increase of 15.0%) with underlying EPS up 25.8%
from 35.3p.
The interim dividend is increased by 18.5% to 16.0p and will be payable on 10
October 2007.
The six months covered by this report have seen world equity markets benefiting
from increasing earnings and considerable corporate activity. The period has
however also been characterised by some volatility, especially at the end of
February and into early March when weakness in Far Eastern markets caused
considerable nervousness.
Volatility in world markets underlines the need for carefully considered and
soundly-based investment policies which reflect the individual circumstances and
requirements of our clients and their appetite for risk. We have continued to
develop our investment processes and in particular have added to our expertise
in strategic asset allocation and the use of structured products, fund of hedge
funds and private equity.
At the end of June total funds under management had reached £13.3 billion,
compared with £12.2 billion at 31 December 2006, an increase of 9.0%. This
compares with an increase in the FTSE/APCIMS Balanced Index of 3.0%. The value
of funds under management within Rathbone Investment Management rose by 8.7% to
£11.2 billion. For the first time, charity funds under management have exceeded
£1 billion. The value of funds under management in Rathbone Unit Trust
Management rose by 10.5% to £2.1 billion.
All parts of Rathbones have continued to attract inflows of new client funds.
Within Rathbone Investment Management the underlying annualised rate of net
organic growth during the period was 7.8% and in Rathbone Unit Trust Management
it was 21.0%. These encouraging figures reflect continued emphasis on marketing
in general and in particular our developing involvement with the investment
management of funds held in self-invested personal pensions (SIPPs) offered by a
variety of providers.
During the first half of the year profits from our trust and tax division rose
by 46.2% to £1.9 million, reflecting benefits from the consolidation of our
Jersey business into one location as well as an encouraging flow of new business
into our Geneva and UK businesses. The trust and tax division continues to
provide important services to a wide range of clients. On 2 April 2007 we
acquired 100% of a small trust advisory business in Singapore to complement the
range of offshore services that Rathbones is able to offer its clients and to
provide an opportunity to attract new business from the Far East and elsewhere.
We are engaged in a good deal of preparatory work for the Markets in Financial
Instruments Directive which comes into force this autumn; we are particularly
keen to ensure that our clients do not suffer from excessive bureaucracy.
We remain keen to attract acquisitions and recruitments but only where they meet
our requirements for a good cultural fit and where they have the capacity to be
earnings enhancing within a reasonable time frame.
Finally, at the end of this year, Roy Morris, who was chief executive of
Rathbones until 2004 when he became a non-executive director, will retire from
the Board. By this time he will have achieved a quite remarkable 50 years of
continuous service to Rathbones - a contribution to the development of this
Company which is unlikely to be surpassed.
We continue to experience encouraging levels of enquiry throughout the business
and subject to there being no significant deterioration in world markets,
Rathbones remains confident of the future.
Mark Powell
Chairman
25 July 2007
Consolidated interim income statement
for the six months ended 30 June 2007
Note Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2007 2006 2006
£'000 £'000 £'000
Interest and similar income 21,883 15,881 37,335
Interest expense and similar charges (13,416) (8,783) (21,297)
Net interest income 8,467 7,098 16,038
Fee and commission income 71,304 58,846 120,039
Fee and commission expense (5,687) (3,775) (8,365)
Net fee and commission income 65,617 55,071 111,674
Dividend income 19 93 117
Net trading income 812 917 1,285
Net income from sale of available for - 1,897 3,196
sale securities
Other operating income 728 628 1,376
Operating income 75,643 65,704 133,686
Operating expenses (49,784) (43,377) (88,966)
Profit before tax 25,859 22,327 44,720
Taxation 3 (7,022) (6,237) (12,582)
Profit for the period attributable to 18,837 16,090 32,138
equity holders of the Company
Dividends proposed for the period per 4 16.0p 13.5p 35.0p
ordinary share
Dividends (£'000) 6,817 5,686 14,786
Earnings per share for the period 5
attributable to equity holders of the
Company:
- Basic 44.4p 38.6p 76.6p
- Diluted 43.6p 37.5p 74.7p
Consolidated interim balance sheet
as at 30 June 2007
Note Unaudited Unaudited Audited
30 June 30 June 31 December
2007 2006 2006
£'000 £'000 £'000
Assets
Cash and balances at central banks 280 986 281
Settlement balances 41,169 30,756 19,628
Loans and advances to banks 213,334 172,887 119,247
Loans and advances to customers 38,593 75,012 77,360
Investment securities
- available for sale 6,374 6,662 6,152
- held to maturity 568,401 552,003 558,368
Intangible assets 84,260 76,796 81,248
Property, plant and equipment 7 7,834 4,956 6,463
Deferred tax asset 2,810 4,911 5,321
Prepayments, accrued income and other 45,624 34,002 38,551
assets
Total assets 1,008,679 958,971 912,619
Liabilities
Deposits by banks 8 13,803 12,105 12,119
Settlement balances 46,657 40,790 18,078
Due to customers 724,968 706,864 664,762
Debt securities in issue - 141 -
Accruals, deferred income and other 31,615 26,610 31,157
liabilities
Current tax liabilities 6,327 4,644 8,143
Provisions for liabilities and charges 9 9,484 8,458 8,448
Retirement benefit obligations 10 2,100 11,003 10,763
Total liabilities 834,954 810,615 753,470
Equity
Share capital 11 2,130 2,106 2,114
Share premium 12 27,115 23,270 24,518
Other reserves 12 53,872 54,058 53,717
Retained earnings 12 90,608 68,922 78,800
Total equity 173,725 148,356 159,149
Total equity and liabilities 1,008,679 958,971 912,619
Approved by the Board of Directors on 25 July 2007
Consolidated interim cash flow statement
for the six months ended 30 June 2007
Note Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2007 2006 2006
£'000 £'000 £'000
Cash flows from operating activities
Profit before tax 25,859 22,327 44,720
Net interest income (8,467) (7,098) (16,038)
Net income from sale of available for - (1,897) (3,196)
sale securities
Impairment losses on loans and 56 90 323
advances
Profit on disposal of plant and (25) (6) (49)
equipment
Depreciation and amortisation 2,159 1,516 3,418
Defined benefit pension scheme 1,250 1,809 3,448
charges
Share based payment charges 1,458 897 2,080
Interest paid (14,323) (9,162) (20,655)
Interest received 34,449 21,987 30,728
42,416 30,463 44,779
Changes in operating assets and
liabilities:
- net decrease in loans and advances 19,250 23,295 18,158
to banks and customers
- net (increase) in settlement (21,541) (16,739) (5,611)
balance debtors
- net (increase) in prepayments, (19,556) (15,002) (6,881)
accrued income and other assets
- net increase in amounts due to 61,922 171,017 129,407
customers and deposits by banks
- net increase in settlement balance 28,579 24,658 1,946
creditors
- net increase in accruals, deferred 1,983 2,437 5,296
income, provisions and other
liabilities
Cash generated from operations 113,053 220,129 187,094
Defined benefit pension contributions (4,897) (4,520) (5,927)
paid
Tax paid (7,384) (6,771) (10,609)
Net cash inflow from operating 100,772 208,838 170,558
activities
Cash flows from investing activities
Acquisition of businesses, net of (298) (1,770) (5,786)
cash acquired
Purchase of property, equipment and (5,875) (2,566) (5,690)
intangible assets
Proceeds from sale of property and 25 44 113
equipment
Purchase of investment securities (460,489) (658,338) (1,363,970)
Proceeds from sale and redemption of 395,455 536,232 1,178,798
investment securities
Net cash (used in) investing (71,182) (126,398) (196,535)
activities
Cash flows from financing activities
Repayments of debt securities - - (141)
Purchase of shares for share based (3,033) (2,291) (3,407)
schemes
Issue of ordinary shares 14 2,316 5,611 6,715
Dividends paid (9,107) (7,750) (13,449)
Net cash used in financing activities (9,824) (4,430) (10,282)
Net increase/(decrease) in cash and 19,766 78,010 (36,259)
cash equivalents
Cash and cash equivalents at 198,343 234,883 234,883
beginning of the period
Effect of exchange rate changes on (63) (151) (281)
cash and cash equivalents
Cash and cash equivalents at end of 14 218,046 312,742 198,343
the period
Consolidated interim statement of recognised income and expense
for the six months ended 30 June 2007
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2007 2006 2006
£'000 £'000 £'000
Profit after taxation 18,837 16,090 32,138
Exchange translation differences (77) (112) (240)
Revaluation of available for sale
investment securities:
- net gain from changes in fair value 221 3,390 4,202
- net profit on disposal transferred to - (1,897) (3,196)
income during the period
221 1,493 1,006
Actuarial gain on retirement benefit 5,016 4,996 5,468
obligation
Deferred tax on equity items:
- available for sale investment (66) (448) (302)
securities
- actuarial gains and losses (1,505) (1,499) (1,640)
- share based payments 517 952 362
(1,054) (995) (1,580)
Net income recognised directly in equity 4,106 5,382 4,654
Recognised income and expense for the 22,943 21,472 36,792
period attributable to equity holders of
the Company
Notes to the consolidated interim accounts
for the six months ended 30 June 2007
1. Principal accounting policies
The Group's consolidated accounts are prepared in accordance with International
Financial Reporting Standards as adopted by the EU (IFRS). These interim
accounts are presented in accordance with IAS 34 Interim Financial Reporting.
The interim accounts have been prepared on the basis of the accounting policies,
methods of computation and presentation set out in the Group's consolidated
accounts for the year ended 31 December 2006. The interim accounts should be
read in conjunction with the Group's audited accounts for the year ended 31
December 2006.
The information in this announcement does not comprise Statutory Accounts within
the meaning of section 240 of the Companies Act 1985. The Group's accounts for
the year ended 31 December 2006 have been reported on by the auditors and
delivered to the Registrar of Companies. The report of the auditors was
unqualified and did not draw attention to any matters by way of emphasis. They
also did not contain a statement under section 237(2) or (3) of the Companies
Act 1985.
2. Segmental information
(a) Business segments
For management purposes, the Group is currently organised into three operating
divisions: Investment Management and Banking, Unit Trusts and Trust and Tax
Services. These divisions are the basis on which the Group reports its primary
segment information. A reconciliation of total revenues to the Income Statement
is included in note 2(c).
30 June 2007 Investment
(unaudited) management Trust and
and Unit tax
banking trusts services Eliminations Total
£'000 £'000 £'000 £'000 £'000
External revenues 67,278 15,015 12,453 - 94,746
Revenues from other 822 - - (822) -
segments
68,100 15,015 12,453 (822) 94,746
Unallocated external -
revenues
Total revenues 94,746
Segment result 20,275 3,719 1,865 25,859
Unallocated items -
Profit before tax 25,859
Taxation (7,022)
Profit for the 18,837
period
Segment assets 907,034 23,882 56,971 987,887
Unallocated assets 20,792
Total assets 1,008,679
Segment liabilities 776,336 16,624 17,972 810,932
Unallocated 24,022
liabilities
Total liabilities 834,954
Other segment items:
Capital expenditure 5,287 152 461 5,900
Depreciation and 1,705 71 383 2,159
amortisation
Other non-cash 1,012 129 303 1,444
expenses
Provisions charged 210 - 728 938
in the period
Provisions utilised 2,383 - 42 2,425
in the period
2. Segmental information (continued)
30 June 2006 Investment
(unaudited) management Trust and
and Unit tax
banking trusts services Eliminations Total
£'000 £'000 £'000 £'000 £'000
External revenues 54,513 10,793 11,011 - 76,317
Revenues from other 707 - - (707) -
segments
55,220 10,793 11,011 (707) 76,317
Unallocated external 1,945
revenues
Total revenues 78,262
Segment result 16,578 2,549 1,255 20,382
Unallocated items 1,945
Profit before tax 22,327
Taxation (6,237)
Profit for the 16,090
period
Segment assets 856,204 16,977 55,373 928,554
Unallocated assets 30,417
Total assets 958,971
Segment liabilities 750,656 12,010 18,608 781,274
Unallocated 29,341
liabilities
Total liabilities 810,615
Other segment items:
Capital expenditure 6,091 87 439 6,617
Depreciation and 1,194 59 263 1,516
amortisation
Other non-cash 815 125 378 1,318
expenses
Provisions charged 594 - 72 666
in the period
Provisions utilised 176 - 372 548
in the period
Investment
management Trust and
and Unit tax
31 December 2006 banking trusts services Eliminations Total
(audited) £'000 £'000 £'000 £'000 £'000
External revenues 115,322 22,652 22,178 - 160,152
Revenues from other 1,463 - - (1,463) -
segments
116,785 22,652 22,178 (1,463) 160,152
Unallocated external 3,196
revenues
Total revenues 163,348
Segment result 34,119 5,059 2,346 41,524
Unallocated items 3,196
Profit before tax 44,720
Taxation (12,582)
Profit for the year 32,138
Segment assets 805,597 17,307 55,193 878,097
Unallocated assets 34,522
Total assets 912,619
Segment liabilities 689,943 12,654 18,048 720,645
Unallocated 32,825
liabilities
Total liabilities 753,470
Other segment items:
Capital expenditure 11,995 194 2,393 14,582
Depreciation and 2,737 143 538 3,418
amortisation
Other non-cash 1,481 208 714 2,403
expenses
Provisions charged 1,788 - 613 2,401
in the period
Provisions utilised 6,273 - 457 6,730
in the period
2. Segmental information (continued)
(b) Geographical segments
The Group's operations are located in the United Kingdom, Jersey, Switzerland,
the British Virgin Islands and Singapore. The following table provides an
analysis of the Group's revenues by geographical market, by origin of the
services:
Total revenues by geographical market
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2007 2006 2006
£'000 £'000 £'000
United Kingdom 82,051 67,016 140,666
Jersey 10,410 9,029 18,421
Rest of the world 2,285 2,217 4,261
94,746 78,262 163,348
The following is an analysis of the carrying amount of segment assets, and
additions to property, plant and equipment and intangible assets, analysed by
the geographical area in which the assets are located:
Assets allocated to business segments
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2007 2006 2006
£'000 £'000 £'000
United Kingdom 937,467 882,506 826,822
Jersey 31,733 26,056 31,448
Rest of the world 18,687 19,992 19,827
987,887 928,554 878,097
Additions to property, plant and equipment and intangible assets
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2007 2006 2006
£'000 £'000 £'000
United Kingdom 5,724 6,342 12,421
Jersey 168 252 2,122
Rest of the world 8 23 39
5,900 6,617 14,582
(c) Total revenues and operating income
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2007 2006 2006
£'000 £'000 £'000
Interest and similar income 21,883 15,881 37,335
Fee and commission income 71,304 58,846 120,039
Dividend income 19 93 117
Net trading income 812 917 1,285
Net income from sale of available - 1,897 3,196
for sale securities
Other operating income 728 628 1,376
Total revenues 94,746 78,262 163,348
Interest expense and similar (13,416) (8,783) (21,297)
charges
Fee and commission expense (5,687) (3,775) (8,365)
Operating income 75,643 65,704 133,686
3. Taxation
The current tax expense for the six months ended 30 June 2007 was calculated
based on the estimated average annual effective tax rate. The overall effective
tax rate for this period was 27.2% (30 June 2006: 27.9%; 31 December 2006:
28.13%).
The taxation charge for the period comprises:
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2007 2006 2006
£'000 £'000 £'000
United Kingdom taxation 4,954 3,007 10,078
Overseas taxation 611 539 806
Deferred taxation 1,457 2,691 1,698
7,022 6,237 12,582
The 2007 Finance Bill reduced the standard UK Corporation Tax rate from 30% to
28%, with effect from 1 April 2008. This has been considered in determining
deferred tax assets and liabilities.
4. Dividend
The interim dividend of 16.0p per share is payable on 10 October 2007 to
shareholders on the register at the close of business on 21 September 2007 (30
June 2006: 13.5p). The interim dividend has not been included as a liability in
this interim report. The 2006 final dividend of 21.5p per share was paid on 10
May 2007.
5. Earnings per share
Basic earnings per share has been calculated by dividing the profits
attributable to shareholders of £18,837,000 (30 June 2006: £16,090,000; 31
December 2006: £32,138,000) by the weighted average number of shares in issue
throughout the period of 42,422,960 (30 June 2006: 41,697,326; 31 December 2006:
41,946,781).
Diluted earnings per share is the basic earnings per share, adjusted for the
effect of contingently issuable shares under the Long Term Incentive Plan,
employee share options remaining capable of exercise and any dilutive shares to
be issued under the Share Incentive Plan, weighted for the relevant period (see
table below).
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2007 2006 2006
£'000 £'000 £'000
Weighted average number of 42,422,960 41,697,326 41,946,781
ordinary shares in issue during
the period - basic
Effect of ordinary share options 502,377 667,803 580,127
Effect of dilutive shares 70,109 152,580
issuable under the Share
Incentive Plan 197,480
Effect of contingently issuable 167,385 303,870 334,720
ordinary shares under the Long
Term Incentive Plan
Diluted ordinary shares 43,162,831 42,866,479 43,014,208
6. Business combinations
On 2 April 2007, the Group acquired Federal Trust (Singapore) Pte Limited for
cash consideration of £496,000 and contingent, deferred consideration of up to
£249,000. The acquired business' net assets at the acquisition date were as
follows:
Recognised Fair value Carrying
values adjustments amounts
£'000 £'000 £'000
Cash and cash equivalents 198 - 198
Other current assets 170 - 170
Property, plant and equipment 9 - 9
Client relationships 93 93 -
Current liabilities (293) - (293)
Net identifiable assets acquired 177 93 84
Goodwill on acquisition 568
Total net assets acquired 745
Included within the consolidated income statement for the six months ended 30
June 2007 is a loss before tax, including acquisition costs, of £115,000
relating to the acquired business. If the business had been acquired on 1
January 2007, consolidated profit before tax for the Group would have been
£25,890,000.
The goodwill arising on the acquisition is attributable to the anticipated
profitability of incorporating the business into the Group's operating model.
7. Property, plant and equipment
During the six months ended 30 June 2007, the Group acquired assets with a cost
of £2,673,000 (30 June 2006: £1,591,000; 31 December 2006: £4,170,000),
including assets acquired through business combinations of £9,000 (30 June 2006
and 31 December 2006: £91,000).
Assets with a net book value of £nil were disposed of in the six months ended 30
June 2007 (30 June 2006: £38,000; 31 December 2006: £64,000), resulting in a
gain on disposal of £25,000 (30 June 2006: £6,000; 31 December 2006: £49,000).
8. Deposits by banks
Included within deposits by banks is a term loan of £13,800,000 which is
repayable in nine, six-monthly instalments ending on 4 April 2011. Interest is
payable on the loan at 0.7% above the London Inter-Bank Offer Rate (30 June
2006: £12,000,000; 31 December 2006: £12,000,000).
9. Provisions for liabilities and charges
Deferred Litigation
contingent Client related &
consideration compensation other Total
£'000 £'000 £'000 £'000
At 1 January 2007 6,407 1,525 516 8,448
Exchange adjustments - - (3) (3)
Charged to the income 440 498 938
statement
Unused amount credited (11) (106) (117)
to the income
statement
Net charge to the 429 392 821
income statement (i)
Capitalised during the 2,643 2,643
period (ii)
Utilised/paid during (1,982) (404) (39) (2,425)
the period
7,068 1,550 866 9,484
Current 3,733 1,550 807 6,090
Non-current 3,335 - 59 3,394
7,068 1,550 866 9,484
(i) In addition to the net charge of £821,000 in the above table, a net credit
of £489,000 has been recognised in the income statement during the period in
relation to expected insurance recoveries - an overall charge of £332,000.
(ii) Amounts capitalised as intangible assets during the period include deferred
consideration of £249,000 in relation to the acquisition of Federal Trust
(Singapore) Pte Limited and £2,394,000 of deferred payments to Investment
Managers under earn-out schemes.
10. Retirement benefit obligations
The Group operates two pension schemes providing benefits based on final
pensionable pay for executive directors and staff employed by the Company. For
the purposes of calculating the pension benefit obligation, the following
financial assumptions have been used.
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2007 2006 2006
% p.a. % p.a. % p.a.
Rate of increase in salaries 4.45 4.15 4.15
Rate of increase of pensions in
payment:
- Laurence Keen Scheme *3.60 *2.90 *3.50
- Rathbones 1987 Scheme *3.10 *2.90 *2.90
Rate of increase of deferred 3.20 2.90 2.90
pensions
Discount rate 5.80 5.30 5.20
Inflation assumption 3.20 2.90 2.90
*5% for service prior to April 2001
Normal retirement age is 65 for members of the Laurence Keen Scheme and 60 for
members of the Rathbone 1987 Scheme. The assumed life expectations on
retirement, which are the same as at 30 June 2007, 30 June 2006 and 31 December
2006, were:
Aged 60 Aged 65
Males Females Males Females
Members retiring in 2007 24.7 27.6 20.0 22.9
Members retiring in 2027 25.9 28.7 21.1 23.9
The amount included in the balance sheet arising from the Group's obligations in
respect of the schemes is as follows:
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2007 2006 2006
£'000 £'000 £'000
Present value of defined benefit (63,455) (59,846) (64,405)
obligations
Fair value of scheme assets 61,355 48,843 53,642
(2,100) (11,003) (10,763)
On 29 March 2007, the Group made a special contribution of £3,500,000 (30 June
2006 and 31 December 2006: £3,000,000) into the Rathbone 1987 scheme as part of
its commitment to reduce significantly the scheme's funding deficit.
11. Share capital
The following movements in share capital occurred during the period:
Number
of Exercise Share Share Total
shares price capital premium consideration
issued Pence £'000 £'000 £'000
Issue of shares in
relation to:
- share incentive plan 55,693 1,174.0 3 651 654
- exercise of options 275,237 372.0-1,172.0 13 1,946 1,959
16 2,597 2,613
12. Reserves and retained earnings
Share Merger Available Translation Retained
premium reserve for sale reserve earnings
reserve
£'000 £'000 £'000 £'000 £'000
At 1 January 2006 17,487 49,428 3,585 11 57,843
Profit for the period 16,090
Foreign currency translation (112)
Dividends paid (7,750)
Shares issued 5,783
Actuarial gains and losses 4,996
Revaluation of investment 3,390
securities
Net gains transferred to net (1,897)
profit on disposal of
available for sale investment
securities
Share based payments
- value of employee services 897
- cost of shares issued/ (2,506)
purchased
Tax on equity items (448) (547)
At 30 June 2006 23,270 49,428 4,630 (101) 69,023
Profit for the period 16,048
Foreign currency translation (128)
Dividends paid (5,699)
Shares issued 1,248
Actuarial gains and losses 472
Revaluation of investment 812
securities
Net gains transferred to net (1,299)
profit on disposal of
available for sale investment
securities
Share based payments
- value of employee services 1,183
- cost of shares issued/ (1,267)
purchased
Tax on equity items 146 (731)
At 1 January 2007 24,518 49,428 4,289 (229) 79,029
Profit for the period 18,837
Foreign currency translation (77)
Dividends paid (9,107)
Shares issued 2,597
Actuarial gains and losses 5,016
Revaluation of investment 221
securities
Share based payments
- value of employee services 1,458
- cost of shares issued/ (3,331)
purchased
Tax on equity items (66) (988)
At 30 June 2007 27,115 49,428 4,444 (306) 90,914
Other reserves reported in the Balance Sheet comprise the merger reserve and the
available for sale reserve. Retained earnings reported in the Balance Sheet
include the translation reserve.
13. Contingent liabilities
Since the year end, the Group has completed the review of its Rathbone Self
Invested Personal Pension business. At 30 June 2007 provision has been made,
where judged necessary, for cases subject to the review.
14. Consolidated cash flow statement
For the purposes of the cash flow statement, cash and cash equivalents comprise
the following balances with less than three months maturity from the date of
acquisition:
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2007 2006 2006
£'000 £'000 £'000
Cash and balances at central 11 694 5
banks
Loans and advances to banks 183,035 164,048 108,338
Investment securities 35,000 148,000 90,000
218,046 312,742 198,343
Cash flows arising from issue of ordinary shares comprise:
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2007 2006 2006
£'000 £'000 £'000
Cash inflow - share capital 16 43 51
Cash inflow - share premium 2,597 5,783 7,031
Cash outflow - financing of shares (297) (215) (367)
in relation to share based schemes
2,316 5,611 6,715
15. Related party transactions
Certain directors of Rathbone Trust Company Jersey Limited are also partners of
Nigel Harris & Partners. During the period, £255,138 (30 June 2006: £296,000; 31
December 2006: £562,548) was paid to Nigel Harris & Partners for services
supplied to Rathbone Trust Company Jersey Limited. At 30 June 2007, £272,477
(30 June 2006: £251,000; 31 December 2006: £253,322) was due from Nigel Harris &
Partners.
Certain directors of Rathbone Trust Company Jersey Limited are also partners of
Galsworthy & Stones. During the period, £273,941 (30 June 2006: £178,000; 31
December 2006: £351,946) was received from Galsworthy & Stones for services
supplied by Rathbone Trust Company Jersey Limited. At 30 June 2007, £407,550 (30
June 2006: £275,000; 31 December 2006: £414,366) was due from Galsworthy &
Stones.
At 30 June 2007, key management and their close family members had outstanding
deposits of £339,000 (30 June 2006: £607,000; 31 December 2006: £843,000) and
outstanding loans of £175,000 (30 June 2006: £77,000; 31 December 2006:
£178,000), which were made on normal business terms. A number of the Company's
directors and their close family members make use of the services provided by
companies within the Group. Charges for such services are made at various staff
rates.
Rathbone Trust Company Jersey Limited is the tenant of a property in St Helier,
Jersey, the freehold of which is owned by a number of the directors of the
company. Annual rental of £150,000 (30 June 2006 and 31 December 2006: £150,000)
is payable under the lease.
All amounts outstanding with related parties are unsecured and will be settled
in cash. No guarantees have been given or received. No provisions have been made
for doubtful debts in respect of the amounts owed by related parties.
Independent review report to Rathbone Brothers Plc
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30 June 2007 which comprises the consolidated interim
income statement, consolidated interim balance sheet, consolidated interim cash
flow statement, consolidated interim statement of recognised income and expense
and the notes to the consolidated interim accounts. We have read the other
information contained in the interim report and considered whether it contains
any apparent misstatements or material inconsistencies with the financial
information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The Listing
Rules of the Financial Services Authority require that the accounting policies
and presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes, and
the reasons for them, are disclosed.
This interim report has been prepared in accordance with International
Accounting Standard 34, 'Interim financial reporting'.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of Group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the disclosed accounting policies have
been applied. A review excludes audit procedures such as tests of controls and
verification of assets, liabilities and transactions. It is substantially less
in scope than an audit and therefore provides a lower level of assurance.
Accordingly we do not express an audit opinion on the financial information.
This report, including the conclusion, has been prepared for and only for the
Company for the purpose of the Listing Rules of the Financial Services Authority
and for no other purpose. We do not, in producing this report, accept or assume
responsibility for any other purpose or to any other person to whom this report
is shown or into whose hands it may come save where expressly agreed by our
prior consent in writing.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2007.
PricewaterhouseCoopers LLP
London
25 July 2007
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