Interim Results

Rensburg Sheppards plc 14 November 2007 14 November 2007 Rensburg Sheppards plc ('Rensburg Sheppards' or 'the company') Half-Yearly Financial Report Rensburg Sheppards, the investment management group, today announces its half-yearly results for the six months ended 30 September 2007 Key points: • Profit before tax of £15.0 million (2006: £10.2 million). • Adjusted* profit before tax of £20.1 million (2006: £15.3 million). • Basic earnings per share of 23.9p (2006: 14.4p). • Adjusted* basic earnings per share of 31.7p (2006: 24.2p). • Interim dividend of 8.5p per ordinary share (2006: 7.5p) • Group funds under management at 30 September 2007 of £14.41 billion (2006: £13.28 billion). * Before amortisation of the client relationships intangible asset and share- based charges relating to the Employee Benefit Trust ('EBT'). These items amount to a net charge before tax of £5.1 million (2006: £5.1 million) and a net charge after tax of £3.4 million (2006: £4.3 million). Steve Elliott, Chief Executive of Rensburg Sheppards, commented: "I am pleased to report significant progress across the business. Our strong position in the growing wealth management market means that despite the current market volatility, I believe the group is well positioned for the future" An analysts meeting will be held today at 9.30 am at the offices of Hudson Sandler, 29 Cloth Fair, London, EC1A 7NN. For further information, please contact: Steve Elliott, Chief Executive Tel: 020 7597 1234 Rensburg Sheppards plc Nick Lyon / James White Hudson Sandler Tel: 020 7796 4133 Interim Management Report Financial results and dividend Over the six months ended 30 September 2007 the UK financial markets experienced quite varying conditions. During the first three months, the markets continued to rise. There then followed a period of quite challenging conditions, with marked volatility in the markets brought about by the 'sub-prime' crisis, which originated in the United States. Given such an operating environment, it is pleasing to be able to report a significant improvement in the group's financial performance for the six months ended 30 September 2007. From revenue (net of fees and commissions payable) of £61.4 million (2006: £53.6 million), the group's profit before tax was £15.0 million (2006: £10.2 million). After removing charges totalling £5.1 million (2006: £5.1 million) in respect of the amortisation of the client relationships intangible asset and share-based charges relating to the Employee Benefit Trust associated with the acquisition of Carr Sheppards Crosthwaite ('CSC'), the resulting adjusted profit before tax increased to £20.1 million (2006: £15.3 million). It is the directors' opinion that this adjusted measure of profit before tax and that of earnings given below represent better measures of the group's underlying financial performance. Basic earnings per share were 23.9p (2006: 14.4p) and on the basis of adjusting for the items detailed in the above paragraph, together with the associated tax consequences of these adjustments, the adjusted basic earnings per share were 31.7p (2006: 24.2p). The positive effect on basic (unadjusted) earnings per share resulting from the reduction in the rate of corporation tax, effective from 1 April 2008, is set out in note 7 of the condensed financial statements. The directors have declared an interim dividend of 8.5p (2006: 7.5p) per ordinary share payable on 1 February 2008 to all shareholders on the register at the close of business on 4 January 2008. As previously reported, on 8 May 2007, £10 million of the group's total subordinated debt of £60 million was repaid ahead of schedule. Of the group's total debt now outstanding of £50 million, £45 million is at a fixed rate of interest of 7.155% per annum. Rensburg Sheppards Investment Management ('RSIM') Discretionary funds under management were £8.79 billion (2006: £7.92 billion) an increase of 11.0% over the year; non-discretionary funds under management were £3.85 billion (2006: £3.98 billion) a decrease of 3.3%. This gave total funds under management at 30 September 2007 of £12.64 billion (2006: £11.90 billion), an increase over the year of 6.2% compared with the increase of 5.7% over the corresponding period in the FTSE/APCIMS Private Investors Balanced Index. Of these total funds, 69.5% are operated on a discretionary basis, a welcome increase over the prior year comparative of 66.6%. For the half-year 73.4% of RSIM's net revenue was recurring in nature, this compares favourably with the 70.7% achieved for the six months ended 30 September 2006. Rensburg Fund Management ('RFM') RFM increased the value of its retail unit trust based funds under management by 30.1% to £1.34 billion (2006: £1.03 billion). The total value of the two segregated mandates that are investment managed by RFM have increased to £432 million (2006: £348 million), bringing RFM's total funds under management at 30 September 2007 to £1.77 billion (2006: £1.38 billion). Group funds under management The group's total funds under management at 30 September 2007 were £14.41 billion (30 September 2006: £13.28 billion) representing an increase of 8.5% over the year compared with the increase of 5.7% in the FTSE/APCIMS Private Investors Balanced Index over this time. People On 16 October 2007, shortly following the end of the financial period now being reported on, the board announced a number of changes to its membership, all taking immediate effect. David Bulteel and Jon Seal were appointed as executive directors. David and Jon are both well established divisional investment directors within RSIM and are in day to day charge of the London and Liverpool offices respectively. Ian Maxwell Scott, who was originally due to retire from the board on reaching 62 years of age in December 2007, has agreed to continue as an executive director. Finally, Nick Lane Fox who joined the board in May 2002 resigned from the board to pursue business and other personal interests. Most importantly, we would like to record the board's appreciation to all of the group's staff for their considerable efforts over the first half of this financial year, not only in delivering the increased revenues and profits now being reported, but also for ensuring that the group is ready to meet its obligations arising from the significant regulatory changes that are taking place. Outlook Since 30 September 2007, the UK financial markets have remained volatile and such a backdrop is the principal risk and uncertainty faced by the group in the second half of the financial year. Whilst recognising that this uncertainty does not assist us in the short-term, we believe our efforts in establishing the strong platforms now in place from which the development of the group's businesses can be led, combined with the growing longer-term demand for the services and products that the group offers, leave us well positioned for the future. C.G. Clarke S.M. Elliott Chairman Chief Executive 13 November 2007 Consolidated income statement for the six months ended 30 September 2007 2007 2006 2007 Six months Six months Year ended ended ended 30 September 30 September 31 March Note £'000 £'000 £'000 Revenue 67,415 58,050 122,297 Fees and commissions payable (5,970) (4,456) (9,360) Net revenue 2 61,445 53,594 112,937 Share-based payments - EBT 3 (2,328) (2,328) (4,653) Amortisation of intangible assets - client relationships (2,802) (2,802) (5,603) Other operating expenses (40,873) (37,348) (75,225) Operating expenses (46,003) (42,478) (85,481) Operating profit 15,442 11,116 27,456 Finance income 1,466 1,285 2,694 Finance expenses 4 (1,903) (2,236) (4,483) Profit before tax 15,005 10,165 25,667 Taxation 5 (4,556) (3,897) (9,289) Profit for the period attributable to the equity holders of 10,449 6,268 16,378 the company Earnings per share 7 Basic 23.9p 14.4p 37.5p Diluted 23.8p 14.3p 37.4p Consolidated balance sheet at 30 September 2007 2007 2006 2007 30 September 30 September 31 March Note £'000 £'000 £'000 Assets Non-current assets Intangible assets 8 184,767 190,668 187,601 Property, plant and equipment 9 5,365 4,569 5,422 Available-for-sale investments 2,896 2,349 2,562 Deferred tax assets 1,339 1,977 1,280 194,367 199,563 196,865 Current assets Trade and other receivables 124,349 123,200 130,452 Cash and cash equivalents 51,684 42,047 49,775 176,033 165,247 180,227 Total assets 370,400 364,810 377,092 Liabilities Current liabilities Trade and other payables (120,619) (118,745) (124,359) Loan notes - (379) (72) Provisions 10 (115) - (641) Current tax liabilities (6,434) (3,388) (4,672) (127,168) (122,512) (129,744) Non-current liabilities Accruals and deferred income (1,477) - (798) Subordinated loan 11 (50,000) (60,000) (60,000) Provisions 10 (508) (3,281) (517) Deferred tax liabilities (14,566) (17,125) (16,341) (66,551) (80,406) (77,656) Total liabilities (193,719) (202,918) (207,400) Net assets 176,681 161,892 169,692 Equity attributable to the equity holders of the company Share capital 12,13 4,822 4,822 4,822 Share premium 13 10,610 10,603 10,603 Capital redemption reserve 13 100 100 100 Available-for-sale reserve 13 1,509 1,085 1,234 Revaluation reserve 13 980 966 959 Other reserves 13 130,601 130,601 130,601 Retained earnings 13 28,059 13,715 21,373 Total equity 176,681 161,892 169,692 Consolidated cash flow statement for the six months ended 30 September 2007 2007 2006 2007 Six months Six months Year ended ended ended 30 September 30 September 31 March £'000 £'000 £'000 Cash flows from operating activities Profit before taxation 15,005 10,165 25,667 Adjustments for: - Amortisation of intangible assets 3,107 3,103 6,219 - Finance expenses 1,903 2,236 4,483 - Finance income (1,466) (1,285) (2,694) - Depreciation 433 325 672 Share-based payments 2,788 2,359 4,815 Loss on disposal of property, plant & equipment and - - 102 intangible assets Decrease in trade and other receivables 6,167 44,050 36,901 Decrease in trade payables and provisions (3,327) (59,435) (55,116) Cash generated from operations 24,610 1,518 21,049 Interest received 1,346 1,292 2,318 Dividends received 56 - 280 Interest paid (12) (98) (221) Taxation paid (4,669) (3,378) (7,446) Net cash inflow/(outflow) from operating activities 21,331 (666) 15,980 Cash flows from investing activities Purchase of property, plant and equipment (376) (119) (1,407) Purchase of intangible assets - software (273) (160) (223) Net cash outflow from investing activities (649) (279) (1,630) Cash flows from financing activities Dividends paid to shareholders (6,548) (5,783) (9,073) Proceeds from issue of ordinary share capital 7 1,389 1,390 Costs associated with issue of shares - - (1) Purchase of own shares - - (1,815) Redemption of loan notes (72) (461) (768) Repayment of subordinated loan (10,000) - - Interest paid on subordinated loan (2,160) (2,111) (4,266) Net cash outflow from financing activities (18,773) (6,966) (14,533) Net increase/(decrease) in cash and cash equivalents 1,909 (7,911) (183) Cash and cash equivalents at start of period 49,775 49,958 49,958 Cash and cash equivalents at end of period 51,684 42,047 49,775 Consolidated statement of recognised income and expense for the six months ended 30 September 2007 2007 2006 2007 Six months Six months Year ended ended ended 30 September 30 September 31 March £'000 £'000 £'000 Revaluation of available-for-sale investments -gain arising from changes in fair value 334 161 374 Deferred tax on revaluation of available-for-sale investments -on gain arising from changes in fair value (100) (48) (112) -movement in deferred tax arising from change of tax rate 41 - - Deferred tax on revalued property -movement in deferred tax arising from change of tax rate 27 - - Net income recognised directly in equity 302 113 262 Profit for the period 10,449 6,268 16,378 Total recognised income and expense for the period 10,751 6,381 16,640 Notes to the condensed financial statements 1. Basis of preparation and statement of compliance Rensburg Sheppards plc ('the company') is a public company incorporated in the United Kingdom. The shares of the company are listed on the London Stock Exchange. The consolidated income statement, consolidated balance sheet, consolidated statement of recognised income and expense, consolidated cash flow statement and the related notes represent condensed consolidated interim financial statements of the company and comprise those of the company and its subsidiaries (together referred to as 'the group'). The condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting as adopted by the EU. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the group for the year ended 31 March 2007. The accounting policies applied by the group in these condensed consolidated interim financial statements are the same as those applied by the group in its consolidated financial statements for the year ended 31 March 2007. The financial information contained in these condensed consolidated interim financial statements is unaudited and does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The comparative figures for the year ended 31 March 2007 are not the company's statutory accounts for that year. Those accounts have been reported on by the auditor of the company and delivered to the Registrar of Companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its report and (iii) did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. 2. Revenue and segmental information For management purposes, the group is organised into two business segments, being Investment Management and Fund Management. These segments represent the primary reporting segments of the group. Six months ended 30 September 2007 Investment Fund Management Management Eliminations Group £'000 £'000 £'000 £'000 Revenue External 55,870 11,545 - 67,415 Inter-segment 336 - (336) - 56,206 11,545 (336) 67,415 Fees and commissions payable (2,132) (4,174) 336 (5,970) Segmental net revenue 54,074 7,371 - 61,445 Share-based payments - EBT (2,328) - - (2,328) Amortisation of intangible assets - client (2,802) - - (2,802) relationships Other operating expenses (36,394) (4,479) - (40,873) Segmental expenses (41,524) (4,479) - (46,003) Segmental operating profit 12,550 2,892 - 15,442 Finance income 1,177 289 - 1,466 Finance expenses (1,903) - - (1,903) Profit before tax 11,824 3,181 - 15,005 Segmental net revenue is derived from: Investment Management services 54,074 - - 54,074 Fund Management services - 6,277 - 6,277 Profit on sale of units of unit trusts - 1,094 - 1,094 54,074 7,371 - 61,445 Six months ended 30 September 2006 Investment Fund Management Management Eliminations Group £'000 £'000 £'000 £'000 Revenue External 49,831 8,219 - 58,050 Inter-segment 272 - (272) - 50,103 8,219 (272) 58,050 Fees and commissions payable (1,907) (2,821) 272 (4,456) Segmental net revenue 48,196 5,398 - 53,594 Share-based payments - EBT (2,328) - - (2,328) Amortisation of intangible assets - client (2,802) - - (2,802) relationships Other operating expenses (33,971) (3,377) - (37,348) Segmental expenses (39,101) (3,377) - (42,478) Segmental operating profit 9,095 2,021 - 11,116 Finance income 1,102 183 - 1,285 Finance expenses (2,236) - - (2,236) Profit before tax 7,961 2,204 - 10,165 Segmental net revenue is derived from: Investment Management services 48,196 - - 48,196 Fund Management services - 4,518 - 4,518 Profit on sale of units of unit trusts - 880 - 880 48,196 5,398 - 53,594 Year ended 31 March 2007 Investment Fund Management Management Eliminations Group £'000 £'000 £'000 £'000 Revenue External 104,602 17,695 - 122,297 Inter-segment 598 - (598) - 105,200 17,695 (598) 122,297 Fees and commissions payable (3,783) (6,175) 598 (9,360) Segmental net revenue 101,417 11,520 - 112,937 Share-based payments - EBT (4,653) - - (4,653) Amortisation of intangible assets - client relationships (5,603) - - (5,603) Other operating expenses (68,206) (7,019) - (75,225) Segmental expenses (78,462) (7,019) - (85,481) Segmental operating profit 22,955 4,501 - 27,456 Finance income 2,284 410 - 2,694 Finance expenses (4,483) - - (4,483) Profit before tax 20,756 4,911 - 25,667 Segmental net revenue is derived from: Investment Management services 101,417 - - 101,417 Fund Management services - 9,822 - 9,822 Profit on sale of units of unit trusts - 1,698 - 1,698 101,417 11,520 - 112,937 3. Share-based payments The movements during the period in the number of shares in respect of which awards are outstanding are set out below: Employee SAYE 2007 Employee Benefit 2006 Share Plan Trust Outstanding at 1 April 2007 457,629 202,350 2,548,000 Forfeited (14,614) - - Exercised (1,021) - - Outstanding at 30 September 2007 441,994 202,350 2,548,000 4. Finance expenses Finance expenses include interest payable of £1,892,000 relating to the subordinated loan (September 2006: £2,142,000; March 2007: £4,305,000). 5. Taxation The tax expense for the six months ended 30 September 2007 has been calculated using the estimated annual effective rate of tax for the year ending 31 March 2008. The tax charge recognised in the income statement comprises: 2007 2006 2007 Six months Six months Year ended ended ended 30 September 30 September 31 March £'000 £'000 £'000 United Kingdom corporation tax 6,431 4,574 10,038 Deferred tax (1,875) (677) (749) 4,556 3,897 9,289 The movement on deferred tax for the six months ended 30 September 2007 includes a credit of £852,000 (September 2006: nil; March 2007: nil) which has arisen as a result of the change in the rate of corporation tax from 30% to 28%, effective from 1 April 2008. 6. Dividend The interim dividend declared for the six months ended 30 September 2007 of 8.5 pence per share is payable on 1 February 2008 to shareholders on the register as at the close of business on 4 January 2008. In accordance with the group's accounting policies and the requirements of IAS 10 Events after the balance sheet date this dividend has not been recognised as a liability at 30 September 2007. 7. Earnings per share Basic earnings per share is calculated with reference to earnings for shareholders of £10,449,000 (September 2006: £6,268,000; March 2007: £16,378,000) and the weighted average number of shares in issue during the period of 43,650,486 (September 2006: 43,632,112; March 2007: 43,723,007). Adjusted earnings per share before amortisation of the client relationships intangible asset and share-based payments relating to the EBT is calculated with reference to earnings for shareholders of £13,841,000 (September 2006: £10,557,000; March 2007: £24,953,000). Diluted earnings per share is the basic earnings per share, adjusted for the effect of the conversion into fully paid shares of the weighted average number of all employee share options outstanding during the period. The number of additional shares used for the diluted calculation is 267,686 shares (September 2006: 181,929; March 2007: 112,337). The directors believe that the provision of additional earnings per share figures, in particular before amortisation of the client relationships intangible asset and share-based payments relating to the EBT better represent underlying business performance. The effect of these adjustments on earnings and basic earnings per share is as follows: Six months ended Six months ended Year ended 30 September 2007 30 September 2006 31 March 2007 Earnings Earnings Earnings Earnings Earnings Earnings per per per share share share £'000 Pence £'000 Pence £'000 Pence Unadjusted earnings and EPS 10,449 23.9 6,268 14.4 16,378 37.5 Share-based payments - EBT 2,328 5.3 2,328 5.3 4,653 10.6 Amortisation of intangible assets 2,802 6.4 2,802 6.4 5,603 12.8 - client relationships Tax arising on adjusted items at (841) (1.9) (841) (1.9) (1,681) (3.8) 30% Effect on tax arising on adjusted (897) (2.0) - - - - items following change of rate of taxation Adjusted earnings and EPS 13,841 31.7 10,557 24.2 24,953 57.1 As set out in note 5 above, the tax expense for the six months ended 30 September 2007 has reduced by £852,000 as a result the movement in deferred tax relating to the forthcoming change in the rate of corporation tax from 30% to 28%. This has contributed 2.0 pence per share to the unadjusted basic earnings per share of 23.9 pence per share for the six months ended 30 September 2007. 8. Intangible assets The carrying values of intangible assets are as follows: 2007 2006 2007 30 September 30 September 31 March £'000 £'000 £'000 Goodwill 136,385 136,385 136,385 Client relationships 47,667 53,270 50,469 Software 715 1,013 747 184,767 190,668 187,601 9. Property, plant and equipment During the six months ended 30 September 2007, the group acquired assets with a cost of £376,000 (September 2006: £119,000; March 2007: £1,407,000). No assets were disposed of during the six months ended 30 September 2007 (September 2006: nil; March 2007: assets with a carrying value of £88,000 were disposed of, giving rise to a loss on disposal of £88,000, which was recognised within other operating expenses). 10. Provisions Reorganisation Onerous Property costs leases dilapidations Total £'000 £'000 £'000 £'000 At 1 April 2007 Current liabilities 584 57 - 641 Non-current liabilities - 292 225 517 584 349 225 1,158 Charged to the income statement - - 38 38 Utilised during the period (552) (21) - (573) At 30 September 2007 32 328 263 623 The balances at 30 September 2007 are categorised as follows: Reorganisation Onerous Property costs Leases dilapidations Total £'000 £'000 £'000 £'000 Current liabilities 32 80 3 115 Non-current liabilities - 248 260 508 32 328 263 623 11. Subordinated loan On 8 May 2007, £10 million of the subordinated loan was repaid ahead of schedule. This repayment is in respect of the £15 million floating rate element of the loan and was originally scheduled for repayment in equal annual instalments commencing on 6 May 2008. No penalty arose from the making of this prepayment. Under the terms of the loan agreement, this prepayment is to be applied in chronological order against the future scheduled repayment obligations of the floating rate portion of the loan. Interest payable on the loan is calculated on a daily basis, based on the balance of the loan outstanding; therefore, no further interest expense will be incurred in respect of the £10 million that has been repaid after the repayment date of 8 May 2007. The carrying value of the loan of £50 million at 30 September 2007 comprises £45 million on which a fixed rate of interest is payable of 7.155% per annum and £5 million on which a floating rate of interest is payable of 2.25% above LIBOR per annum. 12. Share capital During the period, the company issued 1,021 ordinary shares of 10 90/91 pence each following the exercise of options relating to the group's Savings-Related Share Option Scheme ('SAYE'). The nominal value of the shares issued was £112 and the total consideration received was £6,739. 13. Reconciliation of changes in shareholders' equity Capital Available Reval- Share Share redemption -for-sale uation Other Retained Total capital premium reserve reserve reserve reserves earnings equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 31 March 2006 4,760 9,276 100 972 972 130,601 11,103 157,784 Profit after taxation - - - - - - 6,268 6,268 Dividends - - - - - - (5,783) (5,783) Issue of shares 62 1,328 - - - - - 1,390 Share issue costs - (1) - - - - - (1) Share-based payments - - - - - - 2,359 2,359 Deferred tax on share-based - - - - - - (238) (238) payments Gain arising on - - - 161 - - - 161 available-for-sale investments Deferred tax on - - - (48) - - - (48) available-for-sale investments Depreciation on revalued - - - - (6) - 6 - property At 30 September 2006 4,822 10,603 100 1,085 966 130,601 13,715 161,892 Profit after taxation - - - - - - 10,110 10,110 Dividends - - - - - - (3,290) (3,290) Purchase of own shares by - - - - - - (1,815) (1,815) Employee Share Ownership Trust Share-based payments - - - - - - 2,456 2,456 Tax relief on share-based - - - - - - 714 714 payments Deferred tax on share-based - - - - - - (524) (524) payments Gain arising on - - - 213 - - - 213 available-for-sale investments Deferred tax on - - - (64) - - - (64) available-for-sale investments Depreciation on revalued - - - - (7) - 7 - property At 31 March 2007 4,822 10,603 100 1,234 959 130,601 21,373 169,692 Profit after taxation - - - - - - 10,449 10,449 Dividends - - - - - - (6,548) (6,548) Issue of shares - 7 - - - - - 7 Share-based payments - - - - - - 2,788 2,788 Deferred tax on share-based - - - - - - (13) (13) payments Gain arising on - - - 334 - - - 334 available-for-sale investments Deferred tax on - - - (100) - - - (100) available-for-sale investments Movement in deferred tax - - - 41 27 - 4 72 arising from change of tax rate Depreciation on revalued - - - - (6) - 6 - property At 30 September 2007 4,822 10,610 100 1,509 980 130,601 28,059 176,681 14. Related party transactions The directors of the company represent the key management of both the group and the company and the amounts paid in respect of their services for the latest full financial year were set out in the Report & Financial Statements for the year ended 31 March 2007. The directors of the company include B. Kantor and S. Koseff, both of whom are also directors of Investec plc. Investec 1 Limited is an associated company of the group. The parent company of Investec 1 Limited is Investec plc. The transactions set out below have taken place with Investec plc or its subsidiary companies ('the Investec group') during the period. The group has a subordinated loan facility with the Investec group. The facility was entered into on 6 May 2005 and had an original value of £60 million. £10 million of the loan was repaid during the period and details of this repayment are set out in note 11 above. The interest charged on the loan during the period amounted to £1,892,000 (September 2006: £2,142,000; March 2007: £4,305,000) and interest of £1,450,000 was payable at 30 September 2007 (September 2006: £1,710,000; March 2007: £1,718,000). The group leases premises at 2 Gresham Street London from the Investec group. The amount payable during the period under the terms of the lease in respect of rent and service charges amounted to £558,000 (September 2006: £668,000; March 2007: £1,253,000) and no amounts were outstanding at 30 September 2007 (September 2006: nil; March 2007: £321,000). The Investec group provides the group with certain infrastructure services under the terms of a three year agreement, which expires on 6 May 2008. The amount payable during the period under the terms of the agreement amounted to £394,000 (September 2006: £338,000; March 2007: £656,000) and no amounts were outstanding at 30 September 2007 (September 2006: £64,000; March 2007: £127,000). The Investec group has provided internal audit services to the group during the period. The amount payable by the group during the period in respect of these services amounted to £148,000 (September 2006: £51,000; March 2007: £138,000) and no amounts were outstanding at 30 September 2007 (September 2006: nil; March 2007: nil). The group contributes to defined contribution pension schemes on behalf of its employees and operates a number of share-based payment arrangements for the purposes of employee remuneration; details of these schemes were set out in the latest full financial statements for the year ended 31 March 2007. Directors, and all employees of the group, are eligible to receive investment management services from the group at discounted staff rates. Responsibility statement of the directors in respect of the half-yearly financial report We confirm that to the best of our knowledge: • the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU; • the interim management report includes a fair review of the information required by: (a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and (b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so. By order of the board P.M. Watts Company Secretary 13 November 2007 Independent Review Report by KPMG Audit Plc to Rensburg Sheppards plc Introduction We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2007 which comprises the consolidated income statement, consolidated balance sheet, consolidated statement of recognised income and expense, consolidated cash flow statement and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ('the DTR') of the UK's Financial Services Authority (' the UK FSA'). Our review has been undertaken so that we might state to the company those matters we are required to state to it in this 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 for our review work, for this report, or for the conclusions we have reached. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FSA. As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. Our responsibility Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. Scope of review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2007 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA. KPMG Audit Plc Chartered Accountants Leeds 13 November 2007 This information is provided by RNS The company news service from the London Stock Exchange

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