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Rensburg Sheppards (RBG)

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Wednesday 13 June, 2007

Rensburg Sheppards

Final Results

Rensburg Sheppards plc
13 June 2007

                                                                    13 June 2007

                             Rensburg Sheppards plc
                     ('Rensburg Sheppards' or 'the Company')
                              Preliminary Results



Rensburg Sheppards, the investment management group, today announces its
preliminary results for the year ended 31 March 2007, its first full year
results under International Financial Reporting Standards



Key Points:


  • Profit before tax of £25.7 million (16 months ended 31 March 2006: £13.0
    million)

  • Adjusted* profit before tax of £35.9 million (16 months ended 31 March
    2006: £29.1 million)

  • Basic earnings per share of 37.5p (16 months ended 31 March 2006: 20.9p)

  • Adjusted* basic earnings per share of 57.1p (16 months ended 31 March
    2006: 55.1p)

  • Proposed final dividend of 15p per ordinary share, giving a total dividend
    for the year of 22.5p

  • In respect of the acquisition of Carr Sheppards Crosthwaite, the
    achievement by 31 March 2007 of future annualised pre-tax cost synergies of
    approximately £5.5 million per annum

  • Group funds under management at 31 March 2007 of £14.40 billion (31 March
    2006: £ 13.13 billion), an increase of 9.7%



* Before amortisation of the client relationships intangible asset, share-based
payments relating to the Employee Benefit Trust ('EBT'), reorganisation costs
and profit on disposal of available-for-sale investments. These items amount to
a net charge before tax of £10.2 million (16 months ended 31 March 2006:  £16.1
million) and a net charge after tax of £8.6 million (16 months ended 31 March
2006: £12.5 million).


Steve Elliott, Chief Executive of Rensburg Sheppards, commented:

"These strong figures are the culmination of an important year for Rensburg
Sheppards.  Whilst we have benefited from favourable market conditions, it is
important to recognise the contribution from the successfully completed
integration of Carr Sheppards Crosthwaite, the capital investments we have made
in strengthening our infrastructure and the hard work from all of our employees.

The combination of the current macro-economic backdrop, the strength of the
enlarged Rensburg Sheppards group and the potential sustainable growth
opportunities which we have identified leads me to look to the future with
confidence."


An analysts meeting will be held today at 10.00am 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                                    Tel:  020 7796 4133

Hudson Sandler




Chairman's statement

I am delighted that we are reporting on an excellent set of results at the end
of our first full year of trading following the acquisition of Carr Sheppards
Crosthwaite ('CSC'). We knew that an acquisition of such significance would be a
considerable challenge, but there was great confidence throughout the Company
that a successful integration would be achieved. It has been, and the result is
that the group has achieved record levels of profits and earnings.

We have of course had the benefit of a following wind in that world stock
markets have moved higher, but pleasingly our funds under management have grown
faster than the comparable indices. It is therefore entirely appropriate that I
draw attention early in this report to the sheer hard work and continued
commitment shown by every employee. They have generated the profits now being
reported upon, and I believe all shareholders will share my appreciation of
their efforts.


Results and dividend

For the year ended 31 March 2007, reported profit before tax was £25.7 million
and basic earnings per share were 37.5p. Adjusting for amortisation of the
client relationships intangible asset and share-based payments relating to the
Employee Benefit Trust ('EBT'), together with their associated tax consequences,
gives underlying profit before tax of £35.9 million and underlying basic
earnings per share of 57.1p.

Unfortunately, for this year, it is difficult to make meaningful comparisons
with the figures for the prior reporting period. In part this is because we
previously had an extended period of 16 months following the change in the
Company's financial year end and furthermore those results only included those
derived from CSC subsequent to its acquisition by Rensburg Sheppards part-way
through that period. I can however make the general observation that we have
made considerable progress and all parts of the business have shown satisfactory
growth.

The directors are now recommending a final dividend of 15p per ordinary share
payable on 10 August 2007 to all shareholders on the register at the close of
business on 20 July 2007.  When added to the interim dividend of 7.5p per
ordinary share, this brings the total dividends in respect of the year to 22.5p
per ordinary share.


Board


Right at the end of the year under review we saw significant change to the
board. Two executive directors, Mike Burns and Nick Bagshawe, retired on 31
March 2007 and I should like to pay tribute to them both for their great efforts
on the group's behalf.

Mike Burns was chief executive for the past ten years and it would be very
difficult to exaggerate the contribution he made during this time. Under Mike's
leadership what is now Rensburg Sheppards has been created from what was
initially a stockbroking and investment management business of quite modest
size. Whilst this period of exciting growth has always been a team effort, it is
clear who was the chief architect and I thank him warmly for all that he has
done.

Nick Bagshawe also contributed greatly as an executive director following the
merger with CSC. We will miss his wise counsel around the boardroom table and I
know his clients recognise the same wisdom he has used to good effect on their
behalf during a long and successful City career. We wish him and Mike well in
their retirements.

We are very fortunate that in Steve Elliott, the managing director of the group
since the CSC acquisition and previously chief executive of CSC, we have an
ideal replacement for Mike Burns and he therefore took up the position of chief
executive on 1 April 2007. I wish Steve every success in his new role.


Outlook

With the major task of integrating CSC completed, the group is now well placed
to concentrate on growing its revenue and earnings, aided, I hope, by a
continuation of the favourable operating environment that we have enjoyed during
the past few years.



C.G. Clarke
Chairman
12 June 2007




Chief executive's report

I would like to open this, my first report since taking over as chief executive
on 1 April 2007, by acknowledging the tremendous contribution made by my
predecessor Mike Burns, who led the transformation of the business over the last
ten years into one of the UK's leading private client investment management
businesses.

The year to 31 March 2007 was, apart from the small dip in the first quarter,
one in which the UK financial markets in which we operate continued to
strengthen. This backdrop has undoubtedly assisted us in delivering the strong
financial results reported, however it is essential to acknowledge that such
results would simply not have been achievable, were it not for the absolute
professionalism and commitment of all of the group's employees.

The market for private client investment and fund management and financial
planning services that the group provides to its clients is generally recognised
to be a market which will see greater demand, given in particular, the
increasing recognition by individuals of the need for specialist advice to
invest for their own futures and the increased availability of personal wealth
for possible investment.

The current pressures from both a regulatory and operational efficiency
perspective will, I believe, drive further consolidation within the industry for
which we as a group will ensure that we are prepared.


Rensburg Sheppards Investment Management ('RSIM')

As a business, RSIM seeks to grow the proportion of total funds under management
operated on a discretionary basis and consequently the proportion of its revenue
which is recurring in nature. Our current target is to achieve 75% of total
funds under management managed on a discretionary basis. We consider that, on
balance, retaining a meaningful proportion of the business run on a
non-discretionary basis results in a higher level of interaction with such
clients, satisfying the requirements of certain clients and also being desirable
for the business.

Discretionary funds under management at 31 March 2007 were £8.53 billion (31
March 2006: £7.88 billion) a pleasing increase of 8.2% over the year;
non-discretionary funds increased by 0.7% to £4.11 billion over the same period.
This gave total funds under management at 31 March 2007 of £12.64 billion
compared with £11.96 billion at 31 March 2006 of which the proportion managed on
a discretionary basis had increased to 67.5% from 65.9%.

The increase in RSIM's total funds under management of 5.7% compared favourably
with the increase in the FTSE/APCIMS Private Investors Balanced index of 3.1%
over this period; this index being the one which we believe most closely
reflects the composition of RSIM client portfolios.

At the four principal quarterly fee billing points during the year, the FTSE/
APCIMS Private Investors Balanced index was as follows:



31 May 2006            2,758.7

31 August 2006         2,813.8

30 November 2006       2,892.9

28 February 2007       2,935.4

Average of above       2,850.2



31 March 2007          2,977.6



Of RSIM's total net revenue for the year, 70.8% was recurring in nature.

During the year a significant capital investment has been made to improve the
company's infrastructure.  These investments include the relocation of the
Liverpool based employees to a new office that offers a significantly more
efficient working environment and much improved facilities for receiving
clients. In November 2006, the existing ex-Rensburg London team was smoothly
relocated to the London Gresham Street office and we are now in the process of
planning a refurbishment of our Leeds office. Capital investment into our IT and
telephony systems commenced during the latter half of the financial year and
this will continue through 2007 and beyond, ensuring we retain the necessary
tools to serve our clients.

The provision of improved formal reporting to our clients commenced during the
second half of 2006 and is now continuing with the delivery of much clearer,
more user friendly year-end packs. We will seek to develop these and other
mediums of communication with our clients, as their needs and requirements
change.

The harmonisation of employee remuneration across the historic businesses of
Rensburg Investment Management ('RIM') and Carr Sheppards Crosthwaite ('CSC')
was agreed during the year, with these new arrangements becoming effective from
1 April 2007. While we believe our client-facing personnel are incentivised
appropriately, on both annual and longer-term bases, we keep our remuneration
arrangements for all of our employees under regular review.

Looking forward, RSIM management has recently embarked on a comprehensive
exercise to review and refresh the company's strategy. This is a logical step
following the successful completion of the major task of integrating the
historic RIM and CSC businesses. One area where we have already identified
opportunities for improvement is with regard to RSIM's brand awareness. We will
look to significantly increase the levels of marketing and business development
activity undertaken in this area and the first steps to address this are
currently underway.


Rensburg Fund Management ('RFM')

RFM has once again delivered an excellent performance both in terms of growth of
funds under management and in terms of investment performance.

Unit trust sales in the year of £434 million and a net inflow into trusts of
£205 million (16 months ended 31 March 2006: sales of £429 million and a net
inflow of £225 million) have, together with the rising financial markets,
continued solid investment performance and the launch of a new Managers' Focus
fund increased the value of RFM's retail unit trust funds under management by
36.9% to £1.29 billion as at 31 March 2007 (31 March 2006: £942 million). By 31
March 2007, the Managers' Focus fund had grown to £88 million since its launch
seven months earlier.

The total funds under the two segregated mandates managed by RFM have more than
doubled over the year to £472 million at 31 March 2007 (31 March 2006: £223
million) with the bulk of this growth being derived from new inflows for
investment. This brings the total assets managed by RFM to £1.76 billion (31
March 2006: £1.17 billion) an increase of 50.4%, compared with a rise in the
FTSE All-Share index (which we consider most closely reflects the investments
managed by RFM) of 7.7%.

Of RFM's total net revenue for the year, 85% was recurring in nature.  This
represented a marginal increase over that achieved for the 16 months ended 31
March 2006.


Group funds under management

Combining RSIM and RFM brings the group's total funds under management as at 31
March 2007 to £14.40 billion (31 March 2006: £13.13 billion) an increase of
9.7%.


Regulation

During the year more resources than ever have been directed towards ensuring we
meet our regulatory and legal obligations, both as a UK listed company and as a
group whose trading businesses are authorised and regulated by the Financial
Services Authority. Issues either addressed or being addressed include the
introduction of International Financial Reporting Standards as adopted by the
European Union ('IFRS'), the Markets in Financial Instruments Directive ('
MiFID'), the Capital Requirements Directive ('CRD'), the Transparency Directive
and the new Companies Act. The simultaneous introduction of such items
inevitably places a burden on internal resources and incurs both direct and
indirect costs. I hope, as we reach the end of 2007, that the future level and
pace of such change will start to slow for the benefit of all.


Outlook

Ten weeks into the new financial year I am pleased to report that trading has
started satisfactorily, assisted by the further marked rise in the level of the
UK financial markets since 31 March 2007.  The combination of the current
macro-economic backdrop, the strength of the fully-integrated enlarged Rensburg
Sheppards group and the potential sustainable growth opportunities which we have
identified leads me to look to the future with confidence.


S.M. Elliott
Chief Executive
12 June 2007



Financial review

Financial results

From revenue (net of fees and commissions payable to introducers) of £112.9
million (16 months ended 31 March 2006: £109.4 million), the group's reported
profit before tax for the year ended 31 March 2007 was £25.7 million (16 months
ended 31 March 2006: £13.0 million). After removing a net charge totalling £10.2
million (16 months ended 31 March 2006: £16.1 million) in respect of the
amortisation of the client relationships intangible asset, the share-based
payments relating to the Employee Benefit Trust ('EBT'), the reorganisation
costs associated with the integration of Carr Sheppards Crosthwaite ('CSC') and
profit on disposal of available-for-sale investments, the resulting adjusted
profit before tax increased to £35.9 million (16 months ended 31 March 2006:
£29.1 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.

Reported basic earnings per share were 37.5p (16 months ended 31 March 2006:
20.9p) 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 57.1p (16 months ended 31 March 2006:
55.1p).

The financial results reported for the year ended 31 March 2007, including the
restated comparative figures for the 16 months ended 31 March 2006, are the
first set of full year results that the group has prepared under International
Financial Reporting Standards as adopted by the European Union ('IFRS').  The
effect of the transition to IFRS on the group's previously reported figures for
the 16 months ended 31 March 2006 was announced on 13 October 2006 and a summary
of the effects is set out in note 18.


Synergies and associated reorganisation costs

With the integration of CSC having been completed some nine months ago, it is
pleasing to be able to report that by 31 March 2007 we had achieved a position
where the future annualised pre-tax cost synergies from the acquisition of CSC
had reached the target originally stated of approximately £5.5 million per
annum, with the final total of the pre-tax reorganisation costs necessarily
incurred to achieve these synergies being £9.9 million, compared with the
originally stated estimate of £10 million. During the year to 31 March 2007, the
group benefited from approximately £3.2 million of such synergies, which was
weighted approximately one third / two thirds between the first and second half
years.


Tax

The effective tax rate for the year is 36.2% (16 months ended 31 March 2006:
41.5%) calculated as the total tax charge of £9.3 million (16 months ended 31
March 2006: £5.4 million) divided by the profit before tax of £25.7 million (16
months ended 31 March 2006: £13.0 million). A full reconciliation of the tax
charge which explains why the effective rate of tax is higher than the UK
standard rate of 30%, is set out in note 4.


Dividend

An interim dividend of 7.5p per share was paid to shareholders on 2 February
2007 and the board is recommending a final dividend of 15p, resulting in a total
payment of 22.5p. In determining the dividend, the directors specifically
considered the requirement for the group to ensure it retains adequate levels of
working capital and regulatory capital for the foreseeable future, the group's
commitment to repay the £60 million subordinated loan and the need to retain
adequate reserves for re-investment towards the future growth of the business.
In accordance with current accounting standards the final dividend of 15p has
not been recognised in these financial results, but has been disclosed as a post
balance sheet event in note 17.


Cash flow

During the year the business enjoyed a net cash inflow from its operating
activities, after corporation tax payments, of £16.0 million.  The group's
investing and financing cash flows for the year, which principally included
dividend payments of £9.1 million, loan interest of £4.3 million and capital
expenditure of £1.6 million, amounted to a net cash payment of £16.2 million,
resulting in a slight overall decrease in the group's cash balances during the
year of £0.2 million.


Key performance indicators ('KPIs')

The principal KPIs used by management for the group as a whole, and also for
each of the two individual business segments that make up the group, are stated
below. The comparison between the two reporting periods is, for certain KPIs,
not particularly meaningful. This is a consequence of the differing lengths of
the reporting periods and the fundamental changes taking place within both
reporting periods arising from the acquisition of CSC on 6 May 2005. Where
figures are described in the tables below as 'underlying', then this is after
adjusting, where appropriate, for the items referred to in the opening paragraph
of this financial review for the reason stated.


The group:
                                                                   Year ended   16 months ended         
                                                                     31 March          31 March
                                                                         2007              2006         % change

Total funds under management*                                  £14.40 billion    £13.13 billion            +9.7%
FTSE/APCIMS Balanced Index*                                           2,977.6           2,887.4            +3.1%
Underlying operating profit                                     £37.7 million     £29.9 million           +26.1%
Underlying operating profit as a % of net revenue                       33.4%             27.3%           +22.3%
Underlying basic earnings per share                                57.1 pence        55.1 pence            +3.6%



* As at the period end



Investment management:


                                                                   Year ended   16 months ended         
                                                                     31 March          31 March
                                                                         2007              2006         % change

Total funds under management*                                  £12.64 billion    £11.96 billion            +5.7%
FTSE/APCIMS Balanced Index*                                           2,977.6           2,887.4            +3.1%
% of total funds managed on a discretionary basis*                      67.5%             65.9%            +2.4%
Underlying operating profit                                     £33.2 million     £27.0 million           +23.0%
Underlying operating profit as a % of net revenue                       32.7%             27.2%           +20.2%


* As at the period end



Fund management:

                                                                   Year ended   16 months ended         
                                                                     31 March          31 March
                                                                         2007              2006         % change

Total funds under management*                                   £1.76 billion     £1.17 billion           +50.4%
FTSE All-Share Index*                                                 3,283.2           3,048.0            +7.7%
Underlying operating profit                                      £4.5 million      £2.9 million           +55.2%
Underlying operating profit as a % of net revenue                       39.1%             28.5%           +37.2%



* As at the period end



Capital structure and treasury management

At 31 March 2007 the group had net assets of £169.7 million, which included
£187.6 million of intangible assets principally comprising goodwill of £136.4
million and client relationships of £50.5 million.

Throughout the year, the group was financed by equity shareholders funds which
at 31 March 2007 were £169.7 million, together with debt which comprised a
subordinated loan of £60 million. The loan is repayable in equal annual
instalments of £7.5 million commencing May 2008 and ending May 2015. The group
maintained the bulk of its cash balances, which at 31 March 2007 totalled £49.8
million, within its regulated trading subsidiaries in order to provide them with
comfortable levels of regulatory capital. Cash was placed on deposit with highly
rated banks and was available on instant or near instant access, thus minimising
credit and liquidity risk. The nature of the group's business has been such that
currency risk was insignificant.

Repayments of capital in relation to the subordinated loan that was entered into
as a part of the consideration for the acquisition of CSC, were due to commence
on 6 May 2008. However given the subsequent stronger financial performance of
the group than was anticipated at the point of acquiring CSC in May 2005, the
board announced that on 8 May 2007 an early repayment of £10 million of this
debt had been made. Full details of this are provided in note 17 to this
preliminary statement.


Regulatory capital

The group's two principal trading subsidiaries are both FSA regulated and hence
are required at all times to hold certain minimum levels of regulatory capital.
These businesses are both well capitalised and have throughout the year held
regulatory capital comfortably above the minimum levels required. The Capital
Requirements Directive ('CRD'), which is a European Directive, came into effect
on 1 January 2007 although due to a staged implementation, the full impact of
this will not be felt until 1 January 2008 and beyond. The introduction of CRD
has led to a modest increase in the minimum amount of regulatory capital
required since 1 January 2007 and we fully expect this may increase further on 1
January 2008.  This further increase is not anticipated at this point in time to
be major and we are confident that we will continue to have sufficient capital
to meet the future requirements.


Risks and uncertainties

The significant risks faced by the group and the controls operating over such
risks are kept under regular review by the group's risk committee and, acting on
behalf of the board, by the audit committee. These risks have been faced by the
group throughout the reporting period and are expected to continue to be faced
going forward. Hence, the appropriate management of these risks is key to the
successful future development, performance and position of the group.

The principal risks and uncertainties, together with the associated controls
are:

 1. Reputational risk which may arise from poor investment advice or service to
    clients, or from a public censure by the regulator. This risk is mitigated
    by the group's strong service ethic demonstrated by its professionally
    qualified and experienced staff who operate in an environment where
    compliance is given a high priority and are supported by a strong internal
    research function and appropriate investment committees.

 2. Market risk from the group's exposure to downturns in the UK and world
    financial markets in which it operates.  We continue to reduce this risk by
    seeking to further increase the proportion of the group's income which is
    recurring in nature and also by keeping a significant proportion of the
    total remuneration of client facing staff in the form of incentives
    dependent upon the level of income they produce.

 3. Competition risk which manifests itself in a reduction in clients due to
    inappropriate and/or poorly priced service/product offerings or insufficient
    professional staff to properly serve clients. To mitigate this risk we keep
    developments in the market in which we operate under careful review and we
    invest heavily in our staff, not only in terms of their remuneration
    packages, but also in the office environments from which they operate and in
    ensuring we meet their ongoing training and development needs.

 4. Operational risk which principally arises from inadequate business continuity
    /disaster recovery planning or a significant business process failure in one
    of our key support functions. Business continuity/disaster recovery is an
    area we continue to recognise the increasing importance of and we are
    currently investing significant management time and financial resources to
    mitigate this risk further.  With regard to our support functions,
    operational risk in this area was sharply heightened during 2005 and 2006 as
    we undertook the major integration of Rensburg and CSC. This risk has now
    subsided following the completion of the integration last autumn and we now
    consider that through proper resourcing we are appropriately mitigating the
    risk in this area.

 5. Fraud risk that follows from holding significant cash and securities both on
    our own behalf and on behalf of our clients. This risk is mitigated by:

      • regular reconciliations of both firm and client assets;
      • the detailed personal knowledge of clients that their investment
        management team possesses which, in particular, assists greatly in
        protecting against the growing risk of identity theft;
      • the significant level of fidelity insurance carried by the group.



J.P. Wragg
Finance Director
12 June 2007



Consolidated income statement
for the year ended 31 March 2007

                                                                                                 2007            2006
                                                                                                 Year       16 months
                                                                                                ended           ended
                                                                                             31 March        31 March
                                                            Note                                £'000           £'000

Revenue                                                                                      122,297         117,389
Fees and commissions payable                                                                  (9,360)         (8,004)
Net revenue                                                   2                              112,937         109,385

Reorganisation costs                                                                               -          (9,907)
Share-based payments - EBT                                                                    (4,653)         (4,226)
Amortisation of intangible assets - client relationships                                      (5,603)         (5,066)
Other operating expenses                                                                     (75,225)        (79,468)
Operating expenses                                                                           (85,481)        (98,667)

Operating profit                                                                              27,456          10,718
Profit on disposal of available-for-sale investments                                               -           3,129
Finance income                                                3                                2,694           3,365
Finance expenses                                              3                               (4,483)         (4,205)
Profit before tax                                                                             25,667          13,007
Taxation                                                      4                               (9,289)         (5,374)
Profit for the period attributable to the equity holders of                                   16,378           7,633
the company

Earnings per share                                            6

Basic                                                                                           37.5p           20.9p
Diluted                                                                                         37.4p           20.6p





Consolidated balance sheet
at 31 March 2007

                                                                                                  2007            2006
                                                            Note                                 £'000           £'000


Assets

Non-current assets

Intangible assets                                            7                                187,601         193,611

Property, plant and equipment                                8                                  5,422           4,775
Available-for-sale investments                               9                                  2,562           2,188
Deferred tax assets                                          10                                 1,280           2,984
                                                                                              196,865         203,558

Current assets
Trade and other receivables                                                                   130,452         167,257
Cash and cash equivalents                                    11                                49,775          49,958
                                                                                              180,227         217,215

Total assets                                                                                  377,092         420,773

Liabilities
Current liabilities
Trade and other payables                                                                     (124,359)       (174,276)
Loan notes                                                                                        (72)           (840)
Provisions                                                   13                                  (641)         (6,284)
Current tax liabilities                                                                        (4,672)         (2,794)
                                                                                             (129,744)       (184,194)

Non-current liabilities
Accruals and deferred income                                                                     (798)              -
Subordinated loan                                            12                               (60,000)        (60,000)
Provisions                                                   13                                  (517)           (875)
Deferred tax liabilities                                     10                               (16,341)        (17,920)
                                                                                              (77,656)        (78,795)

Total liabilities                                                                            (207,400)       (262,989)

Net assets                                                                                    169,692         157,784


Equity attributable to the equity holders of the company

Share capital                                              14,16                                4,822           4,760
Share premium                                                16                                10,603           9,276
Capital redemption reserve                                   16                                   100             100
Available-for-sale reserve                                   16                                 1,234             972
Revaluation reserve                                          16                                   959             972
Other reserves                                               16                               130,601         130,601
Retained earnings                                            16                                21,373          11,103
Total equity                                                                                  169,692         157,784



Consolidated cash flow statement
for the year ended 31 March 2007

                                                                                                 2007            2006
                                                                                                 Year       16 months
                                                                                                ended           ended
                                                            Note                             31 March        31 March
                                                                                                £'000           £'000

Cash flows from operating activities
Profit before taxation                                                                        25,667          13,007
Adjustments for:
- Amortisation of intangible assets                                                            6,219           5,617
- Finance expenses                                                                             4,483           4,205
- Finance income                                                                              (2,694)         (3,365)
- Depreciation                                                                                   672             747
Share-based payments                                                                           4,815           4,472
Profit on disposal of available-for-sale investments                                               -          (3,129)
Loss on disposal of tangible and intangible assets                                               102              58
Non-cash reorganisation costs                                                                      -             669
Decrease/(increase) in trade and other receivables                                            36,901         (52,992)
(Decrease)/increase in trade payables and provisions                                         (55,116)         55,095
Cash generated from operations                                                                21,049          24,384
Interest received                                                                              2,318          3,762
Dividends received                                                                               280              61
Interest paid                                                                                   (221)           (317)
Taxation paid                                                                                 (7,446)         (5,595)
Net cash inflow from operating activities                                                     15,980          22,295

Cash flows from investing activities
Purchase of property, plant and equipment                                                     (1,407)           (810)
Purchase of intangible software                                                                 (223)         (1,024)
Proceeds from disposal of available-for-sale investments                                           -           3,129
Acquisition of subsidiaries, net of cash acquired                                                  -          16,830
Deferred consideration paid                                                                        -             (52)
Net cash (outflow)/inflow from in investing activities                                        (1,630)         18,073

Cash flows from financing activities
Dividends paid to shareholders                                                                (9,073)        (26,939)
Proceeds from issue of ordinary share capital                                                  1,390              25
Costs associated with issue of shares                                                             (1)           (180)
Purchase of own shares                                                                        (1,815)              -
Redemption of loan notes                                                                        (768)         (1,755)
Interest paid on subordinated loan                                                            (4,266)         (2,179)
Net cash outflow from financing activities                                                   (14,533)        (31,028)

Net (decrease)/increase in cash and cash equivalents                                            (183)          9,340
Cash and cash equivalents at start of period                                                  49,958          40,618
Cash and cash equivalents at end of period                   11                               49,775          49,958




Consolidated statement of recognised income and expense
for the year ended 31 March 2007

                                                                                                   2007           2006
                                                                                                   Year      16 months
                                                                                                  ended          ended
                                                                                               31 March       31 March
                                                                                                  £'000          £'000

Revaluation of available-for-sale investments
-gain arising from changes in fair value                                                           374            738
-gain on disposal transferred to the income statement                                                -         (2,709)
Deferred tax on revaluation of available-for-sale investments
-on gain arising from changes in fair value                                                       (112)          (221)
-on gain on disposal transferred to the income statement                                             -            813
Net income/(expense) recognised directly in equity                                                 262         (1,379)
Profit for the period                                                                           16,378          7,633
Total recognised income and expense for the period                                              16,640          6,254




Notes to the financial statements


1. Basis of preparation

The group financial statements consolidate those of the company and its
subsidiaries (together referred to as 'the group'). The financial statements
have been prepared and approved by the directors in accordance with
International Financial Reporting Standards as adopted by the European Union
('IFRS'). The group has presented its financial statements in accordance with
IFRS for the first time for the year ended 31 March 2007 and has applied the
requirements of IFRS 1 First-time adoption of IFRS. The effect of the transition
to IFRS on the group's previously reported figures for the 16 months ended 31
March 2006 was announced on 13 October 2006 and a summary is set out in note 18
below. In applying the requirements of IFRS 1, the group has taken advantage of
the following exemptions:


• IFRS 3 Business combinations has not been applied retrospectively to business
  combinations that took place prior to the date of transition to IFRS, being 1
  December 2004.

• IFRS 2 Share-based payment has not been applied to equity instruments that
  were granted before 7 November 2002 or to those that were granted after 7
  November 2002 that vested before 1 January 2005.


A summary of the group's significant accounting policies will be included in the
2007 Report & Financial Statements.

The financial information contained in this announcement does not constitute the
company's statutory accounts for the year ended 31 March 2007 or the 16 month
period ended 31 March 2006 but is derived from those accounts. Statutory
accounts for 2006 have been delivered to the Registrar of Companies, and those
for 2007 will be delivered following the company's annual general meeting. The
independent auditor has reported on those accounts; its reports were unqualified
and did not contain statements 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.  This organisation reflects the
differing nature of each segment's services, client base and risk profile. The
principal activity of the investment management segment is the provision of
investment management services to private clients, pension funds and charities.
The fund management segment manages unit trusts and segregated mandates.
Transactions between the two business segments are undertaken on an arm's length
basis on normal commercial terms.  All of the group's activities are undertaken
in the United Kingdom and hence relate to a single geographical segment.


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                (5,603)               -                 -             (5,603)
relationships
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

Other segmental items:
Total assets                                             355,962           21,130                 -            377,092
Total liabilities                                       (191,213)         (16,187)                -           (207,400)
Capital expenditure                                        1,404                3                 -              1,407
Acquisition of intangible assets                             223                -                 -                223
Depreciation and amortisation                              6,888                3                 -              6,891



16 months ended 31 March 2006
                                                       Investment             Fund
                                                       Management       Management      Eliminations              Group
                                                            £'000            £'000             £'000              £'000

Revenue

External                                                 101,885           15,504                 -            117,389
Inter-segment                                                788                -              (788)                 -

                                                         102,673           15,504              (788)           117,389
Fees and commissions payable                              (3,492)          (5,300)              788             (8,004)
Segmental net revenue                                     99,181           10,204                 -            109,385

Reorganisation costs                                      (9,907)               -                 -             (9,907)
Share-based payments - EBT                                (4,226)               -                 -             (4,226)
Amortisation of intangible assets - client                (5,066)               -                 -             (5,066)
relationships
Other operating expenses                                 (72,176)          (7,292)                -            (79,468)
Segmental expenses                                       (91,375)          (7,292)                -            (98,667)

Segmental operating profit                                 7,806            2,912                 -             10,718
Profit on disposal of available-for-sale                   3,129                -                 -              3,129
investments
Finance income                                             2,992              373                 -              3,365
Finance expenses                                          (4,205)               -                 -             (4,205)
Profit before tax                                          9,722            3,285                 -             13,007

Segmental net revenue is derived from:
Investment Management services                            99,181                -                 -             99,181
Fund Management services                                       -            8,658                 -              8,658
Profit on sale of units of unit trusts                         -            1,546                 -              1,546
                                                          99,181           10,204                 -            109,385

Other segmental items:
Total assets                                             403,815           16,958                 -            420,773
Total liabilities                                       (250,542)         (12,447)                -           (262,989)
Capital expenditure                                          808                2                 -                810
Acquisition of intangible assets                         185,771                -                 -            185,771
Depreciation and amortisation                              6,360                4                 -              6,364



3. Finance income and expenses

                                                                                                  2007           2006
                                                                                                  Year      16 months
                                                                                                 ended          ended
                                                                                              31 March       31 March
                                                                                                 £'000          £'000

Interest receivable on bank deposits                                                             2,414          3,304
Dividends receivable                                                                               280             61
Finance income                                                                                   2,694          3,365

Interest payable on bank overdrafts and loan notes                                                 178            347
Interest payable on subordinated loan                                                            4,305          3,858
Finance expenses                                                                                 4,483          4,205



4. Taxation

                                                                                                 2007             2006
                                                                                                 Year        16 months
                                                                                                ended            ended
                                                                                             31 March         31 March
                                                                                                £'000            £'000

Current tax expense:
United Kingdom corporation tax at 30% (2006: 30%)                                               9,950            6,327
Adjustments in respect of prior periods                                                            88               (3)
                                                                                               10,038            6,324
Deferred tax expense:
Origination and reversal of timing differences                                                   (560)            (962)
Adjustments in respect of prior periods                                                          (189)              12
Total tax expense in the income statement                                                       9,289            5,374



The tax charge for the year and the amount calculated by applying the standard
United Kingdom corporation tax rate of 30% (16 months ended 31 March 2006: 30%)
to the profit before tax per the income statement can be reconciled as follows:


                                                                                                   2007          2006
                                                                                                   Year     16 months
                                                                                                  ended         ended
                                                                                               31 March      31 March
                                                                                                  £'000         £'000

Profit before tax                                                                                25,667        13,007
Tax expense using the United Kingdom corporation tax rate of 30%                                  7,700         3,902
Effects of:
Share-based payments not tax deductible                                                           1,396         1,268
Other expenses not tax deductible                                                                   378           197
Income not chargeable to tax                                                                        (84)           (2)
Adjustments to current tax in respect of prior periods                                               88            (3)
Adjustments to deferred tax in respect of prior periods                                            (189)           12
                                                                                                  9,289         5,374



The following amounts of deferred tax have been recognised directly in equity:

                                                                                                    2007          2006
                                                                                                    Year     16 months
                                                                                                   ended         ended
                                                                                                31 March      31 March
                                                                                                   £'000         £'000

Available-for-sale investments                                                                     (112)          592
Share-based payments                                                                               (762)          598
                                                                                                   (874)        1,190



5. Dividends



The final dividend proposed for the year ended 31 March 2007 of 15.0 pence per
share is payable on 10 August 2007 to shareholders on the register as at the
close of business on 20 July 2007.  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 31 March 2007.  Dividends
have been recognised in the periods set out below:


                                                                                                   2007          2006
                                                                                                   Year     16 months
                                                                                                  ended         ended
                                                                                               31 March      31 March
                                                                                                  £'000         £'000

Amounts recognised as distributions to equity holders during the period:
Final dividend for the year ended 30 November 2004 of 12.0p per share                                 -         2,629
First interim dividend for the six months ended 31 May 2005 of 6.6p per share                         -         1,319
Second interim dividend for the four months ended 30 September 2005 of 6.6p per share                 -         2,854
Special dividend of 45.0p per share                                                                   -         9,871
Final dividend for the sixteen months ended 31 March 2006 of 13.2p per share                      5,783             -
Interim dividend for the six months ended 30 September 2006 of 7.5p per share                     3,290             -
                                                                                                  9,073         16,673


The amount recognised as distributions to equity holders shown above for the 16
months ended 31 March 2006 excludes the dividend of £10,266,000 paid by Carr
Sheppards Crosthwaite Limited ('CSC') to Investec following the group's
acquisition of CSC on 6 May 2005, as the liability for this dividend formed part
of the net assets of CSC at the date of acquisition.  However, this payment does
represent a cash outflow from the group during the 16 months ended 31 March 2006
and is included in the cash flow statement in that period.



6. Earnings per share

Basic earnings per share is calculated with reference to earnings for
shareholders of £16,378,000 (16 months ended 31 March 2006: £7,633,000) and the
weighted average number of shares in issue during the period of 43,723,007 (16
months ended 31 March 2006: 36,595,582). Adjusted earnings per share before
amortisation of the client relationships intangible asset, share-based payments
relating to the EBT, reorganisation costs and profit on disposal of
available-for-sale investments is calculated with reference to earnings for
shareholders of £24,953,000 (16 months ended 31 March 2006: £20,150,000).

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 112,337 shares (16 months
ended 31 March 2006: 491,190). Details of contingently issuable shares, that are
not included in the calculation of basic or diluted earnings per share, are
given in note 12.

The directors believe that the provision of additional earnings per share
figures, in particular before amortisation of the client relationships
intangible asset, share-based payments relating to the EBT, reorganisation costs
and profit on disposal of available-for-sale investments, better represent
underlying business performance. The effect of these adjustments on earnings and
basic earnings per share is as follows:


                                                                   Year ended                 16 months ended
                                                                 31 March 2007                 31 March 2006
                                                              Earnings       Earnings       Earnings       Earnings
                                                                                  per                           per
                                                                                share                         share
                                                                 £'000          Pence          £'000          Pence

Unadjusted earnings and EPS                                    16,378           37.5          7,633           20.9
Share-based payments - EBT                                      4,653           10.6          4,226           11.5
Amortisation of intangible assets - client                      5,603           12.8          5,066           13.9
relationships
Reorganisation costs                                                -              -          9,907           27.1
Profit on disposal of available-for-sale investments                -              -         (3,129)          (8.6)
Tax arising on adjusted items                                  (1,681)          (3.8)        (3,553)          (9.7)

Adjusted earnings and EPS                                      24,953           57.1         20,150           55.1



7. Intangible assets

The carrying values of intangible assets at 31 March are as follows:

                                                                                                  2007            2006
                                                                                                 £'000           £'000

Goodwill                                                                                      136,385         136,385
Client relationships                                                                           50,469          56,072
Software                                                                                          747           1,154
                                                                                              187,601         193,611



The client relationships intangible asset comprises amounts at cost of
£58,087,000 relating to private client business and £3,051,000 relating to
charities business. These amounts are being amortised on a straight line basis
over the estimate of their useful economic lives of 12 and four years
respectively.

Amortisation of software is recognised in the income statement within other
operating expenses.

Goodwill is allocated to the cash generating unit ('CGU') to which it relates
and the goodwill shown above has been allocated to the group's London,
Cheltenham, Farnham and Reigate offices (collectively referred to as the 'London
and Southern offices') and the group's Sheffield office.  The London and
Southern offices and the Sheffield office each represent separate CGUs. The
allocation of all intangible assets to CGUs is summarised below:


                                                                               Client
                                                           Goodwill     relationships        Software           Total
                                                              £'000             £'000           £'000           £'000
Cash generating unit
London and Southern offices                                129,637            50,469             273         180,379
Sheffield office                                             6,748                 -              86           6,834
Other                                                            -                 -             388             388

                                                           136,385            50,469             747         187,601


The recoverable amounts of the group's CGUs are determined from value-in-use
calculations. The key assumptions for the value-in-use calculations are those
regarding discount rates, future income growth rates, changes in the cost base
of the business and future market conditions. The basis of the value-in-use
calculations is the budget for the forthcoming financial year ending 31 March
2008, which has been approved by the board. This budget has been established
based on management's experience and future expectations of the business and the
market in which it operates. Projections beyond 31 March 2008 are extrapolated
using a growth rate of 2.25%, which represents the historic long-term UK
economic growth rate. The future cash flows are discounted using the group's
weighted average cost of capital, which has been calculated at 12% per annum.

To establish whether any impairment exists, the value-in-use of each CGU to
which goodwill and intangible assets have been allocated has been compared with
the present carrying value of the CGUs' assets. In each case, the value-in-use
exceeds the carrying value of the assets and it has therefore been concluded
that no impairment exists.


8. Property, plant and equipment

Included within property, plant and equipment is the group's freehold property.
The carrying value of the property at 31 March 2007 amounted to £3,160,000
(2006: £3,208,000). The property was revalued at 1 December 2004 by independent
qualified valuers. The valuation was undertaken in accordance with the Appraisal
and Valuation standards issued by the Royal Institution of Chartered Surveyors.
The valuation was on a market value basis. The valuation has been incorporated
into the financial statements and the resulting revaluation adjustment has been
taken to the revaluation reserve. The revaluation surplus at 31 March 2007
amounted to £959,000 (31 March 2006: £972,000).  This revaluation surplus is not
distributable.

At 31 March 2007, had the freehold property been carried at historic cost less
accumulated depreciation, the carrying amount would have been £1,789,000 (31
March 2006: £1,819,000).



9. Available-for-sale investments


Available-for-sale financial assets at 31 March comprise:
 
                                                                                                2007            2006
                                                                                               £'000           £'000
Equity securities:
Listed                                                                                         1,588           1,588
Unlisted                                                                                         974             600
                                                                                               2,562           2,188


Unlisted available-for-sale investments represent ordinary equity shares of
Euroclear plc. The fair value attributed to these shares represents the
directors' estimate of the value that could be obtained in an arm's length
disposal of the shares, taking into account recently published market
transaction information.


10.  Deferred tax assets and liabilities

Deferred tax is calculated in full on temporary differences under the liability
method using a tax rate of 30% (2006: 30%). Deferred tax assets have been
recognised in respect of all tax losses and other temporary timing differences
giving rise to deferred tax assets, as it is considered to be probable that
these assets are recoverable in full.


Deferred tax assets and liabilities are attributed to the following:

                                                           Assets              Liabilities               Net
                                                      2007       2006       2007       2006       2007       2006
                                                     £'000      £'000      £'000      £'000      £'000      £'000

Intangible assets                                        -          -    (15,141)   (16,822)   (15,141)   (16,822)
Property, plant and equipment                          566        589       (484)      (432)        82        157
Available-for-sale investments                           -          -       (609)      (497)      (609)      (497)
Trade and other receivables                              -          -       (107)      (169)      (107)      (169)
Share-based payments                                    91      1,069          -          -         91      1,069
Provisions, accruals and other payables                623      1,326          -          -        623      1,326
Net deferred tax assets/(liabilities)                1,280      2,984    (16,341)   (17,920)   (15,061)   (14,936)



11. Cash and cash equivalents

For the purposes of the cash flow statement, cash and cash equivalents comprise
cash in hand, deposits with banks and financial institutions with a maturity of
up to three months and bank overdrafts repayable on demand.


                                                                                                2007            2006
                                                                                               £'000           £'000

Cash at bank and in hand                                                                      49,775          44,958
Fixed term deposits                                                                                -           5,000
                                                                                              49,775          49,958



12. Subordinated loan

The company entered into a £60 million subordinated loan agreement with Investec
1 Limited on 6 May 2005. The loan formed part of the consideration for the
acquisition of Carr Sheppards Crosthwaite Limited. A fixed rate of interest of
7.155% per annum is payable on £45 million of the loan and a floating rate,
being 2.25% above LIBOR, is payable on £15 million of the loan. Interest on the
subordinated loan is payable every six months in May and November. The total
amount of the loan is repayable in equal instalments over eight years, with the
first instalment becoming payable in May 2008.

The company has the option to redeem part or all of the floating rate debt at
any point during the term of the loan. Early redemption of part or all of the
fixed rate debt is not permitted for five years from the date of commencement of
the loan, until May 2010. Early redemption after this period is at the option of
the company. As set out in note 17, the company redeemed £10 million of the
floating rate debt on 8 May 2007.

The loan is subordinated to all other creditors of the company. For the purposes
of the regulatory capital requirements of the Financial Services Authority ('
FSA'), the loan is required to be treated as part of the consolidated capital
requirement of the Investec group. If for any reason the Investec group is
unable to provide the consolidated regulatory capital required in respect of the
loan, the relevant amount of the loan will, at the request of the company, be
converted into ordinary shares of the company. The rate of conversion would be
based on the company's average mid-market share price during the three months
prior to a conversion.

However, where a conversion is required as a consequence of a disposal of shares
by Investec 1 Limited, or a conversion would otherwise require a member of the
Investec group to make a general offer for the company, an alternative
instrument, that would enable the company to satisfy the FSA's regulatory
capital requirements, would be issued in place of ordinary shares.



13. Provisions

                                      Reorganisation       Onerous     Restructuring          Property
                                               costs        leases             costs     dilapidations           Total
                                               £'000         £'000             £'000             £'000           £'000
At 1 April 2006
Current liabilities                           6,212            18                54                 -           6,284
Non-current liabilities                         584           130                11               150             875

                                              6,796           148                65               150           7,159

Charged to the income statement                   -           219                 -                75             294
Utilised during the year                     (6,212)          (18)              (54)                -          (6,284)
Released to the income statement                  -             -               (11)                -             (11)
At 31 March 2007                                584           349                 -               225           1,158



The balances at 31 March 2007 are categorised as follows:


                                      Reorganisation       Onerous     Restructuring          Property
                                               costs        leases             costs     dilapidations           Total
                                               £'000         £'000             £'000             £'000           £'000

Current liabilities                             584            57                 -                 -             641
Non-current liabilities                           -           292                 -               225             517
                                                584           349                 -               225           1,158


Reorganisation costs relate to the integration of the business of CSC into the
group.

The onerous leases provision represents future rentals and running costs of
unoccupied leasehold premises to the end of the lease term. All such leases are
due to expire during or before 2017.

The provision for restructuring costs represents the residue of amounts
previously provided within Carr Sheppards Crosthwaite Limited prior to its
acquisition by the company, in respect of the cost of restructuring certain
business activities.

The provision for property dilapidation costs reflects the obligations that the
group has to reinstate leasehold properties to their original condition prior to
the expiry of the relevant lease. The leases held on these properties expire in
the period up to 2017.


14. Share capital
                                                                                                               Nominal
                                                                                             Number              value
                                                                                          of shares              £'000

Authorised ordinary shares of 10 90/91 pence each
At 31 March 2006 and 31 March 2007                                                      54,600,000              6,000

Allotted, called up and fully paid ordinary shares
At 1 December 2004: ordinary shares of 10 pence each                                    22,087,078              2,209
Exercise of share options                                                                    3,220                  -
Issued on acquisition of CSC                                                            25,500,000              2,550
                                                                                        47,590,298              4,759
Effect of share consolidation                                                           (4,283,127)                 -
Exercise of share options                                                                    6,897                  1
At 31 March 2006: ordinary shares of 10 90/91 pence each                                43,314,068              4,760
Exercise of share options                                                                  567,314                 62
At 31 March 2007: ordinary shares of 10 90/91 pence each                                43,881,382              4,822


The authorised share capital at 1 December 2004 comprised 30,000,000 ordinary
shares of 10 pence each. The authorised share capital was increased to
£6,000,000, comprising 60,000,000 ordinary shares of 10 pence each, on 20 April
2005. On 20 May 2005, the company's share capital was consolidated by the issue
of 91 new ordinary shares of 10 90/91 pence each for every 100 existing ordinary
shares of 10 pence each. Following the share consolidation, the authorised share
capital became 54,600,000 ordinary shares of 10 90/91 pence each.

During the year, 567,314 ordinary shares of 10 90/91 pence each were issued to
certain employees of the group at £2.45 per share following the exercise of
share options on 1 June 2006 under the terms of the group's Savings-Related
Share Option ('SAYE') Scheme. The aggregate nominal value of these shares was
£62,342 and the total consideration received was £1,389,919. The market price of
the shares on 1 June 2006 was £6.93 per share.

On 2 March 2007, the Employee Share Ownership Trust ('the Trust') purchased
180,700 ordinary shares of 10 90/91 pence each of Rensburg Sheppards plc at a
price of 900 pence per share; a further 21,650 shares of the same class were
purchased by the Trust on 8 March 2007 at 870 pence per share. The shares were
purchased to satisfy awards granted by Rensburg Sheppards plc under the 2007
Employee Share Plan.

At 31 March 2007, 233,600 ordinary shares of 10 90/91 pence each (2006: 76,660
shares) were held by the Trust. The trustee of the trust is R S Trustees
Limited, a wholly owned subsidiary of Rensburg Sheppards plc. These shares are
held in order to satisfy outstanding awards under the group's Employee Share
Ownership Plan and the 2007 Employee Share Plan, details of which are set out in
note 15 below.

At 31 March 2007, Investec 1 Limited ('Investec'), an associated company of the
group, held 20,657,000 ordinary shares of 10 90/91 pence each (2006: 20,657,000
shares). These shares were issued to Investec under the terms of the acquisition
of Carr Sheppards Crosthwaite Limited ('CSC'), which occurred on 6 May 2005. A
total of 25,500,000 shares were issued to Investec under the terms of the
acquisition, prior to the effect of the share consolidation noted above. Of the
25,500,000 shares issued, 2,800,000 of these shares were immediately transferred
by Investec to an Employee Benefit Trust ('EBT'). The 2,800,000 shares were
subject to the share consolidation which took place on 20 May 2005 and hence at
31 March 2007 the EBT held 2,548,000 ordinary shares of 10 90/91 pence each
(2006: 2,548,000 shares).

At 31 March 2007, 457,629 new ordinary shares of 10 90/91 pence each are
issuable in respect of outstanding options under the group's current SAYE
scheme.


15. Share-based payments

The total charge for the year relating to employee share-based payment schemes
was £4,815,000 (16 months ended 31 March 2006: £4,472,000), all of which related
to equity-settled share-based payment transactions. The equity-settled share and
share option schemes relevant to the group are as follows:


Save As You Earn

The group operates a Savings-Related Share Option ('SAYE') scheme in which all
employees of the group are eligible to participate. Options have been granted
under the SAYE scheme in April 2003 and December 2006. Options are granted with
a fixed exercise price determined in accordance with the scheme rules. The
options can be exercised at any time during the six month period following the
vesting date. Exercise of the options is subject to continued employment with
the group; however, options may be exercised prior to the vesting date where
employment ceases as a result of redundancy, ill health or on reaching normal
retirement age. The vesting of options is not subject to any performance
conditions.


2007 Employee Share Plan

Awards were made under the 2007 Employee Share Plan over a fixed number of
shares to certain of the group's employees during March 2007. The future award
is conditional on the participant remaining in the employment of the group, and
not having been given or received notice, by 31 March 2010. The future provision
of these shares is not subject to any performance criteria or consideration and
no amounts were payable at the time the potential entitlements were conferred.


Employee Benefit Trust

The Employee Benefit Trust ('EBT') was established by Investec under the terms
of the acquisition of Carr Sheppards Crosthwaite Limited ('CSC') by Rensburg
Sheppards plc on 6 May 2005. Under the terms of the EBT, the number of shares
conferred on each participating employee, or other equivalent benefit, will be
transferred to the participants on 6 May 2008 providing that they remain
employees of the group at that date. The future provision of these shares is not
subject to any performance criteria or consideration and no amounts were payable
at the time the potential entitlements were conferred.


Employee Share Ownership Plan

At 31 March 2007, options in respect of 31,250 shares (2006: 76,660) which were
granted to certain of the group's employees under the Employee Share Ownership
Plan remain outstanding. All of these options were granted before 7 November
2002 and as such, do not fall within the scope of IFRS 2 Share-based payment.
The group has therefore not attributed a fair value to these options. The
remaining options are exercisable at any time and are not subject to any
performance criteria or consideration.

The fair value of all share-based payments arising from share awards granted
post 7 November 2002 have been estimated using the Black-Scholes option pricing
model. The assumptions used in the calculations are as follows:


                                                  SAYE                SAYE       2007 Employee            Employee
                                                  2003                2006          Share Plan       Benefit Trust

Nature of scheme                         Share options       Share options    Potential future    Potential future
                                                                                entitlement to      entitlement to
                                                                                        shares              shares
Grant date                                 16 Apr 2003         18 Dec 2006          9 Mar 2007          6 May 2005

Share price at grant date                        £3.19               £8.45               £8.92              £4.99*
Exercise price                                   £2.45               £6.60                 Nil                 Nil
Shares under option or potential               665,501             461,635             202,350         2,548,000**
future entitlement at date of
grant
Expected volatility                              29.3%               24.0%                 N/A                 N/A
Expected life (years)                             3.12                3.12                3.30                3.00
Risk free rate                                    3.9%                4.8%                 N/A                 N/A
Expected dividends expressed as a                 2.6%                2.9%                2.8%                 N/A
dividend yield
Expected forfeiture rate                            6%                  6%                  0%                 N/A
Fair value at date of grant                      £0.99               £2.42               £8.15               £4.99



* After deduction of the special dividend of 45p paid on 1 June 2005 and the
first interim dividend in respect of the six month period ended

31 May 2005 of 6.6p, for which the shares issued to Investec under the terms of
the acquisition did not rank.

** After taking account of the share consolidation which took place on 20 May
2005.


The expected volatility is based on historic volatility over an appropriate
period, consistent with the expected life of the option during the period
immediately preceding the date of grant. The risk free rate of return represents
the yield on UK Gilt Strip at the date of grant of a term consistent with the
life of the option.


A reconciliation of the number of shares in respect of which awards have been
made is set out below.

                                                                  SAYE           SAYE   2007 Employee        Employee
                                                                  2003           2006      Share Plan   Benefit Trust

Outstanding at 1 December 2004                                 595,235              -               -               -

Granted                                                              -              -               -       2,800,000
Effect of share consolidation                                        -              -               -        (252,000)
Forfeited                                                      (17,804)             -               -               -
Exercised                                                      (10,117)             -               -               -
Outstanding at 31 March 2006                                   567,314              -               -       2,548,000
Granted                                                              -        461,635         202,250               -
Forfeited                                                            -         (4,006)              -               -
Exercised                                                     (567,314)             -               -               -
Outstanding at 31 March 2007                                         -        457,629         202,350       2,548,000



16. 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 1 December 2004             2,209      9,252          100     2,351        989       6,086      29,028      50,015
Profit after taxation              -          -            -         -          -           -       7,633       7,633
Dividends                          -          -            -         -          -           -     (16,673)    (16,673)
Issue of shares:
- ordinary shares issued       2,551         24            -         -          -     124,695           -     127,270
- EBT shares issued for nil        -          -            -         -          -           -     (13,972)    (13,972)
consideration
- share issue costs                -          -            -         -          -        (180)          -        (180)
Share-based payments               -          -            -         -          -           -       4,472       4,472
Deferred tax on share-based        -          -            -         -          -           -         598         598
payments
Gain on available-for-sale
investments:
- changes in fair value            -          -            -       738          -           -           -         738
- transferred to income            -          -            -    (2,709)         -           -           -      (2,709)
statement on disposal
Deferred tax on
available-for-sale
investments:
- on changes in fair value         -          -            -      (221)         -           -           -        (221)
- transferred to income            -          -            -       813          -           -           -         813
statement on disposal
Depreciation on revalued           -          -            -         -        (17)          -           17          -
property
At 31 March 2006               4,760      9,276          100       972        972     130,601      11,103     157,784
Profit after taxation              -          -            -         -          -           -      16,378      16,378
Dividends                          -          -            -         -          -           -      (9,073)     (9,073)
Issue of shares                   62      1,328            -         -          -           -           -       1,390
Share issue costs                  -         (1)           -         -          -           -           -          (1)
Purchase of own shares by          -          -            -         -          -           -      (1,815)     (1,815)
Employee Share Ownership
Trust
Share-based payments               -          -            -         -          -           -       4,815       4,815
Tax relief on share-based          -          -            -         -          -           -         714         714
payments
Deferred tax on share-based        -          -            -         -          -           -        (762)       (762)
payments
Gain arising on                    -          -            -       374          -           -           -         374
available-for-sale
investments
Deferred tax on                    -          -            -      (112)         -           -           -        (112)
available-for-sale
investments
Depreciation on revalued           -          -            -         -        (13)          -          13           -
property
At 31 March 2007               4,822     10,603          100     1,234        959     130,601      21,373     169,692


17. Events after the balance sheet date

On 8 May 2007, £10 million of the £60 million subordinated loan, the details of
which are set out in note 12, 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.

On 12 June 2007, the directors proposed a final dividend in respect of the year
ended 31 March 2007 of 15.0 pence per share. Subject to the approval of
shareholders at the forthcoming annual general meeting, which is to be held on
31 July 2007, the dividend will be payable on 10 August 2007 to shareholders on
the register at the close of business on 20 July 2007.


18. Transition to IFRS

On 13 October 2006 the group announced the effect of the transition to
International Financial Reporting Standards as adopted by the European Union ('
IFRS') on its results previously reported under UK GAAP. This transitional
statement is available on the group's website at www.rensburgsheppards.co.uk.
The effect of the transition to IFRS on the group's total equity at 31 March
2006 and its profit after tax for the 16 months ended 31 March 2006, which is
explained fully in the transitional statement, is summarised below.


Summary reconciliation of changes in equity                                                               At 31 March
                                                                                                                 2006
                                                                                                                £'000


Total equity as previously reported under UK GAAP                                                             153,675
Revaluation of available-for-sale investments                                                                   1,388
Deferred tax on revaluation of available-for-sale investments                                                    (416)
Deferred tax on share-based payments                                                                            1,069
Dividends                                                                                                       5,783
Revaluation of property, plant and equipment                                                                    1,389
Deferred tax on revaluation of property, plant and equipment                                                     (417)
Business combinations                                                                                           5,059
EBT prepayment taken to equity                                                                                 (9,746)
Total value of IFRS adjustments                                                                                 4,109
Total equity as restated under IFRS                                                                           157,784

Summary reconciliation of changes in profit after tax                                                            2006
                                                                                                            16 months
                                                                                                                ended
                                                                                                             31 March
                                                                                                                £'000


Profit after tax as previously reported under UK GAAP                                                           2,763
Business combinations                                                                                           3,539
Revaluation of property, plant and equipment                                                                      (24)
Share-based payments                                                                                             (246)
Tax effect of above adjustments                                                                                 1,601
Total value of IFRS adjustments                                                                                  4,870
Profit after tax as restated under IFRS                                                                         7,633


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