14th Nov 2006 07:01
Rensburg Sheppards plc14 November 2006 14 November 2006 Rensburg Sheppards plc ('Rensburg Sheppards' or 'the Company') Interim Results Rensburg Sheppards, the investment management group, today announces its interimresults for the six months ended 30 September 2006 Key points: • Profit before tax of £10.2 million (2005: loss before tax of £2.2 million). • Adjusted* profit before tax of £15.3 million (2005: £11.0 million). • Basic earnings per share of 14.4p (2005: loss per share of 5.4p). • Adjusted* basic earnings per share of 24.2p (2005: 19.4p). • Interim dividend of 7.5p per ordinary share. • The integration of Carr Sheppards Crosthwaite has been completed and we continue to expect to achieve in full, the originally stated annualised pre-tax cost synergies of £5.5 million from the financial year beginning 1 April 2007. • Group funds under management total £13.3 billion (2005: £11.7 billion). • Mike Burns to retire as the Chief Executive with effect from 31 March 2007 and to be succeeded by Steve Elliott, currently the Managing Director. * Before amortisation of the client relationships intangible asset, share-basedcharges relating to the Employee Benefit Trust ('EBT') and reorganisation costs.These items amount to a net charge before tax of £5.1 million (2005: £13.2million) and a net charge after tax of £4.3 million (2005: £9.8 million). Mike Burns, Chief Executive of Rensburg Sheppards, commented: "These results reflect the successful integration with CSC and the enlargedgroup is now in a strong position to achieve further growth." An analysts meeting will be held today at 9.30am at the offices of HudsonSandler, 29 Cloth Fair, London, EC1A 7NN. For further information, please contact: Michael Burns, Chief Executive Tel: 0151 227 2030Rensburg Sheppards plc Steve Elliott, Managing Director Tel: 020 7597 1234Rensburg Sheppards plc Nick Lyon / James White Tel: 020 7796 4133Hudson Sandler CHAIRMAN'S STATEMENT Financial results and dividend It is pleasing to be able to report an improvement in the group's underlyingfinancial performance for the six months ended 30 September 2006. This reflectsan increased level of synergy benefits that have been derived from theacquisition in May 2005 of Carr Sheppards Crosthwaite ('CSC') and the continuedimprovement in the UK financial markets. From revenue (net of fees and commissions payable to introducers) of £53.6million (2005: £42.5 million), the group's profit before tax was £10.2 million(2005: loss before tax of £2.2 million). After removing charges totalling £5.1million (2005: £13.2 million) in respect of the amortisation of the clientrelationships intangible asset, the share-based charges relating to the EmployeeBenefit Trust ('EBT') and the reorganisation costs associated with theintegration of CSC, the resulting adjusted profit before tax increased to £15.3million (2005: £11.0 million). It is the directors' opinion that this adjustedmeasure of profit before tax and that of earnings given below represent bettermeasures of the group's underlying financial performance. Basic earnings per share were 14.4p (2005: loss per share of 5.4p) and on thebasis of adjusting for the items detailed in the above paragraph, together withthe associated tax consequences of these adjustments, the adjusted basicearnings per share were 24.2p (2005: 19.4p). The results for the six months ended 30 September 2006 have been prepared underInternational Financial Reporting Standards ('IFRS'). The effect of thetransition to IFRS on the group's figures for the last full financial periodended 31 March 2006 was announced during October 2006 and further details areset out in note 12 to the interim results. The directors have declared a dividend of 7.5p per ordinary share payable on 2February 2007 to all shareholders on the register as at the close of business on5 January 2007. Operations Rensburg Sheppards Investment Management ('RSIM') had discretionary funds undermanagement totalling £7.9 billion (2005: £6.7 billion) and non-discretionaryfunds under management of £4.0 billion (2005: £4.1 billion). This gives totalfunds under management at 30 September 2006 of £11.9 billion (2005: £10.8billion); an increase over the year of 10.2%, compared with an increase of 7.2%over the corresponding period in the FTSE/APCIMS Private Investors Balancedindex, which ended the period at 2,856.90. At the two key quarterly fee billing points during this reporting period theFTSE/APCIMS Private Investors Balanced index was as follows: 31 May 2006 - 2,758.69 31 August 2006 - 2,813.78 During this reporting period all central functions have been merged, informationtechnology systems integrated and the alignment of employee remunerationstructures has been decided. As announced on 11 October 2006, the final stage of the integration of CSC,being the consolidation of the two settlement functions, was completed on 30September 2006. During the half year under review the group benefited fromapproximately £1 million of pre-tax cost synergy benefits derived from theacquisition of CSC. Given that the settlement functions have now combined, theboard expects the group to benefit from approximately £2 million of suchsynergies in the second half of this financial year and the board continues toexpect that from 1 April 2007 onwards the group will benefit from approximately£5.5 million of annual pre-tax cost synergies. The level of exceptional pre-tax reorganisation costs incurred to achieve theabove synergies will be finalised over the second half of this financial year.At this advanced stage, with the majority of the reorganisation costs firmlyagreed, the final total cost of such expenditure is not now expected to exceedour original estimate of £10 million. This compares with the board's lastestimate stated on 16 May 2006 of in the range £10 million to £10.5 million. Now that we are operating on a single settlement platform, and following thealignment of our charging structures onto a common rate card, we have commenceda full scale review of the output delivered to our clients, with improvementsalready starting to filter through. We have identified an extensive programmeof alterations to ensure we keep our services at the forefront of thoseavailable across our peer group. The committees that determine our investmentprocess are now well settled and are delivering a consistent message that istailored for each client by their investment manager. Rensburg Fund Management ('RFM') increased the value of its retail unit trustbased funds under management by 34% to £1.03 billion (2005: £0.77 billion). On 1September 2006 RFM successfully launched the UK Managers' Focus Trust, which by30 September 2006 had grown to £42 million. The total value of the twosegregated mandates that are investment managed by the company have increased to£348 million (2005: £76 million), bringing RFM's total funds under management to£1.38 billion (2005: £0.85 billion). People Our Chief Executive, Mike Burns, will be 60 next year and will retire from theCompany as both Chief Executive and as a director at the end of the currentfinancial year on 31 March 2007. Having served the Company with sucheffectiveness for more than 10 years, Mike will be missed greatly, but in SteveElliott, currently Managing Director of the Company and previously ChiefExecutive of CSC prior to the merger with Rensburg, we have an ideal successor.Steve will therefore become our Chief Executive on 1 April 2007. I would also like to record my sincere thanks to all of the group's staff fortheir efforts over the period, but notably to those whose drive anddetermination allowed us to complete the integration of CSC and Rensburg. Outlook Since 30 September 2006 the UK financial markets have advanced further, whichaugurs well for the second half of the financial year. The completion of theintegration of CSC now enables the group to focus its attention upon the organicgrowth opportunities that are undoubtedly available and to evaluate carefullyany opportunities to acquire businesses that may arise. C.G. ClarkeChairman13 November 2006 Consolidated income statementfor the six months ended 30 September 2006 2006 2005 2006 6 months 6 months 16 months ended ended ended 30 September 30 September 31 March Note £'000 £'000 £'000 Revenue 58,050 45,396 117,389Fees and commissions payable (4,456) (2,907) (8,004) Net revenue 2 53,594 42,489 109,385 Reorganisation costs - (9,068) (9,907)Share-based charges - EBT (2,328) (1,897) (4,226)Share-based charges - other (31) (93) (246)Amortisation of intangible assets - client relationships (2,802) (2,272) (5,066)Other operating expenses (37,317) (30,831) (79,222) Operating expenses (42,478) (44,161) (98,667) Operating profit/(loss) 11,116 (1,672) 10,718 Profit on disposal of available-for-sale investments - - 3,129 Finance income 1,285 1,341 3,365 Finance charges 3 (2,236) (1,876) (4,205) Profit/(loss) before tax 10,165 (2,207) 13,007 Income tax expense 4 (3,897) 73 (5,374) Profit/(loss) for the period attributable to the equity 6,268 (2,134) 7,633holders of the parent Earnings/(loss) per share 6 Basic 14.4p (5.4p) 20.9p Diluted 14.3p (5.3p) 20.6p Details of dividends are set out in note 5. Consolidated balance sheetat 30 September 2006 2006 2005 2006 30 September 30 September 31 March Note £'000 £'000 £'000 Assets Non-current assets Intangible assets 7 190,668 195,974 193,611 Property, plant and equipment 4,569 4,595 4,775 Available-for-sale investments 2,349 1,664 2,188 Deferred tax assets 1,977 2,467 2,984 199,563 204,700 203,558 Current assets Trade and other receivables 123,200 106,077 167,257 Cash and cash equivalents 42,047 44,907 49,958 165,247 150,984 217,215 Total assets 364,810 355,684 420,773 Current liabilities Trade and other payables (118,745) (112,659) (174,276) Financial liabilities (379) (840) (840) Current tax liabilities (3,388) (1,618) (2,794) (122,512) (115,117) (177,910) Non-current liabilities Subordinated loan 8 (60,000) (60,000) (60,000) Deferred tax liabilities (17,125) (18,612) (17,920) Provisions 9 (3,281) (8,004) (7,159) (80,406) (86,616) (85,079) Total liabilities (202,918) (201,733) (262,989) Net assets 161,892 153,951 157,784 Equity attributable to theequity holders of the parent Share capital 10,11 4,822 4,759 4,760 Share premium 11 10,603 9,260 9,276 Capital redemption reserve 11 100 100 100 Available-for-sale reserve 11 1,085 605 972 Revaluation reserve 11 966 979 972 Other reserves 11 130,601 130,601 130,601 Retained earnings 11 13,715 7,647 11,103 Total equity 11 161,892 153,951 157,784 Consolidated statement of recognised income and expensefor the six months ended 30 September 2006 2006 2005 2006 6 months 6 months 16 months ended ended ended 30 September 30 September 31 March £'000 £'000 £'000 Revaluation of available-for-sale investments -gain arising from changes in fair value 161 156 738 -gain on disposal transferred to the income statement - - (2,709) Deferred tax on revaluation of available-for-saleinvestments -on gain arising from changes in fair value (48) (47) (221) -on gain on disposal transferred to the income statement - - 813 Net income/(expense) recognised directly in equity 113 109 (1,379) Profit/(loss) for the period 6,268 (2,134) 7,633 Total recognised income and expense for the period 6,381 (2,025) 6,254 Consolidated cash flow statementfor the six months ended 30 September 2006 2006 2005 2006 6 months 6 months 16 months ended ended ended 30 September 30 September 31 March £'000 £'000 £'000 Cash flows from operating activities Profit/(loss) before taxation 10,165 (2,207) 13,007Adjustments for: - Amortisation of intangible assets 3,103 2,523 5,617- Finance charges 2,236 1,876 4,205- Finance income (1,285) (1,341) (3,365)- Depreciation 325 263 747 Share-based charges 2,359 1,990 4,472Profit on disposal of available-for-sale investments - - (3,129)Loss on disposal of tangible fixed assets - 56 58Non-cash reorganisation costs - 669 669Decrease/(increase) in trade and other receivables 44,050 17,017 (52,992)(Decrease)/increase in trade payables and provisions (59,435) (14,209) 55,095 Cash generated from operations 1,518 6,637 24,384 Interest received 1,292 1,458 3,823Interest paid (98) (101) (317)Income taxes paid (3,378) (798) (5,595) Net cash (outflow)/inflow from operating activities (666) 7,196 22,295 Cash flows from investing activitiesPurchase of property, plant and equipment (119) (315) (1,024)Purchase of intangible software (160) (258) (810)Proceeds from disposal of available-for-sale investments - - 3,129Acquisition of subsidiaries, net of cash acquired - 16,830 16,830Deferred consideration paid - - (52) Net cash used in investing activities (279) 16,257 18,073 Cash flows from financing activitiesDividends paid to shareholders 5 (5,783) (22,766) (26,939)Proceeds from issue of ordinary share capital 1,389 3 25Costs associated with issue of shares - (180) (180)Redemption of loan notes (461) (1,755) (1,755)Interest paid on subordinated loan (2,111) - (2,179) Net cash used in financing (6,966) (24,698) (31,028) Net (decrease)/increase in cash and cash equivalents (7,911) (1,245) 9,340 Notes to the interim report 1. Basis of preparation For the year ending 31 March 2007, Rensburg Sheppards plc is required by ECRegulation No. 1606/2002 to report its consolidated financial statements inaccordance with International Financial Reporting Standards as endorsed by theEuropean Union ('EU') and adopted by the EU ('adopted IFRSs'). The financialinformation contained within these interim results has been prepared inaccordance with current standards and interpretations as issued by theInternational accounting standards Board ('IASB') and its predecessors andadopted by the European Commission ('EC'). However, the standards that are inissue are subject to ongoing review and endorsement by the IASB and the EC,whilst the application of the standards continues to be subject to review by theInternational Financial Reporting Interpretations Commission ('IFRIC').Accordingly, modifications may be required to be made to the information aspresented in these interim results as further guidance is issued and as practicedevelops, before its inclusion in the 2007 Report and Accounts, which will bethe group's first full financial statements prepared in accordance with IFRS. The financial information included in these interim results is unaudited anddoes not constitute statutory accounts within the meaning of section 240 of theCompanies Act 1985. The comparative figures for the 16 month period ended 31March 2006 are not the company's statutory accounts for that period. Thoseaccounts, which were prepared under UK Generally Accepted Accounting Practices,have been reported on by the company's auditor and delivered to the Registrar ofCompanies. The report of the auditor was (i) unqualified, (ii) did not includea reference to any matters to which the auditors drew attention by way ofemphasis without qualifying their report and (iii) did not contain a statementunder section 237 (2) or (3) of the Companies Act 1985. The accounting policies that the directors expect will apply to the preparationof the first annual IFRS financial statements for the year ending 31 March 2007are set out in the IFRS transitional statement issued by the company on 13October 2006. The statement is available on the group's website atwww.rensburgsheppards.co.uk. 2. Segmental information For management purposes, the group is organised into two business segments,being Investment Management and Fund Management. Transactions between the twobusiness segments are undertaken on an arm's length basis on normal commercialterms. All of the group's activities are undertaken in the United Kingdom andhence relate to a single geographical segment. Six months ended 30 September 2006 Investment Fund Management Management Eliminations Group £'000 £'000 £'000 £'000 Revenue - External 49,831 8,219 - 58,050 - Inter-segment 272 - (272) - 50,103 8,219 (272) 58,050Fees and commissions payable (1,907) (2,821) 272 (4,456) Segmental net revenue 48,196 5,398 - 53,594 Share-based charges - EBT (2,328) - - (2,328)Share-based charges - other (29) (2) - (31)Amortisation of intangible assets - client (2,802) - - (2,802)relationshipsOther operating expenses (32,857) (3,338) - (36,195) Segmental expenses (38,016) (3,340) - (41,356) Segmental operating profit 10,180 2,058 - 12,238 Central expenses (1,122)Finance income 1,285Finance charges (2,236) Profit before tax 10,165 Six months ended 30 September 2005 Investment Fund Management Management Eliminations Group £'000 £'000 £'000 £'000 Revenue - External 40,012 5,384 - 45,396 - Inter-segment 243 - (243) - 40,255 5,384 (243) 45,396Fees and commissions payable (1,307) (1,843) 243 (2,907) Segmental net revenue 38,948 3,541 - 42,489 Reorganisation costs (9,068) - - (9,068)Share-based charges - EBT (1,897) - - (1,897)Share-based charges - other (87) (5) - (92)Amortisation of intangible assets - client (2,272) - - (2,272)relationshipsOther operating expenses (27,311) (2,658) - (29,969) Segmental expenses (40,635) (2,663) - (43,298) Segmental operating profit (1,687) 878 - (809) Central expenses (863)Finance income 1,341Finance charges (1,876) Loss before tax (2,207) Sixteen 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) 117,389Fees 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 charges - EBT (4,226) - - (4,226)Share-based charges - other (230) (12) - (242)Amortisation of intangible assets - client (5,066) - - (5,066)relationshipsOther operating expenses (69,817) (7,280) - (77,097) Segmental expenses (89,246) (7,292) - (96,538) Segmental operating profit 9,935 2,912 - 12,847 Central expenses (2,129)Profit on disposal of available-for-sale 3,129investmentsFinance income 3,365Finance charges (4,205) Profit before tax 13,007 3. Finance charges Finance charges include amounts payable relating to subordinated debt of£2,142,000 (September 2005: £1,743,000; March 2006: £3,858,000). Details ofsubordinated debt are set out in note 8. 4. Income tax expense United Kingdom corporation tax at 30% (September 2005: 30%; March 2006: 30%).No tax relief is available in respect of the amortisation of the clientrelationships intangible asset nor is tax relief anticipated to be available inrespect of share-based charges in relation to the EBT. 5. Dividends The interim dividend declared for the six months ended 30 September 2006 of 7.5pper share is payable on 2 February 2007 to shareholders on the register as atthe close of business on 5 January 2007. In accordance with the group'saccounting policies and the requirements of IAS 10 'Post Balance Sheet Events',this dividend has not been recognised as a liability at 30 September 2006.Dividends have been recognised in the periods set out below: 2006 2005 2006 6 months 6 months 16 months ended ended ended 30 September 30 September 31 March £'000 £'000 £'000 Amounts recognised as distributions to equity holders during theperiod: Final dividend for the year ended 30 November 2004 of 12.0p per share - 2,629 2,629 First interim dividend for the six months ended 31 May 2005 of 6.6p - - 1,319per share Second interim dividend for the four months ended 30 September 2005 of6.6p per share - - 2,854 Final dividend for the sixteen months ended 31 March 2006 of 13.2p pershare 5,783 - - Special dividend of 45.0p per share - 9,871 9,871 5,783 12,500 16,673 The amounts recognised as distributions to equity holders shown above for thesix months ended 30 September 2005 and the 16 months ended 31 March 2006 excludethe 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 theliability for this dividend formed part of the net assets of CSC at the date ofacquisition. However, this payment does represent a cash outflow from the groupduring the six months ended 30 September 2005 and the 16 months ended 31 March2006 and is included in the cash flow statement in these periods. 6. Earnings per share Basic earnings per share is calculated with reference to earnings forshareholders of £6,268,000 (September 2005: loss for shareholders of £2,134,000;March 2006: earnings for shareholders of £7,633,000) and the weighted averagenumber of shares in issue during the period of 43,632,112 (September 2005:39,722,435; March 2006: 36,595,582). Basic earnings per share beforeamortisation of the client relationships intangible asset, share-based chargesrelating to the EBT, reorganisation costs and profit on disposal ofavailable-for-sale investments is calculated with reference to earnings forshareholders of £10,557,000 (September 2005: £7,701,000; March 2006:£20,150,000) Diluted earnings per share is the basic earnings per share, adjusted for theeffect of the conversion into fully paid shares of the weighted average numberof all employee share options outstanding during the period. The number ofadditional shares used for the diluted calculation is 181,929 shares (September2005: 478,023; March 2006: 491,190). The directors believe that the provision of additional earnings per sharefigures, in particular before amortisation of the client relationshipsintangible asset, share-based charges relating to the EBT, reorganisation costsand profit on disposal of available-for-sale investments, better representunderlying business performance. The effect of these adjustments on earnings andbasic earnings per share is as follows: Six months ended Six months ended Sixteen months ended 30 September 2006 30 September 2005 31 March 2006 Earnings Earnings Earnings Earnings Earnings Earnings per per per share share share £'000 Pence £'000 Pence £'000 Pence Unadjusted earnings and EPS 6,268 14.4 (2,134) (5.4) 7,633 20.9 Share-based charges - EBT 2,328 5.3 1,897 4.8 4,226 11.5 Amortisation of intangible assets 2,802 6.4 2,272 5.7 5,066 13.9- client relationships Reorganisation costs - - 9,068 22.8 9,907 27.1 Profit on disposal of available-for-sale investments - - - - (3,129) (8.6) Tax arising on adjusted items (841) (1.9) (3,402) (8.5) (3,553) (9.7) Adjusted earnings and EPS 10,557 24.2 7,701 19.4 20,150 55.1 7. Intangible assets 2006 2005 2006 30 September 30 September 31 March £'000 £'000 £'000 Goodwill 136,385 136,385 136,385 Client relationships 53,270 58,866 56,072 Software 1,013 723 1,154 190,668 195,974 193,611 8. Subordinated loan The company entered into a £60 million subordinated loan agreement with Investec1 Limited on 6 May 2005. The loan formed part of the consideration for theacquisition of Carr Sheppards Crosthwaite Limited. A fixed rate of interest of7.155% 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. The totalamount of the loan is repayable in equal instalments over eight years, with thefirst instalment becoming payable in 2008. 9. Provisions Reorganisation Lease Restructuring Property Total costs rentals costs dilapidations £'000 £'000 £'000 £'000 £'000 At 1 April 2006 6,796 148 65 150 7,159 Utilised in the period (3,855) (13) (10) - (3,878) At 30 September 2006 2,941 135 55 150 3,281 Reorganisation costs relate to the integration of Carr Sheppards Crosthwaite ('CSC') into the group. Lease rentals represent future rentals on unoccupied leasehold premises to theend of the lease term, up to 2013. The restructuring provision represents the residue of amounts previouslyprovided within Carr Sheppards Crosthwaite Limited, prior to its acquisition bythe company, in respect of the cost of restructuring certain businessactivities. Property dilapidations represent potential costs of reinstatement of the group'sleasehold premises upon expiry of property leases, up to 2017. 10. Share capital 2006 2005 2006 30 September 30 September 31 March Authorised: 54,600,000 ordinary shares of 10 90/91p each £6,000,000 £6,000,000 £6,000,000(September 2005 and March 2006: 54,600,000 ordinary sharesof 10 90/91p each) Allotted and fully paid:43,881,382 ordinary shares of 10 90/91p each £4,822,130 £4,759,087 £4,759,788(September 2005: 43,307,691 ordinary shares of 10 90/91p each;March 2006: 43,314,068 ordinary shares of 10 90/91p each) During the period the company issued 567,314 ordinary shares at a price of £2.45per share under the group's Savings Related Share Option Scheme (SAYE). 11. Reconciliation of equity Sixteen months ended 31 March 2006 and six months ended 30 September 2006 Share Share Capital Available- Revaluation Other Retained Total capital premium redemption for-sale reserve reserves earnings equity reserve reserve £'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 - costs associated with - - - - - (180) - (180)issue of shares Share-based payments - - - - - - 4,472 4,472 Deferred tax on share-based - - - - - - 598 598payments Changes in value ofavailable-for-saleinvestments: - gain arising from changes - - - 738 - - - 738in fair value - gain on disposal - - - (2,709) - - - (2,709)transferred to the incomestatement Deferred tax on revaluationof available-for-saleinvestments: - on gain arising from - - - (221) - - - (221)changes in fair value - on gain on disposal - - - 813 - - - 813transferred to the incomestatement 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 - - - - - - 6,268 6,268 Dividends - - - - - - (5,783) (5,783) Issue of shares 62 1,327 - - - - - 1,389 Share-based payments - - - - - - 2,359 2,359 Deferred tax on share-based - - - - - - (238) (238)payments Gain arising on - - - 161 - - - 161available-for-saleinvestments Deferred tax on - - - (48) - - - (48)available-for-saleinvestments Depreciation on revalued - - - - (6) - 6 -property At 30 September 2006 4,822 10,603 100 1,085 966 130,601 13,715 161,892 Six months ended 30 September 2005 Share Share Capital Available- Revaluation Other Retained Total capital premium redemption for-sale reserve reserves earnings equity reserve reserve £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 31 March 2005 2,209 9,257 100 496 985 6,086 34,151 53,284 Loss after taxation - - - - - - (2,134) (2,134) Dividends - - - - - - (12,500) (12,500) Issue of shares: - ordinary shares issued 2,550 3 - - - 124,695 - 127,248 - EBT shares issued for nil - - - - - - (13,972) (13,972)consideration - costs associated with - - - - - (180) - (180)issue of shares Share-based payments - - - - - - 1,990 1,990 Deferred tax on share-based - - - - - - 106 106payments Gain arising on - - - 156 - - - 156available-for-saleinvestments Deferred tax on - - - (47) - - - (47)available-for-saleinvestments Depreciation on revalued - - - - (6) - 6 -property At 30 September 2005 4,759 9,260 100 605 979 130,601 7,647 153,951 12. Transition to International Financial Reporting Standards On 13 October 2006 the group announced the effect of the transition toInternational Financial Reporting Standards ('IFRS') on its results previouslyreported under UK GAAP. This transitional statement is available on the group'swebsite at www.rensburgsheppards.co.uk. The effect of the transition to IFRS onthe group's total equity at 31 March 2006 and profit after tax for the 16 monthsended 31 March 2006, which is explained fully in the transitional statement, issummarised below. In addition, the effect of the transition on the balancesheet at 30 September 2005 is also set out 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 Consolidated balance sheetat 30 September 2005 Presentation effects of IAS 1 'Presentation of Financial Statements' on UK GAAPbalances As reported IFRS IFRS UK GAAP under adjustments: adjustments: balances in UK GAAP Assets Liabilities IFRS format £'000 £'000 £'000 £'000 Assets Fixed assets Non-current assets Intangible assets 174,885 - - 174,885 Intangible assets Tangible assets 3,920 - - 3,920 Property, plant and equipment Investments 800 - - 800 Available-for-sale investments - 1,708 - 1,708 Deferred tax assets 179,605 1,708 - 181,313 Current assets Current assets Debtors - due within one 112,442 (6,365) - 106,077 Trade and other receivablesyear Debtors - due after one year 7,418 4,657 - 12,075 EBT prepayment Cash at bank and in hand 43,589 - - 43,589 Cash and cash equivalents 163,449 (1,708) - 161,741 Total assets 343,054 - - 343,054 Total assets Creditors Current liabilities Amounts falling due within (117,968) - 2,458 (115,510) Trade and other payablesone year - - (840) (840) Financial liabilities - - (1,618) (1,618) Current tax liabilities (117,968) - - (117,968) Creditors Non-current liabilities Amounts falling due after (60,000) - - (60,000) Subordinated loanmore than one year Provisions for liabilities (8,028) - 8,028 -and charges - - (24) (24) Deferred tax liabilities - - (8,004) (8,004) Provisions (68,028) - - (68,028) Total liabilities (185,996) - - (185,996) Total liabilities Net assets 157,058 - - 157,058 Net assets Capital and reserves Equity attributable to the equity holders of the parent Called up share capital 4,759 - - 4,759 Share capital Share premium account 9,260 - - 9,260 Share premium Capital redemption reserve 100 - - 100 Capital redemption reserve Other reserves 130,601 - - 130,601 Other reserves Profit and loss account 12,338 - - 12,338 Retained earnings Equity shareholders' funds 157,058 - - 157,058 Total equity Consolidated balance sheetat 30 September 2005Measurement effects of IFRS on UK GAAP balances UK GAAP Property Events after balances Business Intangible plant and Financial balance Share-based in IFRS combinations assets equipment instruments sheet date payments format IFRS 3 IAS 38 IAS 16 IAS 39 IAS 10 IFRS 2 IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Assets Non-current assets Intangible assets 174,885 20,366 723 - - - - 195,974 Property, plant and 3,920 - (723) 1,398 - - - 4,595equipment Available-for-sale 800 - - - 864 - - 1,664investments Deferred tax assets 1,708 - - - - - 759 2,467 181,313 20,366 - 1,398 864 - 759 204,700 Current assets Trade and other 106,077 - - - - - - 106,077receivables EBT prepayment 12,075 - - - - - (12,075) - Cash and cash equivalents 43,589 - - - - 1,318 - 44,907 161,741 - - - - 1,318 (12,075) 150,984 Total assets 343,054 20,366 - 1,398 864 1,318 (11,316) 355,684 Current liabilities Trade and other payables (115,510) - - - - 2,851 - (112,659) Financial liabilities (840) - - - - - - (840) Current tax liabilities (1,618) - - - - - - (1,618) (117,968) - - - - 2,851 - (115,117) Non-current liabilities Subordinated loan (60,000) - - - - - - (60,000) Deferred tax liabilities (24) (17,910) - (419) (259) - - (18,612) Provisions (8,004) - - - - - - (8,004) (68,028) (17,910) - (419) (259) - - (86,616) Total liabilities (185,996) (17,910) - (419) (259) 2,851 - (201,733) Net assets 157,058 2,456 - 979 605 4,169 (11,316) 153,951 Equity attributable to theequity holders of theparent Share capital 4,759 - - - - - - 4,759 Share premium 9,260 - - - - - - 9,260 Capital redemption reserve 100 - - - - - - 100 Available-for-sale reserve - - - - 605 - - 605 Revaluation reserve - - - 979 - - - 979 Other reserves 130,601 - - - - - - 130,601 Retained earnings 12,338 2,456 - - - 4,169 (11,316) 7,647 Total equity 157,058 2,456 - 979 605 4,169 (11,316) 153,951 Independent review report by KPMG Audit Plc to Rensburg Sheppards plc Introduction We have been engaged by the company to review the financial informationcontained in the interim report for the six months ended 30 September 2006,which comprises the consolidated income statement, the consolidated balancesheet, the consolidated statement of recognised income and expense, theconsolidated cash flow statement and the related notes. We have read the otherinformation contained in the interim report and considered whether it containsany apparent misstatements or material inconsistencies with the financialinformation. This report is made solely to the company in accordance with the terms of ourengagement to assist the company in meeting the requirements of the ListingRules of the Financial Services Authority. Our review has been undertaken sothat we might state to the company those matters we are required to state to itin this report and for no other purpose. To the fullest extent permitted by law,we do not accept or assume responsibility to anyone other than the company forour review work, for this report, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules which require that the accounting policies and presentation applied to theinterim figures should be consistent with those applied in preparing thepreceding annual financial statements except where any changes, and the reasonsfor them, are disclosed. As disclosed in note 1 to the financial information, the next annual financialstatements of the group will be prepared in accordance with IFRSs as adopted bythe European Union. The accounting policies that have been adopted in preparing the financialinformation are consistent with those that the directors currently intend to usein the next annual financial statements. There is, however, a possibility thatthe directors may determine that some changes to these policies are necessarywhen preparing the full annual financial statements for the first time inaccordance with those IFRSs as adopted by the European Union. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4Review of interim financial information issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of making enquiriesof group management and applying analytical procedures to the financialinformation and underlying financial data and, based thereon, assessing whetherthe accounting policies and presentation have been consistently applied unlessotherwise disclosed. A review is substantially less in scope than an auditperformed in accordance with International Standards of Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 September 2006. KPMG Audit PlcChartered AccountantsLeeds13 November 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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