26th Jul 2007 07:00
Rathbone Brothers PLC26 July 2007 26 July 2007Rathbone Brothers PlcInterim results for the 6 months to 30 June 2007 Rathbones announces record interim results Rathbone Brothers Plc, a leading provider of discretionary fund management andwealth management services for private investors and trustees, announces itsinterim results for the half year ended 30 June 2007. Highlights: • Operating income increased by 15.1% to £75.6 million (30 June 2006: £65.7 million).• Profit before tax for the first half of the year was £25.9 million (30 June 2006: £22.3 million including profit of £1.9 million for a part disposal of the Company's holding of the London Stock Exchange Plc).• Underlying profit before tax, which excludes gains from London Stock Exchange Plc shares, for the first half of the year was £25.9 million - an increase of 27.0% (30 June 2006: £20.4 million).• Basic earnings per share rose by 15.0% to 44.4p (30 June 2006: 38.6p) with underlying basic earnings up 25.8% from 35.3p.• Interim dividend per share is increased by 18.5% to 16.0p (2006: 13.5p) and is payable on 10 October 2007.• Total funds under management increased by 9.0% over the six months to 30 June 2007 to £13.3 billion compared with an increase in the FTSE/APCIMS Balanced Index of 3.0% over the same period.• Funds managed by Rathbone Unit Trust Management increased by 10.5% over the period to £2.1 billion as at 30 June 2007. Mark Powell, chairman of Rathbone Brothers Plc, commented: "All parts of Rathbones have continued to attract inflows of new client funds.Within Rathbone Investment Management the underlying annualised rate of netorganic growth during the period was 7.8% and in Rathbone Unit Trust Managementit was 21.0%. These encouraging figures reflect continued emphasis on marketingin general and in particular our developing involvement with the investmentmanagement of funds held in self-invested personal pensions (SIPPs) offered by avariety of providers. "We continue to experience encouraging levels of enquiry throughout the businessand subject to there being no significant deterioration in world markets,Rathbones remains confident of the future." For further information contact: Rathbone Brothers Plc 020 7399 0000Mark Powell, ChairmanAndy Pomfret, Chief ExecutiveEmily Morris, Marketing DirectorSmithfieldReg Hoare/Miranda Good 020 7360 4900 Notes for editors: Rathbone Brothers Plc Rathbone Brothers Plc specialises in providing, through its subsidiaries,personalised investment management and wealth management services for privateinvestors and trustees, including discretionary fund management, unit trusts,tax planning, trust and company management, pension and banking services. Itmanages £13.3 billion of funds, including £2.1 billion managed by Rathbone UnitTrust Management Limited (as at 30 June 2007). Chairman's statement The six months ended 30 June 2007 has seen Rathbones again produce recordresults. Profits before tax for the first half of the year were £25.9 million, comparedwith £22.3 million for the same period in 2006. Figures for the first half of2006 included profits of £1.9 million for a part disposal of the Company'sholding of the London Stock Exchange Plc and excluding this, underlying profitswere up 27.0% from £20.4 million. Full year reported profits for 2006 were £44.7million. Similarly, reported basic earnings per share rose to 44.4p, compared with 38.6pin the first half of 2006 (an increase of 15.0%) with underlying EPS up 25.8%from 35.3p. The interim dividend is increased by 18.5% to 16.0p and will be payable on 10October 2007. The six months covered by this report have seen world equity markets benefitingfrom increasing earnings and considerable corporate activity. The period hashowever also been characterised by some volatility, especially at the end ofFebruary and into early March when weakness in Far Eastern markets causedconsiderable nervousness. Volatility in world markets underlines the need for carefully considered andsoundly-based investment policies which reflect the individual circumstances andrequirements of our clients and their appetite for risk. We have continued todevelop our investment processes and in particular have added to our expertisein strategic asset allocation and the use of structured products, fund of hedgefunds and private equity. At the end of June total funds under management had reached £13.3 billion,compared with £12.2 billion at 31 December 2006, an increase of 9.0%. Thiscompares with an increase in the FTSE/APCIMS Balanced Index of 3.0%. The valueof funds under management within Rathbone Investment Management rose by 8.7% to£11.2 billion. For the first time, charity funds under management have exceeded£1 billion. The value of funds under management in Rathbone Unit TrustManagement rose by 10.5% to £2.1 billion. All parts of Rathbones have continued to attract inflows of new client funds.Within Rathbone Investment Management the underlying annualised rate of netorganic growth during the period was 7.8% and in Rathbone Unit Trust Managementit was 21.0%. These encouraging figures reflect continued emphasis on marketingin general and in particular our developing involvement with the investmentmanagement of funds held in self-invested personal pensions (SIPPs) offered by avariety of providers. During the first half of the year profits from our trust and tax division roseby 46.2% to £1.9 million, reflecting benefits from the consolidation of ourJersey business into one location as well as an encouraging flow of new businessinto our Geneva and UK businesses. The trust and tax division continues toprovide important services to a wide range of clients. On 2 April 2007 weacquired 100% of a small trust advisory business in Singapore to complement therange of offshore services that Rathbones is able to offer its clients and toprovide an opportunity to attract new business from the Far East and elsewhere. We are engaged in a good deal of preparatory work for the Markets in FinancialInstruments Directive which comes into force this autumn; we are particularlykeen to ensure that our clients do not suffer from excessive bureaucracy. We remain keen to attract acquisitions and recruitments but only where they meetour requirements for a good cultural fit and where they have the capacity to beearnings enhancing within a reasonable time frame. Finally, at the end of this year, Roy Morris, who was chief executive ofRathbones until 2004 when he became a non-executive director, will retire fromthe Board. By this time he will have achieved a quite remarkable 50 years ofcontinuous service to Rathbones - a contribution to the development of thisCompany which is unlikely to be surpassed. We continue to experience encouraging levels of enquiry throughout the businessand subject to there being no significant deterioration in world markets,Rathbones remains confident of the future. Mark PowellChairman25 July 2007 Consolidated interim income statementfor the six months ended 30 June 2007 Note Unaudited Unaudited Audited Six months Six months Year to to to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Interest and similar income 21,883 15,881 37,335Interest expense and similar charges (13,416) (8,783) (21,297) Net interest income 8,467 7,098 16,038 Fee and commission income 71,304 58,846 120,039Fee and commission expense (5,687) (3,775) (8,365) Net fee and commission income 65,617 55,071 111,674 Dividend income 19 93 117Net trading income 812 917 1,285Net income from sale of available for - 1,897 3,196sale securitiesOther operating income 728 628 1,376Operating income 75,643 65,704 133,686Operating expenses (49,784) (43,377) (88,966)Profit before tax 25,859 22,327 44,720Taxation 3 (7,022) (6,237) (12,582)Profit for the period attributable to 18,837 16,090 32,138equity holders of the Company Dividends proposed for the period per 4 16.0p 13.5p 35.0pordinary shareDividends (£'000) 6,817 5,686 14,786 Earnings per share for the period 5attributable to equity holders of theCompany:- Basic 44.4p 38.6p 76.6p- Diluted 43.6p 37.5p 74.7p Consolidated interim balance sheetas at 30 June 2007 Note Unaudited Unaudited Audited 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000AssetsCash and balances at central banks 280 986 281Settlement balances 41,169 30,756 19,628Loans and advances to banks 213,334 172,887 119,247Loans and advances to customers 38,593 75,012 77,360Investment securities- available for sale 6,374 6,662 6,152- held to maturity 568,401 552,003 558,368Intangible assets 84,260 76,796 81,248Property, plant and equipment 7 7,834 4,956 6,463Deferred tax asset 2,810 4,911 5,321Prepayments, accrued income and other 45,624 34,002 38,551assets Total assets 1,008,679 958,971 912,619 LiabilitiesDeposits by banks 8 13,803 12,105 12,119Settlement balances 46,657 40,790 18,078Due to customers 724,968 706,864 664,762Debt securities in issue - 141 -Accruals, deferred income and other 31,615 26,610 31,157liabilitiesCurrent tax liabilities 6,327 4,644 8,143Provisions for liabilities and charges 9 9,484 8,458 8,448Retirement benefit obligations 10 2,100 11,003 10,763Total liabilities 834,954 810,615 753,470EquityShare capital 11 2,130 2,106 2,114Share premium 12 27,115 23,270 24,518Other reserves 12 53,872 54,058 53,717Retained earnings 12 90,608 68,922 78,800Total equity 173,725 148,356 159,149Total equity and liabilities 1,008,679 958,971 912,619 Approved by the Board of Directors on 25 July 2007 Consolidated interim cash flow statementfor the six months ended 30 June 2007 Note Unaudited Unaudited Audited Six months Six months Year to to to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000Cash flows from operating activitiesProfit before tax 25,859 22,327 44,720Net interest income (8,467) (7,098) (16,038)Net income from sale of available for - (1,897) (3,196)sale securities Impairment losses on loans and 56 90 323advancesProfit on disposal of plant and (25) (6) (49)equipmentDepreciation and amortisation 2,159 1,516 3,418Defined benefit pension scheme 1,250 1,809 3,448chargesShare based payment charges 1,458 897 2,080Interest paid (14,323) (9,162) (20,655)Interest received 34,449 21,987 30,728 42,416 30,463 44,779 Changes in operating assets andliabilities:- net decrease in loans and advances 19,250 23,295 18,158to banks and customers- net (increase) in settlement (21,541) (16,739) (5,611)balance debtors- net (increase) in prepayments, (19,556) (15,002) (6,881)accrued income and other assets- net increase in amounts due to 61,922 171,017 129,407customers and deposits by banks- net increase in settlement balance 28,579 24,658 1,946creditors- net increase in accruals, deferred 1,983 2,437 5,296income, provisions and otherliabilitiesCash generated from operations 113,053 220,129 187,094 Defined benefit pension contributions (4,897) (4,520) (5,927)paidTax paid (7,384) (6,771) (10,609)Net cash inflow from operating 100,772 208,838 170,558activities Cash flows from investing activitiesAcquisition of businesses, net of (298) (1,770) (5,786)cash acquiredPurchase of property, equipment and (5,875) (2,566) (5,690)intangible assetsProceeds from sale of property and 25 44 113equipmentPurchase of investment securities (460,489) (658,338) (1,363,970)Proceeds from sale and redemption of 395,455 536,232 1,178,798investment securitiesNet cash (used in) investing (71,182) (126,398) (196,535)activities Cash flows from financing activitiesRepayments of debt securities - - (141)Purchase of shares for share based (3,033) (2,291) (3,407)schemesIssue of ordinary shares 14 2,316 5,611 6,715Dividends paid (9,107) (7,750) (13,449)Net cash used in financing activities (9,824) (4,430) (10,282) Net increase/(decrease) in cash and 19,766 78,010 (36,259)cash equivalentsCash and cash equivalents at 198,343 234,883 234,883beginning of the periodEffect of exchange rate changes on (63) (151) (281)cash and cash equivalentsCash and cash equivalents at end of 14 218,046 312,742 198,343the period Consolidated interim statement of recognised income and expensefor the six months ended 30 June 2007 Unaudited Unaudited Audited Six months Six months Year to to to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Profit after taxation 18,837 16,090 32,138Exchange translation differences (77) (112) (240)Revaluation of available for saleinvestment securities:- net gain from changes in fair value 221 3,390 4,202- net profit on disposal transferred to - (1,897) (3,196)income during the period 221 1,493 1,006 Actuarial gain on retirement benefit 5,016 4,996 5,468obligationDeferred tax on equity items:- available for sale investment (66) (448) (302)securities- actuarial gains and losses (1,505) (1,499) (1,640)- share based payments 517 952 362 (1,054) (995) (1,580) Net income recognised directly in equity 4,106 5,382 4,654Recognised income and expense for the 22,943 21,472 36,792period attributable to equity holders ofthe Company Notes to the consolidated interim accountsfor the six months ended 30 June 2007 1. Principal accounting policies The Group's consolidated accounts are prepared in accordance with InternationalFinancial Reporting Standards as adopted by the EU (IFRS). These interimaccounts are presented in accordance with IAS 34 Interim Financial Reporting.The interim accounts have been prepared on the basis of the accounting policies,methods of computation and presentation set out in the Group's consolidatedaccounts for the year ended 31 December 2006. The interim accounts should beread in conjunction with the Group's audited accounts for the year ended 31December 2006. The information in this announcement does not comprise Statutory Accounts withinthe meaning of section 240 of the Companies Act 1985. The Group's accounts forthe year ended 31 December 2006 have been reported on by the auditors anddelivered to the Registrar of Companies. The report of the auditors wasunqualified and did not draw attention to any matters by way of emphasis. Theyalso did not contain a statement under section 237(2) or (3) of the CompaniesAct 1985. 2. Segmental information (a) Business segments For management purposes, the Group is currently organised into three operatingdivisions: Investment Management and Banking, Unit Trusts and Trust and TaxServices. These divisions are the basis on which the Group reports its primarysegment information. A reconciliation of total revenues to the Income Statementis included in note 2(c). 30 June 2007 Investment (unaudited) management Trust and and Unit tax banking trusts services Eliminations Total £'000 £'000 £'000 £'000 £'000 External revenues 67,278 15,015 12,453 - 94,746Revenues from other 822 - - (822) -segments 68,100 15,015 12,453 (822) 94,746Unallocated external -revenuesTotal revenues 94,746 Segment result 20,275 3,719 1,865 25,859Unallocated items -Profit before tax 25,859Taxation (7,022)Profit for the 18,837period Segment assets 907,034 23,882 56,971 987,887Unallocated assets 20,792Total assets 1,008,679 Segment liabilities 776,336 16,624 17,972 810,932Unallocated 24,022liabilitiesTotal liabilities 834,954 Other segment items:Capital expenditure 5,287 152 461 5,900Depreciation and 1,705 71 383 2,159amortisationOther non-cash 1,012 129 303 1,444expensesProvisions charged 210 - 728 938in the periodProvisions utilised 2,383 - 42 2,425in the period 2. Segmental information (continued) 30 June 2006 Investment (unaudited) management Trust and and Unit tax banking trusts services Eliminations Total £'000 £'000 £'000 £'000 £'000 External revenues 54,513 10,793 11,011 - 76,317Revenues from other 707 - - (707) -segments 55,220 10,793 11,011 (707) 76,317Unallocated external 1,945revenuesTotal revenues 78,262 Segment result 16,578 2,549 1,255 20,382Unallocated items 1,945Profit before tax 22,327Taxation (6,237)Profit for the 16,090period Segment assets 856,204 16,977 55,373 928,554Unallocated assets 30,417Total assets 958,971 Segment liabilities 750,656 12,010 18,608 781,274Unallocated 29,341liabilitiesTotal liabilities 810,615 Other segment items:Capital expenditure 6,091 87 439 6,617Depreciation and 1,194 59 263 1,516amortisationOther non-cash 815 125 378 1,318expensesProvisions charged 594 - 72 666in the periodProvisions utilised 176 - 372 548in the period Investment management Trust and and Unit tax31 December 2006 banking trusts services Eliminations Total (audited) £'000 £'000 £'000 £'000 £'000 External revenues 115,322 22,652 22,178 - 160,152Revenues from other 1,463 - - (1,463) -segments 116,785 22,652 22,178 (1,463) 160,152Unallocated external 3,196revenuesTotal revenues 163,348 Segment result 34,119 5,059 2,346 41,524Unallocated items 3,196Profit before tax 44,720Taxation (12,582)Profit for the year 32,138 Segment assets 805,597 17,307 55,193 878,097Unallocated assets 34,522Total assets 912,619 Segment liabilities 689,943 12,654 18,048 720,645Unallocated 32,825liabilitiesTotal liabilities 753,470 Other segment items:Capital expenditure 11,995 194 2,393 14,582Depreciation and 2,737 143 538 3,418amortisationOther non-cash 1,481 208 714 2,403expensesProvisions charged 1,788 - 613 2,401in the periodProvisions utilised 6,273 - 457 6,730in the period 2. Segmental information (continued) (b) Geographical segments The Group's operations are located in the United Kingdom, Jersey, Switzerland,the British Virgin Islands and Singapore. The following table provides ananalysis of the Group's revenues by geographical market, by origin of theservices: Total revenues by geographical market Unaudited Unaudited Audited Six months Six months Year to to to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 United Kingdom 82,051 67,016 140,666Jersey 10,410 9,029 18,421Rest of the world 2,285 2,217 4,261 94,746 78,262 163,348 The following is an analysis of the carrying amount of segment assets, andadditions to property, plant and equipment and intangible assets, analysed bythe geographical area in which the assets are located: Assets allocated to business segments Unaudited Unaudited Audited Six months Six months Year to to to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 United Kingdom 937,467 882,506 826,822Jersey 31,733 26,056 31,448Rest of the world 18,687 19,992 19,827 987,887 928,554 878,097 Additions to property, plant and equipment and intangible assets Unaudited Unaudited Audited Six months Six months Year to to to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 United Kingdom 5,724 6,342 12,421Jersey 168 252 2,122Rest of the world 8 23 39 5,900 6,617 14,582 (c) Total revenues and operating income Unaudited Unaudited Audited Six months Six months Year to to to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Interest and similar income 21,883 15,881 37,335Fee and commission income 71,304 58,846 120,039Dividend income 19 93 117Net trading income 812 917 1,285Net income from sale of available - 1,897 3,196for sale securitiesOther operating income 728 628 1,376Total revenues 94,746 78,262 163,348Interest expense and similar (13,416) (8,783) (21,297)chargesFee and commission expense (5,687) (3,775) (8,365)Operating income 75,643 65,704 133,686 3. Taxation The current tax expense for the six months ended 30 June 2007 was calculatedbased on the estimated average annual effective tax rate. The overall effectivetax rate for this period was 27.2% (30 June 2006: 27.9%; 31 December 2006:28.13%). The taxation charge for the period comprises: Unaudited Unaudited Audited Six months Six months Year to to to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 United Kingdom taxation 4,954 3,007 10,078Overseas taxation 611 539 806Deferred taxation 1,457 2,691 1,698 7,022 6,237 12,582 The 2007 Finance Bill reduced the standard UK Corporation Tax rate from 30% to28%, with effect from 1 April 2008. This has been considered in determiningdeferred tax assets and liabilities. 4. Dividend The interim dividend of 16.0p per share is payable on 10 October 2007 toshareholders on the register at the close of business on 21 September 2007 (30June 2006: 13.5p). The interim dividend has not been included as a liability inthis interim report. The 2006 final dividend of 21.5p per share was paid on 10May 2007. 5. Earnings per share Basic earnings per share has been calculated by dividing the profitsattributable to shareholders of £18,837,000 (30 June 2006: £16,090,000; 31December 2006: £32,138,000) by the weighted average number of shares in issuethroughout the period of 42,422,960 (30 June 2006: 41,697,326; 31 December 2006:41,946,781). Diluted earnings per share is the basic earnings per share, adjusted for theeffect of contingently issuable shares under the Long Term Incentive Plan,employee share options remaining capable of exercise and any dilutive shares tobe issued under the Share Incentive Plan, weighted for the relevant period (seetable below). Unaudited Unaudited Audited Six months Six months Year to to to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Weighted average number of 42,422,960 41,697,326 41,946,781ordinary shares in issue duringthe period - basicEffect of ordinary share options 502,377 667,803 580,127Effect of dilutive shares 70,109 152,580issuable under the ShareIncentive Plan 197,480Effect of contingently issuable 167,385 303,870 334,720ordinary shares under the LongTerm Incentive PlanDiluted ordinary shares 43,162,831 42,866,479 43,014,208 6. Business combinations On 2 April 2007, the Group acquired Federal Trust (Singapore) Pte Limited forcash consideration of £496,000 and contingent, deferred consideration of up to£249,000. The acquired business' net assets at the acquisition date were asfollows: Recognised Fair value Carrying values adjustments amounts £'000 £'000 £'000 Cash and cash equivalents 198 - 198Other current assets 170 - 170Property, plant and equipment 9 - 9Client relationships 93 93 -Current liabilities (293) - (293)Net identifiable assets acquired 177 93 84Goodwill on acquisition 568Total net assets acquired 745 Included within the consolidated income statement for the six months ended 30June 2007 is a loss before tax, including acquisition costs, of £115,000relating to the acquired business. If the business had been acquired on 1January 2007, consolidated profit before tax for the Group would have been£25,890,000. The goodwill arising on the acquisition is attributable to the anticipatedprofitability of incorporating the business into the Group's operating model. 7. Property, plant and equipment During the six months ended 30 June 2007, the Group acquired assets with a costof £2,673,000 (30 June 2006: £1,591,000; 31 December 2006: £4,170,000),including assets acquired through business combinations of £9,000 (30 June 2006and 31 December 2006: £91,000). Assets with a net book value of £nil were disposed of in the six months ended 30June 2007 (30 June 2006: £38,000; 31 December 2006: £64,000), resulting in again on disposal of £25,000 (30 June 2006: £6,000; 31 December 2006: £49,000). 8. Deposits by banks Included within deposits by banks is a term loan of £13,800,000 which isrepayable in nine, six-monthly instalments ending on 4 April 2011. Interest ispayable on the loan at 0.7% above the London Inter-Bank Offer Rate (30 June2006: £12,000,000; 31 December 2006: £12,000,000). 9. Provisions for liabilities and charges Deferred Litigation contingent Client related & consideration compensation other Total £'000 £'000 £'000 £'000 At 1 January 2007 6,407 1,525 516 8,448Exchange adjustments - - (3) (3) Charged to the income 440 498 938statementUnused amount credited (11) (106) (117)to the incomestatementNet charge to the 429 392 821income statement (i) Capitalised during the 2,643 2,643period (ii)Utilised/paid during (1,982) (404) (39) (2,425)the period 7,068 1,550 866 9,484 Current 3,733 1,550 807 6,090Non-current 3,335 - 59 3,394 7,068 1,550 866 9,484 (i) In addition to the net charge of £821,000 in the above table, a net creditof £489,000 has been recognised in the income statement during the period inrelation to expected insurance recoveries - an overall charge of £332,000. (ii) Amounts capitalised as intangible assets during the period include deferredconsideration of £249,000 in relation to the acquisition of Federal Trust(Singapore) Pte Limited and £2,394,000 of deferred payments to InvestmentManagers under earn-out schemes. 10. Retirement benefit obligations The Group operates two pension schemes providing benefits based on finalpensionable pay for executive directors and staff employed by the Company. Forthe purposes of calculating the pension benefit obligation, the followingfinancial assumptions have been used. Unaudited Unaudited Audited Six months Six months Year to to to 30 June 30 June 31 December 2007 2006 2006 % p.a. % p.a. % p.a. Rate of increase in salaries 4.45 4.15 4.15Rate of increase of pensions inpayment:- Laurence Keen Scheme *3.60 *2.90 *3.50- Rathbones 1987 Scheme *3.10 *2.90 *2.90Rate of increase of deferred 3.20 2.90 2.90pensionsDiscount rate 5.80 5.30 5.20Inflation assumption 3.20 2.90 2.90 *5% for service prior to April 2001 Normal retirement age is 65 for members of the Laurence Keen Scheme and 60 formembers of the Rathbone 1987 Scheme. The assumed life expectations onretirement, which are the same as at 30 June 2007, 30 June 2006 and 31 December2006, were: Aged 60 Aged 65 Males Females Males Females Members retiring in 2007 24.7 27.6 20.0 22.9 Members retiring in 2027 25.9 28.7 21.1 23.9 The amount included in the balance sheet arising from the Group's obligations inrespect of the schemes is as follows: Unaudited Unaudited Audited Six months Six months Year to to to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Present value of defined benefit (63,455) (59,846) (64,405)obligationsFair value of scheme assets 61,355 48,843 53,642 (2,100) (11,003) (10,763) On 29 March 2007, the Group made a special contribution of £3,500,000 (30 June2006 and 31 December 2006: £3,000,000) into the Rathbone 1987 scheme as part ofits commitment to reduce significantly the scheme's funding deficit. 11. Share capital The following movements in share capital occurred during the period: Number of Exercise Share Share Total shares price capital premium consideration issued Pence £'000 £'000 £'000Issue of shares inrelation to:- share incentive plan 55,693 1,174.0 3 651 654- exercise of options 275,237 372.0-1,172.0 13 1,946 1,959 16 2,597 2,613 12. Reserves and retained earnings Share Merger Available Translation Retained premium reserve for sale reserve earnings reserve £'000 £'000 £'000 £'000 £'000 At 1 January 2006 17,487 49,428 3,585 11 57,843 Profit for the period 16,090Foreign currency translation (112)Dividends paid (7,750)Shares issued 5,783Actuarial gains and losses 4,996Revaluation of investment 3,390securitiesNet gains transferred to net (1,897)profit on disposal ofavailable for sale investmentsecuritiesShare based payments- value of employee services 897- cost of shares issued/ (2,506)purchasedTax on equity items (448) (547)At 30 June 2006 23,270 49,428 4,630 (101) 69,023Profit for the period 16,048Foreign currency translation (128)Dividends paid (5,699)Shares issued 1,248Actuarial gains and losses 472Revaluation of investment 812securitiesNet gains transferred to net (1,299)profit on disposal ofavailable for sale investmentsecuritiesShare based payments- value of employee services 1,183- cost of shares issued/ (1,267)purchasedTax on equity items 146 (731) At 1 January 2007 24,518 49,428 4,289 (229) 79,029Profit for the period 18,837Foreign currency translation (77)Dividends paid (9,107)Shares issued 2,597Actuarial gains and losses 5,016Revaluation of investment 221securities Share based payments- value of employee services 1,458- cost of shares issued/ (3,331)purchasedTax on equity items (66) (988)At 30 June 2007 27,115 49,428 4,444 (306) 90,914 Other reserves reported in the Balance Sheet comprise the merger reserve and theavailable for sale reserve. Retained earnings reported in the Balance Sheetinclude the translation reserve. 13. Contingent liabilities Since the year end, the Group has completed the review of its Rathbone SelfInvested Personal Pension business. At 30 June 2007 provision has been made,where judged necessary, for cases subject to the review. 14. Consolidated cash flow statement For the purposes of the cash flow statement, cash and cash equivalents comprisethe following balances with less than three months maturity from the date ofacquisition: Unaudited Unaudited Audited Six months Six months Year to to to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Cash and balances at central 11 694 5 banks Loans and advances to banks 183,035 164,048 108,338 Investment securities 35,000 148,000 90,000 218,046 312,742 198,343 Cash flows arising from issue of ordinary shares comprise: Unaudited Unaudited Audited Six months Six months Year to to to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Cash inflow - share capital 16 43 51 Cash inflow - share premium 2,597 5,783 7,031 Cash outflow - financing of shares (297) (215) (367)in relation to share based schemes 2,316 5,611 6,715 15. Related party transactions Certain directors of Rathbone Trust Company Jersey Limited are also partners ofNigel Harris & Partners. During the period, £255,138 (30 June 2006: £296,000; 31December 2006: £562,548) was paid to Nigel Harris & Partners for servicessupplied to Rathbone Trust Company Jersey Limited. At 30 June 2007, £272,477(30 June 2006: £251,000; 31 December 2006: £253,322) was due from Nigel Harris &Partners. Certain directors of Rathbone Trust Company Jersey Limited are also partners ofGalsworthy & Stones. During the period, £273,941 (30 June 2006: £178,000; 31December 2006: £351,946) was received from Galsworthy & Stones for servicessupplied by Rathbone Trust Company Jersey Limited. At 30 June 2007, £407,550 (30June 2006: £275,000; 31 December 2006: £414,366) was due from Galsworthy &Stones. At 30 June 2007, key management and their close family members had outstandingdeposits of £339,000 (30 June 2006: £607,000; 31 December 2006: £843,000) and outstanding loans of £175,000 (30 June 2006: £77,000; 31 December 2006: £178,000), which were made on normal business terms. A number of the Company's directors and their close family members make use of the services provided by companies within the Group. Charges for such services are made at various staff rates. Rathbone Trust Company Jersey Limited is the tenant of a property in St Helier,Jersey, the freehold of which is owned by a number of the directors of thecompany. Annual rental of £150,000 (30 June 2006 and 31 December 2006: £150,000)is payable under the lease. All amounts outstanding with related parties are unsecured and will be settledin cash. No guarantees have been given or received. No provisions have been madefor doubtful debts in respect of the amounts owed by related parties. Independent review report to Rathbone Brothers PlcIntroduction We have been instructed by the Company to review the financial information forthe six months ended 30 June 2007 which comprises the consolidated interimincome statement, consolidated interim balance sheet, consolidated interim cashflow statement, consolidated interim statement of recognised income and expenseand the notes to the consolidated interim accounts. We have read the otherinformation contained in the interim report and considered whether it containsany apparent misstatements or material inconsistencies with the financialinformation. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The ListingRules of the Financial Services Authority require that the accounting policiesand presentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes, andthe reasons for them, are disclosed. This interim report has been prepared in accordance with InternationalAccounting Standard 34, 'Interim financial reporting'. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of Group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the disclosed accounting policies havebeen applied. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit and therefore provides a lower level of assurance.Accordingly we do not express an audit opinion on the financial information.This report, including the conclusion, has been prepared for and only for theCompany for the purpose of the Listing Rules of the Financial Services Authorityand for no other purpose. We do not, in producing this report, accept or assumeresponsibility for any other purpose or to any other person to whom this reportis shown or into whose hands it may come save where expressly agreed by ourprior consent in writing. 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 June 2007. PricewaterhouseCoopers LLPLondon25 July 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Rathbone