Interim Results

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

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