Interim Results
Rensburg Sheppards plc
14 November 2006
14 November 2006
Rensburg Sheppards plc
('Rensburg Sheppards' or 'the Company')
Interim Results
Rensburg Sheppards, the investment management group, today announces its interim
results 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-based
charges relating to the Employee Benefit Trust ('EBT') and reorganisation costs.
These items amount to a net charge before tax of £5.1 million (2005: £13.2
million) 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 enlarged
group is now in a strong position to achieve further growth."
An analysts meeting will be held today at 9.30am at the offices of Hudson
Sandler, 29 Cloth Fair, London, EC1A 7NN.
For further information, please contact:
Michael Burns, Chief Executive Tel: 0151 227 2030
Rensburg Sheppards plc
Steve Elliott, Managing Director Tel: 020 7597 1234
Rensburg Sheppards plc
Nick Lyon / James White Tel: 020 7796 4133
Hudson Sandler
CHAIRMAN'S STATEMENT
Financial results and dividend
It is pleasing to be able to report an improvement in the group's underlying
financial performance for the six months ended 30 September 2006. This reflects
an increased level of synergy benefits that have been derived from the
acquisition in May 2005 of Carr Sheppards Crosthwaite ('CSC') and the continued
improvement in the UK financial markets.
From revenue (net of fees and commissions payable to introducers) of £53.6
million (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 £5.1
million (2005: £13.2 million) in respect of the amortisation of the client
relationships intangible asset, the share-based charges relating to the Employee
Benefit Trust ('EBT') and the reorganisation costs associated with the
integration of CSC, the resulting adjusted profit before tax increased to £15.3
million (2005: £11.0 million). It is the directors' opinion that this adjusted
measure of profit before tax and that of earnings given below represent better
measures of the group's underlying financial performance.
Basic earnings per share were 14.4p (2005: loss per share of 5.4p) and on the
basis of adjusting for the items detailed in the above paragraph, together with
the associated tax consequences of these adjustments, the adjusted basic
earnings per share were 24.2p (2005: 19.4p).
The results for the six months ended 30 September 2006 have been prepared under
International Financial Reporting Standards ('IFRS'). The effect of the
transition to IFRS on the group's figures for the last full financial period
ended 31 March 2006 was announced during October 2006 and further details are
set out in note 12 to the interim results.
The directors have declared a dividend of 7.5p per ordinary share payable on 2
February 2007 to all shareholders on the register as at the close of business on
5 January 2007.
Operations
Rensburg Sheppards Investment Management ('RSIM') had discretionary funds under
management totalling £7.9 billion (2005: £6.7 billion) and non-discretionary
funds under management of £4.0 billion (2005: £4.1 billion). This gives total
funds under management at 30 September 2006 of £11.9 billion (2005: £10.8
billion); 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 Balanced
index, which ended the period at 2,856.90.
At the two key quarterly fee billing points during this reporting period the
FTSE/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, information
technology systems integrated and the alignment of employee remuneration
structures 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 30
September 2006. During the half year under review the group benefited from
approximately £1 million of pre-tax cost synergy benefits derived from the
acquisition of CSC. Given that the settlement functions have now combined, the
board expects the group to benefit from approximately £2 million of such
synergies in the second half of this financial year and the board continues to
expect 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 the
above synergies will be finalised over the second half of this financial year.
At this advanced stage, with the majority of the reorganisation costs firmly
agreed, the final total cost of such expenditure is not now expected to exceed
our original estimate of £10 million. This compares with the board's last
estimate 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 the
alignment of our charging structures onto a common rate card, we have commenced
a full scale review of the output delivered to our clients, with improvements
already starting to filter through. We have identified an extensive programme
of alterations to ensure we keep our services at the forefront of those
available across our peer group. The committees that determine our investment
process are now well settled and are delivering a consistent message that is
tailored for each client by their investment manager.
Rensburg Fund Management ('RFM') increased the value of its retail unit trust
based funds under management by 34% to £1.03 billion (2005: £0.77 billion). On 1
September 2006 RFM successfully launched the UK Managers' Focus Trust, which by
30 September 2006 had grown to £42 million. The total value of the two
segregated 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 the
Company as both Chief Executive and as a director at the end of the current
financial year on 31 March 2007. Having served the Company with such
effectiveness for more than 10 years, Mike will be missed greatly, but in Steve
Elliott, currently Managing Director of the Company and previously Chief
Executive 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 for
their efforts over the period, but notably to those whose drive and
determination allowed us to complete the integration of CSC and Rensburg.
Outlook
Since 30 September 2006 the UK financial markets have advanced further, which
augurs well for the second half of the financial year. The completion of the
integration of CSC now enables the group to focus its attention upon the organic
growth opportunities that are undoubtedly available and to evaluate carefully
any opportunities to acquire businesses that may arise.
C.G. Clarke
Chairman
13 November 2006
Consolidated income statement
for 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 45,396 117,389
Fees 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) 7,633
holders 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 sheet
at 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 the
equity 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 expense
for 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-sale
investments
-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 statement
for 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) 13,007
Adjustments 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 4,472
Profit on disposal of available-for-sale investments - - (3,129)
Loss on disposal of tangible fixed assets - 56 58
Non-cash reorganisation costs - 669 669
Decrease/(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 3,823
Interest 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 activities
Purchase of property, plant and equipment (119) (315) (1,024)
Purchase of intangible software (160) (258) (810)
Proceeds from disposal of available-for-sale investments - - 3,129
Acquisition of subsidiaries, net of cash acquired - 16,830 16,830
Deferred consideration paid - - (52)
Net cash used in investing activities (279) 16,257 18,073
Cash flows from financing activities
Dividends paid to shareholders 5 (5,783) (22,766) (26,939)
Proceeds from issue of ordinary share capital 1,389 3 25
Costs 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 EC
Regulation No. 1606/2002 to report its consolidated financial statements in
accordance with International Financial Reporting Standards as endorsed by the
European Union ('EU') and adopted by the EU ('adopted IFRSs'). The financial
information contained within these interim results has been prepared in
accordance with current standards and interpretations as issued by the
International accounting standards Board ('IASB') and its predecessors and
adopted by the European Commission ('EC'). However, the standards that are in
issue 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 the
International Financial Reporting Interpretations Commission ('IFRIC').
Accordingly, modifications may be required to be made to the information as
presented in these interim results as further guidance is issued and as practice
develops, before its inclusion in the 2007 Report and Accounts, which will be
the group's first full financial statements prepared in accordance with IFRS.
The financial information included in these interim results is unaudited and
does not constitute statutory accounts within the meaning of section 240 of the
Companies Act 1985. The comparative figures for the 16 month period ended 31
March 2006 are not the company's statutory accounts for that period. Those
accounts, which were prepared under UK Generally Accepted Accounting Practices,
have been reported on by the company's auditor and delivered to the Registrar of
Companies. The report of the auditor was (i) unqualified, (ii) did not include
a reference to any matters to which the auditors drew attention by way of
emphasis without qualifying their report and (iii) did not contain a statement
under section 237 (2) or (3) of the Companies Act 1985.
The accounting policies that the directors expect will apply to the preparation
of the first annual IFRS financial statements for the year ending 31 March 2007
are set out in the IFRS transitional statement issued by the company on 13
October 2006. The statement is available on the group's website at
www.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 two
business segments are undertaken on an arm's length basis on normal commercial
terms. All of the group's activities are undertaken in the United Kingdom and
hence relate to a single geographical segment.
Six months ended 30 September 2006
Investment Fund
Management Management Eliminations Group
£'000 £'000 £'000 £'000
Revenue
- External 49,831 8,219 - 58,050
- Inter-segment 272 - (272) -
50,103 8,219 (272) 58,050
Fees and commissions payable (1,907) (2,821) 272 (4,456)
Segmental net revenue 48,196 5,398 - 53,594
Share-based charges - EBT (2,328) - - (2,328)
Share-based charges - other (29) (2) - (31)
Amortisation of intangible assets - client (2,802) - - (2,802)
relationships
Other 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 1,285
Finance 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) 45,396
Fees 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)
relationships
Other 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 1,341
Finance 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) 117,389
Fees and commissions payable (3,492) (5,300) 788 (8,004)
Segmental net revenue 99,181 10,204 - 109,385
Reorganisation costs (9,907) - - (9,907)
Share-based charges - EBT (4,226) - - (4,226)
Share-based charges - other (230) (12) - (242)
Amortisation of intangible assets - client (5,066) - - (5,066)
relationships
Other 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 3,129
investments
Finance income 3,365
Finance 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 of
subordinated 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 client
relationships intangible asset nor is tax relief anticipated to be available in
respect of share-based charges in relation to the EBT.
5. Dividends
The interim dividend declared for the six months ended 30 September 2006 of 7.5p
per share is payable on 2 February 2007 to shareholders on the register as at
the close of business on 5 January 2007. In accordance with the group's
accounting 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 the
period:
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 - - 1,319
per share
Second interim dividend for the four months ended 30 September 2005 of
6.6p per share - - 2,854
Final dividend for the sixteen months ended 31 March 2006 of 13.2p per
share 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 the
six months ended 30 September 2005 and the 16 months ended 31 March 2006 exclude
the dividend of £10,266,000 paid by Carr Sheppards Crosthwaite Limited ('CSC')
to Investec following the group's acquisition of CSC on 6 May 2005, as the
liability for this dividend formed part of the net assets of CSC at the date of
acquisition. However, this payment does represent a cash outflow from the group
during the six months ended 30 September 2005 and the 16 months ended 31 March
2006 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 for
shareholders 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 average
number 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 before
amortisation of the client relationships intangible asset, share-based charges
relating to the EBT, reorganisation costs and profit on disposal of
available-for-sale investments is calculated with reference to earnings for
shareholders 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 the
effect of the conversion into fully paid shares of the weighted average number
of all employee share options outstanding during the period. The number of
additional shares used for the diluted calculation is 181,929 shares (September
2005: 478,023; March 2006: 491,190).
The directors believe that the provision of additional earnings per share
figures, in particular before amortisation of the client relationships
intangible asset, share-based charges relating to the EBT, reorganisation costs
and profit on disposal of available-for-sale investments, better represent
underlying business performance. The effect of these adjustments on earnings and
basic earnings per share is as follows:
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 Investec
1 Limited on 6 May 2005. The loan formed part of the consideration for the
acquisition of Carr Sheppards Crosthwaite Limited. A fixed rate of interest of
7.155% per annum is payable on £45 million of the loan and a floating rate,
being 2.25% above LIBOR, is payable on £15 million of the loan. The total
amount of the loan is repayable in equal instalments over eight years, with the
first 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 the
end of the lease term, up to 2013.
The restructuring provision represents the residue of amounts previously
provided within Carr Sheppards Crosthwaite Limited, prior to its acquisition by
the company, in respect of the cost of restructuring certain business
activities.
Property dilapidations represent potential costs of reinstatement of the group's
leasehold 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 shares
of 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 £2.45
per 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 - - - - - - 598 598
payments
Changes in value of
available-for-sale
investments:
- gain arising from changes - - - 738 - - - 738
in fair value
- gain on disposal - - - (2,709) - - - (2,709)
transferred to the income
statement
Deferred tax on revaluation
of available-for-sale
investments:
- on gain arising from - - - (221) - - - (221)
changes in fair value
- on gain on disposal - - - 813 - - - 813
transferred to the income
statement
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 - - - 161
available-for-sale
investments
Deferred tax on - - - (48) - - - (48)
available-for-sale
investments
Depreciation on revalued - - - - (6) - 6 -
property
At 30 September 2006 4,822 10,603 100 1,085 966 130,601 13,715 161,892
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 - - - - - - 106 106
payments
Gain arising on - - - 156 - - - 156
available-for-sale
investments
Deferred tax on - - - (47) - - - (47)
available-for-sale
investments
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 to
International Financial Reporting Standards ('IFRS') on its results previously
reported under UK GAAP. This transitional statement is available on the group's
website at www.rensburgsheppards.co.uk. The effect of the transition to IFRS on
the group's total equity at 31 March 2006 and profit after tax for the 16 months
ended 31 March 2006, which is explained fully in the transitional statement, is
summarised below. In addition, the effect of the transition on the balance
sheet 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 sheet
at 30 September 2005
Presentation effects of IAS 1 'Presentation of Financial Statements' on UK GAAP
balances
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 receivables
year
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 payables
one 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 loan
more 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 sheet
at 30 September 2005
Measurement 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 - - - 4,595
equipment
Available-for-sale 800 - - - 864 - - 1,664
investments
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 - - - - - - 106,077
receivables
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 the
equity holders of the
parent
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 information
contained in the interim report for the six months ended 30 September 2006,
which comprises the consolidated income statement, the consolidated balance
sheet, the consolidated statement of recognised income and expense, the
consolidated cash flow statement and the related notes. 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.
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the Listing
Rules of the Financial Services Authority. Our review has been undertaken so
that we might state to the company those matters we are required to state to it
in this report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the company for
our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of and has been approved by the directors. The directors are
responsible for preparing the interim report in accordance with the Listing
Rules which require that the accounting policies and presentation applied to the
interim figures should be consistent with those applied in preparing the
preceding annual financial statements except where any changes, and the reasons
for them, are disclosed.
As disclosed in note 1 to the financial information, the next annual financial
statements of the group will be prepared in accordance with IFRSs as adopted by
the European Union.
The accounting policies that have been adopted in preparing the financial
information are consistent with those that the directors currently intend to use
in the next annual financial statements. There is, however, a possibility that
the directors may determine that some changes to these policies are necessary
when preparing the full annual financial statements for the first time in
accordance with those IFRSs as adopted by the European Union.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
Review of interim financial information 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 accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review is substantially less in scope than an audit
performed in accordance with International Standards of Auditing (UK and
Ireland) 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 that
should be made to the financial information as presented for the six months
ended 30 September 2006.
KPMG Audit Plc
Chartered Accountants
Leeds
13 November 2006
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