TIDMRAT
Funds under management up 5% at Rathbones
This statement is a half-yearly financial report in accordance with the UK
Listing Authority's Disclosure and Transparency Rules. It covers the six month
period ended 30 June 2012.
Andy Pomfret, Chief Executive of Rathbone Brothers Plc, said:
"Our first half performance has been resilient despite volatile investment
markets as we have seen the full benefit of recent acquisitions and continuing
net organic growth. Organic and acquired growth in our investment management
business was an annualised 6.7% in the six months to 30 June 2012 (2011: 8.4%).
"In spite of challenging investment conditions, we are continuing to invest in
people and systems to improve both our efficiency and respond to regulatory
change. Whilst investment markets are expected to remain uncertain, Rathbones is
as well placed as ever to develop future growth."
Highlights:
* Total funds under management at 30 June 2012 were GBP16.65 billion, up 5.0%
from GBP15.85 billion at 31 December 2011. In contrast, the FTSE 100 Index was
unchanged over the same period, whilst the FTSE APCIMS Balanced Index had
increased by 1.6%.
* Total net organic and acquired growth in the funds managed by Rathbone
Investment Management was GBP497 million in the first six months of 2012,
representing a net annual growth rate of 6.7% (2011: 8.4%). Net organic
growth of GBP270 million for the first half represents an underlying
annualised rate of net organic growth of 3.7% (2011: 6.9%).
* Profit before tax was GBP19.9 million for the six months ended 30 June 2012,
down 3.4% compared to GBP20.6 million in 2011. Underlying profit before tax
(excluding amortisation of client relationship intangible assets and head
office relocation costs) decreased 4.1% from GBP24.2 million to GBP23.2
million.
* Underlying operating income in Investment Management of GBP73.4 million in the
first six months of 2012 (2011: GBP69.5 million) was up 5.6%. The average
FTSE 100 Index was 5647 on our quarterly billing dates in 2012, compared to
5976 in 2011, a decrease of 5.5%.
* Net interest income of GBP5.1 million in the first six months of 2012 is
largely comparable to the GBP5.2 million earned in the same period in 2011 as
lower returns on treasury assets offset higher levels of average client
deposits.
* Funds under management in Rathbone Unit Trust Management were GBP1,147 million
at 30 June 2012 (31 December 2011: GBP1,085 million) after seven consecutive
quarters of net inflows. Net inflows were GBP32 million in the first half of
2012 (2011: GBP38 million). Underlying operating income in Rathbone Unit
Trust Management of GBP4.4 million in the six months ended 30 June 2012
increased 7.3% from GBP4.1 million in the first half of 2011.
* Underlying operating expenses of GBP54.5 million for the six months ended 30
June 2012 were up 10.5% on GBP49.3 million in the first half of 2011 largely
as a result of higher client facing headcount and investment in marketing,
research and compliance staff. Pension costs increased by GBP1.0 million
compared to 2011 as a result of lower bond yields, and property costs
increased as a result of our recent London head office move and additional
space in Liverpool.
Issued on 25 July 2012
For further information contact:
Rathbone Brothers Plc Quill PR
Tel: 020 7399 0000 Tel: 020 7466 5054
email: marketing@rathbones.com
Mark Nicholls, Chairman Hugo Mortimer-Harvey
Andy Pomfret, Chief Executive
Paul Stockton, Finance Director
Rathbone Brothers Plc
Rathbone Brothers Plc is a leading provider of high-quality, personalised
investment and wealth management services for private clients, charities and
trustees. This includes discretionary investment management, unit trusts, tax
planning, trust and company management, pension advice and banking services.
Rathbones has over 780 staff in 11 UK locations and Jersey, and has its
headquarters in Curzon Street, London.
www.rathbones.com
Interim management report
Results and Financial Highlights
Profit before tax for the first half of 2012 was GBP19.9 million, down 3.4% on the
GBP20.6 million reported in the same period last year. Earnings per share
increased 1.6% to 34.83p (2011: 34.28p) reflecting lower corporate tax rates.
Underlying profit before tax (stated before amortisation of client relationships
and head office relocation costs) was GBP23.2 million, down 4.1% on the GBP24.2
million in 2011.
Total net organic and acquired growth in the funds managed by our investment
management business was GBP497 million in the first half of 2012 (2011: GBP616
million), representing an annualised growth rate of 6.7% (2011: 8.4%). Our net
organic growth of GBP270 million represents an annualised rate of 3.7% (2011:
6.9%) which demonstrates resilience in the difficult markets we are currently
operating in. Acquired growth of GBP227 million has benefited from 12 investment
professionals joining us over the last twelve months, and includes GBP79 million
of funds from our acquisition of R M Walkden & Co. Limited which was completed
in April 2012.
Rathbone Unit Trust Management attracted GBP32 million of net inflows in the first
half of 2012 (2011: net inflows of GBP38 million).
Our interim dividend has been maintained at 17.0p per share and will be paid on
3 October 2012.
Financial Markets
The first half of 2012 proved challenging for investment markets as continuing
eurozone worries weighed heavily on sentiment and global markets were volatile.
We did see some early signs of growth in the USA, and Asian economies remained
reasonably resilient but there are no signs of a broader recovery. This
environment made asset allocation and investment selection difficult in the
period.
The FTSE 100 Index remained broadly within a 5600 to 6000 range until the end of
April after which adverse sentiment took hold. After a brief rally at the end of
June, the FTSE 100 Index ended the half at 5571, flat over the period. The FTSE
APCIMS Balanced Index was 2940 at 30 June 2012, 1.6% higher than it was at 31
December 2011. Over the first half, Rathbones funds under management increased
5.0% to GBP16.65 billion.
As we have a banking licence, the great majority of cash in client portfolios is
held with us as a deposit. We place this cash in money markets so do have
exposure to a number of banks in Europe, although counterparties must be 'A'
rated or higher by Fitch and are regularly reviewed by the banking committee. At
the end of the first half of 2012 we had no direct exposure to banks in Spain or
Italy and UK treasury bills represented 9% (2011: nil) of total treasury assets
which totalled GBP0.8 billion at 30 June 2012 (2011: GBP0.8 billion). As interest
rates remained stubbornly low and monetary stimulus policies continued to be
pursued by US and European governments, our net interest margins continued to
decline.
Business review
This is the first interim statement following our relocation to a new head
office in London. The move to these premises was completed in February and the
12% of additional space strongly supports our future growth aspirations. First
half results include one-off costs of GBP0.3 million in respect of the move.
The first half of 2012 has been a busy period for our marketing team, and we are
continuing to invest in this area to build the business. We won the Investors
Chronicle/FT Wealth Manager Award for Alternative Investments in May and have
recently launched a new advertising campaign targeted at clients who are looking
for a service more tailored to their needs. We ran financial awareness training
in schools and trustee training this year, the latter attracting more than
double the number of participants compared to one year ago. This activity
provides timely support to the business as we enhance service to clients, build
our investment capability and partner with professional intermediaries.
At 30 June 2012, Rathbones managed GBP318 million on behalf of some 1,300 clients
that had been introduced under the brand name "Cavanagh Asset Management". In
the first half, Close Brothers Asset Management, who acquired Cavanagh in April
2012, gave us notice of their intent to terminate the agreement to provide
discretionary investment management services to Cavanagh Financial Management
Limited. This arrangement will therefore come to an end on 23 November 2012. We
have had a productive and constructive relationship with Cavanagh over the last
four years, and will work with Close financial advisers as they advise clients
on suitable options.
Net fee income of GBP47.6 million (2011: GBP43.7 million) was 8.9% higher than the
first half of 2011 reflecting the continued growth in the business and the full
impact of new charges which were introduced in the second quarter of 2011. The
average FTSE 100 Index based on our key quarterly billing dates was 5647, down
5.5% from an average of 5976 in the corresponding period last year. Net
commission income of GBP19.9 million was marginally down on last year (2011: GBP20.0
million) with volumes tailing off in the second quarter as markets stagnated.
Net interest income of GBP5.1 million in the first half was down 1.9% on GBP5.2
million in 2011. Lower yields on treasury assets offset an increase in average
liquidity to GBP1,061 million (2011: ÂGBP887 million). Fees from advisory services,
now reported with other income, marginally increased to GBP4.0 million (2011: GBP3.9
million).
Underlying operating expenses (which exclude amortisation of client
relationships and head office relocation costs) were GBP54.5 million, up 10.5% on
the GBP49.3 million last year. Full time equivalent headcount increased 5.5% to
785 from 744 in June 2011 primarily as a result of new investment/revenue
generating teams. Other direct expenses of GBP8.3 million (2011: GBP7.7 million)
increased largely as a result of higher property related costs in London and
Liverpool and GBP1.0 million of higher pension service costs arising as a direct
result of lower long term bond yields.
There were no exceptional FSCS charges in the half year (2011: nil) but we have
noted guidance published by the FSCS which indicates that there is a risk of a
further cross subsidy in this levy year to the Fund Management Class arising
following a number of recent high profile business failures. We continue to
believe that a compensation model which involves cross-subsidisation across
sectors of the financial services industry with very different risk profiles is
unwise and unfair and we welcome the FSA's upcoming consultation on this topic.
Our balance sheet at 30 June 2012 has changed little from the end of 2011. Total
equity increased 2.7% from GBP190.7 million at 31 December 2011 to GBP195.8 million
at 30 June 2012. We reported a net pension deficit of GBP5.4 million at 30 June
2012 which is lower than the deficit of GBP7.3 million at 31 December 2011 due
largely to discount rate assumption changes.
Related party transactions and balances for the half year ended 30 June 2012 are
set out in note 16 to the condensed consolidated interim financial statements.
Legal proceedings
On 25 July 2012, we issued proceedings to confirm insurance cover against the
insurers on the excess layer of our civil liability (professional
indemnity) policy. We have done this to protect the Company's interests as we
are aware that a claim relating to the management of a Jersey trust has been
filed against a former director of Rathbone Trust Company Jersey Limited.
Rathbone Trust Company Jersey Limited was owned by us from March 2000 until
October 2008. Although we believe this underlying claim will be unsuccessful, we
have sought to confirm the insurance position over the last few months. Based on
information currently available, the primary layer insurer has confirmed
cover subject to policy terms and conditions (and this includes their share of
the excess layer) but the remaining excess insurers have to date refused to
confirm cover.
Legal expenses of GBP0.6 million have been incurred to 30 June 2012, including
advice from Leading Counsel, and are expected to continue. The Board considers
that it is unlikely that a material liability to Rathbones will arise from this
claim, and accordingly no provision has been made.
Regulation
Regulation continues to be an area of significant change for our industry. We
have held initial meetings with our new supervisory teams who will represent the
PRA and FCA when the new "twin peaks" regulatory structure comes into force in
2013. Both meetings have been positive and we look forward to developing both
relationships further.
Preparations for the RDR compliance deadline are well advanced. Whilst Rathbone
Investment Management ("RIM") is an independent discretionary investment manager
(as we invest client portfolios across the whole of the market), our advice will
be 'restricted' in RDR terms as it does not cover pensions and life assurance.
In contrast, Rathbones Pension and Advisory Services is a general financial
adviser and as it provides advice across the whole of the RDR range of assets,
it is classified as 'independent' for RDR. Our fee scales are RDR ready and we
have operated to RDR disclosure levels for many years. System changes have also
now been completed to comply with adviser charging requirements. Trail
commission was GBP1.1 million in the first half of 2012 (2011: GBP1.3 million) and
this is expected to reduce to zero during 2013. Our Unit Trust business launched
institutional unit classes in March.
The interpretation of parts of RDR rules continues to be discussed in the
industry but we remain supportive of its principles of transparency and
confident that our business model is compliant.
We will not be impacted by bank ring-fencing proposals in HM Treasury's White
paper on Banking Reform should the threshold of GBP25 billion of mandated deposits
be adopted.
Risk
Risk management continues to be an important part of our agenda and following
the appointment of Kathryn Matthews as non-executive chairman of the Group risk
committee, we have worked hard to strengthen our risk team and improve our risk
reporting framework.
The principal risks that face Rathbones in 2012 are described on pages 23 to 26
of our 2011 annual report and accounts and little has changed in the first half
of 2012. We continue to regard the key risks to Rathbones as threats to our
reputation, regulatory intervention in our sector and the counterparty risk
inherent in being a bank.
Board and management changes
At our AGM in May, Richard Lanyon stood down from the Board and his managerial
responsibilities as head of investment management. We sincerely thank Richard
for his hard work and valuable contribution to Rathbones as a Board director.
His insight into the business and willingness to tackle any challenge presented
to him are widely valued. He remains a highly respected member of our investment
management team as he returns to managing his client portfolios.
In March 2012, Paul Chavasse was appointed as head of investment management, and
Andrew Butcher joined Rathbones as chief operating officer from Charles Stanley.
Looking ahead
In spite of challenging investment conditions, our first half performance has
been resilient, and we are continuing to invest in people and systems to improve
both our efficiency and respond to regulatory change. Whilst investment markets
are expected to remain uncertain, Rathbones is as well placed as ever to develop
future growth opportunities.
Mark Nicholls Andy Pomfret
Chairman Chief Executive
Statement of directors' responsibilities in respect of the interim statement
The directors confirm that:
* the condensed consolidated interim financial statements have been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by the
European Union;
* the Interim management report includes a fair view of the information
required by the Disclosure and Transparency Rules of the UK Financial
Services Authority (DTR) 4.2.7R (indication of important events during the
first six months and description of principal risks and uncertainties for
the remaining six months of the year); and
* the Interim management report includes a fair view of the information
required by DTR 4.2.8R (disclosures of related parties' transactions and
changes therein).
By order of the Board
Andy Pomfret
Chief Executive
25 July 2012
Consolidated interim statement of comprehensive income
for the six months ended 30 June 2012
=------------------------------------------------------------------------------
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 2012 30 June 2011 31 December 2011
Note GBP'000 GBP'000 GBP'000
=------------------------------------------------------------------------------
Interest and similar income 5,705 5,774 11,259
Interest expense and similar (645) (593) (1,238)
charges
=------------------------------------------------------------------------------
Net interest income 5,060 5,181 10,021
=------------------------------------------------------------------------------
Fee and commission income 76,935 72,490 141,484
Fee and commission expense (5,438) (4,983) (10,029)
=------------------------------------------------------------------------------
Net fee and commission 71,497 67,507 131,455
income
=------------------------------------------------------------------------------
Dividend income 28 26 98
Net trading income 306 259 480
Gains on disposal of - - 1,095
financial securities
Other operating income 839 565 1,303
=------------------------------------------------------------------------------
Operating income 77,730 73,538 144,452
=------------------------------------------------------------------------------
Amortisation of acquired 10 (3,007) (2,515) (5,134)
client relationships
Head office relocation costs 4 (301) (1,170) (3,028)
Other operating expenses (54,496) (49,302) (97,138)
=------------------------------------------------------------------------------
Operating expenses (57,804) (52,987) (105,300)
=------------------------------------------------------------------------------
Profit before tax 19,926 20,551 39,152
Taxation 5 (4,865) (5,803) (10,446)
=------------------------------------------------------------------------------
Profit for the period
attributable to equity 15,061 14,748 28,706
holders of the Company
=------------------------------------------------------------------------------
Other comprehensive income:
Net actuarial (loss)/gain on
retirement benefit (746) 3,057 (6,383)
obligations
Net gain/(loss) from changes
in fair value of available 640 686 (134)
for sale investment
securities
Deferred tax relating to
components of other
comprehensive income:
- revaluation of available
for sale investment (124) (111) 94
securities
- actuarial (loss)/gain on
retirement benefit 56 (883) 1,477
obligations
=------------------------------------------------------------------------------
Other comprehensive income (174) 2,749 (4,946)
net of tax
=------------------------------------------------------------------------------
Total comprehensive income
for the period net of tax 14,887 17,497 23,760
attributable to equity
holders of the Company
=------------------------------------------------------------------------------
Dividends paid and proposed
for the period per ordinary 6 17.0p 17.0p 46.0p
share
Dividends paid and proposed 7,448 7,394 20,001
for the period
Earnings per share for the
period attributable to 7
equity holders of the
Company:
- basic 34.83p 34.28p 66.72p
- diluted 34.51p 33.76p 65.90p
=------------------------------------------------------------------------------
The accompanying notes form an integral part of the condensed consolidated
interim financial statements.
Consolidated interim statement of changes in equity
for the six months ended 30 June 2012
=--------------------------------------------------------------------------------
Available
Share Share Merger for sale Treasury Retained Total
capital premium reserve reserve shares earnings equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=--------------------------------------------------------------------------------
At 1 January 2,169 32,488 31,835 2,219 (2,899) 119,562 185,374
2011
Profit for 14,748 14,748
the period
+-------------------------------------------------------------------------------+
|Net actuarial |
|gain on |
|retirement 3,057 3,057 |
|benefit |
|obligations |
| |
|Revaluation |
|of available |
|for sale 686 686 |
|investment |
|securities |
| |
|Deferred tax |
|relating to |
|components of (111) (883) (994)|
|other |
|comprehensive |
|income |
+-------------------------------------------------------------------------------+
Other
comprehensive - - - 575 - 2,174 2,749
income net of
tax
Dividends (12,123) (12,123)
paid
Issue of 13 6 1,002 1,008
share capital
Share-based
payments:
- value of
employee 1,360 1,360
services
- cost of
treasury (2,307) (2,307)
shares
acquired
- cost of
treasury 872 (872) -
shares
vesting
- tax on
share-based 220 220
payments
=--------------------------------------------------------------------------------
At 30 June
2011 2,175 33,490 31,835 2,794 (4,334) 125,069 191,029
(unaudited)
Profit for 13,958 13,958
the period
+-------------------------------------------------------------------------------+
|Net actuarial |
|loss on |
|retirement (9,440) (9,440)|
|benefit |
|obligations |
| |
|Revaluation |
|of available |
|for sale (820) (820)|
|investment |
|securities |
| |
|Deferred tax |
|relating to |
|components of 205 2,360 2,565 |
|other |
|comprehensive |
|income |
+-------------------------------------------------------------------------------+
Other
comprehensive - - - (615) - (7,080) (7,695)
income net of
tax
Dividends (7,368) (7,368)
paid
Issue of 13 3 726 729
share capital
Share-based
payments:
- value of
employee 629 629
services
- cost of
treasury (648) (648)
shares
acquired
- cost of
treasury 253 (253) -
shares
vesting
- tax on
share-based 19 19
payments
=--------------------------------------------------------------------------------
At 31
December 2,178 34,216 31,835 2,179 (4,729) 124,974 190,653
2011
(audited)
Profit for 15,061 15,061
the period
+-------------------------------------------------------------------------------+
|Net actuarial |
|loss on |
|retirement (746) (746)|
|benefit |
|obligations |
| |
|Revaluation |
|of available |
|for sale 640 640 |
|investment |
|securities |
| |
|Deferred tax |
|relating to |
|components (124) 56 (68)|
| of other |
|comprehensive |
|income |
+-------------------------------------------------------------------------------+
Other
comprehensive - - - 516 - (690) (174)
income net of
tax
Dividends (12,640) (12,640)
paid
Issue of 13 16 3,180 3,196
share capital
Share-based
payments:
- value of
employee 1,015 1,015
services
- cost of
treasury (1,321) (1,321)
shares
acquired
- cost of
treasury 242 (242) -
shares
vesting
- tax on
share-based 48 48
payments
=--------------------------------------------------------------------------------
At 30 June
2012 2,194 37,396 31,835 2,695 (5,808) 127,526 195,838
(unaudited)
=--------------------------------------------------------------------------------
The accompanying notes form an integral part of the condensed consolidated
interim financial statements.
Consolidated interim balance sheet
as at 30 June 2012
=------------------------------------------------------------------------------
Unaudited Unaudited Audited
30 June 2012 30 June 2011 31 December 2011
Note GBP'000 GBP'000 GBP'000
=------------------------------------------------------------------------------
Assets
Cash 5 3 4
Settlement balances 41,857 30,376 13,443
Loans and advances to banks 126,864 69,590 65,008
Loans and advances to 55,923 45,473 47,787
customers
Investment securities:
- available for sale 55,421 18,882 68,563
- held to maturity 784,027 766,416 843,983
Prepayments, accrued income 39,917 36,891 38,413
and other assets
Property, plant and equipment 9 12,741 5,806 10,660
Deferred tax asset 2,083 681 3,134
Intangible assets 10 95,312 91,743 92,844
Surplus on retirement benefit 12 - 533 -
schemes
=------------------------------------------------------------------------------
Total assets 1,214,150 1,066,394 1,183,839
=------------------------------------------------------------------------------
Liabilities
Deposits by banks - 4,068 513
Settlement balances 30,754 53,598 22,196
Due to customers 930,246 772,109 908,656
Accruals, deferred income and 38,652 31,155 40,915
other liabilities
Current tax liabilities 3,835 4,822 3,557
Provisions for liabilities and 11 9,390 8,745 10,009
charges
Retirement benefit obligations 12 5,435 868 7,340
=------------------------------------------------------------------------------
Total liabilities 1,018,312 875,365 993,186
=------------------------------------------------------------------------------
Equity
Share capital 13 2,194 2,175 2,178
Share premium 13 37,396 33,490 34,216
Merger reserve 31,835 31,835 31,835
Available for sale reserve 2,695 2,794 2,179
Treasury shares (5,808) (4,334) (4,729)
Retained earnings 127,526 125,069 124,974
=------------------------------------------------------------------------------
Total equity 195,838 191,029 190,653
=------------------------------------------------------------------------------
Total liabilities and equity 1,214,150 1,066,394 1,183,839
=------------------------------------------------------------------------------
The condensed consolidated interim financial statements were approved by the
Board of directors and authorised for issue on 25 July 2012 and were signed on
their behalf by:
Andy Pomfret Paul Stockton
Chief Executive Finance Director
Company registered number: 01000403
The accompanying notes form an integral part of the condensed consolidated
interim financial statements.
Consolidated interim statement of cash flows
for the six months ended 30 June 2012
=------------------------------------------------------------------------------
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 2012 30 June 2011 31 December 2011
Note GBP'000 GBP'000 GBP'000
=------------------------------------------------------------------------------
Cash flows from operating
activities
Profit before tax 19,926 20,551 39,152
Net interest income (5,060) (5,181) (10,021)
Net impairment
charges/(recoveries) on
impaired loans and advances 2 18 (1)
Net (release)/charge for 11 (325) 1,564 2,465
provisions
Profit on disposal of
property, plant and (12) (4) (17)
equipment
Depreciation and 5,035 4,448 8,997
amortisation
Defined benefit pension 1,502 721 1,484
scheme charges
Share-based payment charges 1,620 1,672 2,604
Interest paid (666) (658) (1,282)
Interest received 7,499 5,498 10,359
=------------------------------------------------------------------------------
29,521 28,629 53,740
Changes in operating assets
and liabilities:
- net increase in loans and
advances to banks and (8,385) (5,480) (8,523)
customers
- net (increase)/decrease in (28,414) (12,207) 4,726
settlement balance debtors
- net increase in
prepayments, accrued income (3,047) (234) (1,133)
and other assets
- net increase in amounts
due to customers and 21,079 10,848 143,841
deposits by banks
- net increase/(decrease) in 8,558 29,886 (1,516)
settlement balance creditors
- net (decrease)/increase in
accruals, deferred income, (6,480) (5,678) 3,725
provisions and other
liabilities
=------------------------------------------------------------------------------
Cash generated from 12,832 45,764 194,860
operations
Defined benefit pension (4,156) (3,972) (7,170)
contributions paid
Tax paid (3,573) (4,570) (10,345)
=------------------------------------------------------------------------------
Net cash inflow from 5,103 37,222 177,345
operating activities
=------------------------------------------------------------------------------
Cash flows from investing
activities
Acquisition of subsidiaries, (519) - -
net of cash acquired
Purchase of property,
equipment and intangible (5,993) (2,844) (12,976)
assets
Proceeds from sale of
property, plant and 43 10 41
equipment
Purchase of investment (916,244) (777,426) (1,565,418)
securities
Proceeds from sale and
redemption of investment 975,983 762,095 1,472,520
securities
=------------------------------------------------------------------------------
Net cash generated
from/(used in) investing 53,270 (18,165) (105,833)
activities
=------------------------------------------------------------------------------
Cash flows from financing
activities
Purchase of shares for - (1,948) (2,259)
share-based schemes
Issue of ordinary shares 15 1,875 649 1,041
Dividends paid (12,640) (12,123) (19,491)
=------------------------------------------------------------------------------
Net cash used in financing (10,765) (13,422) (20,709)
activities
=------------------------------------------------------------------------------
Net increase in cash and 47,608 5,635 50,803
cash equivalents
Cash and cash equivalents at 129,872 79,069 79,069
the beginning of the period
=------------------------------------------------------------------------------
Cash and cash equivalents at 15 177,480 84,704 129,872
the end of the period
=------------------------------------------------------------------------------
The accompanying notes form an integral part of the condensed consolidated
interim financial statements.
Notes to the consolidated interim financial statements
1 Basis of preparation
Rathbone Brothers Plc ('the Company') is the parent company of a group of
companies ('the Group') which offers a range of investment management services
and related professional advice to private individuals, trustees, charities,
pension funds and the professional advisers of these clients. The Group also
provides financial planning, private banking, offshore fund management and trust
administration services. The Group's primary activities are set out in its
annual report and accounts for the year ended 31 December 2011.
These condensed consolidated interim financial statements are presented in
accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU. The
condensed consolidated interim financial statements have been prepared on a
going concern basis, using the accounting policies, methods of computation and
presentation set out in the Group's financial statements for the year ended 31
December 2011 except as disclosed below. The condensed consolidated interim
financial statements should be read in conjunction with the Group's audited
financial statements for the year ended 31 December 2011, which are prepared in
accordance with International Financial Reporting Standards as adopted by the EU
(IFRS).
The information in this announcement does not comprise statutory financial
statements within the meaning of section 434 of the Companies Act 2006. The
Group's financial statements for the year ended 31 December 2011 have been
reported on by its 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 498 of
the Companies Act 2006.
Developments in reporting standards and interpretations
Standards affecting the financial statements
In the current period, there have been no new or revised standards and
interpretations that have been adopted and have affected the amounts reported in
these financial statements.
Standards not affecting the reported results or the financial position
The following new and revised standards and interpretations have been adopted in
the current year. Their adoption has not had any significant impact on the
amounts reported in these financial statements but may impact the accounting for
future transactions and arrangements:
· Amendments to IFRS7 'Financial instruments: Disclosures'
New standards and interpretations
A number of new standards and amendments to standards and interpretations are
effective for annual and interim periods beginning after 1 January 2012, and
therefore have not been applied in preparing these condensed consolidated
interim financial statements. None of these is expected to have a significant
effect on the condensed consolidated interim financial statements and the
consolidated financial statements of the Group, except for amendments to IAS 19
'Employee Benefits', which is expected to become mandatory for the Group's
consolidated financial statements for the year ending 31 December 2013. The
amendments to IAS 19, if applied for the year ended 31 December 2012, would
reduce profit after tax by approximately GBP217,000, of which GBP109,000 would have
been recognised in the six months ended 30 June 2012, and increase actuarial
gains in other comprehensive income by the same amount. There would be no effect
on total equity. The Group does not plan to adopt this standard early.
2 Segmental information
For management purposes, the Group is currently organised into two operating
divisions: Investment Management and Unit Trusts. The information presented in
this note follows the presentation for internal reporting to the group executive
committee.
The presentation of income has been amended to show interest income separately
from other income, which is now presented with fees from advisory services. This
follows a change in presentation in the information provided to the group
executive committee and facilitates easier analysis of the Group's basis point
return on funds under management, which excludes other income. Comparatives have
been re-presented accordingly.
=------------------------------------------------------------------------------
Investment
Management Unit Trusts Total
Six months ended 30 June 2012 (unaudited) GBP'000 GBP'000 GBP'000
=------------------------------------------------------------------------------
Net fee income 43,609 3,982 47,591
Net commission income 19,851 - 19,851
Net interest income 5,060 - 5,060
Fees from advisory services and other income 4,831 397 5,228
=------------------------------------------------------------------------------
Underlying operating income 73,351 4,379 77,730
=------------------------------------------------------------------------------
Staff costs - fixed (18,210) (1,460) (19,670)
Staff costs - variable (8,715) (501) (9,216)
=------------------------------------------------------------------------------
Total staff costs (26,925) (1,961) (28,886)
Other direct expenses (7,293) (991) (8,284)
Allocation of indirect expenses (16,183) (1,143) (17,326)
=------------------------------------------------------------------------------
Underlying operating expenses (50,401) (4,095) (54,496)
=------------------------------------------------------------------------------
Underlying profit before tax 22,950 284 23,234
Amortisation of client relationships (note (3,007) - (3,007)
10)
=------------------------------------------------------------------------------
Segment profit before tax 19,943 284 20,227
Head office relocation costs (unallocated) (301)
(note 4)
-----------
Profit before tax 19,926
Taxation (4,865)
=------------------------------------------------------------------------------
Profit for the period attributable to equity 15,061
holders of the Company
=------------------------------------------------------------------------------
Segment total assets 1,184,437 19,481 1,203,918
Unallocated assets 10,232
=------------------------------------------------------------------------------
Total assets 1,214,150
=------------------------------------------------------------------------------
=------------------------------------------------------------------------------
Investment
Management Unit Trusts Total
Six months ended 30 June 2011 (unaudited)
(re-presented) GBP'000 GBP'000 GBP'000
=------------------------------------------------------------------------------
Net fee income 39,893 3,757 43,650
Net commission income 20,006 - 20,006
Net interest income 5,181 - 5,181
Fees from advisory services and other income 4,370 331 4,701
=------------------------------------------------------------------------------
Underlying operating income 69,450 4,088 73,538
=------------------------------------------------------------------------------
Staff costs - fixed (16,066) (1,227) (17,293)
Staff costs - variable (8,923) (549) (9,472)
=------------------------------------------------------------------------------
Total staff costs (24,989) (1,776) (26,765)
Other direct expenses (6,737) (977) (7,714)
Allocation of indirect expenses (13,894) (929) (14,823)
=------------------------------------------------------------------------------
Underlying operating expenses (45,620) (3,682) (49,302)
=------------------------------------------------------------------------------
Underlying profit before tax 23,830 406 24,236
Amortisation of client relationships (2,515) - (2,515)
=------------------------------------------------------------------------------
Segment profit before tax 21,315 406 21,721
Head office relocation costs (unallocated) (1,170)
(note 4)
-----------
Profit before tax 20,551
Taxation (5,803)
=------------------------------------------------------------------------------
Profit for the period attributable to equity 14,748
holders of the Company
=------------------------------------------------------------------------------
Segment total assets 1,017,398 16,935 1,034,333
Unallocated assets 32,061
=------------------------------------------------------------------------------
Total assets 1,066,394
=------------------------------------------------------------------------------
=------------------------------------------------------------------------------
Investment
Management Unit Trusts Total
Year ended 31 December 2011 (audited) (re-
presented) GBP'000 GBP'000 GBP'000
=------------------------------------------------------------------------------
Net fee income 80,086 7,562 87,648
Net commission income 36,170 - 36,170
Net interest income 10,021 - 10,021
Fees from advisory services and other income 8,832 686 9,518
=------------------------------------------------------------------------------
Underlying operating income 135,109 8,248 143,357
=------------------------------------------------------------------------------
Staff costs - fixed (31,649) (2,503) (34,152)
Staff costs - variable (15,770) (1,071) (16,841)
=------------------------------------------------------------------------------
Total staff costs (47,419) (3,574) (50,993)
Other direct expenses (13,284) (1,828) (15,112)
Allocation of indirect expenses (29,013) (2,020) (31,033)
=------------------------------------------------------------------------------
Underlying operating expenses (89,716) (7,422) (97,138)
=------------------------------------------------------------------------------
Underlying profit before tax 45,393 826 46,219
Gains on disposal of financial securities 1,095 - 1,095
Amortisation of client relationships (5,134) - (5,134)
=------------------------------------------------------------------------------
Segment profit before tax 41,354 826 42,180
Head office relocation costs (unallocated) (3,028)
(note 4)
-----------
Profit before tax 39,152
Taxation (10,446)
=------------------------------------------------------------------------------
Profit for the year attributable to equity 28,706
holders of the Company
=------------------------------------------------------------------------------
Segment total assets 1,154,085 16,428 1,170,513
Unallocated assets 13,326
=------------------------------------------------------------------------------
Total assets 1,183,839
=------------------------------------------------------------------------------
Included within Investment Management underlying operating income is GBP869,000
(30 June 2011: GBP756,000; 31 December 2011: GBP1,547,000) of fees and commissions
receivable from Unit Trusts. Intersegment sales are charged at prevailing
market prices.
Centrally incurred indirect expenses are allocated to operating segments on the
basis of the cost drivers that generate the expenditure.
Geographic analysis
The following table presents underlying operating income analysed by the
geographical location of the Group entity providing the service:
=------------------------------------------------------------------------------
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 2012 30 June 2011 31 December 2011
Underlying operating income by GBP'000 GBP'000 GBP'000
geographical market
=------------------------------------------------------------------------------
United Kingdom 75,441 71,366 139,128
Jersey 2,289 2,172 4,229
=------------------------------------------------------------------------------
77,730 73,538 143,357
=------------------------------------------------------------------------------
The Group's non-current assets are all substantially located in the United
Kingdom.
Major clients
The Group is not reliant on any one client or group of connected clients for
generation of revenues. At 30 June 2012, the Group provided investment
management services to approximately 39,000 clients.
3 Business combinations
On 5 April 2012, the Group acquired the entire share capital of R M Walkden &
Co. Limited; an investment management company, which also offers tax advisory
services. At 30 June 2012 the acquisition had added GBP78,704,000 to the Group's
funds under management. In addition to cash consideration of GBP1,117,000, which
was paid on 5 April 2012, deferred contingent consideration totalling up to
GBP1,834,000 is payable based on the value of funds under management retained by
the Group at 30 September 2012. At 30 June 2012, a provision of GBP1,834,000 has
been recognised for the deferred contingent consideration.
The acquired business' net assets at the acquisition date were as follows:
=------------------------------------------------------------------------------
Fair value
Carrying amounts adjustments Recognised values
GBP'000 GBP'000 GBP'000
=------------------------------------------------------------------------------
Loans and advances to
banks 598 - 598
Loans and advances to
customers 213 - 213
Prepayments, accrued
income and other
assets 38 - 38
Property, plant and
equipment 8 - 8
Intangible assets - 2,182 2,182
Accruals, deferred
income and other
liabilities (73) - (73)
Current tax
liabilities (15) - (15)
=------------------------------------------------------------------------------
Total net assets
acquired 769 2,182 2,951
=------------------------------------------------------------------------------
Total consideration 2,951
=------------------------------------------------------------------------------
Included within the condensed consolidated statement of comprehensive income for
the six months ended 30 June 2012 is a loss before tax of GBP304,000 relating to
the acquired business. If the business had been acquired on 1 January 2012, the
loss before tax included in the consolidated results would have been GBP326,000.
The fair value of acquired receivables is equal to the contractual amounts
receivable, all of which are expected to be collected.
Acquisition related costs totalling GBP123,000 for legal and professional advice
and stamp duty have been recognised in other operating expenses in the period
(six months ended 30 June 2011 and year ended 31 December 2011: GBPnil).
4 Operating expenses
Rathbones completed the move of its head office premises to 1 Curzon Street,
London W1J 5FB, on 27 February 2012. Charges of GBP301,000 relating to the move
have been recognised in the six months ended 30 June 2012 (six months ended 30
June 2011: GBP1,170,000; year ended 31 December 2011: GBP3,028,000); no further
exceptional costs will be incurred in relation to the head office relocation.
5 Taxation
The current tax expense for the six months ended 30 June 2012 was calculated
based on the estimated average annual effective tax rate. The overall effective
tax rate for this period was 24.4% (30 June 2011: 28.2%; 31 December
2011: 26.7%).
=----------------------------------------------------------------------------
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 2012 30 June 2011 31 December 2011
GBP'000 GBP'000 GBP'000
=----------------------------------------------------------------------------
United Kingdom taxation 3,802 4,745 9,229
Overseas taxation 32 39 67
Deferred taxation 1,031 1,019 1,150
=----------------------------------------------------------------------------
4,865 5,803 10,446
=----------------------------------------------------------------------------
The UK Government has proposed that the UK corporation tax rate be reduced to
22.0% over the three years from 2012. At 30 June 2012 only an element of this
reduction, taking the UK tax rate to 24.0% from April 2012, had been
substantively enacted. The underlying UK corporation tax rate for the year
ending 31 December 2012 is 24.5% (2011: 26.5%). A further reduction in the UK
tax rate to 23.0% was substantively enacted on 4 July 2012; the effect of this
would be to reduce the Group's deferred tax asset by GBP89,000.
Deferred tax assets and liabilities are calculated at the rate that is expected
to be in force when the temporary differences unwind, but limited to the extent
that such rates have been substantively enacted.
6 Dividends
An interim dividend of 17.0p per share is payable on 3 October 2012 to
shareholders on the register at the close of business on 14 September 2012 (30
June 2011: 17.0p). In accordance with International Accounting Standards, the
interim dividend has not been included as a liability in this interim statement.
A final dividend for 2011 of 29.0p per share was paid on 17 May 2012.
7 Earnings per share
Earnings used to calculate earnings per share on the bases reported in these
condensed interim financial statements were:
=------------------------------------------------------------------------------
Unaudited Unaudited Audited
Six months Six months Year to 31
to 30 June to 30 June December
2012 2011 2011
Pre-tax Post-tax Pre-tax Post-tax Pre-tax Post-tax
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=------------------------------------------------------------------------------
Underlying
profit 23,234 17,558 24,236 17,457 46,219 33,901
attributable to
shareholders
Gains on
disposal of - - - - 1,095 805
financial
securities
Amortisation of
client (3,007) (2,270) (2,515) (1,849) (5,134) (3,774)
relationships
(note 10)
Head office
relocation costs (301) (227) (1,170) (860) (3,028) (2,226)
(note 4)
=------------------------------------------------------------------------------
Profit
attributable to 19,926 15,061 20,551 14,748 39,152 28,706
shareholders
=------------------------------------------------------------------------------
Basic earnings per share has been calculated by dividing earnings by the
weighted average number of shares in issue throughout the period, excluding
treasury shares, of 43,244,354 (30 June 2011: 43,022,073; 31 December
2011: 43,027,127).
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
30 June 2012 30 June 2011 31 December 2011
=------------------------------------------------------------------------------
Weighted average number of
ordinary shares in issue during 43,244,354 43,022,073 43,027,127
the period - basic
Effect of ordinary share 129,866 220,308 201,651
options/Save As You Earn
Effect of dilutive shares issuable 11,266 186,857 98,654
under the Share Incentive Plan
Effect of contingently issuable
ordinary shares under the Long 260,452 252,337 235,027
Term Incentive Plan
=------------------------------------------------------------------------------
Diluted ordinary shares 43,645,938 43,681,575 43,562,459
=------------------------------------------------------------------------------
=------------------------------------------------------------------------------
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 2012 30 June 2011 31 December 2011
=------------------------------------------------------------------------------
Underlying earnings per share for
the period attributable to equity
holders of the Company:
- basic 40.60p 40.58p 78.79p
- diluted 40.23p 39.96p 77.82p
=------------------------------------------------------------------------------
8 Loans and advances to customers
Included within loans and advances to customers are vendor loan notes ('Notes')
with a nominal value of GBP5,000,000 issued by the acquirer of the Group's Jersey
trust operations in 2008. The Notes are repayable on the occurrence of certain
events, principally the refinancing of the operations disposed of.
The carrying value of the Notes has been calculated as GBP3,262,000 (30 June
2011: GBP3,419,000; 31 December 2011: GBP3,268,000) using a discounted cash flow
model based on the estimated repayment date, using a discount rate equal to the
initial effective interest rate of the loan.
9 Property, plant and equipment
During the six months ended 30 June 2012, the Group acquired assets with a cost
of GBP3,400,000 (six months ended 30 June 2011: GBP863,000; year ended 31 December
2011: GBP6,925,000), including assets acquired through business combinations of
GBP8,000 (six months ended 30 June 2011: GBPnil; year ended 31 December 2011: GBPnil).
Leasehold improvements include additions totalling GBP2,192,000 (six months ended
30 June 2011: GBPnil; year ended 31 December 2011: GBP4,815,000) in relation to the
relocation of our London head office from New Bond Street to 1 Curzon Street,
London W1J 5FB.
Assets with a net book value of GBP31,000 were disposed of in the six months ended
30 June 2012 (six months ended 30 June 2011: GBP6,000; year ended 31 December
2011: GBP24,000) resulting in a gain on disposal of GBP12,000 (30 June 2011: GBP4,000;
31 December 2011: GBP17,000).
10 Intangible assets
=------------------------------------------------------------------------------
Software
Client development Purchased
Goodwill relationships costs software Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=------------------------------------------------------------------------------
Cost
At 1 January 2012 47,241 54,333 2,860 14,191 118,625
Internally developed in - - 171 - 171
the period
Purchased in the period - 3,131 - 730 3,861
Acquired through - 2,183 - - 2,183
business combinations
Disposals - (947) - (805) (1,752)
=------------------------------------------------------------------------------
At 30 June 2012 47,241 58,700 3,031 14,116 123,088
=------------------------------------------------------------------------------
Amortisation
At 1 January 2012 - 12,787 2,137 10,857 25,781
Charge in the period - 3,007 200 540 3,747
Disposals - (947) - (805) (1,752)
=------------------------------------------------------------------------------
At 30 June 2012 - 14,847 2,337 10,592 27,776
=------------------------------------------------------------------------------
Carrying value at 30
June 2012 47,241 43,853 694 3,524 95,312
=------------------------------------------------------------------------------
Carrying value at 30
June 2011 47,241 41,198 700 2,604 91,743
=------------------------------------------------------------------------------
Carrying value at 31
December 2011 47,241 41,546 723 3,334 92,844
=------------------------------------------------------------------------------
11 Provisions for liabilities and charges
=-------------------------------------------------------------------------------
Deferred,
contingent
costs to acquire Property
client Client related
relationship
intangibles compensation and other Total
GBP'000 GBP'000 GBP'000 GBP'000
=-------------------------------------------------------------------------------
At 1 January 2011 5,092 622 476 6,190
+------------------------------------------------------------------------------+
|Charged to profit or - 370 1,230 1,600 |
|loss |
| |
|Unused amount |
|credited to profit or |
|loss - (10) (26) (36)|
+------------------------------------------------------------------------------+
Net charge to profit - 360 1,204 1,564
or loss
Other movements 2,985 - - 2,985
Utilised/paid during (1,745) (167) (82) (1,994)
the period
=-------------------------------------------------------------------------------
At 30 June 2011 6,332 815 1,598 8,745
+------------------------------------------------------------------------------+
|Charged to profit or - 875 406 1,281 |
|loss |
| |
|Unused amount |
|credited to profit or |
|loss - - (380) (380)|
+------------------------------------------------------------------------------+
Net charge to profit - 875 26 901
or loss
Other movements 2,707 - - 2,707
Utilised/paid during (2,243) (24) (77) (2,344)
the period
=-------------------------------------------------------------------------------
At 1 January 2012 6,796 1,666 1,547 10,009
+------------------------------------------------------------------------------+
|Charged to profit or - - 651 651 |
|loss |
| |
|Unused amount |
|credited to profit or |
|loss - (555) (421) (976)|
+------------------------------------------------------------------------------+
Net credit to profit - (555) 230 (325)
or loss
Other movements 4,965 - - 4,965
Utilised/paid during (3,533) (766) (960) (5,259)
the period
=-------------------------------------------------------------------------------
At 30 June 2012 8,228 345 817 9,390
=-------------------------------------------------------------------------------
Other movements in provisions relate to deferred payments to investment managers
and third parties for the introduction of client relationships, which have been
capitalised in the period, and other assets acquired through business
combinations.
Deferred, contingent costs to acquire client relationship intangibles at 30 June
2012 includes GBP1,834,000 (30 June 2011: GBPnil; 31 December 2011: GBPnil) in
relation to deferred contingent consideration for the purchase of R M Walkden &
Co. Limited (note 3).
The non-current element of provisions (expected to be paid after more than one
year) totals GBP4,385,000 as at 30 June 2012 (30 June 2011: GBP4,355,000; 31
December 2011: GBP5,745,000).
Property related and other provisions include a provision of GBP387,000 (30 June
2011: GBP1,170,000; 31 December 2011: GBP1,196,000) in relation to onerous lease and
dilapidation costs following the decision to relocate the London head office
(note 4).
12 Long term employee benefits
The Group operates two defined benefit pension schemes providing benefits based
on pensionable salary for executive directors and staff employed by the Company.
For the purposes of calculating the pension benefit obligations, the following
assumptions have been used:
=------------------------------------------------------------------------------
Unaudited Unaudited Audited
30 June 2012 30 June 2011 31 December 2011
% p.a. % p.a. % p.a.
=------------------------------------------------------------------------------
Rate of increase in salaries 3.90 4.95 4.10
Rate of increase of pensions in
payment:
- Laurence Keen Scheme 3.30 3.70 3.40
- Rathbones 1987 Scheme 2.90 3.50 3.10
Rate of increase of deferred
pensions 2.90 3.70 3.10
Discount rate 4.50 5.50 4.70
Inflation* 2.90 3.70 3.10
=------------------------------------------------------------------------------
* Inflation assumptions are based on the Retail Prices Index
The assumed life expectations of members retiring, aged 65 were:
=------------------------------------------------------------------------------
Unaudited Unaudited Unaudited Unaudited Audited Audited
30 June 30 June 30 June 30 June 31 December 31 December
2012 2012 2011 2011 2011 2011
Males Females Males Females Males Females
=------------------------------------------------------------------------------
Retiring today 24.0 26.0 22.2 24.3 23.8 25.9
Retiring in
20 years 26.3 28.0 23.7 25.5 26.1 27.9
=------------------------------------------------------------------------------
The amount included in the balance sheet arising from the Group's obligations in
respect of the schemes is as follows:
=------------------------------------------------------------------------------
Unaudited Unaudited Unaudited Unaudited Audited Audited
Laurence Laurence Laurence
Rathbone Keen Rathbone Keen Rathbone Keen
1987 Scheme 1987 Scheme 1987 Scheme
Scheme Scheme Scheme
30 June 30 June 30 June 30 June 31 31
December December
2012 2012 2011 2011 2011 2011
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=------------------------------------------------------------------------------
Present value of
defined benefit (109,013) (13,876) (89,882) (12,073) (103,113) (13,421)
obligations
Fair value of 103,824 13,630 89,014 12,606 96,292 12,902
scheme assets
=------------------------------------------------------------------------------
Total (5,189) (246) (868) 533 (6,821) (519)
(deficit)/surplus
=------------------------------------------------------------------------------
The Group made special contributions into its pension schemes of GBP2,269,000
during the period (30 June 2011: GBP2,128,000; 31 December 2011: GBP3,506,000).
13 Share capital
The following movements in share capital occurred during the period:
=------------------------------------------------------------------------------
Exercise Share Share
Number of price capital premium Total
shares pence GBP'000 GBP'000 GBP'000
=------------------------------------------------------------------------------
At 1 January 2011 43,376,790 2,169 32,488 34,657
Shares issued:
- to Share Incentive Plan 82,194 890.0 4 727 731
- to Save as You Earn 971 696.0 - 7 7
scheme
- on exercise of options 35,833 415.0 - 852.0 2 268 270
=------------------------------------------------------------------------------
At 30 June 2011 43,495,788 2,175 33,490 35,665
=------------------------------------------------------------------------------
Shares issued:
- to Share Incentive Plan 65,035 1,117.0 3 724 727
- to Save as You Earn 317 696.0 - 2 2
scheme
- on exercise of options - - - - -
=------------------------------------------------------------------------------
At 31 December 2011 43,561,140 2,178 34,216 36,394
=------------------------------------------------------------------------------
Shares issued:
- to Share Incentive Plan 136,852 1,150.0 - 1,351.0 7 1,711 1,718
- to Save as You Earn 1,160 696.0 - 8 8
scheme
- on exercise of options 181,158 415.0 - 1,172.0 9 1,461 1,470
=------------------------------------------------------------------------------
At 30 June 2012 43,880,310 2,194 37,396 39,590
=------------------------------------------------------------------------------
At 30 June 2012, the Group held 542,509 treasury shares (30 June
2011: 450,293; 31 December 2011: 475,454).
14 Contingent liabilities and commitments
(a) Indemnities are provided in the normal course of business to a number of
directors and employees who provide tax and trust advisory services in
connection with them acting as trustees / directors of client companies and
providing other services.
A claim relating to the management of a Jersey trust has been filed against a
former employee (and director) of Rathbone Trust Company Jersey Limited.
Rathbone Trust Company Jersey Limited was a subsidiary of the Company from
March 2000 until October 2008. Although we believe this claim will be
unsuccessful, a possible obligation may exist which is contingent on whether the
claim (or any parts of it) are upheld.
Management have sought to confirm the position of the Company's civil liability
(professional indemnity) insurers in relation to the claim. Based on information
currently available, the Company's primary layer insurer has confirmed cover
subject to policy terms and conditions (including their share of the excess
layer) but the remaining excess insurers have to date refused to confirm cover.
Due to the complexity of the claim, the number of parties involved and the
impact of insurance cover available to the trustees, it is not practicable to
estimate reliably the value of any possible obligation for the Company.
The Board considers that it is unlikely that a material liability to Rathbones
will arise from this claim, and accordingly no provision has been made.
(b) Capital expenditure authorised and contracted for at 30 June 2012 but not
provided in the condensed consolidated interim financial statements amounted to
GBP704,000 (30 June 2011: GBP934,000 and 31 December 2011: GBP2,223,000).
(c) The contractual amounts of the Group's commitments to extend credit to its
clients are as follows:
=------------------------------------------------------------------------------
Unaudited Unaudited Audited
30 June 2012 30 June 2011 31 December 2011
GBP'000 GBP'000 GBP'000
=------------------------------------------------------------------------------
Guarantees 578 583 578
Undrawn commitments to lend of 1 4,320 4,617 6,925
year or less
=------------------------------------------------------------------------------
4,898 5,200 7,503
=------------------------------------------------------------------------------
The fair value of the guarantees is GBPnil (30 June 2011 and 31 December 2011:
GBPnil).
(d) In addition to Financial Services Compensation Scheme levies accrued in the
period, further levy charges may be incurred in future years, although the
ultimate cost remains uncertain.
15 Consolidated interim statement of cash flows
For the purposes of the consolidated interim statement of cash flows, cash and
cash equivalents comprise the following balances with less than three months
until maturity from the date of acquisition:
=------------------------------------------------------------------------------
Unaudited Unaudited Audited
30 June 2012 30 June 2011 31 December 2011
GBP'000 GBP'000 GBP'000
=------------------------------------------------------------------------------
Cash 5 3 4
Loans and advances to banks 125,864 69,590 64,258
Available for sale investment 51,611 15,111 65,610
securities
=------------------------------------------------------------------------------
177,480 84,704 129,872
=------------------------------------------------------------------------------
Available for sale investment securities are amounts invested in money market
funds which are realisable on demand.
Cash flows arising from issue of ordinary shares comprise:
=------------------------------------------------------------------------------
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 2012 30 June 2011 31 December 2011
GBP'000 GBP'000 GBP'000
=------------------------------------------------------------------------------
Share capital issued (note 13) 16 6 9
Share premium on shares issued 3,180 1,002 1,728
(note 13)
Shares issued in relation to
share-based schemes for which no (1,321) (359) (696)
cash consideration was received
=------------------------------------------------------------------------------
1,875 649 1,041
=------------------------------------------------------------------------------
16 Related party transactions
The key management personnel of the Group are defined as the Company's directors
and other members of senior management who are responsible for planning,
directing and controlling the activities of the Group.
Dividends totalling GBP224,000 were paid in the period (six months ended 30 June
2011: GBP246,000; year ended 31 December 2011: GBP399,000) in respect of ordinary
shares held by key management personnel.
At 30 June 2012, key management personnel and their close family members had
gross outstanding deposits of GBP1,193,000 (30 June 2011: GBP924,000; 31 December
2011: GBP1,040,000) and gross outstanding loans of GBP1,456,000 (30 June 2011:
GBP365,000; 31 December 2011: GBP1,685,000) 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.
The Group managed 18 unit trusts and OEICs during the first half of 2012 (six
months ended 30 June 2011: 17 unit trusts and OEICs; year ended 31 December
2011: 18 unit trusts and OEICs). Total annual management charges of GBP7,947,000
(six months ended 30 June 2011: GBP7,297,000; year ended 31 December 2011:
GBP14,451,000) were earned, calculated on the bases published in the individual
fund prospectuses, which also state the terms and conditions of the management
contract with the Group. Annual management fees owed to the Group as at 30 June
2012 totalled GBP1,149,000 (six months ended 30 June 2011: GBP1,159,000; year ended
31 December 2011: GBP1,208,000).
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.
17 Events after the consolidated interim balance sheet date
There have been no material events occurring between the consolidated interim
balance sheet date and the date of signing this interim statement.
Independent review report to Rathbone Brothers Plc
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half yearly financial report for the six months ended 30 June
2012 which comprises the consolidated interim statement of comprehensive income,
consolidated interim statement of changes in equity, consolidated interim
balance sheet, consolidated interim statement of cash flows and the related
explanatory notes. We have read the other information contained in the half
yearly financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the condensed
set of financial statements.
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 Disclosure
and Transparency Rules ("the DTR") of the UK's Financial Services Authority
("the UK FSA"). 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 half yearly financial report is the responsibility of, and has been approved
by, the Directors. The Directors are responsible for preparing the half yearly
financial report in accordance with the DTR of the UK FSA.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the EU. The condensed set of
financial statements included in this half yearly financial report has been
prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the
EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
set of financial statements in the half yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK and Ireland) and consequently does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half yearly financial
report for the six months ended 30 June 2012 is not prepared, in all material
respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK
FSA.
I Cummings (senior statutory auditor)
for and on behalf of KPMG Audit Plc, statutory auditor
Chartered Accountants
15 Canada Square
London
E14 5GL
25 July 2012
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Rathbone Brothers PLC via Thomson Reuters ONE
[HUG#1629409]
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