TIDMRAT
Underlying profit before tax up 22.7% to GBP43.3 million
Philip Howell, Chief Executive of Rathbone Brothers Plc, said:
"The first six months of 2017 has seen another busy period for Rathbones
as we continue to deliver our strategic plans without detracting from
our high standards of service to our clients. We remain confident in the
medium term potential of our growth initiatives. Short term market
conditions are dominated by a backdrop of ongoing geopolitical
uncertainty and we will continue to invest with discipline."
Highlights:
-- Underlying profit before tax* increased 22.7% from GBP35.3 million to
GBP43.3 million in the first six months of 2017. Underlying profit margin
remained strong at 30.4% compared to 29.4% in 2016. Underlying earnings
per share increased 21.1% to 68.4p (2016: 56.5p).
-- Profit before tax for the half year increased 16.7% from GBP22.8 million
to GBP26.6 million, reflecting GBP15.8 million of costs associated with
the London office move, offset by a plan amendment gain of GBP5.5 million
arising from the closure of our defined benefit pension schemes. Basic
earnings per share increased 16.5% to 41.6p (2016: 35.7p).
-- The board recommends a 22.0p interim dividend for 2017 (2016: 21.0p).
-- Total funds under management at 30 June 2017 were GBP36.6 billion, up
7.0% from GBP34.2 billion at 31 December 2016. This compared to an
increase of 2.4% in the FTSE 100 Index and an increase of 2.7% in the
MSCI WMA Private Investor Balanced Index over the same period.
-- Total net organic and acquired growth in the funds managed by Investment
Management was GBP0.6 billion in the first six months of 2017,
representing a net annual growth rate of 4.0% (2016: 4.2%). Net organic
growth of GBP0.4 billion for the first half represents an underlying
annualised rate of net organic growth of 2.9% (2016: 2.5%). In the period,
we experienced higher outflows from low margin accounts and adjusting for
this, the annualised net organic growth rate was 3.4%.
-- Underlying operating income in Investment Management of GBP127.4 million
in the first six months of 2017 (2016: GBP108.8 million) was up 17.1%,
largely due to growth in funds under management. The average FTSE 100
Index was 7322 on quarterly billing dates in 2017, compared to 6298 in
2016, an increase of 16.3%.
-- Underlying operating expenses of GBP99.1 million (2016: GBP84.9 million)
increased 16.7% year-on-year largely as a result of variable staff costs,
reflecting both the higher profitability in the period and an improved
investment performance element for growth awards.
-- Funds under management in Unit Trusts were GBP4.6 billion at 30 June 2017
(31 December 2016: GBP4.0 billion). Net inflows were GBP269 million in
the first half of 2017 (2016: GBP259 million). Underlying operating
income in Unit Trusts was GBP14.9 million in the six months ended 30 June
2017, an increase of 30.7% from GBP11.4 million in the first half of
2016.
-- Shareholders equity of GBP342.4 million at 30 June 2017 increased 5.4%
since 31 December 2016 (GBP324.8 million) and 22.4% since 30 June 2016
(GBP279.7 million), largely as a result of the fall in value of
retirement benefit obligations, which totalled GBP20.0 million at 30 June
2017, 49.4% lower than the GBP39.5 million recorded at 31 December 2016.
* Excluding a plan amendment gain on the closure of the defined benefit
pension schemes and charges in relation to client relationships and
goodwill, acquisition-related costs and London head office relocation
costs.
25 July 2017
For further information contact:
Rathbone Brothers Plc Camarco
Tel: 020 7399 0000 Tel: 020 3757 4984
email: shelly.patel@rathbones.com email: ed.gascoigne-pees@camarco.co.uk
Philip Howell, Chief Executive Ed Gascoigne-Pees
Paul Stockton, Finance Director
Shelly Patel, Investor Relations Manager
Rathbone Brothers Plc
Rathbone Brothers Plc ("Rathbones"), through its subsidiaries, is a
leading provider of high-quality, personalised investment and wealth
management services for private clients, charities and trustees. Our
services include discretionary investment management, unit trusts,
banking and loan services, financial planning, unitised portfolio
services, and UK trust, legal, estate and tax advice.
Rathbones has over 1,100 staff in 16 locations in the UK and Jersey; its
headquarters is 8 Finsbury Circus, London.
rathbones.com http://www.rathbones.com
Investment management report
Continuing growth in funds under management
In the first half of 2017, investment markets largely shrugged off
political events, and continued to build momentum with the FTSE 100
reaching all time highs during the period. Our own funds under
management grew 7.0% to reach GBP36.6 billion at 30 June 2017,
benefitting from a combination of continued acquired and organic growth
and these resilient conditions. This compares to a 2.4% increase in the
FTSE 100 Index and a 2.7% increase in the MSCI WMA Private Investor
Balanced Index.
Funds under management in our Investment Management business were
GBP32.0 billion at 30 June 2017 (2016: GBP30.2 billion). Investment
Management net inflows were GBP0.6 billion in the first half (2016:
GBP0.5 billion) representing a total annualised growth rate of 4.0%
(2016: 4.2%). Net organic growth totalled GBP0.4 billion up from GBP0.3
billion at 30 June 2016, equating to an annualised net organic growth
rate of 2.9%. In the period, we experienced higher outflows from low
margin accounts and adjusting for this, the annualised net organic
growth rate was 3.4%. Purchased growth totalled GBP0.2 billion (2016:
GBP0.2 billion), with nearly all investment managers set to meet or
exceed their earn-out targets. Our charities business continued to
perform well and retained the position of the second biggest investment
management provider to the top 5,000 charities in the UK. Its funds
under management grew 4.9% to GBP4.3 billion in the first six months of
2017. The market profile of our ethical business, Rathbone Greenbank
Investments, continues to rise with funds under management increasing by
9.6% to reach GBP946 million in the first half.
Funds under management in our Unit Trusts business increased 15.0% from
GBP4.0 billion at 31 December 2016 to GBP4.6 billion at 30 June 2017.
Positive markets and competitive investment performance helped to
attract gross sales of GBP733 million compared to GBP576 million for the
same period in 2016. In common with many in the industry, redemptions of
GBP464 million were higher at the start of 2017 as investor concerns
heightened, and many sought to realise gains. Whilst the lead up to and
subsequent results of the UK election did have some adverse impacts in
June, net inflows for the first half totalled GBP269 million compared to
GBP259 million at 30 June 2016.
We continue to strive to provide high quality service to our clients and
in May 2017, for the second year in a row, Rathbones was named both
"Private Client Asset Manager of the Year (Institutional)" at the
Citywealth awards and "Asset Manager of the Year" at the Better Society
Awards. These awards recognise a continued excellence in client service,
leadership and an overall contribution to the profession.
Underlying profit before tax up 22.7% to GBP43.3 million
Underlying profit before tax increased 22.7% to GBP43.3 million (2016:
GBP35.3 million) in the first six months of 2017, representing an
underlying profit margin of 30.4% (2016: 29.4%). Underlying earnings per
share of 68.4p increased 21.1% from 56.5p in 2016.
Profit before tax for the half year of GBP26.6 million is 16.7% higher
than the GBP22.8 million in 2016 and reflects GBP15.8 million of costs
associated with the London office move (see note 3), offset by a plan
amendment gain of GBP5.5 million arising from the closure of our defined
benefit pension schemes with effect from 30 June 2017 (see note 13).
Prior year profit before tax included charges of GBP4.4 million in
respect of the acquisition of the Vision businesses. We are working hard
to let our Curzon Street premises, though the rental market remains soft
particularly in light of Brexit uncertainty.
Fee income of GBP105.5 million in the first half of 2017 increased 21.1%
compared to the same period last year (2016: GBP87.1 million) reflecting
positive markets and growth in organic and acquired new business over
the period. The average FTSE 100 Index (calculated on our fee billing
dates) was 7322, up 16.3% compared to 6298 a year ago. Fee income
represented 74.1% of total underlying operating income in the six months
ended 30 June 2017 (2016: 72.5%), as our fee only tariff becomes more
widely adopted, helping to support our move to higher quality fee-based
income.
Net commission income of GBP21.9 million was up 12.3% from GBP19.5
million in the first half of 2016, reflecting more positive investing
conditions and a strong first quarter in particular. Net interest income
was relatively stable at GBP5.6 million in the first half (2016: GBP5.7
million), as higher liquidity largely offset the impact of lower base
interest rates. As active investment managers, we remain focused on
balancing risks and returns, and as a result saw overall cash weightings
in portfolios rise to 7.1% compared to 6.6% a year ago reflecting a
greater degree of uncertainty over future equity markets. Average
deposits were GBP2.3 billion in the first half of the year compared to
GBP1.7 billion a year ago. Client loans increased 8.7% to GBP115.5
million from GBP106.3 million at 31 December 2016. Fees from advisory
services and other income increased 19.0% to GBP9.4 million (2016:
GBP7.9 million) reflecting more positive flows from Vision following a
slower period last year as the business completed a comprehensive file
review exercise.
Underlying operating expenses of GBP99.1 million (2016: GBP84.9 million)
increased 16.7% year-on-year. This was largely as a result of variable
staff costs, which increased 32.3% to GBP25.8 million (2016: GBP19.5
million) reflecting both the higher profitability in the period and an
improved investment performance element for growth awards. Variable
staff costs as a percentage of underlying profit before variable staff
costs also therefore increased to 37.3% (2016: 35.6%). In line with our
strategy, planned additions in headcount increased fixed staff costs by
11.2% to GBP44.7 million (2016: GBP40.2 million) and average headcount
in the first half of 2017 was 1,123, up 7.5% compared to 1,045 a year
ago. Other direct costs of GBP28.6 million (2016: GBP25.2 million) were
up 13.5% as a result of higher property costs and planned project
expenditure.
Our effective tax rate for the first half of 2017 was 21.1% (2016:
25.3%). The prior year rate was higher as a result of deferred payments
to acquire the Vision businesses. Our interim dividend has been
increased by 1p per share to 22p (2016: 21p) and will be paid on 3
October 2017.
Progress on growth strategy
Vision continues to gain momentum and now has GBP1.2 billion of funds
under advice on its discretionary investment management panel, up 20.0%
from the GBP1.0 billion at 31 December 2016, and 108 advisers, up from
99 at 31 December 2016. The business remains on track to grow to our
target of 150 advisers and we remain confident in its growth prospects.
Our distribution strategy continues to focus on promoting our
discretionary investment management services to professional
intermediaries, principally national and regional IFA networks. It
continues to make good progress with net flows of GBP108 million in the
first six months of the year, up 96.4% from GBP55 million at the same
time last year. We continue to build our presence in the intermediary
market as evidenced by a May 2017 Defaqto report which confirmed that
the usage of Rathbones as a discretionary fund management provider to
advisers had more than doubled in the last year, and placed Rathbones
very highly in the critical areas of 'Quality of investment staff' and
'Service'. We successfully launched an execution only Managed Portfolio
Service in March 2017 which attracted GBP7.2 million of net flows in its
first 3 months of launch.
With the Credit Suisse partnership fully operational, the Rathbone
Private Office was formally launched in January. The nucleus team of
three senior client advisers and four support staff is making good
progress in promoting this new advisory capability. This service is
offered directly to super high net worth clients and family offices as
well as seeking introductions from the professional intermediary market
and from our own investment manager community. The team has already
engaged its first clients and is developing an encouraging pipeline of
prospective clients for the full year.
We continue to focus on improving our client experience and striving for
greater operational efficiency in our support functions with the aim of
creating additional capacity for growth. At the full year, we outlined
our plans to spend an additional GBP1 million in 2017 to implement a new
client relationship management system and improve our client take on
processes. These plans are developing more quickly than originally
planned and in light of more favourable investment conditions, we have
chosen to bring forward capital expenditure originally planned for 2018
to the second half of this year in order to accelerate delivery and
improve functionality through greater automation. This brings the total
expected capital expenditure in relation to our client relationship
management system and client take on process improvement to
approximately GBP2 million in 2017.
Expenditure on the other growth strategies remains in line with
expectations. The relocation of our London head office to 8 Finsbury
Circus has proved very successful.
Financial position and regulatory capital
Shareholders' equity of GBP342.4 million at 30 June 2017 increased 5.4%
since 31 December 2016 (GBP324.8 million) and 22.4% since 30 June 2016
(GBP279.7 million). This is largely as a result of the fall in value of
retirement benefit obligations which totalled GBP20.0 million at 30 June
2017, 49.4% lower than the GBP39.5 million recorded at 31 December 2016.
This reflected a high number of members transferring their benefits out
of the scheme, a reduction in the assumed rates of improvement in
longevity and breakage of the link between pension entitlements and
final salaries. Triennial valuation discussions with trustees are
ongoing and are expected to complete in the second half of the year.
Total assets at 30 June 2017 were GBP2,829.9 million (31 December 2016:
GBP2,404.0 million; 30 June 2016: GBP2,344.8 million), of which
GBP2,215.1 million (31 December 2016: GBP1,888.9 million; 30 June 2016:
GBP1,860.0 million) represents the cash element of client portfolios
that is held as a banking deposit. As a result of these higher levels of
cash, balances with central banks increased from GBP1,075.7 million at
31 December 2016 to GBP1,480.9 million at 30 June 2017 (30 June 2016:
GBP960.1 million).
Our consolidated Common Equity Tier 1 ratio was 18.2 % at 30 June 2017
(31 December 2016: 17.7%; 30 June 2016: 16.0%). Our consolidated
leverage ratio was 6.2% at 30 June 2017 (31 December 2016: 6.6%; 30 June
2016: 6.2%). The capital surplus of own funds over the Pillar 1 and 2A
requirements and CRD IV buffers was GBP69.9m at 30 June 2017 (excluding
year to date post tax profits and improvements in the value of
retirement benefit obligations) compared to GBP49.2m at 30 June 2016,
largely reflecting the impact of additional equity raised in October
2016 offset by higher capital requirements.
Business risks
The board believes that the nature of the principal risks and
uncertainties which may have a material effect on the group's
performance during the remainder of its financial year remain unchanged
from those identified in the strategic report and group risk committee
report in our 2016 annual report and accounts (pages 18-25 and pages
80-81 respectively).
Regulatory changes
We continue to prepare for the changes brought on by MiFID II and the
General Data Protection Regime and are working hard to ensure our people
and systems are compliant. We anticipate that the cost of these projects
will be approximately GBP1.5 million which will be absorbed by our
normal expenditure budget for the year.
We note the recommendations of the recent FCA Asset Management Market
Report and the sequence of consultations prior to final implementation.
While we broadly welcome the proposals, they will have an impact on
margins of our Unit Trust business from 2018. In addition, as part of
our implementation of MiFID II, research payments that have long been
charged to our funds will, from 1 January 2018 be borne by the business.
The impact of these changes will be significantly offset by a reduction
in variable remuneration, some cost actions and by the continued funds
growth momentum through this year and beyond. Fund box profits in our
Unit Trust business for the six months ended 30 June 2017 were GBP1.8
million and research costs currently borne by the funds totalled
approximately GBP0.5 million for the same period.
Board and senior management changes
Following the announcement of David Harrel stepping down after nine
years on the board, we are pleased to announce that Sarah Gentleman has
now completed the regulatory approval process and has formally succeeded
David as the chairman of the remuneration committee.
Outlook
The first six months of 2017 has seen another busy period for Rathbones
as we continue to deliver our strategic plans without detracting from
our high standards of service to our clients. We remain confident in the
medium term potential of our growth strategy. Short term market
conditions are dominated by a backdrop of ongoing geopolitical
uncertainty and we will continue to invest with discipline.
Mark Nicholls Philip Howell
Chairman Chief Executive
Consolidated interim statement of comprehensive income
for the six months ended 30 June 2017
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 2017 30 June 2016 31 December 2016
Note GBP'000 GBP'000 GBP'000
Interest and similar income 6,323 7,141 13,890
Interest expense and similar charges (723) (1,394) (2,319)
Net interest income 5,600 5,747 11,571
Fee and commission income 144,600 120,948 253,192
Fee and commission expense (10,636) (8,596) (17,936)
Net fee and commission income 133,964 112,352 235,256
Net trading income 1,769 1,445 3,103
Gain on plan amendment of defined benefit pension
schemes 13 5,523 - -
Other operating income 1,041 657 1,353
Operating income 147,897 120,201 251,283
Charges in relation to client relationships and goodwill 10 (5,960) (5,778) (11,735)
Acquisition-related costs (487) (4,431) (5,985)
Head office relocation costs 3 (15,769) (2,257) (7,031)
Other operating expenses (99,095) (84,910) (176,403)
Operating expenses (121,311) (97,376) (201,154)
Profit before tax 26,586 22,825 50,129
Taxation 5 (5,612) (5,778) (11,972)
Profit for the period attributable to
equity holders of the company 20,974 17,047 38,157
Other comprehensive income:
Items that will not be reclassified to profit or loss
Net remeasurement of defined benefit liability 13,495 (29,080) (37,318)
Deferred tax relating to the net remeasurement of
defined benefit liability (2,294) 4,535 5,936
Items that may be reclassified to profit or loss
Revaluation of available for sale investment securities:
- net gain from changes in fair value 110 12 93
- net profit on disposal transferred to profit or
loss during the year (43) - -
67 12 93
Deferred tax relating to revaluation of available
for sale investment securities (11) - (14)
Other comprehensive income net of tax 11,257 (24,533) (31,303)
Total comprehensive income for the period net of tax
attributable to equity holders of the company 32,231 (7,486) 6,854
Dividends paid and proposed for the period per ordinary
share 6 22.0p 21.0p 57.0p
Dividends paid and proposed for the period 11,274 10,160 28,267
Earnings per share for the period attributable to
equity holders of the company: 7
- basic 41.6p 35.7p 78.9p
- diluted 41.3p 35.4p 78.2p
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 2017
Share capital Share premium Merger reserve Available for sale reserve Own shares Retained earnings Total equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2016 (audited) 2,407 97,643 31,835 71 (6,177) 174,413 300,192
Profit for the period 17,047 17,047
Net remeasurement of defined benefit liability (29,080) (29,080)
Net gain on revaluation of available for sale investment
securities 12 12
Deferred tax relating to components of other comprehensive
income - 4,535 4,535
Other comprehensive income net of tax - - - 12 - (24,545) (24,533)
Dividends paid (16,336) (16,336)
Issue of share capital 14 12 3,817 3,829
Share-based payments:
- value of employee services 734 734
- cost of own shares acquired (1,043) (1,043)
- cost of own shares vesting 659 (659) -
- tax on share-based payments (149) (149)
At 30 June 2016 (unaudited) 2,419 101,460 31,835 83 (6,561) 150,505 279,741
Profit for the period 21,110 21,110
Net remeasurement of defined benefit liability (8,238) (8,238)
Net gain on revaluation of available for sale investment
securities 81 81
Deferred tax relating to components of other comprehensive
income (14) 1,401 1,387
Other comprehensive income net of tax - - - 67 - (6,837) (6,770)
Dividends paid (10,143) (10,143)
Issue of share capital 14 116 38,186 38,302
Share-based payments:
- value of employee services 2,301 2,301
- cost of own shares acquired (542) (542)
- cost of own shares vesting 425 (425) -
- own shares sold 345 435 780
- tax on share-based payments 34 34
At 31 December 2016 (audited) 2,535 139,991 31,835 150 (6,243) 156,545 324,813
Profit for the period 20,974 20,974
Net remeasurement of defined benefit liability 13,495 13,495
Revaluation of available for sale investment securities:
- net gain from changes in fair value 110 110
- net profit on disposal transferred to profit or
loss during the year (43) (43)
Deferred tax relating to components of other comprehensive
income (11) (2,294) (2,305)
Other comprehensive income net of tax - - - 56 - 11,201 11,257
Dividends paid (18,236) (18,236)
Issue of share capital 14 27 2,718 2,745
Share-based payments:
- value of employee services 1,095 1,095
- cost of own shares acquired (437) (437)
- cost of own shares vesting 1,336 (1,336) -
- tax on share-based payments 232 232
At 30 June 2017 (unaudited) 2,562 142,709 31,835 206 (5,344) 170,475 342,443
Consolidated interim balance sheet
as at 30 June 2017
Unaudited Unaudited Audited
30 June 2017 30 June 2016 31 December 2016
Note GBP'000 GBP'000 GBP'000
Assets
Cash and
balances with
central banks 1,480,932 960,115 1,075,673
Settlement
balances 99,197 99,198 37,787
Loans and
advances to
banks 148,257 105,869 114,088
Loans and
advances to
customers 8 123,303 111,382 110,951
Investment
securities:
- available for
sale 126,800 84,705 105,421
- held to
maturity 590,005 725,000 700,000
Prepayments,
accrued income
and other
assets 72,323 70,516 65,710
Property, plant
and equipment 9 17,133 9,492 16,590
Deferred tax
asset 8,623 8,083 10,601
Intangible
assets 10 163,323 170,409 167,192
Total assets 2,829,896 2,344,769 2,404,013
Liabilities
Deposits by
banks 9,065 3,434 294
Settlement
balances 122,026 74,856 39,289
Due to
customers 2,215,117 1,860,023 1,888,895
Accruals,
deferred
income and
other
liabilities 71,497 55,309 70,410
Current tax
liabilities 5,395 4,820 6,523
Provisions for
liabilities
and charges 11 24,692 15,080 14,744
Subordinated
loan notes 12 19,643 19,541 19,590
Retirement
benefit
obligations 13 20,018 31,965 39,455
Total
liabilities 2,487,453 2,065,028 2,079,200
Equity
Share capital 14 2,562 2,419 2,535
Share premium 14 142,709 101,460 139,991
Merger reserve 31,835 31,835 31,835
Available for
sale reserve 206 83 150
Own shares (5,344) (6,561) (6,243)
Retained
earnings 170,475 150,505 156,545
Total equity 342,443 279,741 324,813
Total
liabilities
and equity 2,829,896 2,344,769 2,404,013
The condensed consolidated interim financial statements were approved by
the board of directors and authorised for issue on 24 July 2017 and were
signed on their behalf by:
Philip Howell 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 2017
Unaudited Unaudited Audited
30 June 2017 30 June 2016 31 December 2016
Note GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit before tax 26,586 22,825 50,129
Net profit on disposal of available for sale investment
securities (43) - -
Net interest income (5,600) (5,747) (11,571)
Net (recoveries)/impairment charges on impaired loans
and advances (15) 1 9
Net charge for provisions 11 16,198 1,014 1,355
Profit on disposal of property, plant and equipment - (13) (16)
Depreciation, amortisation and impairment 10,014 9,925 20,716
Gain on plan amendment of defined benefit pension
schemes 13 (5,523) - -
Defined benefit pension scheme charges 2,134 1,652 3,058
Defined benefit pension contributions paid (2,553) (3,268) (5,422)
Share-based payment charges 1,765 1,860 5,201
Interest paid (676) (1,428) (2,308)
Interest received 9,455 10,466 14,085
51,742 37,287 75,236
Changes in operating assets and liabilities:
- net decrease in loans and advances to banks and
customers 17,364 46,368 16,785
- net increase in settlement balance debtors (61,410) (81,250) (19,839)
- net increase in prepayments, accrued income and
other assets (9,746) (14,328) (6,392)
- net increase in amounts due to customers and deposits
by banks 334,991 460,268 486,000
- net increase in settlement balance creditors 82,737 53,375 17,808
- net (decrease)/increase in accruals, deferred income,
provisions and other liabilities (2,592) (5,057) 9,762
Cash generated from operations 413,086 496,663 579,360
Tax paid (6,833) (6,435) (12,025)
Net cash inflow from operating activities 406,253 490,228 567,335
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired - (2,258) (2,532)
Purchase of property, equipment and intangible assets (9,923) (11,439) (26,137)
Proceeds from sale of property, plant and equipment - 13 16
Purchase of investment securities (295,703) (540,000) (905,701)
Proceeds from sale and redemption of investment
securities 405,160 522,745 912,745
Net cash generated from/(used in) investing activities 99,534 (30,939) (21,609)
Cash flows from financing activities
Issue of ordinary shares 17 2,308 2,786 40,199
Dividends paid (18,236) (16,336) (26,479)
Net cash (used in)/generated from financing activities (15,928) (13,550) 13,720
Net increase in cash and cash equivalents 489,859 445,739 559,446
Cash and cash equivalents at the beginning of the
period 1,263,074 703,628 703,628
Cash and cash equivalents at the end of the period 17 1,752,933 1,149,367 1,263,074
The accompanying notes form an integral part of the condensed
consolidated interim financial statements.
Notes to the condensed consolidated interim financial statements
1 Basis of preparation
Rathbone Brothers Plc ('the company') is the parent company of a group
of companies ('the group') that provides personalised investment and
wealth management services for private clients, charities and trustees.
The group also provides financial planning, private banking, offshore
fund management and trust administration services. The products and
services from which the group derives its revenues are described in 'our
services' on page 3 of the annual report and accounts for the year ended
31 December 2016 and have not materially changed since that date.
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 2016 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 2016, which are prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the EU.
The information in this announcement does not comprise statutory
financial statements within the meaning of section 434 of the Companies
Act 2006. The comparative figures for the financial year ended 31
December 2016 are not the group's statutory accounts for that financial
year. The group's financial statements for the year ended 31 December
2016 have been reported on by its auditors and delivered to the
Registrar of Companies. The report of the auditors on those financial
statements was unqualified and did not draw attention to any matters by
way of emphasis. It also did not contain a statement under section 498
of the Companies Act 2006.
Developments in reporting standards and interpretations
Future new standards and interpretations
A number of new standards and amendments to standards and
interpretations will be effective for future annual periods beginning
after
1 January 2017 and, therefore, have not been applied in preparing these
consolidated financial statements. IFRS 9 'Financial Instruments', IFRS
15 'Revenue from Contracts with Customers' and IFRS 16 'Leases' are
expected to have the most significant effect on the consolidated
financial statements of the group.
IFRS 9 'Financial Instruments'
IFRS 9 is effective for periods commencing on or after 1 January 2018.
The standard was endorsed by the EU during 2016. The group has not
adopted this standard early.
IFRS 9 changes the classification and measurement of financial
instruments and the timing and extent of credit provisioning. The group
has conducted a preliminary assessment of the potential impact, based on
the profile of its financial instruments as at the balance sheet date,
and is well advanced in its approach to classification and valuation.
Classification of financial assets
The basis of classification for financial assets under IFRS 9 is
different from that under IAS 39. Financial assets will be classified
into one of three categories: amortised cost, fair value through profit
or loss (FVTPL) or fair value through other comprehensive income
(FVOCI). The held to maturity, loans and receivables and available for
sale categories available under IAS 39 have been removed. In addition,
the classification criteria for allocating financial assets between
categories are different under IFRS 9. The group is well advanced in its
classification of financial assets under the new standard.
IFRS 9 uses the same measurement bases as IAS 39 and the group has not
yet identified any material differences arising from applying the new
standard. Debt securities currently classified as held to maturity will
be classified as amortised cost. Other assets currently carried at
amortised cost such as cash with central banks and loans and advances to
banks and customers will also continue to be classified as such. Money
market funds currently classified as available for sale will be
classified as FVOCI, given that although they are generally held to
collect contractual cash flows, they can be redeemed, should the need
arise.
Impairment of financial assets
Under IFRS 9, an expected credit loss model replaces the incurred loss
model, meaning there no longer needs to be a triggering event in order
to recognise impairment losses. A provision must be made for the amount
of any loss expected to arise over the life of the group's financial
assets. Under IAS 39, credit losses are recognised when they incurred.
Under the expected credit loss model, a dual measurement approach
applies whereby a financial asset will attract a loss allowance equal to
either 12 month expected credit losses or lifetime expected credit
losses. The latter applies if there has been a significant deterioration
in the credit quality of the asset. This will require considerable
judgement as to how changes in economic factors affect expected credit
losses, which will be determined on a probability-weighted basis.
The group's trade receivables (including trust and financial planning
debtors) are generally short term and does not contain significant
financing components. Therefore, the group expects to apply the
simplified approach and reflect lifetime expected credit losses.
Treasury assets currently held by the group are of high credit quality
and the group has not experienced any historical credit losses in its
treasury or loan portfolios. Work conducted to date suggests that any
impairment charges recognised in the financial statements under the new
standard will be minimal.
Classification of financial liabilities
The basis of classification for financial liabilities under IFRS 9
remains unchanged from that under IAS 39. The two categories are
amortised cost or fair value through profit or loss (either designated
as such or held for trading)
The group does not currently designate any liabilities as fair value
through profit or loss, and do not anticipate doing so. Therefore, under
IFRS 9, the group expects to classify all financial liabilities as
amortised cost, with no material impact on measurement.
IFRS 15 ' Revenue from Contracts with Customers'
IFRS 15 is effective for periods commencing on or after 1 January 2018.
The standard was endorsed by the EU during 2016. The group has not
adopted this standard early.
IFRS 15 changes how and when revenue is recognised from contracts with
customers. The group will be required to identify all contracts it has
with customers in order to determine whether, how much and when revenue
is recognised. The group is in the process of quantifying the potential
impact of adopting the standard, based on its existing revenue streams.
In addition, the group is considering the impact on its policy of
capitalising costs to secure investment management contracts.
Net fee and commission income
Included within net fee and commission income are initial fees, charged
by a number of group companies in relation to certain business
activities. Under IFRS 15, the group will be required to make an
assessment as to whether the work performed to earn such fees
constitutes the transfer of services and, therefore, fulfils any
performance obligation(s). If so, then these fees can be recognised when
charged; if not, then the fees can only be recognised in the period the
services are provided.
The group has not yet identified any other revenue streams that will be
materially impacted by the new standard.
Client relationship intangibles
Where payments are made to new investment managers to secure investment
management contracts, such costs are capitalised and amortised, where
they are separable, reliably measurable and expected to be recovered,
under IAS 18.
IFRS 15 reinforces this view, stating that incremental costs of
obtaining any contract with a customer shall be capitalised if the
entity expects to recover those costs.
Therefore, the group does not believe the adoption of IFRS 15 will
materially change the way it accounts for client relationship
intangibles.
Transition
The group plans to adopt IFRS 15 in its consolidated financial
statements for the year ending 31 December 2018, using the retrospective
approach.
IFRS 16 ' Leases'
IFRS 16 is effective for periods commencing on or after 1 January 2019.
The standard was endorsed by the EU during 2017. The group does not plan
to adopt this standard early.
IFRS 16 eliminates the classification of leases as either operating
leases or finance leases. The group will be required to recognise all
leases with a term of more than 12 months as a right-of-use lease asset
on its balance sheet; the group will also recognise a financial
liability representing its obligation to make future lease payments.
The group has conducted an initial quantification of the impact of
adopting the standard, based on its existing lease contracts. The most
significant impact is in respect of its new London head office premises.
Transition
Definition of a lease
On transition to IFRS 16, the Group can choose whether to:
- Apply the new definition of a lease to all its contracts as if IFRS 16
had always applied; or
- Apply a practical expedient and retain its previous assessments of
which contracts contain a lease.
The group intends to apply the practical expedient and therefore will
not be reassessing those contracts that are not deemed to contain a
lease prior to the date of adoption.
Retrospective approach
As a lessee, the Group can either apply the standard using a:
- Retrospective approach; or
- Modified retrospective approach with optional practical expedients.
The Group has assessed the impact of both approaches in relation to its
existing lease contracts, and is most likely to apply the modified
retrospective approach.
Potential impact
The group's total assets and total liabilities will be increased by the
recognition of lease assets and liabilities. The lease assets will be
depreciated over the shorter of the expected life of the asset and the
lease term. The lease liability will be reduced by lease payments,
offset by the unwinding of the liability over the lease term.
On the group's statement of comprehensive income, the profile of lease
costs will be front-loaded, at least individually, as the interest
charge is higher in the early years of a lease term as the discount rate
unwinds. The total cost of the lease over the lease term is expected to
be unchanged.
In addition to the above impacts, recognition of lease assets will
increase the group's regulatory capital requirement.
Lessor accounting
Where the Group acts as an intermediate lessor in a sub-lease
arrangement it will need to make adjustments for such leases.
2 Segmental information
For management purposes, the group is organised into two operating
divisions: Investment Management and Unit Trusts. Centrally incurred
indirect expenses are allocated to these operating segments on the basis
of the cost drivers that generate the expenditure; principally the
headcount of staff directly involved in providing those services from
which the segment earns revenues, the value of funds under management
and the segment's total revenue. The allocation of these costs is shown
in a separate column in the table below, alongside the information
presented for internal reporting to the executive committee, which is
the group's chief operating decision maker.
Investment Management Unit Trusts Indirect expenses Total
Six months ended 30 June 2017 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
Net investment management fee income 92,523 13,018 - 105,541
Net commission income 21,869 - - 21,869
Net interest income 5,600 - - 5,600
Fees from advisory services and other income 7,433 1,931 - 9,364
Underlying operating income 127,425 14,949 - 142,374
Staff costs - fixed (30,448) (1,545) (12,744) (44,737)
Staff costs - variable (19,675) (3,507) (2,604) (25,786)
Total staff costs (50,123) (5,052) (15,348) (70,523)
Other direct expenses (10,389) (1,830) (16,353) (28,572)
Allocation of indirect expenses (28,743) (2,958) 31,701 -
Underlying operating expenses (89,255) (9,840) - (99,095)
Underlying profit before tax 38,170 5,109 - 43,279
Charges in relation to client relationships and goodwill
(note 10) (5,960) - - (5,960)
Acquisition-related costs (487) - - (487)
Segment profit before tax 31,723 5,109 - 36,832
Gain on plan amendment of defined benefit pension
schemes (note 13) 5,523
Head office relocation costs (note 3) (15,769)
Profit before tax 26,586
Taxation (note 5) (5,612)
Profit for the period attributable to equity holders
of the company 20,974
Investment Management Unit Trusts Total
GBP'000 GBP'000 GBP'000
Segment total assets 2,758,696 66,358 2,825,054
Unallocated assets 4,842
Total assets 2,829,896
Investment Management Unit Trusts Indirect expenses Total
Six months ended 30 June 2016 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
Net investment management fee income 77,315 9,799 - 87,114
Net commission income 19,443 - - 19,443
Net interest income 5,747 - - 5,747
Fees from advisory services and other income 6,288 1,609 - 7,897
Underlying operating income 108,793 11,408 - 120,201
Staff costs - fixed (29,075) (1,541) (9,576) (40,192)
Staff costs - variable (14,430) (2,290) (2,780) (19,500)
Total staff costs (43,505) (3,831) (12,356) (59,692)
Other direct expenses (11,254) (2,600) (11,364) (25,218)
Allocation of indirect expenses (22,487) (1,233) 23,720 -
Underlying operating expenses (77,246) (7,664) - (84,910)
Underlying profit before tax 31,547 3,744 - 35,291
Charges in relation to client relationships and goodwill
(note 10) (5,778) - - (5,778)
Acquisition-related costs (4,431) - - (4,431)
Segment profit before tax 21,338 3,744 - 25,082
Head office relocation costs (note 3) (2,257)
Profit before tax 22,825
Taxation (note 5) (5,778)
Profit for the period attributable to equity holders
of the company 17,047
Investment Management Unit Trusts Total
GBP'000 GBP'000 GBP'000
Segment total assets 2,290,797 47,735 2,338,532
Unallocated assets 6,238
Total assets 2,344,770
Investment Management Unit Trusts Indirect expenses Total
Year ended 31 December 2016 (audited) GBP'000 GBP'000 GBP'000 GBP'000
Net investment management fee income 163,268 21,532 - 184,800
Net commission income 38,904 - - 38,904
Net interest income 11,571 - - 11,571
Fees from advisory services and other income 12,578 3,430 - 16,008
Underlying operating income 226,321 24,962 - 251,283
Staff costs - fixed (57,613) (3,020) (19,123) (79,756)
Staff costs - variable (32,437) (5,333) (7,210) (44,980)
Total staff costs (90,050) (8,353) (26,333) (124,736)
Other direct expenses (22,882) (5,355) (23,430) (51,667)
Allocation of indirect expenses (47,184) (2,579) 49,763 -
Underlying operating expenses (160,116) (16,287) - (176,403)
Underlying profit before tax 66,205 8,675 - 74,880
Charges in relation to client relationships and goodwill
(note 10) (11,735) - - (11,735)
Acquisition-related costs (5,985) - - (5,985)
Segment profit before tax 48,485 8,675 - 57,160
Head office relocation costs (note 3) (7,031)
Profit before tax 50,129
Taxation (note 5) (11,972)
Profit for the year attributable to equity holders
of the company 38,157
Investment Management Unit Trusts Total
GBP'000 GBP'000 GBP'000
Segment total assets 2,340,973 54,912 2,395,885
Unallocated assets 8,128
Total assets 2,404,013
The following table reconciles underlying operating income to operating
income:
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Underlying operating income 142,374 120,201 251,283
Gain on plan amendment of defined benefit pension
schemes (note 13) 5,523 - -
Operating income 147,897 120,201 251,283
The following table reconciles underlying operating expenses to
operating expenses:
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Underlying operating expenses 99,095 84,910 176,403
Charges in relation to client relationships and goodwill
(note 10) 5,960 5,778 11,735
Acquisition-related costs 487 4,431 5,985
Head office relocation costs (note 3) 15,769 2,257 7,031
Operating expenses 121,311 97,376 201,154
Included within Investment Management underlying operating income is
GBP951,000 (30 June 2016: GBP634,000; 31 December 2016: GBP1,412,000) of
fees and commissions receivable from Unit Trusts. Intersegment sales are
charged at prevailing market prices.
Geographic analysis
The following table presents 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 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
United Kingdom 142,503 115,798 241,882
Jersey 5,394 4,403 9,401
Operating income 147,897 120,201 251,283
The group's non-current assets are substantially all 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 2017, the group provided
investment management services to 49,000 clients (30 June 2016: 48,000;
31 December 2016: 48,000).
3 Head office relocation
On 6 January 2016, the group exchanged contracts for five 17-year leases
for a total of 75,000 sq ft of office space at 8 Finsbury Circus. The
group began recognising costs relating to rent and dilapidations on the
new premises from the date the leases began, 13 May 2016.
The move to the 8 Finsbury Circus office concluded on 13 February 2017,
which triggered recognition of a provision for the net cost of the
surplus property at 1 Curzon Street until the end of the existing lease
(see note 11).
During the six months to 30 June 2017, incremental costs of
GBP15,769,000 (30 June 2016: GBP2,257,000; 31 December 2016:
GBP7,031,000) were incurred as a result of the decision to move the head
office to 8 Finsbury Circus. These incremental costs were as follows:
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Rental costs for 8 Finsbury Circus prior to
relocation 538 599 3,328
Accelerated depreciation charge for 1 Curzon Street 779 1,409 2,745
Provision for dilapidations 123 181 739
Net charge in relation to onerous lease provision
(note 11) 13,807 - -
Professional and other costs 522 68 219
15,769 2,257 7,031
4 Staff numbers
The average number of employees, on a full time equivalent basis, during
the period was as follows:
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Investment
Management:
- investment
management services 724 679 698
- advisory services 89 81 82
Unit Trusts 27 26 27
Shared services 283 259 259
1,123 1,045 1,066
5 Taxation
The tax expense for the six months ended 30 June 2017 was calculated
based on the estimated average annual effective tax rate. The overall
effective tax rate for this period was 21.1% (six months ended 30 June
2016: 25.3%; year ended 31 December 2016: 23.9%).
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
United Kingdom
taxation 5,527 4,805 11,953
Overseas taxation 179 92 236
Deferred taxation (94) 881 (217)
5,612 5,778 11,972
The underlying UK corporation tax rate for the year ending 31 December
2017 is 19.2% (2016: 20.0%).
The Finance Bill 2016 contained legislation to reduce the UK corporation
tax rate to 17.0% in April 2020 and was substantively enacted in
September 2016. Deferred income taxes are calculated on all temporary
differences under the liability method using the rate expected to apply
when the relevant timing differences are forecast to unwind.
6 Dividends
An interim dividend of 22.0p per share was declared on 24 July 2017 and
is payable on 3 October 2017 to shareholders on the register at the
close of business on 8 September 2017 (30 June 2016: 21.0p). In
accordance with IFRS, the interim dividend has not been included as a
liability in this interim statement. A final dividend for 2016 of 36.0p
per share was paid on 16 May 2017.
7 Earnings per share
Earnings used to calculate earnings per share on the bases reported in
these condensed consolidated interim financial statements were:
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 2017 30 June 2016 31 December 2016
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 attributable to equity holders 43,279 34,457 35,291 27,020 74,880 59,064
Gain on plan amendment of defined benefit pension
schemes (note 13) 5,523 4,460 - - - -
Charges in relation to client relationships and goodwill
(note 10) (5,960) (4,813) (5,778) (4,622) (11,735) (9,388)
Acquisition-related costs (487) (487) (4,431) (3,545) (5,985) (5,894)
Head office relocation costs (note 3) (15,769) (12,643) (2,257) (1,806) (7,031) (5,625)
Profit attributable to equity holders 26,586 20,974 22,825 17,047 50,129 38,157
Basic earnings per share has been calculated by dividing profit
attributable to equity holders by the weighted average number of shares
in issue throughout the period, excluding own shares, of 50,403,394 (30
June 2016: 47,805,338 ; 31 December 2016: 48,357,728 ).
Diluted earnings per share is the basic earnings per share, adjusted for
the effect of contingently issuable shares under Long Term and Executive
Incentive Plans, employee share options remaining capable of exercise
and any dilutive shares to be issued under the Share Incentive Plan, all
weighted for the relevant period:
Unaudited Unaudited Audited
30 June 2017 30 June 2016 31 December 2016
Weighted average number of ordinary shares in issue
during the period - basic 50,403,394 47,805,338 48,357,728
Effect of ordinary share options/Save As You Earn 171,711 134,226 114,415
Effect of dilutive shares issuable under the Share
Incentive Plan 11,043 12,207 37,186
Effect of contingently issuable ordinary shares under
Long Term and Executive Incentive Plans 221,128 217,754 260,655
Diluted ordinary shares 50,807,276 48,169,525 48,769,984
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 2017 30 June 2016 31 December 2016
Underlying earnings per share for the period attributable
to equity holders of the company:
- basic 68.4p 56.5p 122.1p
- diluted 67.8p 56.1p 121.1p
8 Loans and advances to customers
Unaudited Unaudited Audited
30 June 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Overdrafts 6,997 6,232 3,740
Investment management
loan book 115,538 104,180 106,335
Trust and financial
planning debtors 748 953 855
Other debtors 20 17 21
123,303 111,382 110,951
9 Property, plant and equipment
During the six months ended 30 June 2017, the group purchased assets
with a cost of GBP3,022,000 (six months ended 30 June 2016:
GBP2,276,000; year ended 31 December 2016: GBP12,175,000). The move to 8
Finsbury Circus accounted for GBP2,760,000 (six months ended 30 June
2016: GBP1,457,000; year ended 31 December 2016: GBP9,900,000) of the
amount capitalised in the six months ended 30 June 2017.
No assets were disposed of in the six months ended 30 June 2017 (six
months ended 30 June 2016 and year ended 31 December 2016: assets with
net book value of GBPnil) with no resulting gain or loss on disposal
(six months ended 30 June 2016: gain on disposal of GBP13,000; year
ended 31 December 2016: gain on disposal of GBP16,000).
10 Intangible assets
Goodwill Client relationships Software development costs Purchased software Total Intangibles
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January
2017 64,272 144,652 4,936 24,354 238,214
Internally
developed in
the period - - 392 - 392
Purchased in
the period - 1,596 - 1,677 3,273
Disposals - (1,061) - - (1,061)
At 30 June
2017 64,272 145,187 5,328 26,031 240,818
Amortisation
and
impairment
At 1 January
2017 807 47,451 4,037 18,727 71,022
Charge in the
period 283 5,677 241 1,333 7,534
Disposals - (1,061) - - (1,061)
At 30 June
2017 1,090 52,067 4,278 20,060 77,495
Carrying value
at 30 June
2017
(unaudited) 63,182 93,120 1,050 5,971 163,323
Carrying value
at 30 June
2016
(unaudited) 63,465 100,017 890 6,037 170,409
Carrying value
at 31
December 2016
(audited) 63,465 97,201 899 5,627 167,192
The total amount charged to profit or loss in the period, in relation to
goodwill and client relationships, was GBP5,960,000 (six months ended 30
June 2016: GBP5,778,000; year ended 31 December 2016: GBP11,735,000). A
further GBP2,301,000 (six months ended 30 June 2016: GBP1,553,000; year
ended 31 December 2016: GBP4,005,000) was expensed as staff costs during
the period, representing amounts due for client relationships introduced
more than 12 months after the cessation of any non-compete period.
Impairment
During the period, the group updated its assessment of goodwill
allocated to the investment management, trust and tax and Rooper &
Whately cash generating units (CGUs) for impairment.
The recoverable amounts of goodwill allocated to the CGUs are determined
from value-in-use calculations. There was no indication of impairment of
goodwill allocated to the investment management or Rooper & Whately CGUs
during the period.
The calculated recoverable amount of goodwill allocated to the trust and
tax CGU at 30 June 2017 was GBP864,000, which was lower than the
carrying value of GBP1,147,000 at 31 December 2016. The recoverable
amount was calculated based on forecast earnings for the current year,
extrapolated for a ten year period, assuming an annual decrease in
revenues of 1.0% per annum (31 December 2016: decrease of 1.0% per
annum). The pre-tax rate used to discount the forecast cash flows was
14.0% (31 December 2016: 11.3%) as the group judges this discount rate
appropriately reflects the market in which the CGU operates and, in
particular, its small size. The group has therefore recognised an
impairment charge of GBP283,000 during the period. This impairment has
been included in the Investment Management segment in the segmental
analysis (note 2).
11 Provisions for liabilities and charges
Deferred, variable costs to acquire client relationship Deferred and contingent consideration in business
intangibles combinations Legal and compensation Property-related Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2016 13,392 3,908 721 1,795 19,816
Charged to
profit or
loss - - 855 306 1,161
Unused amount
credited to
profit or
loss - (58) (89) - (147)
Net charge to
profit or
loss - (58) 766 306 1,014
Other movements 4,783 48 - - 4,831
Utilised/paid
during the
period (7,902) (2,258) (421) - (10,581)
At 30 June 2016
(unaudited) 10,273 1,640 1,066 2,101 15,080
Charged to
profit or
loss - - 62 697 759
Unused amount
credited to
profit or
loss - (21) (397) - (418)
Net charge to
profit or
loss - (21) (335) 697 341
Other movements 3,143 34 - - 3,177
Utilised/paid
during the
period (3,204) (517) (133) - (3,854)
At 1 January
2017
(audited) 10,212 1,136 598 2,798 14,744
Charged to
profit or
loss - - 93 16,105 16,198
Unused amount
credited to
profit or
loss - - - - -
Net charge to
profit or
loss - - 93 16,105 16,198
Other movements 1,597 (13) - - 1,584
Utilised/paid
during the
period (4,820) - (46) (2,968) (7,834)
At 30 June 2017
(unaudited) 6,989 1,123 645 15,935 24,692
Payable within
1 year 5,118 - 645 5,528 11,291
Payable after 1
year 1,871 1,123 - 10,407 13,401
At 30 June 2017
(unaudited) 6,989 1,123 645 15,935 24,692
Deferred, variable costs to acquire client relationship intangibles
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.
Deferred and contingent consideration in business combinations
Deferred and contingent consideration of GBP1,123,000 (30 June 2016:
GBP1,640,000; 31 December 2016: GBP1,136,000) is the present value of
amounts payable at the end of 2019 in respect of the acquisition of
Vision and Castle.
Legal & compensation
During the ordinary course of business the group may, from time to time,
be subject to complaints, as well as threatened and actual legal
proceedings (which may include lawsuits brought on behalf of clients or
other third parties) both in the UK and overseas. Any such material
matters are periodically reassessed, with the assistance of external
professional advisers where appropriate, to determine the likelihood of
the group incurring a liability. In those instances where it is
concluded that it is more likely than not that a payment will be made, a
provision is established to the group's best estimate of the amount
required to settle the obligation at the relevant balance sheet date.
The timing of settlement of provisions for client compensation or
litigation is dependent, in part, on the duration of negotiations with
third parties.
Property-related
Property-related provisions of GBP15,935,000 relate to dilapidation and
onerous lease provisions expected to arise on leasehold premises held by
the group (30 June 2016: GBP2,101,000; 31 December 2016: GBP2,798,000).
The move to the 8 Finsbury Circus office was completed on 13 February
2017, which triggered the recognition of a provision for the net cost of
the surplus property at 1 Curzon Street until the end of the existing
lease. The ultimate amount of the provision is dependent on the timing
of any subletting arrangement and the associated terms agreed with
prospective third parties. Based on management's expectations of future
costs for the premises and potential rental income, and timings thereof,
on 13 February 2017, the group recognised a provision of GBP12,148,000
whilst releasing the unamortised portion of the rent free period and a
landlord contribution totalling GBP2,148,000. Since the middle of
February 2017, management have altered their expected timings of a
potential sublet; this has led to a further charge of GBP3,807,000 being
recognised. The group utilised GBP2,264,000 (30 June 2016 and 31
December 2016: GBPnil) of the onerous lease provision during the period,
being the payment of rent, rates and service charge.
Dilapidation provisions are calculated using a discounted cash flow
model; during the six months ended 30 June 2017, dilapidation provisions
decreased by GBP554,000 (30 June 2016: increased GBP306,000; 31 December
2016: increased GBP1,003,000). The group utilised GBP704,000 (30 June
2016 and 31 December 2016: GBPnil) of the dilapidations provision held
for the surplus property at 1 Curzon Street during the period. The
impact of discounting led to an additional GBP150,000 (30 June 2016:
GBP306,000; 31 December 2016: GBP1,003,000) being provided for over the
period.
Amounts payable after 1 year
Property-related provisions of GBP10,407,000 are expected to be settled
within 19 years of the balance sheet date, which corresponds to the
longest lease for which a dilapidations provision is being held.
Provisions for deferred and contingent consideration in business
combinations of GBP1,123,000 are expected to be settled within three
years of the balance sheet date. Remaining provisions payable after one
year are expected to be settled within three years of the balance sheet
date.
12 Subordinated loan notes
Unaudited Unaudited Audited
30 June 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Subordinated loan
notes
- Face value 20,000 20,000 20,000
- Carrying value 19,643 19,541 19,590
Subordinated loan notes consist of 10-year Tier 2 notes, which are
repayable in August 2025, with a call option in August 2020 and annually
thereafter. Interest is payable at a fixed rate of 5.856% until the
first call option date and at a fixed margin of 4.375% over 6 month
LIBOR thereafter.
13 Long term employee benefits
The group operates two defined benefit pension schemes providing
benefits based on pensionable salary for 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 2017 30 June 2016 31 December 2016
% p.a. % p.a. % p.a.
Rate of increase in salaries N/A 4.10 4.50
Rate of increase of pensions in payment:
- Laurence Keen Scheme 3.60 3.40 3.60
- Rathbones 1987 Scheme 3.40 3.10 3.40
Rate of increase of deferred pensions 3.50 3.10 3.50
Discount rate 2.75 3.05 2.80
Inflation* 3.50 3.10 3.50
* Inflation assumptions are based on the Retail Prices
Index
The assumed life expectations of members retiring, aged 65 were:
Unaudited 30 Unaudited 30 June Audited 31
June 2017 2016 December 2016
Males Females Males Females Males Females
Retiring
today 23.7 25.6 24.3 26.5 24.3 26.5
Retiring
in 20
years 25.4 27.4 26.6 28.8 26.6 28.8
The amount included in the balance sheet arising from the group's
obligations in respect of the schemes is as follows:
Unaudited 30 June 2017 Unaudited 30 June 2016 Audited 31 December 2016
Rathbone 1987 Scheme Laurence Keen Scheme Rathbone 1987 Scheme Laurence Keen Scheme Rathbone 1987 Scheme Laurence Keen Scheme
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Present value
of defined
benefit
obligations (165,322) (12,937) (199,897) (16,801) (216,238) (16,203)
Fair value of
scheme
assets 146,218 12,023 169,915 14,818 178,887 14,099
Total deficit (19,104) (914) (29,982) (1,983) (37,351) (2,104)
Following a consultation with members of the schemes, the decision was
taken to close the scheme to future accrual and to break the link to
salary in both schemes. This has resulted in a plan amendment gain of
GBP5,523,000 being recognised in operating income.
The group made special contributions into its pension schemes of
GBP1,750,000 during the period (30 June 2016: GBP1,936,000; 31 December
2016: GBP2,936,000).
14 Share capital and share premium
The following movements in share capital occurred during the period:
Number of Exercise price Share capital Share premium Total
shares pence GBP'000 GBP'000 GBP'000
At 1 January
2016 48,134,286 2,407 97,643 100,050
Shares
issued:
- in relation
to business
combinations 37,898 1,705.0 2 644 646
- to Share
Incentive 1,968.0 -
Plan 104,667 2,039.0 5 2,069 2,074
- to Save As
You Earn 934.0 -
scheme 102,319 1,641.0 5 1,104 1,109
At 30 June
2016
(unaudited) 48,379,170 2,419 101,460 103,879
Shares
issued:
- to Share
Incentive 1,934.0 -
Plan 65,510 2,264.0 4 1,190 1,194
- to Save As
You Earn 934.0 -
scheme 13,789 1,641.0 1 166 167
- on placing 2,224,210 1,710.0 111 36,830 36,941
Own shares 1,754.0 -
sold - 1,949.0 - 345 345
At 31 December
2016
(audited) 50,682,679 2,535 139,991 142,526
Shares
issued:
- to Share
Incentive 1,784.0 -
Plan 76,983 2,429.0 4 1,475 1,479
- to Save As
You Earn 984.0 -
scheme 85,838 1,648.0 4 1,243 1,247
- to Employee
Benefit
Trust 397,761 5.0 19 - 19
At 30 June
2017
(unaudited) 51,243,261 2,562 142,709 145,271
At 30 June 2017, the group held 672,909 own shares (30 June 2016:
376,273; 31 December 2016: 336,987).
15 Financial instruments
The table below analyses the group's financial instruments measured at
fair value into a fair value hierarchy based on the valuation technique
used to determine the fair value.
-- Level 1: quoted prices (unadjusted) in active markets for identical
assets or liabilities.
-- Level 2: inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly or indirectly.
-- Level 3: inputs for the asset or liability that are not based on
observable market data.
Level 1 Level 2 Level 3 Total
At 30 June 2017 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
Assets
Available for sale
securities:
- equity securities 2,513 - - 2,513
- money market funds - 124,287 - 124,287
Total financial assets 2,513 124,287 - 126,800
Level 1 Level 2 Level 3 Total
At 30 June 2016 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
Assets
Available for sale
securities:
- equity securities 1,082 - - 1,082
- money market funds - 83,623 - 83,623
Total financial assets 1,082 83,623 - 84,705
Level 1 Level 2 Level 3 Total
At 31 December 2016 (audited) GBP'000 GBP'000 GBP'000 GBP'000
Assets
Available for sale
securities:
- equity securities 1,864 - - 1,864
- money market funds - 103,557 - 103,557
Total financial assets 1,864 103,557 - 105,421
The group recognises transfers between levels of the fair value
hierarchy at the end of the reporting period during which the change has
occurred. There have been no transfers between levels during the period.
The fair value of listed equity securities is their quoted price. Money
market funds are demand securities and changes to estimates of interest
rates will not affect their fair value. The fair value of money market
funds is their daily redemption value.
The fair values of the group's other financial assets and liabilities
are not materially different from their carrying values with the
exception of the following:
-- Held to maturity debt securities comprise bank and building society
certificates of deposit, which have fixed coupons. The fair value of debt
securities at 30 June 2017 was GBP592,696,000 (30 June 2016:
GBP727,395,000; 31 December 2016: GBP704,815,000) and the carrying value
was GBP590,005,000 (30 June 2016: GBP725,000,000; 31 December 2016:
GBP700,000,000). Fair value for held to maturity assets is based on
market bid prices and hence would be categorised as level 1 within the
fair value hierarchy.
-- Subordinated loan notes (note 12) comprise Tier 2 loan notes issued in
2015. The fair value of the loan notes at 30 June 2017 was GBP20,604,000
(30 June 2016: GBP20,301,000; 31 December 2016: GBP19,578,000) and the
carrying value was GBP19,643,000 (30 June 2016: GBP19,541,000; 31
December 2016: GBP19,590,000). Fair value of the loan notes is based on
discounted future cash flows using current market rates for debts with
similar remaining maturity, and hence would be categorised as level 2
within the fair value hierarchy.
16 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.
(b) Capital expenditure authorised and contracted for at 30 June 2017
but not provided for in the condensed consolidated interim financial
statements amounted to GBP2,074,000 (30 June 2016: GBP434,000; 31
December 2016: GBP4,430,000).
The contractual amounts of the group's commitments to extend credit to
its clients are as follows:
Unaudited Unaudited Audited
30 June 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Guarantees 117 - 117
Undrawn commitments to
lend of 1 year or
less 22,644 22,146 25,661
Undrawn commitments to
lend of more than 1
year 5,204 - 5,981
27,965 22,146 31,759
The fair value of the guarantees is GBPnil (30 June 2016 and 31 December
2016: GBPnil).
(c) The arrangements put in place by the Financial Services
Compensation Scheme (FSCS) to protect depositors and investors from loss
in the event of failure of financial institutions has resulted in
significant levies on the industry in recent years. The financial impact
of unexpected FSCS levies is largely out of the group's control as they
result from other industry failures.
There is uncertainty over the level of future FSCS levies as they depend
on the ultimate cost to the FSCS of industry failures. The group
contributes to the deposit class, investment fund management class and
investment intermediation levy classes and accrues levy costs for future
levy years when the obligation arises.
17 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
Six months to Six months to Year to
30 June 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Cash and balances at
central banks 1,480,932 960,115 1,075,673
Loans and advances to
banks 147,714 105,629 83,844
Available for sale
investment
securities 124,287 83,623 103,557
1,752,933 1,149,367 1,263,074
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 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Share capital issued (note 14) 27 12 128
Share premium on shares issued (note 14) 2,718 3,817 42,348
Shares issued in relation to share-based schemes for
which no cash consideration was received (437) (1,043) (1,631)
Shares issued in relation to business combinations - - (646)
2,308 2,786 40,199
18 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 GBP204,000 were paid in the period (six months ended
30 June 2016: GBP122,000; year ended 31 December 2016: GBP302,000) in
respect of ordinary shares held by key management personnel.
As at 30 June 2017, the group had provided interest-free season ticket
loans of GBP4,000 (30 June 2016: GBP3,000; 31 December 2016: GBP6,000)
to key management personnel.
At 30 June 2017, key management personnel and their close family members
had gross outstanding deposits of GBP4,252,000 (30 June 2016:
GBP4,104,000; 31 December 2016: GBP5,464,000) and gross outstanding
loans of GBP723,000 (30 June 2016: GBP949,000; 31 December 2016:
GBP959,000) 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.
One group subsidiary, Rathbone Unit Trust Management, has authority to
manage the investments within a number of unit trusts. Another group
company, Rathbone Investment Management International, acted as
investment manager for a protected cell company offering unitised
private client portfolio services. During the first half of 2017, the
group managed 25 unit trusts, Sociétés d'investissement à
Capital Variable (SICAVs) and open-ended investment companies (OEICs)
(together, 'collectives') (six months ended 30 June 2016: 25 unit trusts
and OEICs; year ended 31 December 2016: 27 unit trusts and OEICs).
The group charges each fund an annual management fee for these services,
but does not earn any performance fees on the unit trusts. The
management charges are calculated on the bases published in the
individual fund prospectuses, which also state the terms and conditions
of the management contract with the group.
The following transactions and balances relate to the group's interest
in the unit trusts:
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Total management fees 16,592 12,856 27,783
Unaudited Unaudited Audited
30 June 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Management fees owed to
the group 2,931 2,183 2,557
Holdings in unit trusts
(note 15) 2,513 1,082 1,864
5,444 3,265 4,421
Total management fees are included within 'fee and commission income' in
the consolidated interim statement of comprehensive income.
Management fees owed to the group are included within 'accrued income'
and holdings in unit trusts are classified as 'available for sale equity
securities' in the consolidated interim balance sheet. The maximum
exposure to loss is limited to the carrying amount on the balance sheet
as disclosed above.
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.
19 Interest in unconsolidated structured entities
As described in note 18, at 30 June 2017, the group owned units in
collectives managed by Rathbone Unit Trust Management with a value of
GBP2,513,000 (30 June 2016: GBP1,082,000; 31 December 2016:
GBP1,864,000), representing 0.05% (30 June 2016: 0.03%; 31 December
2016: 0.05%) of the total value of the collectives managed by the group.
These assets are held to hedge the group's exposure to deferred
remuneration schemes for employees of Unit Trusts.
The group's primary risk associated with its interest in the unit trusts
is from changes in fair value of its holdings in the funds.
The group is not judged to control, and therefore does not consolidate,
the collectives. Although the fund trustees have limited rights to
remove Rathbone Unit Trust Management as manager, the group is exposed
to very low variability of returns from its management and share of
ownership of the funds and is therefore judged to act as an agent rather
than having control under IFRS 10.
20 Events after the balance sheet date
An interim dividend of 22.0p per share was declared on 24 July 2017 (see
note 6).
There have been no other material events occurring between the balance
sheet date and 24 July 2017.
Regulatory capital
The group is classified as a banking group under the Capital
Requirements Directive (CRD) and is therefore required to operate within
the restrictions on capital resources and banking exposures prescribed
by the Capital Requirements Regulation, as applied by the Prudential
Regulation Authority (PRA).
Regulatory own funds
The group's regulatory own funds (excluding profits for the six months
ended 30 June, which have not yet been independently verified, but
including independently verified profits to 31 December) are shown in
the table below:
Unaudited Unaudited Unaudited
30 June 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Share capital and share
premium 145,271 103,880 142,526
Reserves 188,586 206,331 188,530
Less:
- Own shares (5,344) (6,561) (6,243)
- Intangible assets
(net of deferred tax) (162,589) (169,582) (166,414)
Total Common Equity
Tier 1 capital 165,924 134,068 158,399
Tier 2 capital 16,498 15,456 15,804
Total own funds 182,422 149,524 174,203
Own funds requirements
The group is required to hold capital to cover a range of own funds
requirements, classified as Pillar 1 and Pillar 2.
Pillar 1 - minimum requirement for capital
Pillar 1 focuses on the determination of risk-weighted assets and
expected losses in respect of the group's exposure to credit,
counterparty credit, market and operational risks and sets a minimum
requirement for capital.
At 30 June 2017, the group's risk-weighted assets were GBP911,163,000
(30 June 2016: GBP837,975,000; 31 December 2016: GBP892,650,000).
Pillar 2 - Supervisory review process
Pillar 2 supplements the Pillar 1 minimum requirement with firm-specific
Individual Capital Guidance (Pillar 2A) and a framework of regulatory
capital buffers (Pillar 2B).
The Pillar 2A own funds requirement is set by the PRA to reflect those
risks, specific to the firm, which are not fully captured under the
Pillar 1 own funds requirement.
Pension obligation risk
The potential for additional unplanned costs that the group would incur
in the event of a significant deterioration in the funding position of
the group's defined benefit pension schemes.
Interest rate risk in the banking book
The potential losses in the non-trading book resulting from interest
rate changes or widening of the spread between Bank of England base
rates and LIBOR rates.
Concentration risk
Greater loss volatility arising from a higher level of loan default
correlation than is assumed by the Pillar 1 assessment.
The group is also required to maintain a number of Pillar 2B regulatory
capital buffers.
Capital conservation buffer (CCB)
The CCB is a general buffer of 2.5% of risk-weighted assets designed to
provide for losses in the event of a stress and is being phased in from
1 January 2016 to 1 January 2019. As at 30 June 2017, the buffer rate
was 1.25% of risk-weighted assets. The CCB must be met with Common
Equity Tier 1 capital.
Countercyclical capital buffer (CCyB)
The CCyB is time-varying and is designed to act as an incentive for
banks to constrain credit growth in times of heightened systemic risk.
The amount of the buffer is determined by reference to rates set by the
Financial Policy Committee (FPC) for individual countries where the
group has credit exposures. The buffer rate is currently set at zero
for the UK, however non-zero rates for Norway, Sweden and Hong Kong,
where the group has small relevant credit exposures, results in an
overall rate of 0.02% of risk weighted assets for the group as at 30
June 2017. The FPC has announced that the rate will increase to 0.5%,
with binding effect from 27 June 2018. Absent a material change in the
outlook, it expects to increase the rate to 1.0% with effect from
November 2018. The CCyB must be met with Common Equity Tier 1 capital.
PRA buffer
The PRA also determines whether any incremental firm-specific buffer is
required, in addition to the CCB and the CCyB. The PRA requires any PRA
buffer to remain confidential between the group and the PRA.
The group's own funds requirements were as follows:
Unaudited Unaudited Unaudited
30 June 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Own funds requirement for credit risk 38,729 36,630 36,859
Own funds requirement for market risk - - 389
Own funds requirement for operational risk 34,164 30,407 34,164
Pillar 1 own funds requirement 72,893 67,037 71,412
Pillar 2A own funds requirement 28,105 27,285 27,898
Total Pillar 1 and 2A own funds requirement 100,998 94,322 99,310
CRD IV buffers:
- Capital conservation buffer (CCB) 11,390 5,237 5,579
- Countercyclical capital buffer (CCyB) 182 754 357
Total Pillar 1 and 2A own funds requirement and CRD
IV buffers 112,570 100,313 105,246
Statement of directors' responsibilities in respect of the interim
statement
Confirmations by the board
We confirm to the best of our knowledge that:
-- the condensed set of financial statements have been prepared in
accordance with IAS 34 'Interim Financial Reporting' as adopted by the
EU;
-- the interim management report includes a fair view of the information
required by:
1. DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the year;
and
2. DTR 4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have taken place in the first six months
of the current financial year and that have materially affected
the financial position or performance of the entity during that
period; and any changes in the related party transactions
described in the last annual report that could do so.
Going concern basis of preparation
Details of the group's results, cash flows and resources, together with
an update on the risks it faces and other factors likely to affect its
future development, performance and position are set out in this interim
management report.
Group companies are regulated by the PRA and FCA and perform annual
capital adequacy assessments, which include the modelling of certain
extreme stress scenarios. The group publishes Pillar 3 disclosures
annually on its website, which provide further detail about its
regulatory capital resources and requirements. During the first half of
2017, and as at 30 June 2017, the group was primarily equity-financed,
with a small amount of gearing in the form of the Tier 2 debt.
In 2017, the group has continued to grow client funds under management,
both organically and through acquisition, and the group remains
profitable. The directors believe that the company remains well-placed
to manage its business risks successfully, despite an uncertain economic
and political backdrop.
As we believe that the group has, and is forecast to continue to have,
sufficient financial and regulatory resources we continue to adopt the
going concern basis of accounting in preparing the condensed
consolidated interim financial statements. In forming our view, we have
considered the company's prospects for a period exceeding 12 months from
the date the condensed consolidated interim financial statements are
approved.
By Order of the Board
Philip Howell
Chief Executive
24 July 2017
Independent review report Rathbone Brothers Plc
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 2017 as set out on pages 6 to 25 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
Conduct Authority ("the UK FCA"). 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 Disclosure and
Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with International
Accounting Standard 34, "Interim Financial Reporting," as adopted by the
European Union.
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 United Kingdom. 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 2017 is
not prepared, in all material respects, in accordance with International
Accounting Standard 34 as adopted by the European Union and the
Disclosure and Transparency Rules of the United Kingdom's Financial
Services Authority.
Nicholas Edmonds
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square, London E14 5GL
24 July 201724 July 201724 July 2017
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Rathbone Brothers Plc via Globenewswire
http://www.rathbones.com/
(END) Dow Jones Newswires
July 25, 2017 02:00 ET (06:00 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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