Company Overview

Commenting on the interim results, Roy Morris, Chief Executive of Rathbone Brothers Plc, said:

"Our policy of many years to concentrate on wealth management through discretionary mandates is proving itself in current difficult market conditions. The Group has no core borrowings, remains profitable and is cash generative. We are gaining significant new business in our chosen universe and changes taking place in other investment houses should continue to present us with opportunities where we will reap the benefits when markets improve."

Rathbone Brothers Plc (020 7399 0000)

• Micky Ingall, Chairman
  
• Mark Powell, Managing Director
  
• Andy Pomfret, Finance Director

• Tim Trotter (Trotter & Co)
  
• Will Kallaway

Chairman's Statement
I have pleasure in presenting Group figures for the six months to 30th June 2002. Profits before tax and goodwill amortisation amounted to £11.4m, an increase of 1.7% over the restated result for the same period last year although earnings per share (before goodwill amortisation) fell by 4.4% to 22.39p from the equivalent restated figure last year (details of the restatement which is due to the adoption of a new accounting standard on deferred tax are set out in Note 7). The fall in EPS is due to the issue of shares for acquisitions made in April 2002 and the exceptional profit in the first six months of 2001. The interim dividend is maintained at 10p per share.

In my statement for the year 2001 published in March, I likened growing an investment management business in 2001 to running up the down escalator and at the same time expressed cautious optimism for a recovery in both world economies and stock markets in 2002. These predictions remained relatively intact until the end of May at which point the downward movement in stock markets began to resemble a high speed lift rather than an escalator. The depreciation in the FTSE 100 Index in the six months to 30 June of 11% was accomplished almost entirely in the month of June.

Despite this significant fall, discretionary funds under management have recorded a modest increase in the six months of 1.7% to £5.9bn (largely due to new business) which must be counted as a significant achievement in very difficult times. Likewise the marginal increase in pre-tax, pre-goodwill profits is a very creditable effort and these two figures disguise what, in more benign market conditions, would have been an impressive performance.

Funds in our unit trusts have again grown significantly in difficult market conditions from £186m at the end of December to £219m at the end of June. We have received a number of awards for good performance.

The results for the Trust Division, which accounts for 20% of Group operating income, have been somewhat disappointing. The profit figures have been marred by a foreign exchange loss on conversion of half year balances and some provisions against outstanding invoices.

Our policy of many years to concentrate on wealth management through discretionary mandates is proving itself in current difficult market conditions. The Group has no core borrowings, remains profitable and is cash generative. We are gaining significant new business in our chosen universe and changes taking place in other investment houses should continue to present us with opportunities where we will reap the benefits when markets improve.

In May 2003, I shall have reached the age of 62 and intend to retire from the Board. The Board intends to appoint Mark Powell, currently Group Managing Director, as my successor as Chairman. Roy Morris will continue as Chief Executive.

Micky Ingall
Chairman
5th September 2002

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