Rathbones Group Plc
A STRONG FIRST HALF FOCUSED ON
DELIVERY
Rathbones Group Plc ("Rathbones" or the "Group")
announces results for the six months ended 30 June 2024
Performance headlines:
- Funds under management and administration (FUMA):
£108.9 billion, +3.4%
- Significant improvement in net flows in Q2
- Underlying profit before tax: £112.1 million,
+120.7%
- Underlying operating margin: 25.1%
- Statutory profit before tax: £65.3 million,
+151.2%
- Interim dividend of 30p, +3.4%
- Accelerated delivery of IW&I integration
synergies
- Successful first stage implementation of InvestCloud Client
Lifecycle Management (CLM) technology platform
- Migration of Saunderson House assets substantially
complete
Paul Stockton, Group Chief
Executive Officer of Rathbones, said:
"Rathbones has continued to focus
on consolidating its position as the leading UK discretionary
wealth manager, with total FUMA growing to £108.9 billion at 30
June 2024 (Q1 2024: £107.6 billion, FY 2023: £105.3
billion).
In the first six months of 2024,
Rathbones has surpassed both the strategic and financial objectives
we set out upon the announcement of the Investec Wealth &
Investment (IW&I) combination. We have achieved synergy
realisation ahead of target, with run-rate synergies of £20 million
delivered to the end of June 2024, well ahead of our year one
post-combination objective of £15 million. These synergies have
delivered a benefit to underlying operating profit for the
six-month period of £8 million and we remain confident in the
guidance set out at the time of the combination.
Our office consolidation programme
is progressing at pace with six office integrations completed so
far, including our London head office move to Gresham Street
earlier this month. The remaining two co-located offices will
complete during the remainder of 2024. Work to develop our combined
service proposition is also advancing well, with several
propositions now aligned across the group.
In June, we launched successfully
the InvestCloud CLM system into the business in line with the
budgeted investment we guided previously. This represents a key
milestone for our digital programme and gives us a strong platform
from which to build enhanced functionality and improve the client
experience.
The migration of Saunderson House
assets has been substantially completed, with the advice process to
migrate assets to Rathbones investment propositions completed or in
progress, with only a small residue of £0.2 billion yet to engage
in the migration process.
Our underlying operating margin was
25.1% for the six months to 30 June 2024 (30 June 2023: 21.3%), in
line with our target and showing significant progress towards our
target of a 30%+ margin. We end the period in a strong position,
with confidence in the prospects for our enlarged business and a
clear focus on maintaining the momentum of delivery during the
second half of the year."
Financial highlights:
- Total FUMA grew to £108.9 billion at 30 June 2024 (Q1 2024:
£107.6 billion, FY 2023: £105.3 billion).
-
£93.6 billion in the Wealth Management segment
(£99.1 billion prior to the elimination of Wealth Management FUMA
invested in the Asset Management segment of £5.5
billion).
-
£15.3 billion in the Asset Management
segment.
- Statutory profit before tax increased by 151.2% to £65.3
million (30 June 2023: £26.0 million), after expensing amortisation
of client relationship intangible assets of £22.0 million (30 June
2023: £9.5 million) and integration related costs of £24.8 million
(30 June 2023: £15.3 million) in the period. Underlying
profit before tax totalled £112.1 million at 30 June 2024 (30 June
2023: £50.8 million), reflecting the inclusion of IW&I for the
current six-month period, with an underlying operating margin of
25.1% (30 June 2023: 21.3%).
- Total operating income for the group increased by 88.0% to
£447.4 million (30 June 2023: £238.0 million). Legacy Rathbones
operating income grew by 11.6% to £265.7 million on a like-for-like
basis, driven by recurring investment management and asset
management fees on higher average FUMA, in addition to increased
net interest income of £32.7 million (30 June 2023: £23.0
million).
- Total underlying operating expenses for the period were
£335.3 million (30 June 2023: £187.2 million) and include the
impact of the integration, and £7.1 million planned investment in
our digital programme (30 June 2023: £6.0 million) with the
remainder of the £15 million guided for the year to be incurred in
the second half of the year, completing the £45 million spend of
the programme implementation.
- Net FUMA flows improved significantly in the second
quarter. While factors which have resulted in elevated
outflows remain relevant, a significant reduction in gross outflows
combined with continued strength in gross inflows saw net outflows
reduce from £0.6 billion in the first quarter to flat in the second
quarter.
-
Total gross inflows increased by 3.3% in the
second quarter to £3.1 billion (Q1 2024: £3.0 billion) while total
gross outflows reduced by 8.6% to £3.2 billion (Q1 2024: £3.5
billion) in the same period. Although remaining elevated,
reflecting the impact that the prolonged higher interest rate
environment has on debt servicing costs and the relative attraction
of cash as an asset class, this result offers a greater degree of
optimism of returning to more normalised outflow levels.
-
Net flows in RIM discretionary & managed
propositions remained positive in the second quarter at £0.1
billion, resulting in £0.5 billion of net inflows for the first
half of the year (30 June 2023: £0.2 billion), representing an
annualised growth rate of 1.9% (30 June 2023: 0.7%).
-
Net flows in IW&I also improved
significantly, returning to positive territory in the second
quarter, with net inflows of £0.2 billion (Q1 2024: net outflows of
£0.6 billion), reflecting both a significant reduction in gross
outflows related to investment managers who left the business prior
to the announcement of the combination and improved gross inflows
as client confidence in investment markets
improves.
- Our single strategy funds remained resilient, with limited
outflows of £0.1 billion in the second quarter (Q1 2024: £0.2
billion), against a challenging industry backdrop (30 June 2023:
£0.3 billion).
Declaration of interim
dividend:
- In line with our progressive dividend policy, we have
increased our interim dividend by 3.4% to 30p (30 June 2023: 29p),
reflecting the strength of our business and balance sheet. The
record date will be 6 September 2024 and the dividend will be paid
on 1 October 2024.
Funds under management and
administration
(I) Segment fuma
|
6 months ended 30
June 2024
|
Wealth Management
(£m)
|
Asset Management
(£m)
|
Intra-group holdings
(£m)
|
Group FUMA
(£m)
|
|
Opening FUMA
|
96,118
|
13,770
|
(4,548)
|
105,340
|
|
Gross Inflows
|
4,727
|
2,533
|
(1,168)
|
6,092
|
|
Gross Outflows
|
(5,209)
|
(2,002)
|
531
|
(6,680)
|
|
Net Flows
|
(482)
|
531
|
(637)
|
(588)
|
|
Transfers
|
(84)
|
84
|
-
|
-
|
|
Market & Investment Performance
|
3,518
|
922
|
(285)
|
4,155
|
|
Closing FUMA
|
99,070
|
15,307
|
(5,470)
|
108,907
|
(Ii) Breakdown of FUMA and flows by
service level
|
6 months ended 30
June 2024
|
Opening FUMA
(£m)
|
Gross Inflows
(£m)
|
Gross Outflows
(£m)
|
Net Flows
(£m)
|
Transfers1
(£m)
|
SHL Migrated Assets
(£m)
|
Market & Investment Performance
(£m)
|
Closing FUMA
(£m)
|
Ann Net Growth2
(%)
|
|
Rathbones Investment Management
|
48,759
|
2,371
|
(2,060)
|
311
|
(2)
|
625
|
1,670
|
51,363
|
1.3
|
|
Bespoke portfolios
|
45,004
|
2,096
|
(1,894)
|
202
|
(304)
|
272
|
1,553
|
46,727
|
0.9
|
|
Managed via in-house
funds
|
3,755
|
275
|
(166)
|
109
|
302
|
353
|
117
|
4,636
|
5.8
|
|
Multi-asset
funds3
|
2,545
|
601
|
(423)
|
178
|
84
|
-
|
185
|
2,992
|
14.0
|
|
Rathbones discretionary
& managed
|
51,304
|
2,972
|
(2,483)
|
489
|
82
|
625
|
1,855
|
54,355
|
1.9
|
|
Non-discretionary service
|
752
|
12
|
(24)
|
(12)
|
(39)
|
-
|
6
|
707
|
(3.2)
|
|
Investec W&I
|
42,267
|
2,128
|
(2,528)
|
(400)
|
(204)
|
-
|
1,614
|
43,277
|
(1.9)
|
|
Saunderson
House4
|
1,590
|
58
|
(238)
|
(180)
|
-
|
(626)
|
36
|
820
|
(22.6)
|
|
Total wealth management
|
95,913
|
5,170
|
(5,273)
|
(103)
|
(161)
|
(1)
|
3,511
|
99,159
|
(0.2)
|
|
Single-strategy funds
|
6,677
|
764
|
(1,048)
|
(284)
|
-
|
-
|
452
|
6,845
|
(8.5)
|
|
Execution only
|
2,750
|
158
|
(359)
|
(201)
|
161
|
1
|
192
|
2,903
|
(14.6)
|
|
Total group
|
105,340
|
6,092
|
(6,680)
|
(588)
|
-
|
-
|
4,155
|
108,907
|
(1.1)
|
|
Q2 ended 30 June
2024
|
Opening FUMA
(£m)
|
Gross Inflows
(£m)
|
Gross Outflows
(£m)
|
Net Flows
(£m)
|
Transfers1
(£m)
|
SHL Migrated Assets
(£m)
|
Market & Investment Performance
(£m)
|
Closing FUMA
(£m)
|
Ann Net Growth2
(%)
|
|
Rathbones Investment Management
|
50,423
|
1,095
|
(1,026)
|
69
|
(23)
|
187
|
707
|
51,363
|
0.5
|
|
Bespoke portfolios
|
46,099
|
969
|
(934)
|
35
|
(170)
|
99
|
664
|
46,727
|
0.3
|
|
Managed via in-house
funds
|
4,324
|
126
|
(92)
|
34
|
147
|
88
|
43
|
4,636
|
3.1
|
|
Multi-asset
funds3
|
2,926
|
278
|
(212)
|
66
|
-
|
-
|
-
|
2,992
|
9.0
|
|
Rathbones discretionary
& managed
|
53,349
|
1,373
|
(1,238)
|
135
|
(23)
|
187
|
707
|
54,355
|
1.0
|
|
Non-discretionary service
|
729
|
6
|
(10)
|
(4)
|
(31)
|
-
|
13
|
707
|
(2.2)
|
|
Investec W&I
|
42,671
|
1,272
|
(1,094)
|
178
|
(21)
|
-
|
449
|
43,277
|
1.7
|
|
Saunderson
House4
|
1,119
|
41
|
(181)
|
(140)
|
-
|
(187)
|
28
|
820
|
(50.0)
|
|
Total wealth management
|
97,868
|
2,692
|
(2,523)
|
169
|
(75)
|
-
|
1,197
|
99,159
|
0.7
|
|
Single-strategy funds
|
6,904
|
371
|
(476)
|
(105)
|
-
|
-
|
46
|
6,845
|
(6.1)
|
|
Execution only
|
2,822
|
72
|
(166)
|
(94)
|
75
|
-
|
100
|
2,903
|
(13.3)
|
|
Total group
|
107,594
|
3,135
|
(3,165)
|
(30)
|
-
|
-
|
1,343
|
108,907
|
(0.1)
|
(iiI) Breakdown of Investment
Management FUMA and flows by channel
|
6 months ended 30
June 2024
|
Opening FUMA
(£m)
|
Gross Inflows
(£m)
|
Gross Outflows
(£m)
|
Net Flows
(£m)
|
Transfers1
(£m)
|
SHL Migrated Assets
(£m)
|
Market & Investment Performance
(£m)
|
Closing FUMA
(£m)
|
Ann Net Growth2
(%)
|
|
Total direct
|
34,411
|
1,479
|
(1,512)
|
(33)
|
(152)
|
-
|
1,224
|
35,450
|
(0.2)
|
|
Total financial adviser linked
|
14,348
|
892
|
(548)
|
344
|
150
|
625
|
446
|
15,913
|
4.8
|
|
Total discretionary
service
|
48,759
|
2,371
|
(2,060)
|
311
|
(2)
|
625
|
1,670
|
51,363
|
1.3
|
|
Execution only
|
2,750
|
158
|
(359)
|
(201)
|
161
|
1
|
192
|
2,903
|
(14.6)
|
|
Non-discretionary service
|
752
|
12
|
(24)
|
(12)
|
(39)
|
-
|
6
|
707
|
(3.2)
|
|
Total Investment
Management
|
52,261
|
2,541
|
(2,443)
|
98
|
120
|
626
|
1,868
|
54,973
|
0.4
|
|
Investec W&I
|
42,267
|
2,128
|
(2,528)
|
(400)
|
(204)
|
-
|
1,614
|
43,277
|
(1.9)
|
|
Total Investment Management for
enlarged group
|
94,528
|
4,669
|
(4,971)
|
(302)
|
(84)
|
626
|
3,482
|
98,250
|
(0.6)
|
|
Q2 ended 30 June
2024
|
Opening FUMA
(£m)
|
Gross Inflows
(£m)
|
Gross Outflows
(£m)
|
Net Flows
(£m)
|
Transfers1
(£m)
|
SHL Migrated Assets
(£m)
|
Market & Investment Performance
(£m)
|
Closing FUMA
(£m)
|
Ann Net Growth2
(%)
|
|
Total direct
|
35,127
|
671
|
(750)
|
(79)
|
(104)
|
-
|
506
|
35,450
|
(0.9)
|
|
Total financial adviser linked
|
15,296
|
424
|
(276)
|
148
|
81
|
187
|
201
|
15,913
|
3.9
|
|
Total discretionary
service
|
50,423
|
1,095
|
(1,026)
|
69
|
(23)
|
187
|
707
|
51,363
|
0.5
|
|
Execution only
|
2,822
|
72
|
(166)
|
(94)
|
75
|
-
|
100
|
2,903
|
(13.3)
|
|
Non-discretionary service
|
729
|
6
|
(10)
|
(4)
|
(31)
|
-
|
13
|
707
|
(2.2)
|
|
Total Investment
Management
|
53,974
|
1,173
|
(1,202)
|
(29)
|
21
|
187
|
820
|
54,973
|
(0.2)
|
|
Investec W&I
|
42,671
|
1,272
|
(1,094)
|
178
|
(21)
|
-
|
449
|
43,277
|
1.7
|
|
Total Investment Management for
enlarged group
|
96,645
|
2,445
|
(2,296)
|
149
|
-
|
187
|
1,269
|
98,250
|
0.6
|
(iV) Total Group FUMA
|
6 months ended 30
June 2024
|
Opening FUMA
(£m)
|
Gross Inflows
(£m)
|
Gross Outflows
(£m)
|
Net Flows
(£m)
|
Transfers3
(£m)
|
SHL Migrated Assets
(£m)
|
Market & Investment Performance
(£m)
|
Closing FUMA
(£m)
|
Ann Net Growth4
(%)
|
|
Rathbones Investment Management
|
52,261
|
2,541
|
(2,443)
|
98
|
120
|
626
|
1,868
|
54,973
|
0.4
|
|
Rathbones Asset Management
|
13,770
|
2,533
|
(2,002)
|
531
|
84
|
-
|
922
|
15,307
|
7.7
|
|
Investec W&I
|
42,267
|
2,128
|
(2,528)
|
(400)
|
(204)
|
-
|
1,614
|
43,277
|
(1.9)
|
|
Saunderson
House4
|
1,590
|
58
|
(238)
|
(180)
|
-
|
(626)
|
36
|
820
|
(22.6)
|
|
Total
|
109,888
|
7,260
|
(7,211)
|
49
|
-
|
-
|
4,440
|
114,377
|
0.1
|
|
Group
eliminations5
|
(4,548)
|
(1,168)
|
531
|
(637)
|
-
|
-
|
(285)
|
(5,470)
|
28.0
|
|
Total
|
105,340
|
6,092
|
(6,680)
|
(588)
|
-
|
-
|
4,155
|
108,907
|
(1.1)
|
|
|
|
|
|
|
|
|
|
|
|
1. Transfers represent client FUMA
which has transferred from one service to another and other
intra-group movements. These are excluded from net
inflows.
2. Annualised net growth in flows
calculated as net flows/opening FUMA.
3. Net inflows into multi-asset
funds include direct flows and flows into managed solutions via
in-house funds.
4. Total
funds under advice by Saunderson House, including those clients
transferred to fellow group companies totalled £4.3 billion at 30
June 2024.
5. Group
eliminations represent RAM funds which are held within portfolios
managed by RIM (£5.2 billion) and IW&I (£0.2 billion) teams and
Saunderson House (£0.1 billion) teams. Consequently, after
excluding the RAM funds, the FUMA of each entity is £49.8 billion
in RIM, £43.1 billion within IW&I and £0.7 billion within
Saunderson House.
Interim results
presentation:
A presentation detailing Rathbones'
2024 interim results is available on the investor relations website
under the tab 'Results Presentations' (https://www.rathbones.com/investor-relations/results-and-presentations).
A presentation to analysts and
investors will take place this morning at 10:00am at Peel Hunt's
offices at 100 Liverpool Street, EC2M 2AT. Participants who wish to
join the presentation virtually can do so by either joining the
video webcast (https://www.investis-live.com/rathbone-brothers/666186c9806e6315001ab2b5/ioiy)
or by dialling in using the conference call details
below:
United Kingdom (Local): +44 20 3936
2999
United Kingdom (Toll-Free): +44 800
358 1035
Participant access code:
822572
A Q&A session will follow the
presentation. Participants will be able to ask their questions
either via the webcast by typing them in or via the conference call
line.
A recording of the presentation
will be available later today on our website at:
www.rathbones.com/investor-relations/results-and-presentations.
31 July 2024
For further information
contact:
Rathbones Group
Plc
Paul Stockton, Group Chief Executive Officer
Iain Hooley, Group Chief Financial Officer
Shelly Patel, Head of Investor Relations
Tel: 020 7399 0071
Email: shelly.patel@rathbones.com
Camarco
Ed Gascoigne-Pees
Julia Tilley
Tel: 020 3757 4984
Email: ed.gascoigne-pees@camarco.co.uk
Rathbones Group Plc
Rathbones provides investment and
wealth management services for private clients, charities, trustees
and professional partners. We have been trusted for generations to
manage and preserve our clients' wealth. Our tradition of investing
and acting for everyone's tomorrow has been with us from the
beginning and continues to lead us forward.
Rathbones has over 3,500 employees
in 23 locations across the UK and Channel Islands; its headquarters
is 30 Gresham Street, London, EC2V 7PG.
www.rathbones.com
Group Chief Executive Officer's
Review
A STRONG FIRST HALF FOCUSED ON
DELIVERY
Rathbones has continued to focus on
consolidating its position as the leading UK discretionary wealth
manager, with total funds under management and administration
('FUMA') growing to £108.9 billion at 30 June 2024 (Q1 2024: £107.6
billion, FY 2023: £105.3 billion).
In the first six months of 2024, Rathbones has
surpassed both the strategic and financial objectives we set out
upon the announcement of the Investec Wealth & Investment
('IW&I') combination. We have achieved synergy realisation
ahead of target, with run-rate synergies1 of £20 million
delivered to the end of June 2024, well ahead of our year one
post-combination objective of £15 million. These synergies have
delivered a benefit to underlying operating profit for the
six-month period of £8 million and we remain confident in the
guidance set out at the time of the combination.
Our office consolidation programme is
progressing at pace with six office integrations completed so far,
including our London head office move to Gresham Street earlier
this month. The remaining two co-located offices will complete
during the remainder of 2024.
Work to develop our combined service
proposition is also advancing well, with several propositions now
aligned across the group.
In June, we launched successfully the
InvestCloud Client Lifecycle Management system into the business in
line with the budgeted investment we guided previously. This
represents a key milestone for our digital programme and gives us a
strong platform from which to build enhanced functionality and
improve the client experience.
The migration of Saunderson House assets has
been substantially completed, with the advice process to migrate
assets to Rathbones investment propositions completed or in
progress, with only a small residue of £0.2 billion yet to engage
in the migration process.
Our underlying operating margin was 25.1% for
the six months to 30 June 2024 (30 June 2023: 21.3%), in line with
our target and showing significant progress towards our target of a
30%+ margin. We end the period in a strong position, with
confidence in the prospects for our enlarged business and a clear
focus on maintaining the momentum of delivery during the second
half of the year.
MARKET BACKDROP
After a sustained period where equity market
growth was dominated by a select number of companies, it was
encouraging to see more of a recovery across a wider number of
sectors and geographies in the first half of 2024, with investor
sentiment towards the UK in particular emerging more positively
towards the end of the period from a challenging few years.
Portfolios in Rathbones Investment Management (RIM) and IW&I
continue to target balanced and diversified positioning to enable
clients to meet their long-term goals and aspirations.
The UK wealth management industry remains
attractive, with its long-term structural drivers well documented.
Our services and propositions are well placed to respond to
external market conditions, along with varied and changing client
preferences in a period of ongoing and significant regulatory
change.
As a combined business with significant scale,
Rathbones offers a compelling and diverse range of investment and
advice solutions, while remaining commercially competitive. Whether
through bespoke investment management, advice services, or unitised
product offerings, we continue to develop our proposition suite to
deliver a service that remains highly valued by clients and their
families, building long-lasting relationships across generations
over multiple planning and investment horizons.
PERFORMANCE, FUMA AND
FINANCIAL REVIEW
Total gross inflows of FUMA were strong in the
second quarter, up 3.3% to £3.1 billion relative to the first
quarter (Q1 2024: £3.0 billion), exhibiting that the demand for
investment management services continues to grow as the
cost-of-living crisis begins to abate. Total gross outflows reduced
8.6% to £3.2 billion (Q1 2024: £3.5 billion) in the second quarter.
Although gross outflows remain elevated, reflecting the impact that
the prolonged higher interest rate environment has on debt
servicing costs and the relative attraction of cash as an asset
class, the reduction we have seen in the second quarter offers a
greater degree of optimism that we are returning to more normalised
outflow levels.
Net flows in RIM discretionary and managed
propositions remained positive in the second quarter at £0.1
billion, resulting in £0.5 billion of net inflows for the first
half of the year (30 June 2023: £0.2 billion).
Net flows in IW&I improved significantly,
returning to positive territory in the second quarter with net
inflows of £0.2 billion (Q1 2024: net outflows of £0.6 billion).
This reflects both a significant reduction in gross outflows
relating to investment managers who left the business prior to the
announcement of the combination and improved gross inflows as
client confidence in investment markets
improves.
Despite renewed investor confidence and
stability in the market, the asset management industry continued to
face challenges. Performance in our single strategy funds, and in
particular across our largest funds, remained resilient, however,
limiting outflows to £0.1 billion in the second quarter (Q1 2024:
£0.2 billion). There has been both stronger client interest in the
Rathbone Global Opportunities Fund and a pickup in interest in the
Rathbone UK Opportunities Fund, following strong recent performance
and renewed interest in UK equities as an asset class. The small
but consistent outflows from the single strategy funds have been
offset by flows into our in-house and multi-asset fund range,
supported by good performance, particularly over the medium and
longer-term.
Underlying financial
business performance
Total operating income for the group increased
by 88.0% to £447.4 million (30 June 2023: £238.0 million). Legacy
Rathbones operating income grew by 11.6% to £265.7 million on a
like-for-like basis, driven by recurring investment management and
asset management fees on higher average FUMA.
Net interest income also contributed £32.7
million to operating income in the first half, up from £23.0
million during the same period last year, reflecting the continuing
higher interest rate environment and higher returns on treasury
investments.
Total underlying operating expenses for the
period were £335.3 million (30 June 2023: £187.2 million). The
increase year-on-year reflects the impact of the integration, as
well as annual salary increases, in addition to variable costs
increasing in line with underlying profitability. Total underlying
expenses also include £7.1 million of planned investment in our
digital programme (30 June 2023: £6.0 million) with the remainder
of the £15 million guided for the year to be spent in the second
half of the year, as we undertake the planned post-implementation
phase of system enhancement and complete the £45 million spend. An
FSCS levy of £4.5 million was expensed in full in the first half,
returning to what we currently expect to be more normal
levels.
Underlying profit before tax totalled £112.1
million at 30 June 2024 (30 June 2023: £50.8 million), reflecting
the inclusion of IW&I for the current six-month period, with an
underlying operating margin of 25.1% (30 June 2023: 21.3%). This
strong development from a lower 20s% margin last year to mid-20s%
this year exhibits our progression towards a 30%+ margin target
which we remain confident can be achieved within previously guided
timescales.
Integration costs and statutory
profit
Statutory profit before tax increased by 151.2%
to £65.3 million (30 June 2023: £26.0 million), after expensing
amortisation of client relationship intangible assets of £22.0
million (30 June 2023: £9.5 million) and integration related costs
of £24.8 million (30 June 2023: £15.3 million) in the period. We
continue to expect that total acquisition-related and integration
costs of £177 million will be expensed over the next 2 - 3 years,
partially funded by £45 million of capital left in IW&I by
Investec at completion.
The successful assignment of our London head
office lease at 8 Finsbury Circus, without incurring penalties or
void rental periods, removes what was previously an area of risk to
the overall cost of the integration. Employee incentive run-rates
also remain in line with expectations. A full reconciliation
between profit before tax and underlying profit before tax can be
found in note 4 of the interim financial statements.
Our balance sheet remains strong and robust
with a consistent Common Equity Tier 1 ratio of 18.1% at 30 June
2024 (FY 2023: 17.8%), evidencing our resilient capital position.
Our capital surplus of own funds (excluding year-to-date post-tax
profits) over our regulatory capital requirement was £145.6 million
at 30 June 2024 (FY 2023: £134.5 million). This significant surplus
puts us in a strong position to fund integration costs over
2024/2025 and maintain our progressive dividend policy. As
mentioned in our Q1 2024 update, the Trustees of Rathbones' two
defined benefit pension schemes entered into an agreement with
Canada Life to fully insure the benefits of members of both schemes
in a "Buy-In" arrangement. This arrangement removes the future
obligation on the group to fund these benefits and substantially
de-risks the group's balance sheet. Subject to regulatory approval,
we expect to be able to confirm the associated capital benefit by
the end of this financial year.
INTERIM DIVIDEND
As with previous integrations, our progressive
dividend policy looks through short-term events and we have
therefore increased our interim dividend by 3.4% to 30p (30 June
2023: 29p), reflecting the strength of our balance sheet and our
confidence in the future. The record date will be 6 September 2024
and the dividend will be paid on 1 October 2024.
INVESTEC WEALTH & INVESTMENT
The integration of IW&I is progressing
well, and we continue to balance the execution of the integration
with business-as-usual activity to deliver both our operational and
strategic objectives.
The process of seeking clients' consent to move
their accounts to RIM from IW&I is well underway. This process
started with small pilots and has now moved to the full-scale
process of communication which is currently ongoing. We have now
written to circa 45% of clients, with the remainder to be contacted
in the coming weeks. Response rates have been positive and in line
with our expectations. Work will continue in earnest for the
remainder of this year, and we remain confident in our ability to
migrate clients in the first quarter of 2025. In preparation for
client migration, our data teams have also carried out successful
test migrations to ensure the smooth migration of client records
following the completion of the consent process.
During the first half of the year, we
successfully combined six of our dual sites across the UK, where
both Rathbones and IW&I have offices, thereby significantly
reducing property cost exposure and delivering the expected
synergies. Our colleagues in Birmingham, Cheltenham, Exeter,
Glasgow, and Edinburgh have been working in combined premises
following their moves during the first half of the year, and our
London colleagues have now also combined premises, moving out of
Finsbury Circus and into Gresham Street earlier this month. Further
regional office moves, including Bristol and Liverpool, will follow
during the second half of the year. Associated costs to achieve
this change are broadly as expected and the opportunity for teams
to work collaboratively under one roof has been widely
welcomed.
The combination presents the opportunity to
provide a compelling range of services. In the first half we
adopted IW&I's structured product and SIPP administration
capabilities, and we are working to streamline MPS offerings across
the combined group by leveraging the capability in Rathbones Asset
Management. Greenbank is now being offered across the group, and
our partnership with Investec Bank is working well, as we continue
to see leads referred into the business.
There is a great deal of similarity in the core
services of RIM and IW&I, and we are making tangible progress
in the alignment of our marketing and distribution teams to ensure
that we deliver propositions to market consistently across the
wider group.
Investment manager turnover remains low across
the combined business. In addition, work to bring client facing and
support teams together is also progressing well with several key
leadership changes below group executive level successfully enacted
during the period. Each organisational change is subject to a
strong governance and decision-making process that considers
structure, capability, and diversity as well as adherence to
synergy targets. This is a unique opportunity to leverage the
considerable talent that exists across our combined
business.
In our first quarter update in May 2024, we
noted that we had achieved £10.6 million of the £15.0 million of
run-rate synergies targeted for 2024. As at 30 June 2024, the
run-rate synergies achieved had increased to £20 million, which
represents a significant acceleration of delivery. These synergies
have delivered a benefit to underlying operating profit for the
six-month period of £8 million.
While it is reassuring to have delivered
synergies ahead of expectations so far, our focus remains on the
delivery of the remaining synergies, the total value of which we
expect to remain consistent with our original objective of £60
million once the integration process is complete.
SAUNDERSON HOUSE
The migration of Saunderson House Limited
('SHL') is now substantially complete, with £4.3 billion of SHL
connected FUMA as at 30 June 2024. Of assets of £0.8 billion not
yet fully migrated, only £0.2 billion relates to clients that are
yet to engage with the consent process.
This has been an important strategic deal for
Rathbones, as our Saunderson House colleagues have significantly
increased our capacity to offer financial planning services to more
of our client base. Revenue generated on migrated assets totalled
£17.2 million across the group in the first half as assets moved
into both investment management and asset management solutions,
with annualised revenue of £37.3 million. Run rate revenue margins
were 114bps at 30 June 2024. In the second half of the year we
expect to largely complete all systems integrations and closures
that will enable us to deliver anticipated cost
synergies.
The Saunderson House brand has now been
decommissioned and the combined Rathbone Financial Planning
business is now operating under the Rathbones brand.
IMPROVING OUR DIGITAL CAPABILITY
In June 2024, we launched successfully the
InvestCloud Client Lifecycle Management ('CLM') system into the
business with first stage functionality. We can now add improved
capability throughout the rest of 2024 in advance of the IW&I
migration in the first quarter of 2025. This has enabled us to
leverage a modern solution that we can now build on to improve
efficiency and client service. Improvements throughout 2024 will be
to both digital onboarding and servicing.
As part of the overall integration with
IW&I and our intention to adopt the best of both business'
capabilities, we have also incorporated Salesforce and IRESS XPlan
to provide common groupwide sales enablement and financial planning
solutions. By blending MyRathbones provided by Objectway,
InvestCloud, Salesforce and Charles River, we will have a modern
and comprehensive suite of applications that will enable us to
manage our client and adviser base more efficiently and
effectively. Project costs for the full year ended 31 December 2024
are expected to be circa £15 million, bringing the total cost to
£45 million over the project period, in-line with guidance.
Following project completion in 2024, further developments in the
capabilities will be met from normal change budgets, under the same
approach that applies to our other applications.
MyRathbones continues to be used by an
increasing portion of our client base, with 60% of clients now
registered users, with an expectation these numbers will increase
further as we move through the integration process.
INSPIRING OUR PEOPLE
I am sure that shareholders will recognise the
amount of work involved in an integration of this size. We are
proud of the substantial effort, commitment and skill that has been
demonstrated by our colleagues in the business throughout the
period, and, in particular, their success in maintaining the high
standards of service that we continually strive to deliver for our
clients. Aside from the inevitable uncertainties that are created
over a period of change, we continue to prioritise timely
communication, continual feedback, and engagement with colleagues
as we work through the operational detail that supports progress
toward our objectives.
Rathbones and IW&I teams are working
closely and collaboratively, building relationships that will lay
the foundations of the firm for many years to come. We remain
committed to our DE&I objectives and to creating teams across
the group that reflect both the best talent the business has to
offer and the right balance for the combined organisation,
supported by executive-sponsored working groups focussing on key
areas where we think we will make a difference.
PRINCIPAL RISKS AND UNCERTAINTIES
The most important external changes to the
group's principal risks and uncertainties relate to the changing
economic and political landscape under a new government. Otherwise,
the principal risks and uncertainties set out in our 2023 annual
report and accounts remain current and continue to receive
management attention.
These are set out in the strategic report and
group risk committee report in pages 82 to 86 and pages 107 to 109
of the 2023 annual report and accounts. Although we have not added
any new material risks to our taxonomy this half year, there have
been changes in how these risks are perceived. Change risk and
integration risk remain elevated as we move through integration,
and people risk is expected to increase as our teams set out their
integration plans. These risks continue to receive a high degree of
focus and management through our integration planning and
governance processes. Pension risk exposure has reduced as a result
of action taken by the pension scheme trustees to complete the
buy-in process to insure the future liabilities of the
schemes.
REGULATION
We remain committed to ensuring that the
interests of our clients are at the forefront of everything we do.
Our ongoing efforts to meet and exceed regulatory requirements are
central to our commitment to maintaining client trust and long-term
sustainable growth. We continue to have an ongoing constructive
dialogue with all regulators and fully support the principles
underlying Consumer Duty as we continue to proactively respond to
regulatory requirements and changes.
GOING CONCERN
As set out in the statement of directors'
responsibilities of the condensed consolidated interim financial
statements, the directors believe that the group is well positioned
to manage its business risks successfully. The group's financial
projections, and the capital adequacy and liquidity assessment,
which is required to apply severe but plausible stress scenarios to
these projections, provide comfort that the group has adequate
financial and regulatory resources to continue in operational
existence for the foreseeable future.
In forming their view, the directors have
considered the group's prospects for a period exceeding 12 months
from the date the condensed consolidated interim financial
statements are approved.
OUTLOOK
The UK wealth market has continued to
consolidate over the first half of the year. We continue to believe
in the benefits of scale for enduring success in this industry, and
the scale that our combined business now has, affords us
independence, stability, more capacity to invest and a higher level
of efficiency and optionality in how we operate and deliver for our
clients, as well as being the employer of choice for the skills and
talent we require for our future success.
Although our focus as a business, and for
clients, is over the long term, the broader outlook for flows in
the shorter-term is improving as client confidence to invest
increases, helped by a more certain UK political backdrop, lower
inflation and the increased likelihood of a reduction in interest
rates. Our breadth of proposition, growing marketing and
distribution capability and robust balance sheet will be the
foundation on which we will take advantage of a structurally
growing sector and achieve the financial objectives we aspire
to.
Paul Stockton
Group Chief Executive Officer
30 July 2024
1 This measure
is considered an alternative performance measure (APM). Please
refer to page 32 for more details on APMs.
CONSOLIDATED INTERIM STATEMENT OF
COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE
2024
|
|
Note
|
Unaudited
Six months to
30 June 2024
£m
|
Unaudited
Six months to
30 June 2023
£m
|
Audited
Year to
31 December 2023
£m
|
|
Interest and similar income
|
|
74.3
|
65.9
|
128.8
|
|
Interest expense and similar charges
|
|
(41.6)
|
(42.9)
|
(77.1)
|
|
Net interest income
|
|
32.7
|
23.0
|
51.7
|
|
Fee and commission income
|
|
415.7
|
228.5
|
538.6
|
|
Fee and commission expense
|
|
(16.7)
|
(14.1)
|
(29.7)
|
|
Net fee and commission
income
|
|
399.0
|
214.4
|
508.9
|
|
Other operating income
|
|
15.7
|
0.6
|
10.5
|
|
Operating income
|
|
447.4
|
238.0
|
571.1
|
|
Charges in relation to client relationship
intangible assets and goodwill
|
14
|
(22.0)
|
(9.5)
|
(25.2)
|
|
Acquisition-related and integration
costs
|
6
|
(24.8)
|
(15.3)
|
(44.3)
|
|
Other operating expenses
|
|
(335.3)
|
(187.2)
|
(444.0)
|
|
Operating expenses
|
|
(382.1)
|
(212.0)
|
(513.5)
|
|
Profit before tax
|
|
65.3
|
26.0
|
57.6
|
|
Taxation
|
8
|
(19.8)
|
(6.3)
|
(20.1)
|
|
Profit after tax
|
|
45.5
|
19.7
|
37.5
|
|
Profit for the period attributable
to equity holders of the company
|
|
45.5
|
19.7
|
37.5
|
|
|
|
|
|
|
|
Other comprehensive
income:
|
|
|
|
|
|
Items that will not be reclassified to profit or
loss
|
|
|
|
|
|
Net remeasurement of defined benefit
asset
|
|
(10.4)
|
(2.8)
|
(5.8)
|
|
Deferred tax relating to the net remeasurement
of defined benefit pension scheme asset
|
|
2.6
|
0.7
|
1.5
|
|
Other comprehensive income net of
tax
|
|
(7.8)
|
(2.1)
|
(4.3)
|
|
Total comprehensive income for the
period net of tax attributable to equity holders of the
company
|
|
37.7
|
17.6
|
33.2
|
|
|
|
|
|
|
|
Dividends paid in and proposed for the period
per ordinary share
|
9
|
30.0p
|
29.0p
|
87.0p
|
|
Dividends paid in and proposed for the
period
|
|
31.0
|
17.0
|
62.9
|
|
|
|
|
|
|
|
Earnings per share for the period attributable
to equity holders of the company:
|
10
|
|
|
|
|
-
basic
|
|
43.9p
|
33.6p
|
52.6p
|
|
-
diluted
|
|
42.8p
|
32.8p
|
50.8p
|
The accompanying notes form an integral part of
the condensed consolidated interim financial statements.
CONSOLIDATED INTERIM STATEMENT OF CHANGES IN
EQUITY
As at 30 June 2024
|
|
Note
|
Share
capital
£m
|
Share
premium
£m
|
Merger
reserve
£m
|
Own
shares
£m
|
Retained
earnings
£m
|
Total
equity
£m
|
|
At 1 January 2023
|
|
3.2
|
310.0
|
77.0
|
(52.6)
|
297.2
|
634.8
|
|
Profit for the period
|
|
-
|
-
|
-
|
-
|
19.7
|
19.7
|
|
Net remeasurement of defined benefit
pension scheme asset
|
|
-
|
-
|
-
|
-
|
(2.8)
|
(2.8)
|
|
Deferred tax relating to components of other
comprehensive income
|
|
-
|
-
|
-
|
-
|
0.7
|
0.7
|
|
Other comprehensive income net of
tax
|
|
-
|
-
|
-
|
-
|
(2.1)
|
(2.1)
|
|
Dividends paid
|
|
-
|
-
|
-
|
-
|
(33.4)
|
(33.4)
|
|
Issue of share capital
|
18
|
-
|
0.8
|
-
|
-
|
-
|
0.8
|
|
Share-based payments:
|
|
|
|
|
|
|
|
|
- cost of
share-based payment arrangements
|
|
-
|
-
|
-
|
-
|
10.7
|
10.7
|
|
- cost of
vested employee remuneration and share plans
|
|
-
|
-
|
-
|
-
|
(5.6)
|
(5.6)
|
|
- cost of
own shares vesting
|
|
-
|
-
|
-
|
11.4
|
(11.4)
|
-
|
|
- cost of
own shares acquired
|
|
-
|
-
|
-
|
(6.7)
|
-
|
(6.7)
|
|
- tax on
share-based payments
|
|
-
|
-
|
-
|
-
|
0.1
|
0.1
|
|
At 30 June 2023
(unaudited)
|
|
3.2
|
310.8
|
77.0
|
(47.9)
|
275.2
|
618.3
|
|
Profit for the period
|
|
-
|
-
|
-
|
-
|
17.8
|
17.8
|
|
Net remeasurement of defined benefit pension
scheme asset
|
|
-
|
-
|
-
|
-
|
(3.0)
|
(3.0)
|
|
Deferred tax relating to components of other
comprehensive income
|
|
-
|
-
|
-
|
-
|
0.8
|
0.8
|
|
Other comprehensive income net of
tax
|
|
-
|
-
|
-
|
-
|
(2.2)
|
(2.2)
|
|
Dividends paid
|
|
-
|
-
|
-
|
-
|
(38.0)
|
(38.0)
|
|
Issue of share capital
|
18
|
2.2
|
1.5
|
747.4
|
-
|
-
|
751.1
|
|
Share-based payments:
|
|
|
|
|
|
|
|
|
- cost of
share-based payment arrangements
|
|
-
|
-
|
-
|
-
|
13.3
|
13.3
|
|
- cost of
vested employee remuneration and share plans
|
|
-
|
-
|
-
|
-
|
(0.4)
|
(0.4)
|
|
- cost of
own shares vesting
|
|
-
|
-
|
-
|
1.6
|
(1.6)
|
-
|
|
- cost of
own shares acquired
|
|
-
|
-
|
-
|
(9.3)
|
-
|
(9.3)
|
|
- tax on
share-based payments
|
|
-
|
-
|
-
|
-
|
(0.4)
|
(0.4)
|
|
At 31 December 2023
(audited)
|
|
5.4
|
312.3
|
824.4
|
(55.6)
|
263.7
|
1,350.2
|
|
Profit for the period
|
|
-
|
-
|
-
|
-
|
45.5
|
45.5
|
|
Net remeasurement of defined benefit pension
scheme asset
|
|
-
|
-
|
-
|
-
|
(10.4)
|
(10.4)
|
|
Deferred tax relating to components of other
comprehensive income
|
|
-
|
-
|
-
|
-
|
2.6
|
2.6
|
|
Other comprehensive income net of
tax
|
|
-
|
-
|
-
|
-
|
(7.8)
|
(7.8)
|
|
Dividends paid
|
|
-
|
-
|
-
|
-
|
(25.2)
|
(25.2)
|
|
Issue of share capital
|
18
|
-
|
2.4
|
-
|
-
|
-
|
2.4
|
|
Share-based payments:
|
|
|
|
|
|
|
|
|
- cost of
share-based payment arrangements
|
|
-
|
-
|
-
|
-
|
14.8
|
14.5
|
|
- cost of
vested employee remuneration and share plans
|
|
-
|
-
|
-
|
-
|
(4.4)
|
(4.1)
|
|
- cost of
own shares vesting
|
|
-
|
-
|
-
|
3.4
|
(3.4)
|
-
|
|
- cost of
own shares acquired
|
|
-
|
-
|
-
|
(8.9)
|
-
|
(8.9)
|
|
- tax on
share-based payments
|
|
-
|
-
|
-
|
-
|
0.7
|
0.7
|
|
At 30 June 2024
(unaudited)
|
|
5.4
|
314.7
|
824.4
|
(61.1)
|
283.9
|
1,367.3
|
Consolidated statement of financial
position
AS AT 30 JUNE 2024
|
|
Note
|
Unaudited
30 June 2024
£m
|
Unaudited
30 June 2023
£m
|
Audited
31 December 2023
£m
|
|
Assets
|
|
|
|
|
|
Cash and balances with central banks
|
|
1,033.0
|
1,141.9
|
1,038.3
|
|
Settlement balances
|
|
371.7
|
215.1
|
165.7
|
|
Loans and advances to banks
|
|
230.3
|
139.5
|
266.9
|
|
Loans and advances to customers
|
11
|
120.3
|
143.4
|
115.6
|
|
Investment securities:
|
|
|
|
|
|
- fair
value through profit or loss
|
|
-
|
3.1
|
1.2
|
|
- amortised
cost
|
|
1,392.9
|
1,233.8
|
1,294.6
|
|
Prepayments, accrued income and other
assets
|
|
244.2
|
152.2
|
225.3
|
|
Property, plant and equipment
|
12
|
39.4
|
10.9
|
16.1
|
|
Right-of-use assets
|
13
|
51.6
|
37.3
|
64.5
|
|
Current tax assets
|
|
6.4
|
9.2
|
3.9
|
|
Intangible assets
|
14
|
997.8
|
347.2
|
1,025.3
|
|
Defined benefit pension scheme asset
|
17
|
0.4
|
7.0
|
7.0
|
|
Total assets
|
|
4,488.0
|
3,440.6
|
4,224.4
|
|
Liabilities
|
|
|
|
|
|
Deposits by banks
|
|
19.4
|
17.2
|
12.4
|
|
Settlement balances
|
|
406.4
|
211.2
|
172.1
|
|
Due to customers
|
|
2,298.8
|
2,377.1
|
2,253.3
|
|
Accruals and other liabilities
|
|
194.0
|
98.5
|
209.6
|
|
Lease liabilities
|
|
48.3
|
48.9
|
74.9
|
|
Current tax liabilities
|
|
0.9
|
0.4
|
0.5
|
|
Net deferred tax liabilities
|
|
79.8
|
9.9
|
86.0
|
|
Provisions for liabilities and
charges
|
15
|
33.2
|
19.2
|
25.5
|
|
Subordinated loan notes
|
16
|
39.9
|
39.9
|
39.9
|
|
Total liabilities
|
|
3,120.7
|
2,822.3
|
2,874.2
|
|
Equity
|
|
|
|
|
|
Share capital
|
18
|
5.4
|
3.2
|
5.4
|
|
Share premium
|
18
|
314.7
|
310.8
|
312.3
|
|
Merger reserve
|
18
|
824.4
|
77.0
|
824.4
|
|
Own shares
|
|
(61.1)
|
(47.9)
|
(55.6)
|
|
Retained earnings
|
|
283.9
|
275.2
|
263.7
|
|
Total equity
|
|
1,367.3
|
618.3
|
1,350.2
|
|
Total liabilities and
equity
|
|
4,488.0
|
3,440.6
|
4,224.4
|
The condensed consolidated interim financial
statements were approved by the board of directors and authorised
for issue on 30 July 2024 and were signed on its behalf
by:
Paul
Stockton
Iain Hooley
Group Chief Executive
Officer
Group Chief Financial Officer
Company registered number: 01000403
30 July 2024
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
|
|
Note
|
Unaudited
30 June 2024
£m
|
Unaudited
30 June 2023
£m
|
Audited
31 December 2023
£m
|
|
Cash flows from operating
activities
|
|
|
|
|
|
Profit before tax
|
|
65.3
|
26.0
|
57.6
|
|
Change in fair value through profit or
loss
|
|
-
|
-
|
(1.0)
|
|
Net interest income
|
|
(32.7)
|
(23.0)
|
(51.7)
|
|
Net (recoveries)/impairment charges on loans
and advances
|
|
(0.1)
|
(0.1)
|
0.1
|
|
Net charge to income statement for
provisions
|
15
|
10.1
|
7.3
|
9.4
|
|
Gain on modification of leases
|
|
(12.9)
|
-
|
-
|
|
Depreciation, amortisation and
impairment
|
|
36.8
|
17.0
|
47.1
|
|
Foreign exchange movements
|
|
(0.2)
|
3.9
|
3.4
|
|
Defined benefit pension scheme
charges
|
|
(0.2)
|
(0.2)
|
(0.5)
|
|
Defined benefit pension contributions
paid
|
|
(3.7)
|
(0.2)
|
(2.9)
|
|
Share-based payment charges
|
19
|
14.8
|
10.7
|
24.0
|
|
Interest paid
|
|
(39.6)
|
(34.5)
|
(67.7)
|
|
Interest received
|
|
104.5
|
49.6
|
111.9
|
|
|
|
142.1
|
56.5
|
129.7
|
|
Changes in operating assets and
liabilities:
|
|
|
|
|
|
- net
(increase)/decrease in loans and advances to banks and
customers
|
|
(2.3)
|
17.3
|
87.4
|
|
- net
(increase)/decrease in settlement balance debtors
|
|
(206.0)
|
(149.3)
|
133.3
|
|
- net
increase in prepayments, accrued income and other assets
|
|
(40.2)
|
(14.9)
|
(36.2)
|
|
- net
increase/(decrease) in amounts due to customers and deposits by
banks
|
|
52.5
|
(122.9)
|
(251.5)
|
|
- net
increase/(decrease) in settlement balance creditors
|
|
234.3
|
141.3
|
(123.6)
|
|
- net
increase/(decrease) in accruals, provisions and other
liabilities
|
|
(23.6)
|
(20.9)
|
1.0
|
|
Cash generated from/(used in)
operations
|
|
156.8
|
(92.9)
|
(59.9)
|
|
Tax paid
|
|
(24.7)
|
(8.7)
|
(29.5)
|
|
Net cash inflow/(outflow) from
operating activities
|
|
132.1
|
(101.6)
|
(89.4)
|
|
Cash flows from investing
activities
|
|
|
|
|
|
Cash acquired on acquisition of
subsidiaries
|
|
-
|
-
|
172.6
|
|
Purchase of property, plant, equipment and
intangible assets
|
|
(35.6)
|
(3.7)
|
(10.7)
|
|
Purchase of investment securities
|
|
(1,040.6)
|
(1,083.9)
|
(2,059.9)
|
|
Proceeds from sale and redemption of investment
securities
|
|
943.6
|
899.6
|
1,818.1
|
|
Net cash used in investing
activities
|
|
(132.6)
|
(188.0)
|
(79.9)
|
|
Cash flows from financing
activities
|
|
|
|
|
|
Issue of ordinary shares
|
22
|
2.4
|
0.8
|
-
|
|
Repurchase of ordinary shares
|
22
|
(8.9)
|
(6.7)
|
(16.0)
|
|
Dividends paid
|
|
(25.2)
|
(33.4)
|
(71.4)
|
|
Payment of lease liabilities
|
|
(5.3)
|
(3.9)
|
(7.5)
|
|
Interest paid
|
|
(2.1)
|
(2.6)
|
(5.6)
|
|
Net cash used in financing
activities
|
|
(39.1)
|
(45.8)
|
(100.5)
|
|
Net decrease in cash and cash
equivalents
|
|
(39.6)
|
(335.4)
|
(269.8)
|
|
Cash and cash equivalents at the beginning of
the period
|
|
1,302.9
|
1,572.7
|
1,572.7
|
|
Cash and cash equivalents at the
end of the period
|
22
|
1,263.3
|
1,237.3
|
1,302.9
|
NOTES TO THE CONDENSED CONSOLIDATED interim
financial statements
1 BASIS OF
PREPARATION
Rathbones Group Plc ('the company') is the
parent company of a group of companies ('the group') that 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
trust management, tax planning, trust services, pension advice and
banking services. The products and services from which the group
derives its revenues are described on page 2 of the annual report
and accounts for the year ended 31 December 2023 and have not
materially changed since that date.
These condensed consolidated interim financial
statements, on pages 7 to 29, are presented in accordance with
United Kingdom adopted International Accounting Standard 34. 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 2023. The
condensed consolidated interim financial statements should be read
in conjunction with the group's audited financial statements for
the year ended 31 December 2023.
The information in these interim financial
statements 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 2023
are not the group's statutory accounts for that financial year. The
group's financial statements for the year ended 31 December 2023
have been reported on by its auditors and delivered to the
Registrar of Companies. The report of the auditor 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
Standards and interpretations adopted during
the current reporting period
The following amendments to standards have been
adopted in the current period, but have not had a significant
impact on the amounts reported in these financial
statements:
- Lease
Liability in a Sale and Leaseback - Amendments to IFRS
16
-
Classification of liabilities as current or non-current
(Amendments to IAS 1)
-
Amendments to IAS 7 Statement of Cash Flows and IFRS 7
Financial Instruments: Disclosures Supplier Finance
Arrangements
-
International Tax Reform - Pillar Two Model Rules (Amendments
to IAS 12)
Future new standards and
interpretations
The following standards are effective for
annual periods beginning after 1 January 2025 and earlier
application is permitted; however, the group has not early-adopted
the amended standards in preparing these consolidated financial
statements.
|
Standards available
for early adoption
|
Effective
date
|
|
Sale or Contribution of Assets between an
Investor and its Associate or
Join Venture (Amendments to IFRS 10 and IAS 28)
|
Optional
|
|
Lack of Exchangeability (Amendments to IAS
21)
|
01 January 2025
|
|
Amendments to the Classification and
Measurement of Financial Instruments (Amendments to IFRS 9 and
IFRS7)
|
01 January 2026
|
None of the standards not yet effective are
expected to have a material impact on the group's financial
statements.
2 CHANGES IN
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies applied in these
condensed consolidated interim financial statements are the same as
those applied in the group's consolidated financial statements as
at, and for the year ended, 31 December 2023.
3 CRITICAL ACCOUNTING
JUDGEMENTS AND KEY SOURCES OF ESTIMATION AND UNCERTAINTY
The group has reviewed the judgements and
estimates that affect its accounting policies and amounts reported
in its financial statements. Other than those noted below, these
are unchanged from those reported in the group's financial
statements for the year ended 31 December 2023.
3.1 BUSINESS COMBINATIONS (NOTE 5)
3.1.1 Investec Wealth &
Investment
Intangible assets
In 2023, the group acquired the entire share
capital of Investec Wealth & Investment Limited ('IW&I').
The group has accounted for the transaction as a business
combination as set out in note 5.
The fair value of net assets acquired was
determined to be £411.8 million. Goodwill of £340.1 million was
recognised at acquisition, and represents the future economic
benefit expected from an acquired workforce, expected future growth
and future client relationships, as well as operational and revenue
synergies. Goodwill was revalued in the period to £332.6 million. A
reduction in goodwill of £8.2 million was attributable to the
recognition of contingent consideration receivable owed to the
group by the seller (see below for further detail). This was
partially offset by a £0.7 million increase in goodwill
attributable to a re-measurement of the acquired client
relationship intangible assets and the related deferred tax
liability (see below for further detail).
The allocation of goodwill between the group's
cash-generating units has been based on their respective relative
values. The allocation of goodwill is provisional and shall be
reviewed and completed before the end of the first annual period
after the acquisition. See note 14.
Client relationship intangible assets of £350.3
million were recognised at acquisition. A multi-period earnings
model was used to value the intangible assets by using estimates of
client longevity and investment performance to derive a series of
discounted cash flows. This was determined with reference to
management's best estimates of future performance and estimates of
the return required to determine an appropriate discount rate.
These assets are being amortised over an average useful economic
life of 14 years. During the period, the intangible assets were
remeasured in line with IFRS 3 and adjusted downwards by £1.2
million to reflect new information about facts and circumstances in
existence at the acquisition date. The related deferred tax
liability was also reduced accordingly by £0.5 million.
Contingent consideration receivable
At acquisition, the seller, Investec Bank plc,
agreed to indemnify the cost of the fit-out works (in excess of any
landlord incentives) to be carried out at 30 Gresham Street, which
operates as the new London head-office for the enlarged group.
Sufficient capital was to be left in IW&I at the time of
completion to fund this. The costs of the fit-out are now expected
to be higher than the original estimate at completion. The exact
amount of the indemnified excess costs is not quantifiable until
the fit-out works are completed and new lease terms are entered
into. The current estimate leaves a shortfall of £8.2 million to be
paid by Investec Bank plc.
In accordance with IFRS 3, as this amount is
payable by the seller to the buyer under the acquisition agreements
and is dependent on a future event, we consider the indemnification
of the additional fit-out costs to be contingent consideration
receivable. The standard notes that contingent consideration may
include an acquirer's right to the return of previously transferred
consideration. At the date of acquisition, the fair value of this
receivable was assessed as nil, as the amount of excess capital
left in IW&I was assumed to exactly cover the future fit-out
costs. As the reassessment of the fair value at the reporting date
is within the IFRS 3 measurement period, being 12 months from the
date of acquisition, this is an adjustment to the acquisition
accounting; recognition of a £8.2 million contingent consideration
receivable has led to a corresponding reduction in
goodwill.
Subsequent changes in the expected fit-out
costs or lease incentives will require further re-measurement of
the contingent consideration receivable; should these arise outside
of the 12-month measurement period, these will be reflected through
profit or loss.
Best expectations for the fit-out costs and
landlord incentives have been used to arrive at the current
estimate of £8.2 million. A range of outcomes for the value of the
contingent consideration receivable is currently expected to be
between £6.0 million and £12.0 million.
3.1.2 Saunderson House
Estimation uncertainty
In 2021, the group acquired the entire share
capital of Saunderson House Limited as part of a business
combination. The equity-settled deferred payments that are
contingent on the recipients remaining employees of the group for a
specific period under the Saunderson House Transaction Incentive
Plan are accounted for as remuneration for ongoing services from
employment. The group's estimate of the amounts ultimately payable
will be expensed over the deferral period.
The amount payable under the Saunderson House
Transaction Incentive Plan 2021 is subject to the achievement of
certain operational and performance targets which are to be
measured at 31 December 2024 ('the measurement date'). A profit or
loss charge has been recognised in equity for the expected
consideration payable.
Under the terms of the agreements, the award is
calculated as 0.1% of funds under management ('FUM') at the
measurement date of 31 December 2024. The key estimation
uncertainty for this award is the value of the FUM at the
measurement date. The key inputs to the estimated value of FUM at
the measurement date are forecast market movements and estimated
net inflows and outflows of FUM. In addition to the FUM-based award
are integration and discretionary awards. The total of all awards
payable under the scheme ranges from nil to a maximum possible
award, payable in shares, of £7.5 million.
Should the maximum total award of £7.5 million
become payable, it would result in an additional charge to profit
or loss in the period of £0.9 million. A payment of nil would
result in a reversal of the accumulated profit or loss charge
recognised since commencement of the scheme of £4.3 million in the
period.
3.2 RETIREMENT BENEFIT OBLIGATIONS (NOTE
17)
An insurance buy-in of the group's retirement
benefits was completed during the period. An asset for the
insurance contract was subsequently recognised at a fair value
equivalent to the liabilities in the scheme. The liabilities
continue to be revalued on a monthly basis in line with IAS 19, and
the insurance asset is revalued accordingly by an equal and
offsetting amount. The net impact on equity and total comprehensive
income from future revaluations is expected to be nil. We therefore
no longer consider this to be an area of estimation
uncertainty.
4 SEGMENTAL
INFORMATION
IFRS 8 requires operating segments to be
identified on the basis of internal reports about components of the
group that are regularly reviewed by the chief operating
decision-maker, which takes the form of the Group Executive
Committee, in order to allocate resources to the segment and to
assess its performance.
The group is organised into two
reporting segments: Wealth Management and Asset Management.
IW&I has been identified as a separate operating segment of the
group. The results of this segment have been reported in aggregate
with the group's previously existing Wealth Management segment, on
the basis that their long-term characteristics are expected to
align following the initial integration period of the
business.
The principal activity of the Wealth Management
segment is the provision of personalised discretionary investment
management solutions to a range of clients. Wealth Management
services offered to clients include bespoke portfolio management,
managed service of ready-made diversified multi-asset portfolios
and direct access to range of ready-made multi-asset funds. The
Wealth Management segment also generates revenue through the
provision of financial planning and advisory services.
The Asset Management segment offers a range of
single-strategy and multi-asset funds to both retail and
institutional investors. The range of funds available are designed
to meet investors' core investment needs, or provide 'building
blocks' for wealth solutions, with distribution primarily through
UK advisors.
Centrally incurred shared service costs are
allocated to these operating segments on the basis of the cost
drivers that generate the expenditure; principally, these are the
headcount of staff directly involved in providing those services
from which the segment earns revenues and the value of funds under
management and administration.
The allocation of these costs is shown in a
separate column in the table opposite, alongside the information
presented for internal reporting. Wealth Management Segmental
Assets relate to assets held within the Investment Management,
Banking and Trust businesses. Asset Management Segmental Assets are
assets held solely within the Asset Management business.
Unallocated Segmental Assets relate to the Net Defined Benefit
Asset held on the statement of financial position.
|
Six months ended 30
June 2024 (unaudited)
|
Wealth
Management
£m
|
Asset
Management
£m
|
Shared
Services
£m
|
Total
£m
|
|
Net investment management fee income
|
285.5
|
38.5
|
-
|
324.0
|
|
Net commission income
|
47.2
|
-
|
-
|
47.2
|
|
Net interest income
|
31.8
|
0.9
|
-
|
32.7
|
|
Fees from advisory services and
other income
|
43.1
|
0.4
|
-
|
43.5
|
|
Operating income
|
407.6
|
39.8
|
-
|
447.4
|
|
|
|
|
|
|
|
Staff costs - fixed
|
(118.1)
|
(3.9)
|
(27.6)
|
(149.6)
|
|
Staff costs - variable
|
(64.4)
|
(9.6)
|
(9.8)
|
(83.8)
|
|
Total staff costs
|
(182.5)
|
(13.5)
|
(37.4)
|
(233.4)
|
|
Other direct expenses
|
(55.1)
|
(7.4)
|
(39.4)
|
(101.9)
|
|
Allocation of shared services
|
(70.6)
|
(6.2)
|
76.8
|
-
|
|
Underlying operating
expenses
|
(308.2)
|
(27.1)
|
-
|
(335.3)
|
|
Underlying profit before
tax
|
99.4
|
12.7
|
-
|
112.1
|
|
Charges in relation to client relationship
intangible assets and goodwill (note 14)
|
(22.0)
|
-
|
-
|
(22.0)
|
|
Acquisition-related and integration costs (note
6)
|
(24.8)
|
-
|
-
|
(24.8)
|
|
Segment profit before
tax
|
52.6
|
12.7
|
-
|
65.3
|
|
Taxation (note 8)
|
-
|
-
|
-
|
(19.8)
|
|
Profit for the period attributable
to equity holders of the company
|
-
|
-
|
-
|
45.5
|
|
|
|
|
|
|
|
|
Wealth
Management
£m
|
Asset
Management
£m
|
Unallocated
Assets
£m
|
Total
£m
|
|
Segment total assets
|
4,394.9
|
92.7
|
0.4
|
4,488.0
|
4 SEGMENTAL
INFORMATION COntinued
|
Six months ended 30
June 2023 (unaudited)
|
Wealth
Management
£m
|
Asset
Management
£m
|
Shared
Services
£m
|
Total
£m
|
|
Net investment management fee income
|
138.8
|
31.1
|
-
|
169.9
|
|
Net commission income
|
23.7
|
-
|
-
|
23.7
|
|
Net interest income
|
22.2
|
0.8
|
-
|
23.0
|
|
Fees from advisory services and other
income
|
21.0
|
0.4
|
-
|
21.4
|
|
Operating income
|
205.7
|
32.3
|
-
|
238.0
|
|
|
|
|
|
|
|
Staff costs - fixed
|
(59.5)
|
(3.7)
|
(25.1)
|
(88.3)
|
|
Staff costs - variable
|
(31.6)
|
(5.3)
|
(7.0)
|
(43.9)
|
|
Total staff costs
|
(91.1)
|
(9.0)
|
(32.1)
|
(132.2)
|
|
Other direct expenses
|
(20.5)
|
(6.2)
|
(28.3)
|
(55.0)
|
|
Allocation of shared services
|
(53.0)
|
(7.4)
|
60.4
|
-
|
|
Underlying operating
expenses
|
(164.6)
|
(22.6)
|
-
|
(187.2)
|
|
Underlying profit before
tax
|
41.1
|
9.7
|
-
|
50.8
|
|
Charges in relation to client relationship
intangible assets and goodwill (note 14)
|
(9.5)
|
-
|
-
|
(9.5)
|
|
Acquisition-related and integration costs (note
6)
|
(2.2)
|
-
|
(13.1)
|
(15.3)
|
|
Segment profit before
tax
|
29.4
|
9.7
|
(13.1)
|
26.0
|
|
Taxation (note 8)
|
-
|
-
|
-
|
(6.3)
|
|
Profit for the period attributable
to equity holders of the company
|
-
|
-
|
-
|
19.7
|
|
|
|
|
|
|
|
|
Wealth
Management
£m
|
Asset
Management
£m
|
Unallocated
Assets
£m
|
Total
£m
|
|
Segment total assets
|
3,276.0
|
157.6
|
7.0
|
3,440.6
|
|
Year ended 31
December 2023 (audited)
|
Wealth
Management
£m
|
Asset
Management
£m
|
Shared
Services
£m
|
Total
£m
|
|
Net investment management fee income
|
350.1
|
64.7
|
-
|
414.8
|
|
Net commission income
|
53.6
|
-
|
-
|
53.6
|
|
Net interest income
|
49.9
|
1.8
|
-
|
51.7
|
|
Fees from advisory services and other
income
|
50.3
|
0.7
|
-
|
51.0
|
|
Operating income
|
503.9
|
67.2
|
-
|
571.1
|
|
|
|
|
|
|
|
Staff costs − fixed
|
(147.2)
|
(7.1)
|
(51.8)
|
(206.1)
|
|
Staff costs − variable
|
(78.2)
|
(13.4)
|
(15.9)
|
(107.5)
|
|
Total staff costs
|
(225.4)
|
(20.5)
|
(67.7)
|
(313.6)
|
|
Other direct expenses
|
(53.7)
|
(12.2)
|
(64.5)
|
(130.4)
|
|
Allocation of shared services
|
(119.4)
|
(12.8)
|
132.2
|
-
|
|
Underlying operating
expenses
|
(398.5)
|
(45.5)
|
-
|
(444.0)
|
|
Underlying profit before
tax
|
105.4
|
21.7
|
-
|
127.1
|
|
Charges in relation to client relationship
intangible assets
and goodwill (note 14)
|
(25.2)
|
-
|
-
|
(25.2)
|
|
Acquisition-related and integration costs (note
6)
|
(11.0)
|
-
|
(33.3)
|
(44.3)
|
|
Segment profit before
tax
|
69.2
|
21.7
|
(33.3)
|
57.6
|
|
Taxation (note 8)
|
-
|
-
|
-
|
(20.1)
|
|
Profit for the year attributable to
equity holders of the company
|
-
|
-
|
-
|
37.5
|
|
|
|
|
|
|
|
|
Wealth
Management
£m
|
Asset
Management
£m
|
Unallocated
Assets
£m
|
Total
£m
|
|
Segment total assets
|
4,099.6
|
117.8
|
7.0
|
4,224.4
|
Included within Wealth Management operating
income is £0.8 million (30 June 2023: £0.8 million; 31 December
2023: £1.5 million) of fees and commissions receivable from the
Asset Management business. Inter-segment sales are charged on an
arm's length basis.
The following table reconciles underlying
operating expenses to operating expenses:
|
|
Unaudited
Six months to
30 June 2024
£m
|
Unaudited
Six months to
30 June 2023
£m
|
Audited
Year to
31 December 2023
£m
|
|
Underlying operating expenses
|
335.3
|
187.2
|
444.0
|
|
Charges in relation to client relationships and
goodwill (note 14)
|
22.0
|
9.5
|
25.2
|
|
Acquisition-related and integration costs (note
6)
|
24.8
|
15.3
|
44.3
|
|
Operating expenses
|
382.1
|
212.0
|
513.5
|
GEOGRAPHIC ANALYSIS
The following table presents operating income
analysed by the geographical location of the group entity providing
the service:
|
|
Unaudited
Six months to
30 June 2024
£m
|
Unaudited
Six months to
30 June 2023
£m
|
Audited
Year to
31 December 2023
£m
|
|
United Kingdom
|
436.7
|
229.7
|
553.4
|
|
Channel Islands
|
10.7
|
8.3
|
17.7
|
|
Operating income
|
447.4
|
238.0
|
571.1
|
The group's non-current assets are
substantially all located in the United Kingdom.
Timing of revenue recognition
The following table presents operating income
analysed by the timing of revenue recognition of the operating
segment providing the service:
|
|
Unaudited
Six months
to
30 June
2024
|
Unaudited
Six months
to
30 June
2023
|
Audited
Year to
31 December
2023
|
|
|
Wealth
Management
£m
|
Asset
Management
£m
|
Wealth
Management
£m
|
Asset
Management
£m
|
Wealth
Management
£m
|
Asset
Management
£m
|
|
Products and services transferred
at a point in time
|
48.8
|
-
|
16.9
|
-
|
44.4
|
-
|
|
Products and services transferred
over time
|
358.8
|
39.8
|
188.8
|
32.3
|
459.5
|
67.2
|
|
Operating income
|
407.6
|
39.8
|
205.7
|
32.3
|
503.9
|
67.2
|
|
|
|
|
|
|
|
|
MAJOR CLIENTS
The group is not reliant on any one client or
group of connected clients for generation of revenues. At 30
June 2024, the group provided wealth management services to 114,294
clients (30 June 2023: 68,629; 31 December 2023:
114,200).
5 BUSINESS
COMBINATIONS
INVESTEC WEALTH & INVESTMENT
On 21 September 2023, the group completed its
acquisition of 100% of the ordinary share capital of Investec
Wealth & Investment Limited (IW&I) from Investec Bank plc.
Full details of the acquisition are set out in note 8 of the 2023
annual report and accounts.
Total consideration transferred to Investec
Bank plc of £751.9 million comprised a share issue of 27,056,463
ordinary shares and 17,481,868 convertible non-voting ordinary
shares. Based on Rathbones' issued share capital at completion, the
total shares transferred to Investec Bank plc amounted to an
economic interest in Rathbones Group Plc of 41.25%, but in
accordance with the terms of the acquisition 29.9% of the total
voting rights in Rathbones.
As set out in note 3, at 30 June 2024, a £8.2
million contingent consideration receivable is due from Investec
Bank plc to fund the fit-out costs at 30 Gresham Street, which were
indemnified at the time of the acquisition. Sufficient capital was
to be left in IW&I at the time of completion to fund this. The
costs of the fit-out are now expected to be higher than the
original estimate.
As this change has occurred within the 12-month
IFRS 3 measurement period post-completion, this is an adjustment to
the acquisition accounting; recognition of a £8.2 million
contingent consideration receivable has led to a corresponding
reduction in goodwill.
Deferred Incentive awards
Deferred awards and contingent payments were
granted to a group of IW&I employees under the Rathbones
Integration Incentive Scheme. These payments require the recipients
of the awards to remain in employment with the group for the
duration of the respective deferral periods, and therefore these
amounts have not been included in the accounting for the
acquisition under IFRS 3 Business Combinations. The cost for these
equity-settled awards is being charged to profit or loss in line
with IFRS 2 and spread over their vesting periods.
In May and June 2024, two additional awards
were granted to a group of employees from Rathbones Group Plc,
conditional upon the delivery of the integration plan for Rathbones
clients. The integration awards are payable in cash in 2025 and
2027 and have been recognised in line with IAS 19.
The charge recognised in profit or loss for the
above elements is as follows:
|
|
Unaudited
Six months to
30 June 2024
£m
|
Unaudited
Six months to
30 June 2023
£m
|
Audited
Year to
31 December 2023
£m
|
|
Incentivisation awards
|
5.1
|
-
|
4.8
|
SAUNDERSON HOUSE LIMITED
On 20 October 2021, the group acquired 100% of
the ordinary share capital of the Saunderson House
group.
Deferred payments
The group continues to provide for the cost of
other deferred and contingent payments to be made to individuals
required to remain in employment with the group for the duration of
the respective deferral periods, as set out in note 8 of the 2023
annual report and accounts.
All of these payments are to be made entirely
in shares and are being accounted for as equity-settled share-based
payments under IFRS 2.
The charge recognised in profit or loss for the
above elements is as follows:
|
|
Unaudited
Six months to
30 June 2024
£m
|
Unaudited
Six months to
30 June 2023
£m
|
Audited
Year to
31 December 2023
£m
|
|
Initial share consideration
|
0.9
|
0.9
|
1.8
|
|
Incentivisation awards
|
0.5
|
0.7
|
2.1
|
|
Total consideration
|
1.4
|
1.6
|
3.9
|
6 ACQUISITION-RELATED
AND INTEGRATION COSTS
|
|
Unaudited
Six months to
30 June 2024
£m
|
Unaudited
Six months to
30 June 2023
£m
|
Audited
Year to
31 December 2023
£m
|
|
Acquisition of Investec Wealth & Investment
UK
|
22.1
|
11.2
|
36.5
|
|
Acquisition of Saunderson House
|
2.7
|
3.5
|
6.8
|
|
Acquisition of Speirs & Jeffrey
|
-
|
0.6
|
1.0
|
|
Acquisition and integration related
costs
|
24.8
|
15.3
|
44.3
|
COSTS RELATING TO THE ACQUISITION OF INVESTEC WEALTH
& INVESTMENT
The group has incurred the following costs in
relation to the acquisition of IW&I, summarised by the
following classification within the income statement:
|
|
Unaudited
Six months to
30 June 2024
£m
|
Unaudited
Six months to
30 June 2023
£m
|
Audited
Year to
31 December 2023
£m
|
|
Acquisition costs:
|
|
|
|
|
Acquisition-related legal and advisory
costs
|
-
|
11.2
|
21.3
|
|
Integration costs:
|
|
|
|
|
Integration related staff costs
|
15.5
|
-
|
6.2
|
|
Other integration costs
|
6.6
|
-
|
9.0
|
|
|
22.1
|
11.2
|
36.5
|
Non-staff acquisition costs (Legal and Advisory
fees) of £nil (30 June 2023: £11.2 million; 31 December 2023:
£21.3 million) and integration costs of £nil (30 June 2023: £nil
million; 31 December 2023: £9.0 million) have not been allocated to
a specific operating segment (note 4).
COSTS RELATING TO THE ACQUISITION OF SAUNDERSON
HOUSE
The group has incurred the following costs in
relation to the acquisition of Saunderson House:
|
|
Unaudited
Six months to
30 June 2024
£m
|
Unaudited
Six months to
30 June 2023
£m
|
Audited
Year to
31 December 2023
£m
|
|
Acquisition costs:
|
|
|
|
|
Staff costs
|
1.4
|
1.6
|
3.9
|
|
Integration costs
|
1.3
|
1.9
|
2.9
|
|
|
2.7
|
3.5
|
6.8
|
Non-staff acquisition and integration costs of
£nil (30 June 2023: £1.9 million; 31 December 2023: £2.9 million)
have not been allocated to a specific operating segment (note
4).
7 EMPLOYEE NUMBERS
The average number of employees during the
period, on a full time equivalent basis, was as follows:
|
|
Unaudited
Six months to
30 June 2024
|
Unaudited
Six months to
30 June 2023
|
Audited
Year to
31 December 2023
|
|
Wealth Management
|
2,240
|
1,493
|
1,686
|
|
Asset Management
|
56
|
52
|
52
|
|
Shared services
|
1,226
|
594
|
760
|
|
|
3,522
|
2,139
|
2,498
|
8 TAXATION
The tax expense for the six months ended 30
June 2024 was calculated based on the estimated average annual
effective tax rate. The overall effective tax rate for this period
was 30.3% (six months ended 30 June 2023: 24.2%; year ended 31
December 2023: 34.9%).
The effective tax rate reflects the
disallowable costs of the deferred consideration payments in
relation to the acquisitions of Speirs & Jeffrey, Saunderson
House and IW&I, as well as property related costs arising on
the lease assignment of 8 Finsbury Circus.
|
|
Unaudited
Six months to
30 June 2024
£m
|
Unaudited
Six months to
30 June 2023
£m
|
Audited
Year to
31 December 2023
£m
|
|
United Kingdom taxation
|
22.2
|
3.5
|
23.4
|
|
Overseas taxation excluding Pillar II income
tax
|
0.3
|
0.3
|
0.5
|
|
Overseas taxation relating to Pillar II income
tax
|
0.1
|
-
|
-
|
|
Deferred taxation
|
(2.8)
|
2.5
|
(3.8)
|
|
|
19.8
|
6.3
|
20.1
|
The statutory UK corporation tax rate for the
year ending 31 December 2024 is 25.0% (2023: average rate of
23.5%).
The UK Government legislated in the Finance Act
2021 to increase the UK corporation tax rate from 19.0% to 25.0%
from 1 April 2023. This has been reflected in the deferred tax
calculations. 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.
On 11 July 2023, the government of the United
Kingdom, being the jurisdiction where the parent company is
incorporated, enacted the Pillar II income taxes legislation
effective from 1 January 2024. Under the legislation, the parent
company will be required to pay, in the United Kingdom, top-up tax
on profits of its subsidiaries located in territories outside the
United Kingdom that are taxed at an effective tax rate of less than
15.0%. As required by IAS 12 Income Taxes, Rathbones Group Plc has
applied the exception to recognising and disclosing information
about deferred tax assets and liabilities related to Pillar II
income taxes.
9 DIVIDENDS
An interim dividend of 30.0p per share is
payable on 1 October 2024 to shareholders on the register at the
close of business on 6 September 2024. The interim dividend has not
been included as a liability in this interim statement. A final
dividend for 2023 of 24.0p per share was paid on 14 May
2024.
10 EARNINGS PER SHARE
Earnings used to calculate earnings per share
on the bases reported in these condensed consolidated interim
financial statements were:
|
|
Unaudited
Six months
to
30 June
2024
|
Unaudited
Six months
to
30 June
2023
|
Audited
Year to
31 December
2023
|
|
|
|
Pre-tax
£m
|
Post-tax
£m
|
Pre-tax
£m
|
Post-tax
£m
|
Pre-tax
£m
|
Post-tax
£m
|
|
Underlying profit attributable to equity
holders
|
112.1
|
83.4
|
50.8
|
38.9
|
127.1
|
96.8
|
|
Charges in relation to client relationships and
goodwill (note 14)
|
(22.0)
|
(16.5)
|
(9.5)
|
(7.3)
|
(25.2)
|
(19.3)
|
|
Acquisition-related and integration costs (note
6)
|
(24.8)
|
(21.4)
|
(15.3)
|
(11.9)
|
(44.3)
|
(40.0)
|
|
Profit attributable to equity
holders
|
65.3
|
45.5
|
26.0
|
19.7
|
57.6
|
37.5
|
|
|
|
|
|
|
|
|
|
|
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 103,695,582 (30 June 2023: 58,538,625; 31 December
2023: 71,269,129). This includes 17,481,868 convertible non-voting
shares issued as consideration for the IW&I transaction. In
total, 44,538,331 shares were issued as a result of the IW&I
transaction on 21 September 2023.
Diluted earnings per share is the basic
earnings per share, adjusted for the effect of contingently
issuable shares under the Saunderson House initial share
consideration and Executive Incentive Plan, Executive Share
Performance Plan, employee share options remaining capable of
exercise, expected shares to be issued under the Key Employee
Equity Plan Support Function award, expected shares to be issued
within the Rathbones Integration Incentive Award Scheme and any
dilutive shares to be issued under the Share Incentive Plan, all
weighted for the relevant period.
|
|
Unaudited
30 June 2024
|
Unaudited
30 June 2023
|
Audited
31 December 2023
|
|
Weighted average number of ordinary shares in
issue during the period
|
103,695,582
|
58,538,625
|
71,269,129
|
|
Effect of ordinary share options/Save As
You Earn
|
495,639
|
558,416
|
443,865
|
|
Effect of dilutive shares issuable under the
Share Incentive Plan
|
2,233
|
1,477
|
2,517
|
|
Effect of contingently issuable ordinary shares
under the Executive Incentive
Plan/Executive Share Performance
Plan
|
195,773
|
597,431
|
294,770
|
|
Effect of contingently issuable shares under
Saunderson House initial share consideration
|
272,952
|
272,952
|
272,952
|
|
Effect of expected shares to be issued under
the Key Employee Equity Plan Support
Function Award
|
314,600
|
-
|
314,600
|
|
Effect of expected shares to be issued
under the Rathbones Integration Incentive
Scheme Award
|
1,276,744
|
-
|
1,276,744
|
|
Diluted ordinary shares
|
106,253,523
|
59,968,901
|
73,874,577
|
|
|
Unaudited
Six months to
30 June 2024
|
Unaudited
Six months to
30 June 2023
|
Audited
Year to
31 December 2023
|
|
Earnings per share for the period attributable
to equity holders of the company:
|
|
|
|
|
-
basic
|
43.9p
|
33.6p
|
52.6p
|
|
-
diluted
|
42.8p
|
32.8p
|
50.8p
|
|
Underlying earnings per share for the period
attributable to equity holders of the company:
|
|
|
|
|
-
basic
|
80.4p
|
66.4p
|
135.8p
|
|
-
diluted
|
78.5p
|
64.8p
|
131.0p
|
Underlying earnings per share is calculated in
the same way as earnings per share, but by reference to underlying
profit after tax attributable to shareholders. The tax rate applied
has been adjusted for tax deductible non-underlying costs,
resulting in an adjusted tax rate of 25.6% (30 June 2023: 23.4%; 31
December 2023: 23.8%).
11 LOANS AND ADVANCES TO
CUSTOMERS
|
|
Unaudited
Six months to
30 June 2024
£m
|
Unaudited
Six months to
30 June 2023
£m
|
Audited
Year to
31 December 2023
£m
|
|
Overdrafts
|
23.6
|
15.1
|
9.7
|
|
Wealth Management loan book
|
93.5
|
124.6
|
101.7
|
|
Trust and financial planning debtors
|
2.9
|
3.6
|
2.6
|
|
Other debtors
|
0.3
|
0.1
|
1.6
|
|
|
120.3
|
143.4
|
115.6
|
12 PROPERTY, PLANT AND
EQUIPMENT
During the six months ended 30 June 2024, the
group purchased assets with a cost of £28.5 million (six months
ended 30 June 2023: £0.6 million; year ended 31 December 2023: £5.1
million), relating to office fit-out and refurbishment
costs.
Due to the shortened useful economic life of
the fixtures and fittings at 8 Finsbury Circus following the
assignment of the property lease, impairment charges of £0.6
million have been recognised within non-underlying costs in the
period. In addition to this, additional depreciation charges of
£1.1 million (31 December 2023: £1.7 million) have been recognised
within non-underlying costs, which represents the net uplift in
costs against the previous monthly charges prior to the lease
assignment taking place.
13 RIGHT-OF-USE ASSETS
|
|
Property
£m
|
Motor vehicles
and equipment
£m
|
Total
£m
|
|
Cost
|
|
|
|
|
1 January 2024
|
90.1
|
0.3
|
90.4
|
|
Additions
|
16.2
|
-
|
16.2
|
|
Disposals
|
(38.5)
|
-
|
(38.5)
|
|
At 30 June 2024
|
67.8
|
0.3
|
68.1
|
|
Depreciation and
impairment
|
|
|
|
|
1 January 2024
|
25.7
|
0.2
|
25.9
|
|
Charge in the period
|
5.9
|
-
|
5.9
|
|
|
|
|
|
|
Disposals
|
(15.3)
|
-
|
(15.3)
|
|
At 30 June 2024
|
16.3
|
0.2
|
16.5
|
|
Carrying amount at 30 June 2024
(unaudited)
|
51.5
|
0.1
|
51.6
|
|
Carrying amount at 30 June 2023
(unaudited)
|
37.1
|
0.2
|
37.3
|
|
Carrying amount at 31 December 2023
(audited)
|
64.4
|
0.1
|
64.5
|
Following the acquisition of IW&I, the
group's enlarged property portfolio was reviewed for leases that
would require early termination. The most material impact is in
relation to the London properties, where the group will vacate the
property at 8 Finsbury Circus by 31 July 2024, prior to it's
termination date, and relocate to office space at 30 Gresham
Street. At the 2023 year end, the right-of-use asset in respect of
the property at 8 Finsbury Circus was reviewed for impairment. An
impairment charge of £2.1 million was recognised in non-underlying
costs in 2023, and a further £0.4 million was recognised in the
current period.
On 6 March 2024, the lease at 8 Finsbury Circus
was assigned to a new tenant. As the original terms and conditions
of the lease did not include an option to terminate the lease or
reduce the lease term, this was treated as a lease modification. At
the effective date of the modification, the lease liability was
remeasured based on the remaining rental payments, the revised
lease term and a revised incremental borrowing rate. The
right-of-use asset was also revalued to reflect its reduced useful
economic life. This resulted in a net gain to profit or loss of
£12.9 million, which has been recognised in non-underlying
costs.
In March 2024, the group entered into a lease
agreement for additional floor space in the property at 30 Gresham
Street. The cost of this lease represents a double-running of costs
with 8 Finsbury Circus until that property is vacated. The property
costs for the vacant properties which are not occupied by staff are
recognised within non-underlying expenditure until the existing
properties cease to be used and are vacated. At 30 June 2024, the
IFRS 16 related property costs net of synergies for the group's
London-based properties recognised as non-underlying comprised £0.2
million of depreciation charged on the right-of-use assets, and a
net £0.2 million saving on interest charged on the lease
liabilities. There were £0.8 million of ancillary property costs
recognised within non-underlying costs in the period.
14 INTANGIBLE ASSETS
In 2023, goodwill of £340.1 million was
recognised as part of the acquisition of IW&I (see note 5).
During the period, goodwill was revalued to £332.6 million. A
reduction of £8.2 million was attributable to the recognition of a
contingent consideration receivable owed to the group by the seller
(see note 2 for further detail). This was partially offset by a 0.7
million increase in goodwill attributable to a reduction in the
acquired client relationship intangible assets and the related
deferred tax liability (see below for further detail).
Goodwill has been provisionally allocated
between the IW&I cash-generating unit ('CGU') and the Wealth
Management group of CGUs in the year, before being reviewed for
impairment. This allocation will be reviewed at 31 December
2024.
Client relationship intangible assets of £350.3
million were recognised as part of the acquisition of IW&I (see
note 5). An average useful life of 14 years was assigned to these
relationships, based on observed historic attrition rates. During
the period, the intangible assets recognised on acquisition were
re-measured in line with IFRS 3 and adjusted downwards by £1.2
million to reflect new information about facts and circumstances in
existence at the acquisition date. The related deferred tax
liability was reduced accordingly by £0.5 million.
|
|
Goodwill
£m
|
Client
relationships
£m
|
Software
development
costs
£m
|
Purchased
software
£m
|
Total
Intangible
assets
£m
|
|
Cost
|
|
|
|
|
|
|
At 1 January 2024
|
509.7
|
651.0
|
16.2
|
59.1
|
1,236.0
|
|
Internally developed in the period
|
-
|
-
|
0.4
|
-
|
0.4
|
|
Purchased in the period
|
-
|
5.0
|
-
|
1.5
|
6.5
|
|
Remeasurement of business combination (note
5)
|
(7.5)
|
(1.2)
|
-
|
-
|
(8.7)
|
|
Disposals
|
-
|
(0.9)
|
-
|
-
|
(0.9)
|
|
At 30 June 2024
|
502.2
|
653.9
|
16.6
|
60.6
|
1,233.3
|
|
|
|
|
|
|
|
|
Amortisation and
impairment
|
|
|
|
|
|
|
At 1 January 2024
|
1.9
|
148.3
|
11.8
|
48.7
|
210.7
|
|
Charge in the period
|
-
|
22.0
|
1.1
|
2.6
|
25.7
|
|
Disposals
|
-
|
(0.9)
|
-
|
-
|
(0.9)
|
|
At 30 June 2024
|
1.9
|
169.4
|
12.9
|
51.3
|
235.5
|
|
Carrying value at 30 June 2024
(unaudited)
|
500.3
|
484.5
|
3.7
|
9.3
|
997.8
|
|
Carrying value at 30 June 2023
(unaudited)
|
167.7
|
167.1
|
3.1
|
9.3
|
347.2
|
|
Carrying value at 31 December 2023
(audited)
|
507.8
|
502.7
|
4.4
|
10.4
|
1,025.3
|
The total amount charged to profit or loss in
the period, in relation to goodwill and client relationship
intangible assets, was £22.0 million (six months ended 30 June
2023: £9.5 million; year ended 31 December 2023: £25.2
million)
IMPAIRMENT
The recoverable amounts of the operating
segments to which goodwill is allocated are assessed for impairment
using value-in-use calculations. The group prepares cash flow
forecasts derived from the most recent financial budgets approved
by the board, which cover the three year period from the end of the
current financial year. This is extrapolated for five years based
on recent historic annual revenue and cost growth for each group of
CGUs, adjusted for significant historic fluctuations in industry
growth rates where relevant, as well as the group's expectation of
future growth.
A five-year extrapolation period is chosen as
this aligns with the period covered by the group's Internal Capital
Adequacy Assessment Process ('ICAAP') modelling. A terminal growth
rate is applied to year five cash flows, which takes into account
the net growth forecasts over the extrapolation period and the
long-term average growth rate for the industry. The group estimates
discount rates using pre-tax rates that reflect current market
assessments of the time value of money and the risks specific to
the operating segments.
At 31 December 2023, the pre-tax rate used to
discount the forecast cash flows was 14.1% for the Wealth
Management operating segment and 15.0% for the IW&I operating
segment. These are based on a risk-adjusted weighted average cost
of capital. The group judges that these discount rates
appropriately reflect the markets in which each operating segment
operates.
There was no indication of impairment to the
goodwill allocated to the Wealth Management operating segment or to
the IW&I operating segment during the period. The group has
considered any reasonably foreseeable changes to the assumptions
used in the value-in-use calculations and the level of risk
associated with the cash flow projections. Based on this
assessment, no such change would result in an impairment of
goodwill.
15 PROVISIONS FOR LIABILITIES AND
CHARGES
|
|
Deferred, variable costs to
acquire client
relationship
intangibles
£m
|
Deferred and
contingent
consideration
in business
combinations
£m
|
Legal and
professional,
and
compensation
£m
|
Property-
related
£m
|
Onerous
Contract
£m
|
Total
£m
|
|
At 1 January 2023
|
4.4
|
-
|
2.7
|
5.8
|
-
|
12.9
|
|
Charged to profit or loss
|
-
|
-
|
7.3
|
0.2
|
-
|
7.5
|
|
Unused amount credited to profit or
loss
|
-
|
-
|
(0.3)
|
-
|
-
|
(0.3)
|
|
Net charge to profit or loss
|
-
|
-
|
7.0
|
0.2
|
-
|
7.2
|
|
Other movements
|
1.6
|
-
|
-
|
-
|
-
|
1.6
|
|
Utilised/paid during the period
|
(1.7)
|
-
|
(0.8)
|
-
|
-
|
(2.5)
|
|
At 30 June 2023
(unaudited)
|
4.3
|
-
|
8.9
|
6.0
|
-
|
19.2
|
|
Charged to profit or loss
|
-
|
-
|
1.8
|
-
|
1.2
|
3.0
|
|
Unused amount credited to profit or
loss
|
-
|
(0.1)
|
(0.8)
|
-
|
-
|
(0.9)
|
|
Net charge to profit or loss
|
-
|
(0.1)
|
1.0
|
-
|
1.2
|
2.1
|
|
Acquisitions through business combinations
(Note 5)
|
-
|
3.4
|
1.9
|
5.4
|
-
|
10.7
|
|
Other movements
|
1.0
|
-
|
-
|
-
|
-
|
1.0
|
|
Utilised/paid during the period
|
(0.6)
|
-
|
(6.9)
|
-
|
-
|
(7.5)
|
|
At 31 December 2023
(audited)
|
4.7
|
3.3
|
4.9
|
11.4
|
1.2
|
25.5
|
|
Charged to profit or loss
|
-
|
-
|
(0.2)
|
12.9
|
-
|
12.7
|
|
Unused amount credited to profit or
loss
|
-
|
-
|
(0.3)
|
(2.3)
|
-
|
(2.6)
|
|
Net charge to profit or loss
|
-
|
-
|
(0.5)
|
10.6
|
-
|
10.1
|
|
Other movements
|
5.0
|
-
|
0.4
|
-
|
-
|
5.4
|
|
Utilised/paid during the period
|
(5.2)
|
(0.7)
|
(0.7)
|
-
|
(1.2)
|
(7.8)
|
|
At 30 June 2024
(unaudited)
|
4.5
|
2.6
|
4.1
|
22.0
|
-
|
33.2
|
|
|
|
|
|
|
|
|
|
Payable within one year
|
0.2
|
2.6
|
3.5
|
15.0
|
-
|
21.3
|
|
Payable after one year
|
4.3
|
-
|
0.6
|
7.0
|
-
|
11.9
|
|
At 30 June 2024
(unaudited)
|
4.5
|
2.6
|
4.1
|
22.0
|
-
|
33.2
|
DEFERRED, VARIABLE COSTS TO ACQUIRE CLIENT
RELATIONSHIP INTANGIBLE ASSETS
Other movements in provisions relate to
deferred payments to investment managers and third parties for the
introduction of client relationships, which have been previously
capitalised.
DEFERRED CONSIDERATION IN BUSINESS COMBINATIONS
Deferred Consideration in Business Combinations
relates to Investec Wealth & Investment's deferred
consideration provision on their acquisition of Murray Asset
Management. The Share Centre deferred consideration provision was
settled in March 2024, on transfer of the assets to Rathbones Asset
Management Limited.
LEGAL AND PROFESSIONAL, AND 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 statement of
financial position date. The group's best estimate is based on
legal advice and management's expectation of the most likely
settlement outcome, which in some cases is calculated by external
professional advisers. 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 £22.0 million
relate to dilapidation provisions expected to arise on leasehold
premises held by the group and a lease incentive payable in respect
of 8 Finsbury Circus, which is discussed in further detail below
(30 June 2023: £6.0 million; 31 December 2023: £11.4
million).
During the six months ended 30 June 2024, the
group utilised £nil in relation to dilapidations (30 June 2023:
£nil; 31 December 2024: £nil). The impact of discounting led to an
additional charge of £1.8 million (30 June 2023: additional charge
of £0.2 million; 31 December 2023: additional charge of £0.2
million) being recognised during the period.
On 6 March 2024, the group assigned its lease
at 8 Finsbury Circus to a new tenant. As part of the sale contract,
the group agreed to pay a reverse premium of £11.2 million to the
new tenant when the property is vacated on completion. £7.5 million
of this total is to be held in escrow and drawn down by the tenant
over 2 years on the anniversary of the completion date. As payment
is probable and the group has a present obligation to fulfil the
obligation, a provision for the full amount was recognised in the
period. The charge to profit or loss has been recognised within
non-underlying costs.
At the date the lease was assigned, all
existing liabilities transferred to the new tenant, including the
group's £2.3 million dilapidations obligation relating to the
property. As payment by the group is no longer probable, a present
obligation to recognise a provision no longer exists. Therefore,
this liability was released to profit or loss in the period; this
gain has been recognised in non-underlying costs.
As part of the lease assignment, the group
agreed to enter into an Authorised Guarantee Agreement, which holds
the group liable to the landlord for any rental payments that the
new tenant may default on over the remaining nine-year lease term.
Due to the assumed low probability of default by the tenant and the
option for the group to reassign the lease in case of a default, no
liability has been recognised in relation to this
agreement.
See note 13 for further detail of lease
modifications in the period relating to the group's London
properties.
ONEROUS CONTRACT
In 2023, the group terminated a support
agreement with a third-party service provider. The onerous element
of the contract represented a cost of £1.2 million to the group,
which was recognised as a provision at the year end. This provision
has been settled in full during the period.
AMOUNTS PAYABLE AFTER ONE YEAR
Property-related provisions of £7.0 million are
expected to be settled within 11 years of the statement of
financial position date, which corresponds to the longest lease for
which a dilapidations provision is being held. Remaining provisions
payable after one year are expected to be settled within ten years
of the statement of financial position date.
16 SUBORDINATED LOAN NOTES
|
|
Unaudited
30 June 2024
£m
|
Unaudited
30 June 2023
£m
|
Audited
31 December 2023
£m
|
|
Subordinated loan notes
|
|
|
|
|
- face
value
|
40.0
|
40.0
|
40.0
|
|
- carrying
value
|
39.9
|
39.9
|
39.9
|
Rathbones Group Plc holds £39.9 million of
10-year tier 2 notes with a call option in October 2026 and
annually thereafter. Interest is payable at a fixed rate of 5.642%
per annum until the first call option date in 2026, and at a fixed
rate of 4.893% over Compounded Daily SONIA thereafter. Legal fees
of £0.1m were incurred in issuing the notes, which have been
accounted for in the carrying value of amortised cost.
17 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
30 June 2024
% p.a.
|
Unaudited
30 June 2023
% p.a.
|
Audited
31 December 2023
% p.a.
|
|
Rate of increase of pensions in
payment:
|
|
|
|
|
- Laurence
Keen Scheme
|
3.70
|
3.60
|
3.70
|
|
- Rathbone
1987 Scheme
|
3.00
|
3.20
|
2.90
|
|
Rate of increase of deferred
pensions
|
3.20
|
3.30
|
3.10
|
|
Discount rate
|
5.10
|
5.10
|
4.40
|
|
Inflation*
|
3.20
|
3.30
|
3.10
|
|
Percentage of members transferring out of the
schemes per annum
|
2.00
|
2.00
|
2.00
|
|
Average age of members at date of transferring
out (years)
|
52.50
|
52.50
|
52.50
|
|
Average duration of defined benefit obligation
(years):
|
|
|
|
|
- Laurence
Keen Scheme
|
12.00
|
12.00
|
12.00
|
|
- Rathbone
1987 Scheme
|
16.00
|
16.00
|
16.00
|
* Inflation assumptions are based
on the Retail Price Index
|
|
Unaudited 30 June 2024
|
Unaudited 30 June 2023
|
Audited 31 December 2023
|
|
|
Males
|
Females
|
Males
|
Females
|
Males
|
Females
|
|
Retiring today
|
22.9
|
24.6
|
23.4
|
25.0
|
22.8
|
24.5
|
|
Retiring in 20 years
|
24.4
|
26.2
|
24.9
|
26.7
|
24.3
|
26.1
|
The amount included in the statement of
financial position arising from the group's obligations in respect
of the schemes is as follows:
|
|
Unaudited 30 June 2024
|
Unaudited 30 June 2023
|
Audited 31 December 2023
|
|
|
Rathbone
1987
Scheme
£m
|
Laurence
Keen Scheme
£m
|
Rathbone
1987 Scheme
£m
|
Laurence
Keen Scheme
£m
|
Rathbone
1987 Scheme
£m
|
Laurence
Keen Scheme
£m
|
|
Present value of defined benefit
obligations
|
(85.1)
|
(6.6)
|
(85.8)
|
(6.9)
|
(93.8)
|
(7.3)
|
|
Fair value of scheme assets
|
85.3
|
6.8
|
91.9
|
7.8
|
99.9
|
8.2
|
|
Total surplus
|
0.2
|
0.2
|
6.1
|
0.9
|
6.1
|
0.9
|
On 9 April 2024 both Schemes invested in a bulk
annuity policy to match their liabilities as part of a "buy-in"
process. The Schemes' assets are now therefore almost entirely
invested in the bulk policies, with some residual funds in the
Schemes' bank accounts. In accordance with IAS 19, the fair value
of the bulk annuity policies has been calculated to be equal to the
value of the liabilities the policies cover.
The group made lump sum contributions into its
pension schemes totalling £3.7 million during the period (30 June
2023: £0.2 million; 31 December 2023: £3.0 million).
Following the purchase of the bulk annuities
which match the Schemes' liabilities, the risks relating to
interest rates, inflation and mortality, have been transferred to
the insurer. The residual risks to the group arising from both
schemes are in respect of counterparty default risk and the risk
that there are changes to the premium.
The analysis of the scheme assets, measured at
bid prices, at the statement of financial position date was as
follows;
|
Rathbone 1987
Scheme
|
Unaudited
six months
to 30 June
2024
£m
|
Unaudited
six months
to 30 June
2023
£m
|
Audited
year to
31 December
2023
£m
|
Unaudited
six months
to 30 June
2024
%
|
Unaudited
six months
to 30 June
2023
%
|
Audited
year to
31 December
2023
%
|
|
Equity instruments
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Debt instruments
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Self Sufficiency Credit Funds
|
-
|
90.0
|
98.4
|
-
|
98.0
|
99.0
|
|
Cash
|
0.2
|
1.9
|
1.5
|
0.2
|
2.0
|
1.0
|
|
Annuities
|
85.1
|
-
|
-
|
99.8
|
-
|
-
|
|
At period end
|
85.3
|
91.9
|
99.9
|
100.0
|
100.0
|
100.0
|
|
Laurence Keen
Scheme
|
Unaudited
six months
to 30 June
2024
£m
|
Unaudited
six months
to 30 June
2023
£m
|
Audited
year to
31 December
2023
£m
|
Unaudited
six months
to 30 June
2024
%
|
Unaudited
six months
to 30 June
2023
%
|
Audited
year to
31 December
2023
%
|
|
Equity instruments
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Debt instruments -
United Kingdom corporate bonds
|
-
|
0.3
|
0.4
|
-
|
4.0
|
5.0
|
|
Self Sufficiency
Credit Funds
|
-
|
7.3
|
7.7
|
-
|
93.0
|
93.0
|
|
Cash
|
0.3
|
0.2
|
0.1
|
4.4
|
3.0
|
2.0
|
|
Annuities
|
6.5
|
-
|
-
|
95.6
|
-
|
-
|
|
At period end
|
6.8
|
7.8
|
8.2
|
100.0
|
100.0
|
100.0
|
18 SHARE CAPITAL, SHARE PREMIUM AND
MERGER RESERVE
The following movements in share capital, share
premium and the merger reserve occurred during the
period:
|
|
Number of voting
ordinary shares
|
Number of
non-voting
ordinary shares
|
Exercise price
pence
|
Share capital
£m
|
Share premium
£m
|
Merger reserve
£m
|
Total
£m
|
|
At 1 January 2023
|
63,394,837
|
-
|
|
3.2
|
310.0
|
77.0
|
390.1
|
|
Shares issued:
|
|
|
|
|
|
|
|
|
- to Share
Incentive Plan
|
38,544
|
-
|
1,574.0 - 2,160.0
|
-
|
0.8
|
-
|
0.8
|
|
- to Save
As You Earn scheme
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
- to
Employee Benefit Trust
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
At 30 June 2023
(unaudited)
|
63,433,381
|
-
|
-
|
3.2
|
310.8
|
77.0
|
390.9
|
|
Shares issued:
|
|
|
|
|
|
|
|
|
- in
relation to business combinations
|
27,056,463
|
17,481,868
|
1,635.9 - 1,722.0
|
2.2
|
-
|
747.4
|
749.6
|
|
- to Share
Incentive Plan
|
94,285
|
-
|
1,574.0 - 2,160.0
|
-
|
1.5
|
-
|
1.5
|
|
- to Save
As You Earn scheme
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
At 31 December 2023
(audited)
|
90,584,129
|
17,481,868
|
-
|
5.4
|
312.3
|
824.4
|
1,142.1
|
|
Shares issued:
|
|
|
|
|
|
|
|
|
- to Share
Incentive Plan
|
139,206
|
-
|
1,556.0 - 1,790.0
|
-
|
2.3
|
-
|
2.3
|
|
- to Save
As You Earn scheme
|
4,809
|
-
|
1,365.0
|
-
|
0.1
|
-
|
0.1
|
|
- to
Employee Benefit Trust
|
69,000
|
-
|
5.0
|
-
|
-
|
-
|
-
|
|
At 30 June 2024
(unaudited)
|
90,797,144
|
17,481,868
|
-
|
5.4
|
314.7
|
824.4
|
1,144.5
|
On 21 September 2023, the company issued to
Investec Bank plc 27,056,463 of ordinary shares at £17.22 per
share, and 17,481,868 of convertible non-voting ordinary shares at
£16.36 per share.
Share issue costs of £2.2 million were offset
against the merger reserve.
At 30 June 2024, the group held 4,612,655 own
shares (30 June 2023: 4,122,553; 31 December 2023:
4,443,517).
19 SHARE-BASED PAYMENTS
The group recognised total expenses of £14.8
million (30 June 2023: £10.7 million, 31 December 2023: £24.0
million) in relation to share-based payment transactions in the
period. This includes the staff costs in relation to the
acquisitions of Speirs & Jeffrey, Saunderson House and
IW&I, reported within acquisition-related costs (note
6).
20 FINANCIAL INSTRUMENTS
FAIR VALUE MEASUREMENT
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.
|
At 30 June 2024
(unaudited)
|
Level 1
£m
|
Level 2
£m
|
Level 3
£m
|
Total
£m
|
|
Financial assets
|
|
|
|
|
|
Fair value through profit or loss:
|
|
|
|
|
|
- equity
securities
|
-
|
-
|
-
|
-
|
|
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
At 30 June 2023
(unaudited)
|
Level 1
£m
|
Level 2
£m
|
Level 3
£m
|
Total
£m
|
|
Financial assets
|
|
|
|
|
|
Fair value through profit or loss:
|
|
|
|
|
|
- equity
securities
|
-
|
-
|
3.1
|
3.1
|
|
|
-
|
-
|
3.1
|
3.1
|
|
|
|
|
|
|
|
At 31 December 2023
(audited)
|
Level 1
£m
|
Level 2
£m
|
Level 3
£m
|
Total
£m
|
|
Financial assets
|
|
|
|
|
|
Fair value through profit or loss:
|
|
|
|
|
|
- equity
securities
|
-
|
-
|
1.2
|
1.2
|
|
|
-
|
-
|
1.2
|
1.2
|
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 values of the group's other financial
assets and liabilities not measured at fair value are not
materially different from their carrying values with the exception
of the
following:
- Debt
securities that are classified and measured at amortised cost
comprise bank and building society certificates of deposit, which
have fixed coupons, and treasury bills. The fair value of debt
securities at 30 June 2024 was £1,393.4 million (30 June 2023:
£1,234.2 million; 31 December 2023: £1,296.8 million) and the
carrying value was £1,392.9 million (30 June 2023: £1,233.8
million; 31 December 2023: £1,294.6 million). Fair value is based
on market bid prices and hence would be categorised as level 1
within the fair value hierarchy.
-
Subordinated loan notes (note 16) represent Tier 2 capital
for regulatory capital purposes. The fair value of the loan notes
at 30 June 2024 was £35.5 million (30 June 2023: £37.3 million; 31
December 2023: £37.4 million) and the carrying value was £39.9
million (30 June 2023: £39.9 million; 31 December 2023: £39.9
million). 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.
LEVEL 3 FINANCIAL INSTRUMENTS
Fair value through profit or loss
At 31 December 2023, the group held 517 shares
in Euroclear Holdings SA (which were valued at £1.2 million by
reference to the price secured from the sale of 1,292 of the
group's shares during 2023), which are classed as Level 3 in the
fair value hierarchy, since readily available observable market
data is not available.
During the six months to 30 June 2024, the
group sold its total remaining shares in Euroclear at the same
price used to value its shareholding at 31 December
2023.
Changes in the fair values of financial
instruments categorised as level 3 within the fair value hierarchy
were as follows:
|
|
Unaudited
Six months to
30 June 2024
£m
|
Unaudited
Six months to
30 June 2023
£m
|
Audited
Year to
31 December 2023
£m
|
|
At 1 January
|
1.2
|
3.2
|
3.1
|
|
Total unrealised gains/(losses) recognised in
profit
or loss
|
-
|
(0.1)
|
1.0
|
|
Total disposals
|
(1.2)
|
-
|
(2.9)
|
|
At end of period
|
-
|
3.1
|
1.2
|
EXPECTED CREDIT LOSS PROVISION
The expected credit loss provision is
recalculated on a quarterly basis and recognised in the statement
of financial position. The provision calculated is
immaterial.
21 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 and/or directors of client companies and
providing other services.
(b) Capital expenditure authorised and
contracted for at 30 June 2024 but not provided for in the
condensed consolidated interim financial statements amounted to
£14.2 million (30 June 2023: £0.5 million; 31 December 2023: £14.0
million).
(c) The contractual amounts of the group's
commitments to extend credit to its clients are as
follows:
|
|
Unaudited
30 June 2024
£m
|
Unaudited
30 June 2023
£m
|
Audited
31 December 2023
£m
|
|
Undrawn commitments to lend of one year or
less
|
14.5
|
15.9
|
11.8
|
|
Undrawn commitments to lend of more than one
year
|
0.6
|
5.6
|
3.6
|
|
|
15.1
|
21.5
|
15.4
|
(d) 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 may result in significant levies on the industry. 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.
22 CASH AND CASH EQUIVALENTS
For the purpose 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
30 June 2024
£m
|
Unaudited
30 June 2023
£m
|
Audited
31 December 2023
£m
|
|
Cash and balances at central banks
|
1,033.0
|
1,139.0
|
1,036.0
|
|
Loans and advances to banks
|
230.3
|
98.3
|
266.9
|
|
|
1,263.3
|
1,237.3
|
1,302.9
|
Cash flows arising from issue of ordinary
shares comprise:
|
|
Unaudited
Six months to
30 June 2024
£m
|
Unaudited
Six months to
30 June 2023
£m
|
Audited
Year to
31 December 2023
£m
|
|
Share capital issued (note 18)
|
-
|
-
|
2.2
|
|
Share premium on shares issued (note
18)
|
2.4
|
0.8
|
2.3
|
|
Merger reserve on shares issued (note
18)
|
-
|
-
|
747.4
|
|
Shares issued in relation to share-based
schemes for which no cash consideration was received
|
-
|
-
|
(751.9)
|
|
Proceeds from issue of share capital
|
2.4
|
0.8
|
-
|
|
Shares repurchased and placed into the employee
benefit trust
|
(8.9)
|
(6.7)
|
(16.0)
|
|
Net repurchase of ordinary shares
|
(6.5)
|
(5.9)
|
(16.0)
|
In 2023, £751.9 million of shares were issued
as consideration of the IW&I transaction. There was no cash
consideration received for this transaction.
During the current period, £8.9 million of
shares were repurchased and placed into the group employee benefit
trust (30 June 2022: £6.7 million; 31 December 2023: £16.0
million).
23 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 £0.1 million were paid in
the period (six months ended 30 June 2023: £0.2 million; year ended
31 December 2023: £0.3 million) in respect of ordinary shares held
by key management personnel.
At 30 June 2024, key management personnel and
their close family members had gross outstanding deposits of £2.2
million (30 June 2023: £2.0 million; 31 December 2023: £1.0
million). 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.
As a result of the IW&I transaction on 21
September 2023, Rathbones Group Plc is an associate of Investec
Bank plc. Investec Bank plc currently provide services to Rathbones
Group Plc under a Transitional Services Agreement (TSA), entered
into on acquisition of IW&I. In April 2024 an Outsourced
Service Agreement (OSA) was established.
As at 30 June 2024 there was a net payable
balance with Investec Bank plc of £16.9 million (30 June 2023:
£nil; 31 December 2023: £8.3 million). The balance outstanding as
at the reporting date is predominantly related to IW&I employee
salary costs and associated payroll taxes which are outsourced to
Investec Bank plc under the TSA.
The total expense recognised for TSA and OSA
services in the period are as follows:
|
|
Unaudited
Six months to
30 June 2024
£m
|
Unaudited
Six months to
30 June 2023
£m
|
Audited
Year to
31 December 2023
£m
|
|
Expense incurred under TSA
|
6.5
|
-
|
4.8
|
|
Expense incurred under OSA
|
4.5
|
-
|
-
|
|
|
11.0
|
-
|
4.8
|
IW&I partially sublets certain regional
office space to Investec Bank plc subsidiary companies and charges
Investec Bank plc for the use of research. Total fees receivable
under these arrangements at 30 June 2024 are as follows:
|
|
Unaudited
Six months to
30 June 2024
£m
|
Unaudited
Six months to
30 June 2023
£m
|
Audited
Year to
31 December 2023
£m
|
|
Research fees
|
0.3
|
-
|
0.3
|
|
Property fees
|
0.2
|
-
|
0.1
|
|
|
0.5
|
-
|
0.4
|
One group subsidiary, Rathbones Asset
Management Limited, has authority to manage the investments within
a number of unit trusts. During the first half of 2024, the group
managed 28 unit trusts, Sociétés d'Investissement à Capital
Variable (SICAVs) and open-ended investment companies (OEICs)
(together, 'collectives') (six months ended 30 June 2023: 26
collectives; year ended 31 December 2023: 28
collectives).
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
Six months to
30 June 2024
£m
|
Unaudited
Six months to
30 June 2023
£m
|
Audited
Year to
31 December 2023
£m
|
|
Total management fees
|
40.4
|
33.8
|
69.6
|
Total management fees are included within 'fee
and commission income' in the consolidated interim statement of
comprehensive income.
|
|
Unaudited
Six months to
30 June 2024
£m
|
Unaudited
Six months to
30 June 2023
£m
|
Audited
Year to
31 December 2023
£m
|
|
Management fees owed to the group
|
6.9
|
5.9
|
6.5
|
Management fees owed to the group are included
within 'accrued income' and holdings in unit trusts were classified
as 'fair value through profit or loss' in the consolidated interim
statement of financial position. The maximum exposure to loss is
limited to the carrying amount on the consolidated interim
statement of financial position 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.
24 EVENTS AFTER THE BALANCE SHEET
DATE
An interim dividend of 30.0p per share was
declared on 30 July 2024 (note 9).
There have been no other material events
occurring between the balance sheet date and 30 July
2024.
REGULATORY CAPITAL
As a banking group, Rathbones is required to
operate in accordance with the requirements relating to capital
resources and banking exposures prescribed by the Capital
Requirements Regulation, as applied in the UK by the Prudential
Regulation Authority (PRA).
The group is required to ensure it maintains
adequate capital resources to meet its combined Pillar 1, Pillar 2
requirements and buffer requirements.
The increase in own funds in the period of
£16.2 million was largely attributable to a reduction in intangible
assets (£22.5 million) and the pension asset (£6.6 million). This
was offset by a £9.8 million reduction in reserves, which resulted
from share-based awards vesting, and an increase of £5.5 million in
own shares held. This resulted in a capital surplus at 30 June 2024
of £145.6 million, up from £134.5 million at 31 December
2023.
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
30 June 2024
£m
|
Unaudited
30 June 2023
£m
|
Unaudited
31 December 2023
£m
|
|
Share capital and share premium
|
320.1
|
314.0
|
317.7
|
|
-
Reserves
|
1,078.3
|
337.3
|
1,088.1
|
|
Less:
|
|
|
|
|
- prudent
valuation of assets held at fair value
through profit or loss
|
-
|
-
|
-
|
|
- own
shares
|
(61.1)
|
(47.9)
|
(55.6)
|
|
-
intangible assets (net of deferred tax)
|
(889.3)
|
(318.6)
|
(911.8)
|
|
- pension
asset
|
(0.4)
|
(7.0)
|
(7.0)
|
|
Total Common Equity Tier 1 capital
|
447.6
|
277.8
|
431.4
|
|
Tier 2 capital
|
40.0
|
40.0
|
40.0
|
|
Total own funds
|
487.6
|
317.8
|
471.4
|
The group's own funds requirements
were as follows:
|
|
Unaudited
30 June 2024
£m
|
Unaudited
30 June 2023
£m
|
Unaudited
31 December 2023
£m
|
|
Own funds requirement for credit risk,
counterparty credit risk and settlement risk
|
75.6
|
60.1
|
72.3
|
|
Own funds requirement for market
risk
|
-
|
-
|
-
|
|
Own funds requirement for operational
risk
|
121.8
|
65.9
|
121.7
|
|
Pillar 1 own funds requirement
|
197.4
|
126.0
|
194.0
|
|
Pillar 2A own funds requirement
|
39.5
|
39.6
|
39.4
|
|
Total Pillar 1 and 2A own funds
requirement
|
236.9
|
165.6
|
233.4
|
|
CRD IV buffers:
|
|
|
|
|
- capital
conservation buffer (CCB)
|
61.7
|
39.4
|
60.6
|
|
-
countercyclical capital buffer (CCyB)
|
43.4
|
14.7
|
42.9
|
|
Total Pillar 1 and 2A own funds
requirement and CRD IV buffers
|
342.0
|
219.7
|
336.9
|
|
|
|
|
|
|
Total capital surplus
|
145.6
|
98.1
|
134.5
|
OWN FUNDS REQUIREMENTS
The group is required to hold capital to cover
a range of own funds requirements, classified as Pillar 1, Pillar 2
and buffers.
PILLAR 1 - OWN FUNDS REQUIREMENT
Pillar 1 determines a total risk exposure
amount (also known as 'risk-weighted assets') for the group, taking
into account expected losses in respect of the group's exposure to
credit, counterparty credit, market and operational risks, and sets
a minimum requirement for the amount of capital the group must
hold.
At 30 June 2024, the group's risk-weighted
assets were £2,467.4 million (30 June 2023: £1,575.7 million; 31
December 2023: £2,425.6 million).
PILLAR 2A - OWN FUNDS REQUIREMENT
The Pillar 2 requirement supplements the Pillar
1 minimum requirement with firm-specific Pillar 2A requirements and
a framework of regulatory capital buffers.
The Pillar 2A own funds requirement is set by
the PRA as part of its supervisory review process and the
calculation of it remains confidential to the PRA. The requirement
reflects those risks that are specific to the firm that are not
fully captured under the Pillar 1 own funds requirement. The
group-specific risks that are reflected in the Pillar 2A
requirement are set out below:
Pension obligation risk
The potential for additional unplanned capital
strain or 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. See note 17 for further detail on
the movement in the year to the net defined benefit pension asset
and the pension buy-in in the period.
Interest rate risk in the banking book
The group operates on a non-trading book basis,
whereby all assets held are with the intent of holding to maturity.
Assets are not actively traded in secondary markets for speculative
purposes. The resulting interest rate risk represents losses that
could arise for a 2% parallel shift in the Bank of England base
rate. The exposure would measure the time to reprice interest
bearing assets and liabilities.
Concentration risk
Greater potential exposure as a result of the
concentration of borrowers located in the UK than other overseas
jurisdictions.
The group is also required to maintain a number
of regulatory capital buffers, all of which must be met with CET1
capital.
Capital conservation buffer (CCB)
The CCB is a general buffer, designed to
provide for losses in the event of a stress, and is set by the PRA.
The CCB is set at 2.5% of the group's total risk exposure amount as
at 30 June 2024.
Countercyclical capital buffer (CCyB)
The CCyB is designed to act as an incentive for
banks to constrain credit growth in times of heightened systemic
risk. The value of the buffer is calculated as a percentage of the
group's total risk exposure amount. For UK credit risk exposures,
the percentage rate that applies is set by the Financial Policy
Committee ('FPC'). For other jurisdictions where the group has
exposures, the percentage rate applicable to each jurisdiction is
applied.
The percentage buffer rate for UK exposures is
currently 2.0%. The group has relevant credit exposures in other
jurisdictions where a different rate applies, resulting in a
weighted rate of 1.76% as at 30 June 2024.
ALTERNATIVE PERFORMANCE MEASURES
Alternative Performance Measures (APM) are
financial measures of historical or future financial performance,
financial position, or cash flow, other than a financial measure
under IFRS.
The following table provides a reconciliation
of underlying performance measures to the closest equivalent IFRS
measure;
|
|
Unaudited
30 June 2024
£m
|
Unaudited
30 June 2023
£m
|
Audited
31 December 2023
£m
|
|
Operating income
|
447.4
|
238.0
|
571.1
|
|
Underlying operating expenses
|
(335.3)
|
(187.2)
|
(444.0)
|
|
Underlying profit before
tax1
|
112.1
|
50.8
|
127.1
|
|
Charges in relation to client relationships and
goodwill
|
(22.0)
|
(9.5)
|
(25.2)
|
|
Acquisition-related costs
|
(24.8)
|
(15.3)
|
(44.3)
|
|
Profit before tax
|
65.3
|
26.0
|
57.6
|
|
Taxation
|
(19.8)
|
(6.3)
|
(20.1)
|
|
Profit after tax
|
45.5
|
19.7
|
37.5
|
|
Operating margin
|
14.6%
|
10.9%
|
10.1%
|
|
Underlying operating
margin2
|
25.1%
|
21.3%
|
22.3%
|
|
Weighted average number of shares in
issue
|
103.7m
|
58.5m
|
71.3m
|
|
Earnings per share (p)
|
43.9
|
33.6
|
52.6
|
|
Underlying earnings per share
(p)3
|
80.4
|
66.4
|
135.8
|
1. Operating income less underlying
operating expense
2. Underlying profit before tax as a percentage
of operating income
3. Underlying profit after tax divided by the
weighted average number of shares in issue
integration synergies (group ceo's
review)
Cost synergies arising in relation
to the integration of Rathbones and IW&I are quantified by
reference to the cost base for the 2022 financial year, being the
baseline for synergy measurement. Synergies are deemed to
have been delivered at the point the related action has been
implemented. The term 'run rate' refers to the annual cost
saving that will arise from the point of delivery
onwards.
Charges in relation to client relationship intangible
assets and goodwill (note 14)
As explained in notes 1.14 and 2.1 of the
annual report and accounts for the year ended 31 December 2023,
client relationship intangible assets are recognised when the group
acquires a business or investment management contracts as a result
of the recruitment of experienced investment managers who have the
capability to attract significant FUMA to the group.
These intangible assets are amortised over the
expected duration of the respective client relationships. The
amortisation is charged to the income statement each year. This
represents a significant non-cash profit and loss item which is
therefore excluded from underlying profit in order to present an
alternative measure that represents largely cash-based results of
the financial reporting period. Research analysts commonly exclude
these amortisation costs when comparing the performance of firms in
the wealth management industry.
Acquisition-related costs (note 6)
Acquisition and integration related costs are
significant non-recurring costs which arise from strategic
investments to grow the business rather than from the business'
operating activities and are therefore excluded from underlying
results.
These costs primarily comprise professional
fees directly related to the execution of the relevant transaction,
certain elements of deferred consideration which are conditional
upon continuing employment with the group and the costs of
integrating the acquired businesses with those of the existing
group.
Deferred consideration costs are generally
significant payments that form part of the total consideration
payable under the terms of the acquisition agreement and are
considered to be capital in nature, reflecting the cost to acquire
the business and the transfer of its ownership. However, in
accordance with IFRS 3, any deferred consideration that is payable
to former shareholders of the acquired business who are required to
remain in employment with the group must be treated as remuneration
and are therefore expensed to the income statement over the period
to which the employment condition applies.
During the six months ending 30 June 2024, £6.5
million of deferred consideration payments (30 June 2023: £2.2
million; 31 December 2023: £9.7 million) and £18.3 million of
integration costs (30 June 2023: £13.1 million; 31 December 2023:
£34.6 million) were charged to the income statement.
Taxation (note 8)
The corporation tax charge for the six months
ended 30 June 2024 was £19.8 million (30 June 2022: £6.3 million;
31 December 2023: £20.1 million) (see note 8). The effective tax
rate for the period ended 30 June 2024 is 30.3% (30 June 2023:
24.2%; 31 December 2023 34.9%). The effective tax rate reflects the
disallowable costs of the deferred consideration payments in
relation to the acquisitions of Speirs & Jeffrey, Saunderson
House and IW&I, as well as property related costs arising on
the lease assignment of 8 Finsbury Circus.
Basic earnings per share (note 10)
Basic earnings per share for the six months
ended 30 June 2024 were 43.9p (30 June 2023: 33.6p; 31 December
2023: 52.6p). The increase in the period reflects the growth in
profit as a result of the IW&I merger which has been partially
offset by the increased number of shares and the increase in the
statutory rate of tax.
On an underlying basis, basic earnings per
share were 80.4p at 30 June 2024, compared to 66.4p at 30 June 2023
(31 December 2023: 135.8p). The increase in the period is due to
increased underlying profit after tax which has been partially
offset by the increased number of shares and the increase in the
statutory rate of tax.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
IN RESPECT OF THE INTERIM STATEMENT
CONFIRMATIONS BY THE BOARD
We confirm to the best of our
knowledge:
- the
condensed set of financial statements has been prepared in
accordance with United Kingdom adopted International Accounting
Standard 34;
- the
interim management report includes a fair view of the information
required by:
(a) DTR
4.2.7R of the Disclosure Guidance 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
(b)
DTR 4.2.8R of the Disclosure Guidance 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 and liquidity 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 2024, and as at 30 June
2024, the group was primarily equity-financed, with a small amount
of gearing in the form of the Tier 2 debt.
The group's financial projections and the
capital adequacy and liquidity assessments provide comfort that the
group has adequate financial and regulatory resources to continue
in operational existence for the foreseeable future. Accordingly,
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
Paul Stockton
Group Chief Executive Officer
30 July 2024
INDEPENDENT REVIEW REPORT
TO
RATHBONES GROUP PLC
CONCLUSION
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 2024 which
comprises the consolidated interim statement of comprehensive
income, consolidated interim statement of changes in equity,
consolidated interim statement of financial position and
consolidated interim statement of cash flows and related notes 1 to
24.
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 2024 is not prepared, in all material
respects, in accordance with United Kingdom adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct
Authority.
BASIS FOR CONCLUSION
We conducted our review in accordance with
International Standard on Review Engagements (UK) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council for use in
the United Kingdom (ISRE (UK) 2410). A review of interim financial
information consists of making inquiries, 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 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.
As disclosed in note 1, the annual financial
statements of the group are prepared in accordance with United
Kingdom adopted international financial reporting standards. The
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with United
Kingdom adopted International Accounting Standard 34, "Interim
Financial Reporting".
CONCLUSION RELATING TO GOING CONCERN
Based on our review procedures, which are less
extensive than those performed in an audit as described in the
Basis for Conclusion section of this report, nothing has come to
our attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This Conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410; however
future events or conditions may cause the entity to cease to
continue as a going concern.
RESPONSIBILITIES OF THE DIRECTORS
The directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
In preparing the half-yearly financial report,
the directors are responsible for assessing the group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
company or to cease operations, or have no realistic alternative
but to do so.
AUDITOR'S RESPONSIBILITIES FOR THE REVIEW OF
THE FINANCIAL INFORMATION
In reviewing the half-yearly financial report,
we are responsible for expressing to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report. Our Conclusion, including our Conclusion Relating
to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion
paragraph of this report.
USE OF OUR REPORT
This report is made solely to the company in
accordance with ISRE (UK) 2410. Our work has been undertaken so
that we might state to the company those matters we are required to
state to it in an independent review 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
formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
30 July 2024