Rathbones Group
Plc
first quarter trading
update
Rathbones
Group Plc ("Rathbones" or the "Group") announces a trading update
for the three months ended 31 March 2024
Paul Stockton, Group Chief Executive
Officer of Rathbones, said:
"Rathbones has made a positive start
to 2024, with operating income 13.6% higher than the first quarter
of 2023 on a like-for-like basis, and 89.8% higher incorporating
Investec Wealth & Investment ("IW&I"). Total funds under
management and administration ("FUMA") increased by 2.1% in the
quarter (Q1 2023: 1.1%) to £107.6 billion. Despite outflows
remaining elevated overall, Rathbones Investment Management ("RIM")
continued to deliver strong gross inflows in discretionary &
managed services, achieving an annualised net organic growth rate
of 2.8% (Q1 2023: 2.6%).
"The integration of IW&I is
progressing well with run-rate synergies now £10.6 million, up from
the £8.0 million reported at 31 December 2023. Work to combine the
Group's offices in locations where both Rathbones and IW&I have
offices is also progressing well, with Birmingham, Cheltenham,
Exeter, and Glasgow colleagues already working in combined premises
and others, including our London head office, to follow during this
year. We also remain on track to launch our digital Client
Lifecycle Management system in June this year.
"While economic uncertainty and
headwinds remain in the UK and abroad, Rathbones is well-equipped
to navigate challenging market conditions. We remain confident in
our integration and synergy targets and are well-positioned to take
advantage of the future benefits of the Group's scale."
Financial highlights:
- Total FUMA
reached £107.6 billion at the end of the first quarter (31 December
2023: £105.3 billion) comprising:
- £49.2 billion in RIM (31 December 2023: £48.0
billion).
- £42.4 billion in IW&I (31 December 2023: £42.2 billion).
- £1.0 billion remaining in Saunderson House (31 December 2023:
£1.3 billion) after FUMA of £0.4 billion were migrated into
Rathbones propositions in the quarter. We have received client
agreement to migrate a further £284 million of FUMA which is
currently presented as Saunderson House FUMA pending completion of
the migration process.
- £15.0 billion in Rathbones Asset Management ("RAM") (31
December 2023: £13.8 billion).
- Market and
investment performance added £2.8 billion to Group FUMA in the
quarter.
- Total net
flows in wealth management were negative in the quarter as positive
inflows in Rathbones were offset by outflows in
IW&I:
- Rathbones discretionary and managed net inflows for the
quarter totalled £0.4 billion (Q1 2023: £0.4 billion).
- Net outflows in IW&I were £0.6 billion, with the impact of
previously disclosed investment manager departures in line with the
prior quarter. Total outflows were also impacted by the withdrawal
of funds from low margin mandates in the period, equating to c.£0.2
billion. Post-combination investment manager turnover continues to
be low in both entities.
- Net
inflows into our multi-asset fund range totalled £0.1 billion in
the quarter. Net outflows in RAM single strategy funds of £0.2
billion were resilient against the wider asset management industry
backdrop.
- Underlying
net operating income totalled £223.6 million for the three months
ended 31 March 2024 (31 March 2023: £117.8 million), representing
growth of 13.6% relative to 2023, excluding the contribution of
£89.8 million from IW&I during the period.
- We
continue to expect underlying operating margin for full year 2024
to be mid-20% and to incur non-underlying costs in line with those
stated at the year-end.
- The final
dividend for the year ended 31 December 2023 of 24 pence per share
will be paid on 14 May 2024, subject to shareholder approval at the
Annual General Meeting on 9 May 2024.
Operational highlights:
- In March
2024, we confirmed a new tenant for our London office, 8 Finsbury
Circus. Rathbones' London-based employees will move to 30 Gresham
Street later this year where they will work alongside their
IW&I colleagues. The assignment of the lease is a key milestone
in the integration process and has been achieved ahead of
plan.
- In April
2024, 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.
The arrangement involved a total cash contribution of
£3.7 million by the Group to effect the insurance contract
purchases, and a write-down of scheme assets by £10.1 million,
both taken through reserves.
The Buy-In of members' benefits
removes the future obligation on the Group to fund these benefits
and substantially de-risks the Group's balance sheet. We expect the
associated capital benefit to be reported by the end of this
financial year, subject to regulatory approval.
Additional disclosures:
- The
transaction to combine with IW&I, which resulted in Investec
Plc ("Investec") holding an economic interest of 41.25% of
Rathbones' issued share capital currently necessitates that
Investec reports its share of Rathbones' profit, as an associated
undertaking, in its results which will be announced later this
month. To support this reporting requirement, Rathbones announces
the following unaudited results for the three months ended 31 March
2024:
- Underlying profit before tax of £59.3 million, representing an
underlying margin of 26.5% for the quarter, reflecting the effects
of seasonality in the first quarter, and the timing of FSCS levy
costs (which are recognised in full on 1 April each
year).
- Statutory profit before tax of £39.1 million, reflecting
non-underlying costs of £20.2 million, comprising £10.7 million in
relation to the amortisation of intangible assets and £9.5 million
in relation to integration and acquisition costs.
- Statutory profit after tax of £27.4 million.
AGM and Interim results
dates:
Annual General Meeting
The Annual General Meeting ("AGM")
will be held today, 9 May, at 11:00am at our London head office at
8 Finsbury Circus, London EC2M 7AZ. This year, the board has made
arrangements to enable members to attend and participate in the
meeting electronically should they wish to do so. Instructions on
how to attend and participate electronically are set out in the
Notice of AGM.
Interim results
The interim results for the six
months to 30 June 2024 will be announced on 31 July
2024.
detailed financial
information
Net operating income
|
3 months
ended 31 March
|
|
2024
Group
|
2024
IW&I
|
2024
Rathbones
|
2023
Rathbones
|
Change
|
Investment Management
|
(£m)
|
(£m)
|
(£m)
|
(£m)
|
(%)
|
- Fees
|
141.2
|
67.3
|
73.9
|
69.5
|
6.3
|
- Commissions
|
25.0
|
10.6
|
14.4
|
12.5
|
15.2
|
- Net interest income
|
15.9
|
1.8
|
14.1
|
8.6
|
64.0
|
- Fees from advisory services &
other income1
|
21.9
|
10.1
|
11.8
|
11.2
|
5.4
|
|
204.0
|
89.8
|
114.2
|
101.8
|
12.2
|
Rathbones Asset Management
|
19.6
|
-
|
19.6
|
16.0
|
22.5
|
Net
operating income
|
223.6
|
89.8
|
133.8
|
117.8
|
13.6
|
|
|
|
|
|
|
MSCI PIMFA Private Investor Balanced
Index on principal charging dates2
|
|
1,815
|
1,853
|
1,698
|
9.1
|
1. Including
income from trust, tax, financial planning services, Vision
Independent Financial Planning, Saunderson House and interest on
client money deposits of £6.9 million (mainly recognised in
IW&I).
2. The principal
charging dates for Rathbones Investment Management clients are 5
April, 30 June, 30 September and 31 December. Rathbones Asset
Management income accrues on daily levels of funds under
management. The principal charging dates for IW&I are 29
February, 31 May, 31 August and 30 November. Until the IW&I
business is fully integrated in the first quarter of 2025, its
existing quarterly billing date schedule will be maintained.
IW&I FUMA at 29 February were £41.9 billion.
Funds under management and
administration
(i) Breakdown of FUMA and flows by service
level
Quarter ended 5 April
20242
|
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
|
48,763
|
1,276
|
(1,033)
|
243
|
19
|
439
|
959
|
50,423
|
2.0
|
Bespoke portfolios
|
45,008
|
1,127
|
(958)
|
169
|
(141)
|
174
|
889
|
46,099
|
1.5
|
Managed via in-house
funds
|
3,755
|
149
|
(75)
|
74
|
160
|
265
|
70
|
4,324
|
7.9
|
Multi-asset
funds5
|
2,545
|
322
|
(211)
|
111
|
84
|
-
|
186
|
2,926
|
17.4
|
Rathbones discretionary & managed
|
51,308
|
1,598
|
(1,244)
|
354
|
103
|
439
|
1,145
|
53,349
|
2.8
|
Non-discretionary service
|
752
|
5
|
(13)
|
(8)
|
(8)
|
-
|
(7)
|
729
|
(4.3)
|
Investec W&I
|
42,267
|
855
|
(1,434)
|
(579)
|
(183)
|
-
|
1,166
|
42,671
|
(5.5)
|
Saunderson
House6
|
1,590
|
17
|
(58)
|
(41)
|
-
|
(440)
|
10
|
1,119
|
(10.3)
|
Total wealth management
|
95,917
|
2,475
|
(2,749)
|
(274)
|
(88)
|
(1)
|
2,314
|
97,868
|
(1.1)
|
Single-strategy funds
|
6,677
|
393
|
(572)
|
(179)
|
-
|
-
|
406
|
6,904
|
(10.7)
|
Execution only
|
2,746
|
86
|
(194)
|
(108)
|
88
|
1
|
95
|
2,822
|
(15.7)
|
Total group
|
105,340
|
2,954
|
(3,515)
|
(561)
|
-
|
-
|
2,815
|
107,594
|
(2.1)
|
(ii) Breakdown of Investment Management FUMA and
flows by channel
Quarter ended 5 April
20242
|
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
(%)
|
Total direct
|
34,416
|
807
|
(760)
|
47
|
(50)
|
-
|
714
|
35,127
|
0.5
|
Total financial adviser
linked
|
14,347
|
469
|
(273)
|
196
|
69
|
439
|
245
|
15,296
|
5.5
|
Total discretionary service
|
48,763
|
1,276
|
(1,033)
|
243
|
19
|
439
|
959
|
50,423
|
2.0
|
Execution only
|
2,746
|
86
|
(194)
|
(108)
|
88
|
1
|
95
|
2,822
|
(15.7)
|
Non-discretionary service
|
752
|
5
|
(13)
|
(8)
|
(8)
|
-
|
(7)
|
729
|
(4.3)
|
Total Investment Management
|
52,261
|
1,367
|
(1,240)
|
127
|
99
|
440
|
1,047
|
53,974
|
1.0
|
Investec W&I
|
42,267
|
855
|
(1,434)
|
(579)
|
(183)
|
-
|
1,166
|
42,671
|
(5.5)
|
Total Investment Management for enlarged
group
|
94,528
|
2,222
|
(2,674)
|
(452)
|
(84)
|
440
|
2,213
|
96,645
|
(1.9)
|
(iii) Total Group FUMA
Quarter ended 5 April
20242
|
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
|
1,367
|
(1,240)
|
127
|
99
|
440
|
1,047
|
53,974
|
1.0
|
Rathbones Asset Management
|
13,770
|
1,285
|
(1,033)
|
252
|
84
|
-
|
870
|
14,976
|
7.3
|
Investec W&I
|
42,267
|
855
|
(1,434)
|
(579)
|
(183)
|
-
|
1,166
|
42,671
|
(5.5)
|
Saunderson
House6
|
1,590
|
17
|
(58)
|
(41)
|
-
|
(440)
|
10
|
1,119
|
(10.3)
|
Total
|
109,888
|
3,524
|
(3,765)
|
(241)
|
-
|
-
|
3,093
|
112,740
|
(0.9)
|
Group
eliminations7
|
(4,548)
|
(570)
|
250
|
(320)
|
-
|
-
|
(278)
|
(5,146)
|
28.1
|
Total
|
105,340
|
2,954
|
(3,515)
|
(561)
|
-
|
-
|
2,815
|
107,594
|
(2.1)
|
|
|
|
|
|
|
|
|
|
|
3. Transfers
represent client FUMA which has transferred from one service to
another and other intra-group movements. These are excluded from
net inflows.
4. Annualised net
growth in flows calculated as net flows/opening FUMA.
5. Net inflows
into multi-asset funds include direct flows and flows into managed
solutions via in-house funds.
6. Total funds
under advice by Saunderson House, including those clients
transferred to fellow group companies totalled £4.3 billion at 31
March 2024 (31 March 2023: £4.2 billion).
7. Group
eliminations represent RAM funds which are held within portfolios
managed by RIM (£4.8 billion), 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 £49.2 billion
in RIM, £42.4 billion within IW&I and £1.0 billion within
Saunderson House.
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
8 Finsbury Circus, London, EC2M 7AZ.
www.rathbones.com