Rathbone Brothers Rathbone Brothers Plc - 3rd Quarter Results
October 17 2018 - 2:00AM
UK Regulatory
TIDMRAT
Third quarter funds under management increased to GBP47.3 billion
following completion of acquisition
Rathbone Brothers Plc ("Rathbones") announces a trading update for the
three months ended 30 September 2018.
Philip Howell, Chief Executive of Rathbone Brothers Plc, said:
"Our continuing growth and the acquisition of Speirs & Jeffrey on 31
August 2018 helped our total funds under management increase to GBP47.3
billion at 30 September 2018. This increase in scale places us in a
strong position to continue to improve our service to clients and,
mindful of recent volatility in investment markets, to maintain our
disciplined investment in the business."
Financial highlights:
-- On 31 August 2018 we completed the acquisition of Speirs & Jeffrey for an
initial consideration of GBP104 million. This consisted of GBP79 million
of cash ("initial cash consideration") and the issue of 1,006,522 new
ordinary Rathbones shares ("initial consideration shares") to Speirs &
Jeffrey shareholders. As previously announced, further contingent
consideration and earn-out payments may also be payable depending upon
the achievement of certain targets.
-- Total funds under management, including GBP6.7 billion from Speirs &
Jeffrey, were GBP47.3 billion at 30 September 2018; up 18.5% from GBP39.9
billion at 30 June 2018 or up 1.8% excluding the impact from the Speirs &
Jeffrey acquisition. This compared to a decrease of 1.7% in the FTSE 100
Index and an increase of 1.0% in the MSCI WMA Private Investor Balanced
Index in the three months ended 30 September 2018. Underlying net
operating income was GBP80.3 million for the three months ended 30
September 2018, up 13.9% from GBP70.5 million in the third quarter of
2017.
-- The net annualised growth in funds under management for Investment
Management, excluding the acquisition of Speirs & Jeffrey, in the three
month period was 2.8% (2017: 3.5%). Net organic growth in the third
quarter represents an annualised growth rate of 2.6% (2017: 2.6%)
contributing to a 2.3% net organic growth rate for the nine month period
to 30 September 2018 (2017: 2.9%).
-- Net operating income of GBP70.8 million in Investment Management for the
three months ended 30 September 2018 was 13.3% higher than the GBP62.5
million for the comparable period in 2017. The value of the FTSE 100
Index on the third quarter charging date was 7510 compared with 7373 a
year ago. The MSCI WMA Private Investor Balanced Index was 1612 and 1545
on the equivalent dates.
-- Funds under management in Unit Trusts at 30 September 2018 were GBP6.0
billion, up 3.4% from GBP5.8 billion at 30 June 2018. Net inflows for the
quarter were GBP121 million compared to GBP342 million a year ago,
reflecting a more difficult trading environment for asset management
generally. Net operating income of GBP9.5 million for the three months
ended 30 September 2018 was 18.8% higher than the GBP8.0 million for the
comparable period in 2017.
Net operating income
3 months ended 30 9 months ended 30
September September
2018 2017 Change 2018 2017 Change
GBPm GBPm % GBPm GBPm %
Investment Management
- Fees 51.9 47.7 8.8 150.3 140.2 7.2
- Commissions 9.8 8.2 19.5 30.8 30.1 2.3
- Net interest
income 4.0 2.9 37.9 10.9 8.5 28.2
- Fees from advisory
services(1) and
other income 5.1 3.7 37.8 14.1 11.2 25.9
70.8 62.5 13.3 206.1 190.0 8.5
Unit Trusts 9.5 8.0 18.8 27.4 22.9 19.7
Underlying net
operating income 80.3 70.5 13.9 233.5 212.9 9.7
Average FTSE 100
Index on principal
charging dates(2) 7510 7373 1.9 7449 7339 1.5
Average MSCI WMA
Balanced Index
on principal charging
dates(2) 1612 1545 4.3 1582 1538 2.9
1. Including income from trust, tax, pension advisory services and Vision
Independent Financial Planning.
2. The principal charging dates for Investment Management clients are 5
April, 30 June, 30 September and 31 December. Unit Trust income accrues
on daily levels of funds under management.
Funds under management
3 months ended 9 months ended
30 September 30 September
2018 2017 2018 2017
GBPm GBPm GBPm GBPm
(i) Investment Management
Opening FUM (1 July/1
January) 34,140 31,981 33,780 30,184
Inflows 7,508 809 9,262 2,542
Organic new business 800 742 2,493 2,311
Acquired new business 6,708 67 6,769 231
Outflows (582) (532) (1,922) (1,663)
Market adjustment 208 277 154 1,472
Closing FUM (30 September) 41,274 32,535 41,274 32,535
Underlying annualised
rate of net organic growth 2.6% 2.6% 2.3% 2.9%
Annualised rate of net
inflows(3) 2.8% 3.5% 2.6% 3.9%
(ii) Unit Trusts
Opening FUM (1 July/1
January) 5,776 4,634 5,367 4,051
Inflows 459 521 1,432 1,254
Outflows (338) (179) (1,012) (643)
Market adjustment 109 6 219 320
Closing FUM (30 September) 6,006 4,982 6,006 4,982
Total FUM (30 September)(4,
5) 47,280 37,517 47,280 37,517
Net fund inflows
Investment Management 6,926 277 7,340 879
Unit Trusts 121 342 420 611
Total 7,047 619 7,760 1,490
1. Annualised rate of net inflows excludes the GBP6.7 billion acquired in
relation to Speirs & Jeffrey.
2. Includes GBP2.3 billion (30 September 2017: GBP1.0 billion) of execution
only funds, Greenbank funds of GBP1.2 billion (30 September 2017: GBP1.0
billion) and funds managed with a charitable mandate of GBP5.7 billion
(30 September 2017: GBP4.5 billion).
3. Cash in client portfolios was GBP2.3 billion (2017 average: GBP2.3
billion). Loans and advances to customers were GBP131.1 million at 30
September 2018, up 6.7% on the GBP122.9 million at 30 June 2018.
The FTSE 100 Index closed at 7059 on 16 October 2018, a decrease of 6.0%
since 30 September 2018. Investment Management fee income in the fourth
quarter is dependent upon the value of funds under management at 31
December 2018.
Speirs and Jeffrey
The initial cash consideration of GBP79 million has been capitalised.
The initial consideration shares are contingent on the continued
employment of the recipients; therefore, the value of these will be
charged to profit or loss over the three years post completion to August
2021 in accordance with IFRS 3.
The additional contingent share consideration of 0.6 million new
Rathbones shares is also conditional on certain operational performance
targets and the continued employment of the recipient and therefore will
be charged to profit and loss over the period post completion until
performance conditions are met. The award is payable no earlier than six
months post completion. Any earn-out awards must satisfy the same
employment conditions as above and will be charged to profit and loss
over the period to December 2021.
17 October 2018
For further information contact:
Rathbone Brothers Plc
Tel: 020 7399 0000
Email: shelly.patel@rathbones.com
Philip Howell, Chief Executive
Paul Stockton, Group Finance Director/Managing Director, Rathbone
Investment Management
Shelly Patel, Head of Investor Relations
Camarco (Communications adviser to Rathbones)
Tel: 020 3757 4984
Email: ed.gascoigne-pees@camarco.co.uk
Ed Gascoigne-Pees
Hazel Stevenson
Rathbone Brothers Plc
Rathbone Brothers Plc ("Rathbones"), through its subsidiaries, is a
leading provider of high-quality, personalised investment and wealth
management services for private clients, charities and trustees. Our
services include discretionary investment management, unit trusts,
banking and loan services, financial planning, unitised portfolio
services, and UK trust, legal, estate and tax advice.
Rathbones has over 1,400 staff in 15 UK locations and Jersey; its
headquarters is 8 Finsbury Circus, London.
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rathbones.com
(END) Dow Jones Newswires
October 17, 2018 02:00 ET (06:00 GMT)
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