TIDMRAT
RNS Number : 1447Q
Rathbone Brothers PLC
17 October 2019
Rathbone Brothers Plc
Third quarter interim management statement and strategic
update
Rathbone Brothers Plc ("Rathbones") announces a trading update
for the three months ended 30 September 2019.
Paul Stockton, Chief Executive of Rathbone Brothers Plc,
said:
"Our funds under management and administration increased
marginally in the quarter to GBP49.4 billion. In difficult markets
we continue to focus on providing a quality service to our clients,
navigating through ongoing market uncertainty but also selectively
investing to pursue organic growth opportunities and develop our
business."
Financial highlights:
- Total funds under management and administration increased 4.4%
to GBP49.4 billion at 30 September 2019 (30 September 2018: GBP47.3
billion). The FTSE 100 Index on the third quarter charging date
decreased 1.4% from the equivalent date last year, whilst the MSCI
WMA Private Investor Balanced Index increased by 2.0%.
- GBP42.4 billion in the Investment Management business (30 September 2018: GBP41.3 billion)
- GBP7.0 billion in the Unit Trusts business (30 September 2018: GBP6.0 billion)
- Total net inflows were GBP0.1 billion in the third quarter
(2018: GBP7.0 billion, largely reflecting the acquisition of Speirs
& Jeffrey).
- Gross organic inflows in Investment Management in the quarter
remained resilient at GBP0.8 billion (2018: GBP0.8 billion) in a
difficult market for savings. Total net outflows in Investment
Management during the quarter were GBP0.2 billion (2018: net
inflows of GBP6.9 billion largely reflecting the acquisition of
Speirs & Jeffrey). This reflected ongoing weak investor
sentiment and investment manager departures. Both factors, together
with anticipated outflows from short term discretionary mandates,
are expected to continue to weigh on net growth in FUMA into
2020.
- Net inflows in Unit Trusts for the quarter remained strong at
GBP0.3 billion against a difficult environment for asset managers
(2018: GBP0.1 billion).
- Underlying operating income totalled GBP86.3 million for the
three months ended 30 September 2019, an increase of 7.5% from the
GBP80.3 million recorded in the third quarter of 2018.
- Income in Investment Management totalled GBP76.7 million in
the quarter, up 8.3% on the GBP70.8 million reported for the
comparable period in 2018. The average FTSE 100 Index was 7427 on
quarterly billing dates in 2019, broadly flat against the 7449
recorded in 2018.
- Income in Unit Trusts totalled GBP9.6 million for the three
months ended 30 September 2019, broadly flat on the GBP9.5 million
reported for the third quarter in 2018 and an increase of 8.9%
excluding managers' box dealing profits.
Strategic update
The executive management team will outline their vision for the
business at the strategic update this morning; a copy of the
presentation is available online at
https://www.rathbones.com/investor-relations and a recording of the
event will be uploaded to the website after the event.
Rathbones has built a leading market position based on a
powerful brand, high quality people, a strong operating platform
and a stable client base who value our relationship led services.
We intend to leverage the core strengths of our business by
investing over the next 2-3 years to enhance organic growth. During
this time, we believe it is appropriate to operate the business
closer to a mid-twenties underlying operating margin to enable us
to create long term growth opportunities, improve client services
and deliver productivity gains.
Net operating income
3 months ended 30 September 9 months ended 30 September
2019 2018 Change 2019 2018 Change
GBPm GBPm % GBPm GBPm %
Investment Management
- Fees 56.0 51.9 7.9 166.6 150.3 10.8
- Commissions 11.3 9.8 15.3 39.0 30.8 26.6
- Net interest income 4.4 4.0 10.0 12.1 10.9 11.0
* Fees from advisory services(1) and other income 5.0 5.1 (2.0) 14.4 14.1 2.1
------- -------- ---------- ------- ------- ----------
76.7 70.8 8.3 232.1 206.1 12.6
Unit Trusts 9.6 9.5 1.1 27.0 27.4 (1.5)
------- -------- ---------- ------- ------- ----------
Underlying net operating
income 86.3 80.3 7.5 259.1 233.5 11.0
------- -------- ---------- ------- ------- ----------
Average FTSE 100 Index
on principal charging
dates(2) 7408 7510 (1.4) 7427 7449 (0.3)
Average MSCI WMA Balanced
Index on principal
charging dates(2) 1645 1612 2.0 1629 1582 3.0
(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
2019 2018 2019 2018
GBPm GBPm GBPm GBPm
(i) Investment Management
Opening FUM (1 July/1 January) 42,482 34,140 38,456 33,780
Inflows 789 7,508 2,690 9,262
----------------------------------- ---------- -------- ----------- --------
Organic new business 757 800 2,483 2,493
Acquired new business 32 6,708 207 6,769
----------------------------------- ---------- -------- ----------- --------
Outflows (953) (582) (2,714) (1,922)
Market adjustment 104 208 3,990 154
---------- -------- ----------- --------
Closing FUM (30 September) 42,422 41,274 42,422 41,274
---------- -------- ----------- --------
Underlying annualised rate of
net organic growth (1.8%) 2.6% (0.8%) 2.3%
Annualised rate of net inflows(3) (1.5%) 2.8% (0.1%) 2.6%
(ii) Unit Trusts
Opening FUM (1 July/1 January) 6,702 5,776 5,643 5,367
Inflows 661 459 1,655 1,432
Outflows (342) (338) (1,007) (1,012)
Market adjustment 6 109 736 219
---------- -------- ----------- --------
Closing FUM (30 September) 7,027 6,006 7,027 6,006
---------- -------- ----------- --------
Total FUM (30 September) (4) 49,449 47,280 49,449 47,280
---------- -------- ----------- --------
Net fund inflows
Investment Management (164) 6,926 (24) 7,340
Unit Trusts 319 121 648 420
---------- -------- ----------- --------
Total 155 7,047 624 7,760
---------- -------- ----------- --------
(3) Annualised rate of net inflows in 2018 excludes the GBP6.7
billion acquired in relation to Speirs & Jeffrey.
(4) Includes GBP2.5 billion (30 September 2018: GBP2.3 billion)
of execution only funds, Greenbank funds of GBP1.5 billion (30
September 2018: GBP1.2 billion) and funds managed with a charitable
mandate of GBP6.0 billion (30 September 2018: GBP5.7 billion).
(iii) Investment Management; Service level breakdown
30 September 31 December 30 September Change Change
2019 2018 2018 9 months 12 months
GBPm GBPm GBPm % %
-------------------------------- ------------- ------------ ------------- ---------- -----------
Direct 30,311 26,642 28,207 13.8 7.5
Financial Adviser linked(5) 8,567 7,515 8,095 14.0 5.8
-------------------------------- ------------- ------------ ------------- ---------- -----------
Total Discretionary 38,878 34,157 36,302 13.8 7.1
Non-Discretionary Investment
Management 2,721 3,332 3,889 (18.3) (30.0)
Execution Only 2,466 2,158 2,304 14.3 7.0
-------------------------------- ------------- ------------ ------------- ---------- -----------
Gross Investment Management
FUMA 44,065 39,647 42,495 11.1 3.7
-------------------------------- ------------- ------------ ------------- ---------- -----------
Discretionary wrapped funds(6) (1,643) (1,191) (1,221) 38.0 34.6
-------------------------------- ------------- ------------ ------------- ---------- -----------
Total Investment Management
FUMA 42,422 38,456 41,274 10.3 2.8
-------------------------------- ------------- ------------ ------------- ---------- -----------
(5) Of the GBP7.8 billion of financial adviser linked business
that we reported in the 2018 report and accounts, GBP7.5 billion is
included in Discretionary and GBP0.3 billion in Execution Only.
(6) Discretionary wrapped funds represent funds operated by Unit
Trusts, managed by both Investment Management teams and Unit Trusts
fund managers.
The FTSE 100 Index closed at 7,168 on 16 October 2019, a
decrease of 3.2% since 30 September 2019. Investment Management fee
income in the fourth quarter is dependent upon the value of funds
under management at 31 December 2019.
17 October 2019
For further information contact:
Rathbone Brothers Plc
Tel: 020 7399 0000
Email: shelly.patel@rathbones.com
Paul Stockton, Chief Executive
Jennifer Mathias, Group Finance Director
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
Rathbones provides individual 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
responsibly has been with us from the beginning and continues to
lead us forward. Our ambition is to be recognised as the UK's most
responsible wealth manager.
Rathbones has over 1,400 staff in 15 UK locations and Jersey;
its headquarters is 8 Finsbury Circus, London.
rathbones.com
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END
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