TIDMRAT
RNS Number : 1305C
Rathbone Brothers PLC
15 October 2020
Rathbone Brothers Plc
Third quarter interim management statement
Rathbone Brothers Plc ("Rathbones") announces a trading update
for the three months ended 30 September 2020.
Paul Stockton, Chief Executive, said:
"Funds under management and administration reached GBP50.5
billion at 30 September 2020, as growth and strong investment
performance more than offset the adverse effect of weaker financial
markets during the first nine months of the year.
Net operating income of GBP87.0 million in the third quarter was
strong (Q3 2019: GBP86.3 million), in light of persistently low
interest rates and year on year falls of 20.8% and 5.8% in the FTSE
100 and MSCI PIMFA Private Investor Balanced Indices respectively.
The performance of our Unit Trusts business continues to be very
strong, delivering an annualised rate of net organic growth of
19.6% in the third quarter.
Whilst the medium term impacts of the pandemic are likely to
weigh on investor sentiment for some time, we continue to convert
more client assets to our discretionary service, invest in
technology, and attract high quality investment professionals to
support our future growth. Our balance sheet remains robust,
placing us in a strong position to support the ongoing safety and
well-being of our colleagues and communities, identify inorganic
opportunities that fit our culture, and deliver long term value to
our clients and shareholders in a structurally growing UK wealth
management market."
Highlights:
- Total funds under management and administration ('FUMA')
increased 0.2% to GBP50.5 billion during the first nine months of
the year (31 December 2019: GBP50.4 billion).
- GBP41.8 billion in the Investment Management business (31 December 2019: GBP43.0 billion).
- GBP8.7 billion in Rathbone Unit Trust Management ('RUTM') (31
December 2019: GBP7.4 billion).
- Total net inflows across Investment Management and RUTM were
GBP0.3 billion in the third quarter (Q3 2019: GBP0.1 billion),
representing an annualised growth rate of 2.2% (Q3 2019: 1.3%).
- Gross organic inflows in Investment Management in the third
quarter were resilient at GBP0.6 billion, (Q3 2019: GBP0.8 billion)
in a challenging growth environment. Outflows were GBP0.8 billion
in the third quarter of 2020, compared to GBP0.9 billion in the
prior period. Outflows included GBP153 million of low margin
mandates and execution only business as well as a further part
withdrawal of a short term mandate (as previously reported).
- RUTM reported Q3 2020 net inflows of GBP0.4 billion (Q3 2019:
GBP0.3 billion), representing 19.6% (annualised) of opening funds
under management (Q3 2019: 19.0%, annualised), with particularly
strong net inflows into the Global Opportunities Fund, Ethical Bond
Fund and multi-asset funds.
- RUTM was named Best Fund Provider at the Investment, Life and
Pensions Moneyfacts Awards 2020 (as voted for by financial
advisers) and was also commended for Best Investment Service.
- According to the Pridham Report, which monitors fund sales and
asset trends in the UK, RUTM was ranked in 10th position for
overall net retail sales during the first and second quarters of
2020, maintaining its top 10 position for the last 5 quarters.
- Total net operating income was GBP87.0 million for the three
months ended 30 September 2020, an increase of 0.8% from the
GBP86.3 million for the three months ended 30 September 2019.
- Investment Management fees were up 1.4% compared to Q3 2019.
- Commission income of GBP11.8 million was 4.4% ahead of Q3
2019. Commissions in Q3 2020 were 39.5% lower than in Q2 2020,
reflecting a return to more normalised levels of client trading in
the third quarter after the market volatility in the first half
resulted in elevated trading volumes.
- Net interest income decreased to GBP2.2 million (Q3 2019:
GBP4.4 million), reflecting UK base rate reductions in place since
March 2020.
- Fees from advisory services and other income decreased by
10.0% to GBP4.5 million (Q3 2019: GBP5.0 million).
- Net operating income in RUTM totalled GBP11.7 million for the
three months ended 30 September 2020, a significant increase of
21.9% on the GBP9.6 million reported for the third quarter in
2019.
Net operating income:
3 months ended 30 September 9 months ended 30 September
2020 2019 Change 2020 2019 Change
GBPm GBPm % GBPm GBPm %
Investment Management
- Fees 56.8 56.0 1.4 163.2 166.6 (2.0)
- Commissions 11.8 11.3 4.4 49.2 39.0 26.2
- Net interest income 2.2 4.4 (50.0) 7.0 12.1 (42.1)
* Fees from advisory services(1) and other income 4.5 5.0 (10.0) 14.6 14.4 1.4
-------- --------- ------- --------- --------- -------
75.3 76.7 (1.8) 234.0 232.1 0.8
RUTM 11.7 9.6 21.9 32.0 27.0 18.5
-------- --------- ------- --------- --------- -------
Total net operating
income 87.0 86.3 0.8 266.0 259.1 2.7
-------- --------- ------- --------- --------- -------
Annualised basis point
return:
Investment Management(2) 66.4
bps 66.8 bps 73.1 bps 68.4 bps
RUTM(3) 54.7
bps 55.1 bps 54.5 bps 55.9 bps
FTSE 100 Index on principal
charging dates(4) 5866 7408 (20.8) 5817 7427 (21.7)
MSCI PIMFA Private
Investor Balanced Index
on principal charging
dates(4) 1568 1665 (5.8) 1510 1636 (7.7)
(1) Including income from trust and tax services, Rathbones
Financial Planning and Vision Independent Financial Planning.
(2) Net operating income excluding interest on own reserves,
interest payable on Tier 2 notes issued, fees from
advisory and other income, divided by the average funds under
management on the quarterly billing dates.
(3) Net annual management charges as a percentage of average
funds under management.
(4) 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. The
index levels for the 9 months ended 30 September represents the
average of the closing index levels at each of the principal
charging dates during the year.
Funds under management and administration ('FUMA'):
3 months ended 9 months ended 12 months
30 September 30 September ended 31
(i) Investment Management December
2020 2019 2020 2019 2019
GBPm GBPm GBPm GBPm GBPm
Opening FUM (1 July/1 January) 41,321 42,482 42,965 38,456 38,456
Inflows 639 789 3,000 2,690 3,510
-------------------------------- ------- ---------- -------- ----------- --------------
Organic new business 595 757 2,480 2,483 3,278
Acquired new business(5) 44 32 520 207 232
-------------------------------- ------- ---------- -------- ----------- --------------
Outflows (764) (953) (2,343) (2,714) (3,861)
Market effect and investment
performance 567 104 (1,859) 3,990 4,860
------- ---------- -------- ----------- --------------
Closing FUMA (30 September) 41,763 42,422 41,763 42,422 42,965
------- ---------- -------- ----------- --------------
Annualised rate of net organic
growth (1.6%) (1.8%) 0.4% (0.8%) (1.5%)
Total annualised net organic
and acquired growth (1.2%) (1.5%) 2.0% (0.1%) (0.9%)
(ii) RUTM
Opening FUM (1 July/1 January) 8,044 6,702 7,438 5,643 5,643
Inflows 867 661 2,550 1,655 2,298
Outflows (472) (342) (1,601) (1,007) (1,355)
Market effect and investment
performance 290 6 342 736 852
------- ---------- -------- ----------- --------------
Closing FUM (30 September) 8,729 7,027 8,729 7,027 7,438
------- ---------- -------- ----------- --------------
Annualised rate of net organic
growth 19.6% 19.0% 17.0% 15.3% 16.7%
Total FUMA (30 September) (6) 50,492 49,449 50,492 49,449 50,403
------- ---------- -------- ----------- --------------
Net flows
Investment Management (125) (164) 657 (24) (351)
RUTM 395 319 949 648 943
------- ---------- -------- ----------- --------------
Total 270 155 1,606 624 592
------- ---------- -------- ----------- --------------
Annualised rate of total net
growth 2.2% 1.3% 4.2% 1.9% 1.3%
(5) Acquired new business is defined as corporate or team
acquisitions, and new business from investment managers who are on
an earn-out arrangement.
(6) Includes Greenbank funds of GBP1.7 billion (31 December
2019: GBP1.6 billion) and funds managed with a charitable mandate
of GBP6.1 billion (31 December 2019: GBP6.1 billion).
Investment Management: Service level breakdown of FUMA
30 September 31 December 30 September Change Change
2020 2019 2019 9 months 12 months
GBPm GBPm GBPm % %
--------------------------------- ------------- ------------ ------------- ---------- -----------
Direct 30,812 31,013 30,311 (0.6) 1.7
Financial Adviser linked 8,730 8,735 8,567 (0.1) 1.9
--------------------------------- ------------- ------------ ------------- ---------- -----------
Total Discretionary 39,542 39,748 38,878 (0.5) 1.7
Non-Discretionary Investment
Management 1,805 2,550 2,721 (29.2) (33.7)
Execution Only 2,381 2,411 2,466 (1.2) (3.5)
--------------------------------- ------------- ------------ ------------- ---------- -----------
Gross Investment Management
FUMA 43,728 44,709 44,065 (2.2) (0.8)
--------------------------------- ------------- ------------ ------------- ---------- -----------
Discretionary wrapped funds(7) (1,965) (1,744) (1,643) (12.7) (19.6)
--------------------------------- ------------- ------------ ------------- ---------- -----------
Total Investment Management
FUMA 41,763 42,965 42,422 (2.8) (1.6)
--------------------------------- ------------- ------------ ------------- ---------- -----------
Proportion of non-discretionary
investment management to
total gross FUMA 4.1% 5.7% 6.2%
(7) Discretionary wrapped funds represent funds operated by
RUTM, managed by both Investment Management teams and RUTM fund
managers.
The FTSE 100 Index closed at 5935 on 14 October 2020, an
increase of 1.2% since 30 September 2020. Investment Management fee
income in the fourth quarter is dependent upon the value of funds
under management at 31 December 2020.
15 October 2020
For further information contact:
Rathbone Brothers Plc
Paul Stockton, Chief Executive
Jennifer Mathias, Group Finance Director
Dominic Lagan, Head of Investor Relations
Tel: 020 7399 0145
email: dominic.lagan@rathbones.com
Camarco
Ed Gascoigne-Pees
Julia Tilley
Tel: 020 3757 4984
email: ed.gascoigne-pees@camarco.co.uk
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 1,500 staff in 15 UK locations and Jersey;
its headquarters is 8 Finsbury Circus, London.
www. rathbones.com
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END
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