TIDMRAT
RNS Number : 9697T
Rathbones Group PLC
28 July 2022
Rathbones Group Plc
Interim results
Rathbones Group Plc ("Rathbones") announces interim results for
the six months ended 30 June 2022.
Paul Stockton, Group Chief Executive of Rathbones, said:
"The first half of 2022 has been a turbulent one for investors
but despite this volatility, net inflows remained positive in the
period. Our net operating income totalled GBP231.9 million to 30
June 2022, an increase of 8.6% from the GBP213.5 million last year,
reflecting continued net organic and acquired growth in funds under
management and stronger advisory revenues.
Rathbones remains focused on delivering the strategic plans we
set out at our full-year results. Investment in our digital and
data capabilities remains critical to our future success which,
supported by high client retention and a robust balance sheet,
places Rathbones in a strong position to navigate short-term market
fluctuations and take advantage of future growth opportunities in
the sector."
Financial highlights:
- Total funds under management and administration were GBP58.9
billion at 30 June 2022 (30 June 2021: GBP59.2 billion, 31 December
2021: GBP68.2 billion). The MSCI PIMFA Private Investor Balanced
index fell 10.0% in the six-month period to 30 June 2022.
- GBP43.8 billion in the Investment Management business (30 June 2021: GBP47.8 billion).
- GBP10.9 billion in the Rathbone Funds business (30 June 2021: GBP11.4 billion).
- GBP4.2 billion in Saunderson House (30 June 2021: n/a).
- Despite a difficult market backdrop, net inflows in the first
half were positive. Total discretionary and managed net inflows
were GBP0.6 billion (H1 2021: GBP1.0 billion) in the period to 30
June 2022, representing an annualised growth rate of 2.3% (H1 2021:
4.5%).
- Discretionary service net inflows totalled GBP0.4 billion (H1 2021: GBP0.7 billion).
- Net inflows into our multi-asset fund range (a central part of
our managed offering to the adviser market) were resilient,
totalling GBP0.2 billion and equating to annualised net growth for
the period of 22.3% (H1 2021: GBP0.3 billion).
- Data published by the Investment Association highlights that
recent market volatility and macroeconomic headwinds have driven
significant outflows across the asset management industry. Against
that backdrop, single-strategy funds outflows of GBP0.2bn in our
funds business were relatively resilient, faring well against
peers.
- Underlying n et operating income totalled GBP231.9 million to
30 June 2022, an increase of 8.6% from the GBP213.5 million in the
corresponding period last year.
- Income in Investment Management totalled GBP200.1 million in
the first six months of 2022, an increase of 8.3% on the prior
period (30 June 2021: GBP184.8 million).
- Income in our funds business totalled GBP31.8 million in the
six months ended 30 June 2022, an increase of 10.8% on the GBP28.7
million reported in the first half of 2021.
- Underlying profit before tax totalled GBP50.0 million in the
first six months of 2022 (30 June 2021: GBP62.9 million) and
reported profit before tax for the six months to 30 June 2022
totalled GBP32.6 million (30 June 2021: GBP48.8 million). Both
reported and underlying profit are net of planned expenditure of
c.GBP8m to further our digital and data capabilities in the first
half.
Declaration of interim dividend:
- In line with our progressive dividend policy, we have
increased our interim dividend 3.7% to 28p (30 June 2021: 27p). The
record date will be 2 September 2022 and the dividend will be paid
on 4 October 2022.
Board changes
- Colin Clark, Senior Independent Director and Non-executive
Director has decided to step down from the board, effective
immediately, in order to take on other responsibilities. Colin
joined the board in 2018 and has helped oversee the appointment of
both a new CEO and Chair over that period. His extensive industry
knowledge and experience has been much valued. Sarah Gentleman, the
current Chair of the Remuneration Committee, will assume the role
of Senior Independent Director subject to regulatory approval.
Funds under management and administration
(i) Breakdown of FUMA and flows by service level
Service
Opening Level Market Closing Ann Net
6 months ended 30 FUM Inflows Outflows Net Flows Transfers Movement FUM Growth
June 2022 (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (%)
------------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Discretionary service
Bespoke portfolios 47,986 1,563 (1,262) 301 (161) (6,381) 41,745 1.3%
Managed via in-house
funds 1,264 120 (45) 75 49 (144) 1,244 11.9%
------------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Multi-asset funds 1,991 428 (206) 222 (282) 1,931 22.3%
------------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Total discretionary
& managed 51,240 2,111 (1,513) 598 (111) (6,807) 44,920 2.3%
------------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Non-discretionary
service 1,026 10 (37) (27) (50) (117) 832 -5.3%
------------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Total wealth management 52,267 2,121 (1,551) 571 (161) (6,925) 45,752 2.2%
------------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Single-strategy funds 8,316 988 (1,188) (201) (1,596) 6,519 -4.8%
Execution only & banking 2,659 118 (231) (113) 161 (275) 2,432 -8.5%
Total group (pre acquisitions) 63,242 3,227 (2,971) 257 - (8,796) 54,703 0.8%
------------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Saunderson House 4,917 296 (346) (50) (623) 4,243 -2.0%
------------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Total group 68,159 3,523 (3,317) 207 (9,420) 58,946 0.6%
------------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Service
Opening Level Market Closing Ann Net
FUM Inflows Outflows Net Flows Transfers Movement FUM Growth
Q2 ended 30 June 2022 (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (%)
------------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Discretionary service
Bespoke portfolios 45,619 655 (525) 130 (82) (3,922) 41,745 1.1%
Managed via in-house
funds 1,292 47 (23) 23 30 (101) 1,244 7.2%
------------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Multi-asset funds 1,992 200 (79) 121 - (182) 1,931 24.2%
------------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Total discretionary
& managed 48,903 902 (628) 274 (52) (4,205) 44,920 2.2%
------------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Non-discretionary
service 948 4 (17) (13) (19) (83) 832 -5.6%
------------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Total wealth management 49,851 906 (645) 261 (71) (4,288) 45,752 2.1%
------------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Single-strategy funds 7,571 416 (553) (136) - (916) 6,519 -7.2%
Execution only & banking 2,631 75 (121) (45) 71 (225) 2,432 -6.9%
Total group (pre acquisitions) 60,053 1,397 (1,318) 79 - (5,430) 54,703 0.5%
------------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Saunderson House 4,675 154 (178) (25) (407) 4,243 -2.1%
------------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Total group 64,728 1,551 (1,496) 54 (5,837) 58,946 0.3%
------------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
(ii) Breakdown of Rathbone Investment Management FUMA and flows
by channel
Service
Opening Level Market Closing Ann Net
6 months ended 30 FUM Inflows Outflows Net Flows Transfers Movement FUM Growth
June 2022 (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (%)
---------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Total direct 37,800 1,097 (1,005) 92 (104) (4,975) 32,814 0.5%
Total financial adviser
linked 11,449 586 (302) 284 (8) (1,550) 10,175 5.0%
---------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Total discretionary
service 49,249 1,683 (1,307) 376 (111) (6,525) 42,989 1.5%
Non-discretionary
service 2,659 118 (231) (113) 161 (275) 2,432 -8.5%
Execution only & banking 1,026 10 (37) (27) (50) (117) 832 -5.3%
---------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Total Investment Management 52,935 1,811 (1,576) 236 0 (6,917) 46,253 0.9%
---------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Service
Opening Level Market Closing Ann Net
FUM Inflows Outflows Net Flows Transfers Movement FUM Growth
Q2 ended 30 June 2022 (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (%)
---------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Total direct 35,944 456 (428) 28 (82) (3,077) 32,814 0.3%
Total financial adviser
linked 10,967 246 (121) 125 29 (946) 10,175 4.6%
---------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Total discretionary
service 46,911 702 (548) 153 (52) (4,023) 42,989 1.3%
Non-discretionary
service 2,631 75 (121) (45) 71 (225) 2,432 -6.9%
Execution only & banking 948 4 (17) (13) (19) (83) 832 -5.6%
---------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
Total Investment Management 50,490 781 (686) 94 0 (4,332) 46,253 0.7%
---------------------------- ------- ------- -------- --------- ---------- --------- ------- -------
(iii) Total Group FUMA
At 30 June At 5 April
----------------------------------------- ------------------------ ---------------
2022 2021 Change 2022 Change
-----------------------------------------
GBPm GBPm % GBPm %
----------------------------------------- ------- ------- ------ ------- ------
Rathbone Investment Management Gross
FUMA 46,253 50,264 (8.0) 50,490 (8.4)
Of which: discretionary wrapped funds(1) (2,439) (2,466) (1.1) (2,593) (5.9)
43,814 47,798 (8.3) 47,897 (8.5)
Rathbone Funds 10,888 11,386 (4.3) 12,156 (10.4)
Saunderson House 4,243 - 100.0 4,675 (9.2)
----------------------------------------- ------- ------- ------ ------- ------
Total Group FUMA 58,946 59,184 (0.4) 64,728 (8.9)
----------------------------------------- ------- ------- ------ ------- ------
1. Discretionary wrapped funds represent funds operated by
Rathbone Funds, managed by both Rathbone Investment Management
teams and Rathbone Funds managers
Interim results presentation
A presentation detailing the 2022 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 10:30am at our offices at 8 Finsbury Circus, London,
EC2M 7AZ. Participants who wish to join the presentation virtually
can do so by either joining the video webcast
(https://www.investis-live.com/rathbone-brothers/62cc2411d943801400779aa7/rathw
) or by dialling in using the conference call details below:
United Kingdom: 0800 640 6441
United Kingdom (Local) : 020 3936 2999
All other locations : +44 203 936 2999
Participant access code: 581500
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.
28 July 2022
For further information contact:
Rathbones Group Plc
Tel: 020 7399 0000
Email: shelly.patel@rathbones.com
Paul Stockton, Group Chief Executive
Jennifer Mathias, Group Chief Financial Officer
Shelly Patel, Head of Investor Relations
Camarco
Tel: 020 3757 4984
Email: ed.gascoigne-pees@camarco.co.uk
Ed Gascoigne-Pees
Julia Tilley
Rathbones Group 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 1,900 staff in 15 UK locations and Jersey;
its headquarters is 8 Finsbury Circus, London, EC2M 7AZ.
www.rathbones.com
Chair and CEO statement
Market overview and client interaction
The first half of 2022 was not the easiest in terms of making
investment decisions. Investors have been confronted by high
inflation, rising interest rates and the conflict in Ukraine, all
of which contributed to a weaker outlook for global economic growth
and corporate earnings. General market sentiment remains nervous
about the potential for recession in many economies.
It is at times like these that our business responds by
repositioning portfolios to explore buying opportunities and
through providing reassurance and advice to our clients. Many
clients are thinking hard about their asset allocation, fund
choices and portfolios. Our teams have spent much time in the first
half of 2022 talking through market movements and continuing to
help them plan their futures.
Market corrections are painful, but we believe that the wealth
and asset management industry continues to be attractive for the
long term.
Performance, FUMA and financial review
Total funds under management and administration for the group
were GBP58.9 billion at 30 June 2022 (H1 2021: GBP59.2 billion, FY
2021: GBP68.2 billion). This comprised GBP43.8 billion in the
Investment Management business (H1 2021: GBP47.8 billion, FY 2021:
GBP50.3 billion), GBP10.9 billion in the Rathbone Funds business
(H1 2021: GBP11.4 billion, FY 2021: GBP13.0 billion) and GBP4.2
billion in Saunderson House (H1 2021: GBPnil, FY 2021: GBP4.9
billion). The MSCI PIMFA Private Investor Balanced index fell 10.0%
in the six-month period to 30 June 2022.
Investment performance has been impacted in the first half as
markets moved very quickly to adjust to a riskier environment.
While the moves have been dramatic, they have not been even across
geographies, sectors or themes. Markets driven by macro themes and
styles are never an easy environment to navigate for long-term
investors. The winners of the last few years have generally
suffered this year, performing poorly compared to sectors such as
energy. The latter was up over 60% at one stage, before falling
back significantly. More generally, 'growth' as an investment style
has underperformed 'value' this year, and 'quality' as an
investment style has also significantly underperformed. Like many
in the industry, this has reduced our levels of funds under
management.
Despite the current market, net inflows in the period have been
positive. Discretionary service net inflows totalled GBP0.4 billion
in the first six months (H1 2021: GBP0.7 billion). External inflows
of GBP0.2 billion into our multi-asset fund range (a central part
of our managed offering to the adviser market) were resilient in
the period (H1 2021: GBP0.3 billion). Total discretionary and
managed net inflows were GBP0.6 billion (H1 2021: GBP1.0 billion)
in the period to 30 June 2022, representing an annualised growth
rate of 2.3% (H1 2021: 4.5%).
Our intermediary sales team continues to perform well, with
indirect net flows from advisers into our discretionary services at
GBP0.3 billion in H1 2022 (H1 2021: GBP0.4 billion).
The whole market for asset management businesses has been
volatile, suffering net outflows as a sector to the end of June,
according to data published by the Investment Association. Our
funds have shown resilience and despite single-strategy funds
suffering net outflows of GBP0.2 billion (H1 2021: net inflows of
GBP0.5 billion), they did attract nearly GBP1.0 billion of gross
inflows and have fared well against peers. Rathbones was ranked in
10th position for total net retail sales in the UK in the first
quarter of 2022 (source: Pridham Report).
Investment Management fee income of GBP139.4 million in the
first half of 2022 was consistent with the GBP140.7 million
recorded in H1 2021. Income in the Funds business increased to
GBP32.1 million year-on-year (H1 2021: GBP27.8 million).
Commission income of GBP26.9 million was lower than the first
six months of 2021 (GBP31.2 million), with the prior period
benefitting from higher trading volumes. We expect normal
seasonality to reduce commission income in the second half, albeit
first half rises in Bank of England base rates will positively
impact net interest income. Net interest income totalled GBP6.1
million (H1 2021: GBP2.4 million), reflecting the steady increases
to the UK base rate since the start of the year.
Fees from advisory and other services increased considerably to
GBP26.9 million during the first half of 2022 (30 June 2021: GBP9.7
million) and includes six full months of Saunderson House (acquired
in October 2021) income totalling GBP17.0 million (H1 2021: GBPnil)
and ongoing growth in Rathbone Financial Planning.
Total operating income for the group was GBP231.9 million, up
8.6% year-on-year.
Underlying operating expenses totalled GBP182.0 million for the
first half (H1 2021: GBP150.7 million). Fixed staff costs of
GBP79.6 million (H1 2021: GBP62.9 million) reflect the impact of
the Saunderson House acquisition which added GBP7.6 million (H1
2021: GBPnil), salary inflation and planned headcount growth to
support our digital and change agenda. Variable staff costs of
GBP44.2 million (H1 2021: GBP41.9 million) include Saunderson House
but also reflect lower performance-based awards. Other direct
expenses of GBP58.1 million (H1 2021: GBP45.9 million) include the
planned investment into our digital and data strategy as well as
costs in relation to the addition of Saunderson House.
Underlying profit before tax totalled GBP50.0 million in H1 2022
(H1 2021: GBP62.9 million) and profit before tax totalled GBP32.6
million (H1 2021: GBP48.8 million). The underlying operating margin
at 30 June 2022 was 21.5% (30 June 2021: 29.4%). Figures include
the planned spend of c.GBP8 million in respect of our digital and
data strategy as well as asset management system capability. After
this period of planned expenditure, margins are expected to return
to over 27%, mindful of market conditions. A full reconciliation
between profit before tax and underlying profit before tax can be
found in note 4 of the financial statements.
Our balance sheet remains robust with a consolidated Common
Equity Tier 1 ratio of 16.7% at 30 June 2022 (31 December 2021:
18.7%). Our capital surplus of own funds (excluding year-to-date
post-tax profits) over our regulatory capital requirement was
GBP96.7 million at 30 June 2022 (GBP115.1 million at 31 December
2021). Following the Financial Policy Committee's announcement of
the increases to the countercyclical capital buffer for UK
exposures, based on our current risk-weighted assets, we expect our
capital requirement to increase by c. GBP16 million in December
2022 and then by a further c.GBP16 million in July 2023.
Interim dividend
In line with our progressive dividend policy, we have increased
our interim dividend 3.7% to 28p (30 June 2021: 27p), reflecting
our business and balance sheet strengths. The record date will be 2
September 2022 and the dividend will be paid on 4 October 2022.
Business review
Wealth management
The group now offers a comprehensive range of investment and
financial advice solutions that are designed to cater to a range of
client needs. Client retention has remained strong at 96.6% (H1
2021: 95.8%, FY 2021: 93.3%).
Investing responsibly remains at the heart of our core values.
We are committed to our own views on the Environmental, Social and
Governance (ESG) profile of the investments we make and have
strengthened our core investment process over this period. These
add to our stewardship capability. All investment teams have
completed a CISI qualification on responsible investing. The
Rathbone Greenbank team continues to grow, and we have added both
investment and business development resources. Flows into the
Rathbone Greenbank Multi-Asset Portfolios have been positive in the
period.
Rathbones has a strong market position in the ESG space,
receiving an ESG rating of AA from MSCI. Our Stewardship Director
also recently received the Editor's Choice Award at the ESG Clarity
Awards this year.
Work with intermediaries continues to be an important area for
growth and in the first half we launched a new 'Reliance on
Adviser' proposition for select advisers which removes duplication
of documentation. This approach will create capacity, streamline
client onboarding and make us an easier business to work with.
Our digital and data strategy objective is to support future
growth and efficiency through improved client and investment
manager experiences. We have made significant improvements to the
quality of client reports through redesigned, content-rich
valuations and tax packs. Around 60% of clients are now receiving
updates digitally in place of hard copies. Now 45% of clients
interact with MyRathbones, our digital gateway accessed either
online or via an app, with regular updates taking place in response
to client and adviser feedback.
Work with InvestCloud to improve the digital experience for
client prospecting, onboarding, and servicing for our clients
continues to progress.
Alongside our in-house financial planning team, in June 2022, we
launched our new propositions for Saunderson House clients
following the completion of the acquisition of that business in
October 2021. These leverage the strength and depth of Rathbones'
investment management solutions and combine them with financial
advice.
Vision Independent Financial Planning continues to operate
independently as an important part of the group. The network has
now grown to 128 advisers that manage FUMA of GBP2.4 billion (31
December 2021: GBP2.7 billion).
Asset management (Funds)
The asset management business remains an important part of our
organic growth strategy. It builds scale and expertise in core
product areas, engages in disciplined investment processes and
works closely with the larger wealth management business.
Our product range remains relevant to the needs of financial
advisers, investment managers and clients. This approach means that
the product range we offer is diversified through a mix of equity,
fixed income and risk-adjusted mandates; the latter designed to
provide more 'all-weather' solutions. Rathbones was awarded
'Multi-Asset Group of the Year' at the Professional Adviser Awards
this year.
Our focus for the business remains on delivering growth and
implementing Charles River's portfolio management system by the end
of 2022.
Finally, we understand that not all funds can outperform all of
the time and the recent market falls have highlighted this,
particularly for our growth-orientated funds. That said, a
diversified product range helps in these times and interest in our
fixed income products is growing amongst investors.
We are confident in our award winning and highly talented team
of fund managers, each of whom has a clear philosophy and process,
supported by governance processes that maintain discipline.
Short-term underperformance is well understood by our investors and
we remain committed to ongoing communication.
Our people
Our employee engagement remains high, scoring 8/10 (0.3 above
the financial services benchmark) during our most recent people
survey in July. In addition, the response to the question asking
how likely employees would be to recommend Rathbones as a place to
work scored 8.3/10 (0.4 above the financial services benchmark). We
recognise the importance of employee feedback and now our surveys
are being run on a quarterly basis.
The ways that we live and work have changed. That which
functioned well in the past will not necessarily do so in the
future. To this end, we have started to re-organise our offices for
hybrid working. Our new Edinburgh office, which we moved to in
June, has been designed around this philosophy. The office features
specially configured meeting rooms and pods, collaboration booths,
sit/stand desks, lockers, community space and a client lounge.
During the first half, we also launched our Diversity, Equality
and Inclusion (DE&I) strategy. This is a business built on
highly personal relationships, and it is our hope that this new
DE&I strategy will guide us towards a better future for our
colleagues, clients and communities.
Principal risks and uncertainties
The most important changes to the group's principal risks and
uncertainties relate to recent market falls and the changing
economic and political landscape. This will impact investment
performance and client sentiment. Otherwise, the principal risks
and uncertainties set out in our 2021 annual report and accounts
have not materially changed. These are in the strategic report and
group risk committee report in pages 46 to 53 and pages 86 to 89 of
the 2021 Annual Report.
We continue to be conscious of the impact of the changing risk
landscape to our clients, our people and our industry. Risks
associated with ESG factors, including climate change, financial
crime and anti-money laundering, along with the potential for
supply chain risks, are considered and assessed regularly. We
remain alert in respect of potential cyber threats.
Regulation
We respond to regulatory changes and acknowledge recent FCA and
PRA consultation activity and statements. We expect further
regulatory guidance and policy statements on a range of topics in
the near term and will respond appropriately.
Board changes
James Dean stepped down at the Annual General Meeting (AGM) in
May as planned, having served nine years on the board. James has
made a huge contribution to the board, both as a non-executive
director and chair of the audit committee. As part of the board's
succession plans, Iain Cummings succeeded James as chair of the
audit committee.
Colin Clark, Senior Independent Director and Non-executive
Director, has decided to step down from the board, effective
immediately, in order to take on other responsibilities. Colin
joined the board in 2018 and has helped oversee the appointment of
both a new CEO and Chair over that period. His extensive industry
knowledge and experience has been much valued. Sarah Gentleman, the
current Chair of the Remuneration Committee, will assume the role
of Senior Independent Director subject to regulatory approval.
On behalf of the entire board, we would like to express our
thanks to Colin for his valuable insights and contributions to the
board and the committees on which he served. We wish him well in
his future endeavours.
Responsible business agenda
We published our first responsible business report in the first
half of the year to highlight progress across the four pillars of
our programme. These include welcoming interns from the #10,000
BlackInterns initiative and joining the Business Disability Forum.
Having supported the Ukraine appeals run by the Disasters Emergency
Committee and the British Red Cross, we are also entering the
second year of our partnership with Social Shifters, supporting
their Global Innovation Challenge.
In the second half of 2022, we will continue working with the
Science Based Targets initiative to verify our near-term net zero
emissions targets. To further strengthen our approach to financial
education and awareness we will join with an external partner to
expand the scope of our current programme. We will share our new
people strategy and continue supporting our colleagues as we return
to the office.
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 extreme 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 for the remainder of the year
Although market levels in the first half were lower than
expected, we continue to see strong client engagement and positive
net flows. We expect normal commission seasonality in the second
half, although first half rises in Bank of England base rates will
positively impact net interest income.
Our digital and data strategy programmes remain critical to
client engagement and efficiency, irrespective of short-term
adverse fluctuations in investment markets. Costs remain in line
with our full-year 2022 guidance of GBP20 million and outcomes we
set to achieve by the end of 2023 are expected to be realised.
Planned acquisition-related costs in full year 2022 will reflect
the previously noted GBP10 million in relation to Saunderson House
and GBP4 million for Speirs & Jeffrey deferred
consideration.
Rathbones is resilient, with a strong balance sheet and
recognised market position. Market conditions are clearly different
to 31 December 2021, and while we will ensure ongoing expense
discipline, strategic expenditure remains an important part of
future growth. We therefore expect a short-term operating margin of
low 20s for 2022 but continue to aim to operating margins of 27-30%
from 2024 onwards.
Our clients remain the priority. Our investment teams will
continue to work with them to navigate through difficult markets to
help them plan for their futures.
Clive Bannister Paul Stockton
Chair Group Chief Executive Officer
27 July 2022
Condensed consolidated interim financial statements
Consolidated interim statement of comprehensive income
for the six months ended 30 June 2022
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2022 2021 2021
Note GBP'000 GBP'000 GBP'000
----------------------------------------------------- ---- ----------- ----------- ------------
Interest and similar income 16,368 4,145 7,710
Interest expense and similar charges (10,271) (1,751) (3,834)
----------------------------------------------------- ---- ----------- ----------- ------------
Net interest income 6,097 2,394 3,876
----------------------------------------------------- ---- ----------- ----------- ------------
Fee and commission income 239,177 223,430 457,696
Fee and commission expense (13,869) (14,001) (29,062)
----------------------------------------------------- ---- ----------- ----------- ------------
Net fee and commission income 225,308 209,429 428,634
----------------------------------------------------- ---- ----------- ----------- ------------
Other operating income 535 1,718 3,417
----------------------------------------------------- ---- ----------- ----------- ------------
Operating income 231,940 213,541 435,927
----------------------------------------------------- ---- ----------- ----------- ------------
Charges in relation to client relationships
and goodwill 14 (9,924) (7,198) (15,595)
Acquisition-related costs 6 (7,426) (6,870) (10,089)
Other operating expenses (181,976) (150,678) (315,208)
----------------------------------------------------- ---- ----------- ----------- ------------
Operating expenses (199,326) (164,746) (340,892)
----------------------------------------------------- ---- ----------- ----------- ------------
Profit before tax 32,614 48,795 95,035
Taxation 8 (7,625) (10,838) (19,806)
----------------------------------------------------- ---- ----------- ----------- ------------
Profit for the period attributable to equity
holders of the company 24,989 37,957 75,229
----------------------------------------------------- ---- ----------- ----------- ------------
Other comprehensive income:
Items that will not be reclassified to profit
or loss
Net remeasurement of defined benefit asset/liability 3,315 7,990 17,091
Deferred tax relating to the net remeasurement
of defined benefit asset/liability 961 (1,518) (3,247)
----------------------------------------------------- ---- ----------- ----------- ------------
Other comprehensive income net of tax 4,276 6,472 13,844
----------------------------------------------------- ---- ----------- ----------- ------------
Total comprehensive income for the period
net of tax attributable to equity holders
of the company 29,265 44,429 89,073
----------------------------------------------------- ---- ----------- ----------- ------------
Dividends paid and proposed for the period
per ordinary share 9 28.0p 27.0p 81.0p
Dividends paid and proposed for the period 16,388 15,543 49,501
Earnings per share for the period attributable
to equity holders of the company: 10
* basic 42.7p 69.9p 133.5p
* diluted 41.6p 67.0p 129.3p
----------------------------------------------------- ---- ----------- ----------- ------------
Consolidated interim statement of changes in equity
for the six months ended 30 June 2022
Share Share Merger Retained Total
capital premium reserve Own shares earnings equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ---- -------- -------- -------- ---------- --------- --------
At 1 January 2021 2,874 215,092 71,756 (46,744) 270,849 513,827
Profit for the period 37,957 37,957
------------------------------------ ---- -------- -------- -------- ---------- --------- --------
Net remeasurement of defined
benefit liability 7,990 7,990
Deferred tax relating to components
of other comprehensive income (1,518) (1,518)
------------------------------------ ---- -------- -------- -------- ---------- --------- --------
Other comprehensive income
net of tax - - - - 6,472 6,472
Dividends paid (25,938) (25,938)
Issue of share capital 18 196 73,918 - - - 74,114
Share-based payments: -
* value of employee services (10,572) (10,572)
* cost of own shares acquired (1,829) (1,829)
* cost of own shares vesting 166 (166) -
* tax on share-based payments 739 739
------------------------------------ ---- -------- -------- -------- ---------- --------- --------
At 30 June 2021 (unaudited) 3,070 289,010 71,756 (48,407) 279,341 594,770
Profit for the period 37,272 37,272
------------------------------------ ---- -------- -------- -------- ---------- --------- --------
Net remeasurement of defined
benefit asset 9,101 9,101
Deferred tax relating to components
of other comprehensive income (1,729) (1,729)
------------------------------------ ---- -------- -------- -------- ---------- --------- --------
Other comprehensive income
net of tax - - - - 7,372 7,372
Dividends paid (18,022) (18,022)
Issue of share capital 18 30 2,016 5,209 - - 7,255
Share-based payments:
* value of employee services 7,325 7,325
* cost of own shares acquired (13,301) (13,301)
* cost of own shares vesting 25,082 (25,082) -
* tax on share-based payments 611 611
------------------------------------ ---- -------- -------- -------- ---------- --------- --------
At 31 December 2021 (audited) 3,100 291,026 76,965 (36,626) 288,817 623,282
Profit for the period 24,989 24,989
------------------------------------ ---- -------- -------- -------- ---------- --------- --------
Net remeasurement of defined
benefit asset 3,315 3,315
Deferred tax relating to components
of other comprehensive income 961 961
------------------------------------ ---- -------- -------- -------- ---------- --------- --------
Other comprehensive income
net of tax - - - - 4,276 4,276
Dividends paid (32,054) (32,054)
Issue of share capital 18 52 12,787 - - - 12,839
Share-based payments:
* value of employee services 2,482 2,482
* cost of own shares acquired (10,843) (10,843)
* cost of own shares vesting 2,217 (2,217) -
* tax on share-based payments 1,172 1,172
------------------------------------ ---- -------- -------- -------- ---------- --------- --------
At 30 June 2022 (unaudited) 3,152 303,813 76,965 (45,252) 287,465 626,143
------------------------------------ ---- -------- -------- -------- ---------- --------- --------
Comprehensive interim balance statement
as at 30 June 2022
Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
Note GBP'000 GBP'000 GBP'000
------------------------------------------------ ---- --------- --------- ------------
Assets
Cash and balances with central banks 1,683,670 1,414,086 1,463,294
Settlement balances 137,672 127,818 69,750
Loans and advances to banks 186,206 158,986 203,589
Loans and advances to customers 11 189,960 186,166 179,840
Investment securities:
* fair value through profit or loss 11,906 112,579 29,934
* amortised cost 829,970 714,765 761,654
Prepayments, accrued income and other assets 124,260 116,285 115,992
Property, plant and equipment 12 14,012 13,814 13,059
Right-of-use assets 13 41,606 42,460 43,895
Current tax asset 6,167 247 2,272
Net deferred tax asset - 3,406 -
Intangible assets 14 365,245 228,417 376,187
Retirement benefit asset 17 15,887 - 12,287
------------------------------------------------ ---- --------- --------- ------------
Total assets 3,606,561 3,119,029 3,271,753
------------------------------------------------ ---- --------- --------- ------------
Liabilities
Deposits by banks 19,587 1,604 2,212
Settlement balances 139,916 152,745 60,075
Due to customers 2,582,703 2,193,869 2,333,011
Accruals, deferred income and other liabilities 122,799 91,474 129,174
Lease liabilities 52,739 53,627 54,971
Current tax liabilities 275 - -
Net deferred tax liability 11,523 - 13,811
Provisions for liabilities and charges 15 10,984 9,286 15,324
Subordinated loan notes 16 39,892 19,964 39,893
Retirement benefit obligation 17 - 1,690 -
------------------------------------------------ ---- --------- --------- ------------
Total liabilities 2,980,418 2,524,259 2,648,471
------------------------------------------------ ---- --------- --------- ------------
Equity
Share capital 18 3,152 3,070 3,100
Share premium 18 303,813 289,010 291,026
Merger reserve 18 76,965 71,756 76,965
Own shares (45,252) (48,407) (36,626)
------------------------------------------------ ---- --------- --------- ------------
Retained earnings 287,465 279,341 288,817
------------------------------------------------ ---- --------- --------- ------------
Total equity 626,143 594,770 623,282
------------------------------------------------ ---- --------- --------- ------------
Total liabilities and equity 3,606,561 3,119,029 3,271,753
------------------------------------------------ ---- --------- --------- ------------
The condensed consolidated interim financial statements were
approved by the board of directors and authorised for issue on 27
July 2022 and were signed on its behalf by:
Paul Stockton Jennifer Mathias
Group Chief Executive Officer Group Chief Financial Officer
Company registered number: 01000403
27 July 2022
Consolidated interim statement of cash flows
for the six months ended 30 June 2022
Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
Note GBP'000 GBP'000 GBP'000
------------------------------------------------------------- ---- --------- --------- ------------
Cash flows from operating activities
Profit before tax 32,614 48,795 95,035
Change in fair value through profit or loss 525 (218) (670)
Net interest income (6,097) (2,394) (3,876)
Net impairment charges/(recoveries) on loans
and advances 13 (576) (712)
Net charge for provisions 15 330 892 3,118
Loss on disposal of right-of-use assets - 81 -
Depreciation, amortisation and impairment 17,564 14,645 31,279
Foreign exchange movements (6,406) 178 (519)
Defined benefit pension scheme charges (117) 63 105
Defined benefit pension contributions paid (168) (168) (5,086)
Share-based payment charges 14,337 10,290 20,132
Interest paid (9,034) (2,469) (4,994)
Interest received 13,510 3,480 11,225
------------------------------------------------------------- ---- --------- --------- ------------
57,071 72,599 145,037
Changes in operating assets and liabilities:
* net increase in loans and advances to banks and
customers (10,355) (14,519) (41,409)
* net (increase)/decrease in settlement balance debtors (67,922) (37,445) 20,624
* net increase in prepayments, accrued income and other
assets (5,242) (16,906) (9,113)
* net increase/(decrease) in amounts due to customers
and deposits by banks 267,210 (367,186) (227,435)
* net increase/(decrease) in settlement balance
creditors 79,841 57,333 (35,336)
* net decrease in accruals, deferred income, provisions
and other liabilities (12,952) (10,417) (39,381)
------------------------------------------------------------- ---- --------- --------- ------------
Cash generated from/(used in) operations 307,651 (316,541) (187,013)
Tax paid (11,398) (12,898) (27,207)
Net cash inflow/(outflow) from operating activities 296,253 (329,439) (214,220)
------------------------------------------------------------- ---- --------- --------- ------------
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired - - (79,736)
Purchase of property, equipment and intangible
assets (9,108) (7,926) (12,632)
Purchase/(disposal) of right-of-use assets 2,748 (119) (70)
Purchase of investment securities (555,202) (579,905) (932,386)
Proceeds from sale and redemption of investment
securities 490,802 515,481 821,790
------------------------------------------------------------- ---- --------- --------- ------------
Net cash used in investing activities (70,760) (72,469) (203,034)
------------------------------------------------------------- ---- --------- --------- ------------
Cash flows from financing activities
Net (repurchase)/issue of ordinary shares 22 (3,703) 50,476 44,335
Repayment of subordinated loan notes - - (20,114)
Net proceeds from the issue of subordinated
loan notes - - 39,893
Dividends paid (32,054) (25,938) (43,960)
Payment of lease liabilities (5,662) (2,497) (5,109)
Interest paid (1,128) (453) (895)
------------------------------------------------------------- ---- --------- --------- ------------
Net cash (used in)/generated from financing
activities (42,547) 21,588 14,150
------------------------------------------------------------- ---- --------- --------- ------------
Net increase/(decrease) in cash and cash equivalents 182,946 (380,320) (403,104)
------------------------------------------------------------- ---- --------- --------- ------------
Cash and cash equivalents at the beginning
of the period 1,653,590 2,056,694 2,056,694
------------------------------------------------------------- ---- --------- --------- ------------
Cash and cash equivalents at the end of the
period 22 1,836,536 1,676,374 1,653,590
------------------------------------------------------------- ---- --------- --------- ------------
Notes to the condensed consolidated interim financial
statements
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 trusts, tax planning,
trust and company management, pension advice and banking services.
The products and services from which the group derives its revenues
are described in 'Rathbones at a glance' on
pages 6 to 7 of the annual report and accounts for the year
ended 31 December 2021 and have not materially changed since that
date.
These condensed consolidated interim financial statements, on
pages 7 to 28, are presented in accordance with United Kingdom
adopted international accounting standards. 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 2021. The condensed
consolidated interim financial statements should be read in
conjunction with the group's audited financial statements for the
year ended 31 December 2021, which are prepared in accordance with
UK-adopted International Accounting Standards.
The information in this announcement 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 2021 are not the group's statutory accounts for
that financial year. The group's financial statements for the year
ended 31 December 2021 have been reported on by its auditors and
delivered to the Registrar of Companies. The report of the auditors
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:
- Onerous Contracts - Cost of Fulfilling a Contract (Amendments
to IAS 37)
- Annual Improvements to IFRS Standards 2018-2020
- Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to IAS 16)
- Reference to the Conceptual Framework (Amendments to IFRS
3)
Future new standards and interpretations
The following standards are effective for annual periods
beginning after 1 January 2023 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
-------------------------------------------------------------------- ----------
IFRS 17 Insurance Contracts 01 January
2023
Classification of liabilities as current or non-current (Amendments 01 January
to IAS 1) 2023
Amendments to IFRS 17 01 January
2023
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS 01 January
Practice Statement 2) 2023
Definition of Accounting Estimate (Amendments to IAS 8) 01 January
2023
Deferred Tax Related to Assets and Liabilities Arising from a 01 January
Single Transaction - 2023
Amendments to IAS 12 Income Taxes
Sale or Contribution of Assets between an Investor and its Associate Optional
or Joint Venture
(Amendments to IFRS 10 and IAS 28)
-------------------------------------------------------------------- ----------
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 2021.
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. These are unchanged from those reported in the group's
financial statements for the year ended 31 December 2021.
During the prior year, the group acquired the entire share
capital of Saunderson House Limited. The group accounted for the
transaction as a business combination, as set out in note 5.
The payment of certain elements of consideration was deferred.
The proportion of the deferred payments that are contingent on the
recipients remaining employees of the group for a specific period
are accounted for as remuneration for ongoing services in
employment. The group's estimate of the amounts ultimately payable
will be expensed over the deferral period.
The group continues to monitor the valuation of the
consideration payable to the senior management team of Saunderson
House Limited (note 5). The deferred payments are subject to the
achievement of certain operational and performance targets at 31
December 2024. A provision for the expected consideration has been
made.
Under the terms of the agreements, the award ranges from a
payment of GBPnil to a maximum possible payment of GBP7.2 million.
Management's best estimate of this award at 30 June 2022 was GBP5.0
million, based on expected qualifying funds under management at 31
December 2024 of GBP5.0 billion. The maximum award of GBP7.2
million, which represents qualifying funds under management of
approximately GBP8.6 billion at the end of 2024, would result in an
additional charge to profit or loss for the period to 30 June 2022
of GBP0.4 million.
4 Segmental information
For management purposes, the group is organised into two
operating divisions: Investment Management and Funds. Centrally
incurred indirect expenses are allocated to these operating
segments on the basis of the cost drivers that generate the
expenditure. These are, principally, the headcount of staff
directly involved in providing those services from which the
segment earns revenues, the value of funds under management and the
segment's total revenue. The allocation of these costs is shown in
a separate column in the table below, alongside the information
presented for internal reporting to the executive committee, which
is the group's chief operating decision-maker.
Investment Indirect
Management Funds expenses Total
Six months ended 30 June 2022 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------- ----------- -------- --------- ---------
Net investment management fee income 139,353 32,101 - 171,454
Net commission income 26,856 - - 26,856
Net interest income 6,052 45 - 6,097
Fees from advisory services and other income 27,812 (279) - 27,533
--------------------------------------------- ----------- -------- --------- ---------
Operating income 200,073 31,867 - 231,940
--------------------------------------------- ----------- -------- --------- ---------
Staff costs - fixed (54,522) (3,796) (21,315) (79,633)
Staff costs - variable (34,765) (7,013) (2,417) (44,195)
--------------------------------------------- ----------- -------- --------- ---------
Total staff costs (89,287) (10,809) (23,732) (123,828)
Other direct expenses (22,419) (5,275) (30,454) (58,148)
Allocation of indirect expenses (50,065) (4,121) 54,186 -
--------------------------------------------- ----------- -------- --------- ---------
Underlying operating expenses (161,771) (20,205) - (181,976)
--------------------------------------------- ----------- -------- --------- ---------
Underlying profit before tax 38,302 11,662 - 49,964
Charges in relation to client relationships
and goodwill (note 14) (9,924) - - (9,924)
Acquisition-related costs (note 6) (6,334) - (1,092) (7,426)
--------------------------------------------- ----------- -------- --------- ---------
Segment profit before tax 22,044 11,662 (1,092) 32,614
Taxation (note 8) (7,625)
--------------------------------------------- ----------- -------- --------- ---------
Profit for the period attributable to equity
holders of the company 24,989
--------------------------------------------- ----------- -------- --------- ---------
Investment
Management Funds Total
GBP'000 GBP'000 GBP'000
--------------------------------------------- ----------- -------- --------- ---------
Segment total assets 3,436,315 154,359 3,590,674
Unallocated assets 15,887
--------------------------------------------- ----------- -------- --------- ---------
Total assets 3,436,315 154,359 3,606,561
--------------------------------------------- ----------- -------- --------- ---------
4 Segmental information continued
Investment Indirect
Management Funds expenses Total
Six months ended 30 June 2021 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------- ----------- -------- --------- ---------
Net investment management fee income 140,660 27,807 - 168,467
Net commission income 31,197 - - 31,197
Net interest income 2,393 1 - 2,394
Fees from advisory services and other income 10,621 862 - 11,483
--------------------------------------------- ----------- -------- --------- ---------
Operating income 184,871 28,670 - 213,541
--------------------------------------------- ----------- -------- --------- ---------
Staff costs - fixed (43,737) (2,299) (16,821) (62,857)
Staff costs - variable (29,919) (6,795) (5,198) (41,912)
--------------------------------------------- ----------- -------- --------- ---------
Total staff costs (73,656) (9,094) (22,019) (104,769)
Other direct expenses (20,257) (5,864) (19,788) (45,909)
Allocation of indirect expenses (37,738) (4,069) 41,807 -
--------------------------------------------- ----------- -------- --------- ---------
Underlying operating expenses (131,651) (19,027) - (150,678)
--------------------------------------------- ----------- -------- --------- ---------
Underlying profit before tax 53,220 9,643 - 62,863
Charges in relation to client relationships
and goodwill (note 14) (7,198) - - (7,198)
Acquisition-related costs (note 6) (6,468) - (402) (6,870)
--------------------------------------------- ----------- -------- --------- ---------
Segment profit before tax 39,554 9,643 (402) 48,795
--------------------------------------------- ----------- -------- --------- ---------
Profit before tax attributable to equity
holders of the company 48,795
Taxation (note 8) (10,838)
--------------------------------------------- ----------- -------- --------- ---------
Profit for the period attributable to equity
holders of the company 37,957
--------------------------------------------- ----------- -------- --------- ---------
Investment
Management Funds Total
GBP'000 GBP'000 GBP'000
--------------------------------------------- ----------- -------- --------- ---------
Segment total assets 2,907,675 204,550 3,112,225
Unallocated assets 6,804
--------------------------------------------- ----------- -------- --------- ---------
Total assets 2,907,675 204,550 3,119,029
--------------------------------------------- ----------- -------- --------- ---------
Investment Indirect
Management Funds expenses Total
Year ended 31 December 2021 (audited) GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------- ----------- -------- --------- ---------
Net investment management fee income 288,089 61,289 - 349,378
Net commission income 53,596 - - 53,596
Net interest income 3,874 2 - 3,876
Fees from advisory services and other income 27,265 1,812 - 29,077
--------------------------------------------- ----------- -------- --------- ---------
Operating income 372,824 63,103 - 435,927
--------------------------------------------- ----------- -------- --------- ---------
Staff costs - fixed (89,343) (5,210) (35,260) (129,813)
Staff costs - variable (61,872) (16,833) (11,426) (90,131)
--------------------------------------------- ----------- -------- --------- ---------
Total staff costs (151,215) (22,043) (46,686) (219,944)
Other direct expenses (37,488) (10,084) (47,692) (95,264)
Allocation of indirect expenses (85,767) (8,611) 94,378 -
--------------------------------------------- ----------- -------- --------- ---------
Underlying operating expenses (274,470) (40,738) - (315,208)
--------------------------------------------- ----------- -------- --------- ---------
Underlying profit before tax 98,354 22,365 - 120,719
Charges in relation to client relationships
and goodwill (note 14) (15,595) - - (15,595)
Acquisition-related costs (note 6) (9,635) - (454) (10,089)
--------------------------------------------- ----------- -------- --------- ---------
Segment profit before tax 73,124 22,365 (454) 95,035
--------------------------------------------- ----------- -------- --------- ---------
Profit before tax attributable to equity
holders of the company 95,035
Taxation (note 8) (19,806)
--------------------------------------------- ----------- -------- --------- ---------
Profit for the year attributable to equity
holders of the company 75,229
--------------------------------------------- ----------- -------- --------- ---------
Investment
Management Funds Total
GBP'000 GBP'000 GBP'000
--------------------------------------------- ----------- -------- --------- ---------
Segment total assets 3,132,898 126,568 3,259,466
Unallocated assets 12,287
--------------------------------------------- ----------- -------- --------- ---------
Total assets 3,132,898 126,568 3,271,753
--------------------------------------------- ----------- -------- --------- ---------
Included within Investment Management operating income is
GBP1,018,000 (30 June 2021: GBP1,072,000; 31 December 2021:
GBP2,264,000) of fees and commissions receivable from the Funds
business. Intersegment sales are charged at prevailing market
prices.
The following table reconciles underlying operating expenses to
operating expenses:
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
--------------------------------------------------------- ----------- ----------- ------------
Underlying operating expenses 181,976 150,678 315,208
Charges in relation to client relationships and goodwill
(note 14) 9,924 7,198 15,595
Acquisition-related costs (note 6) 7,426 6,870 10,089
--------------------------------------------------------- ----------- ----------- ------------
Underlying operating expenses 199,326 164,746 340,892
--------------------------------------------------------- ----------- ----------- ------------
Geographic analysis
The following table presents operating income analysed by the
geographical location of the group entity providing the
service:
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
----------------- ----------- ----------- ------------
United Kingdom 224,958 206,327 421,386
Jersey 6,927 7,214 14,541
Rest of World 55 - -
----------------- ----------- ----------- ------------
Operating income 231,940 213,541 435,927
----------------- ----------- ----------- ------------
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:
Audited
Unaudited Unaudited Year to
Six months to Six months to 31 December
30 June 2022 30 June 2021 2021
--------------------- --------------------- ---------------------
Investment Investment Investment
Management Funds Management Funds Management Funds
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ----------- -------- ----------- -------- ----------- --------
Products and services transferred
at a point in time 30,516 - 33,786 - 44,190 -
Products and services transferred
over time 169,557 31,867 151,085 28,670 327,486 64,251
---------------------------------- ----------- -------- ----------- -------- ----------- --------
Operating income 200,073 31,867 184,871 28,670 371,676 64,251
---------------------------------- ----------- -------- ----------- -------- ----------- --------
Major clients
The group is not reliant on any one client or group of connected
clients for generation of revenues. At 30 June 2022, the group
provided investment management services to 67,171 clients (30 June
2022: 61,200; 31 December 2021: 66,480).
5 Business combinations
Speirs & Jeffrey
On 31 August 2018, the group acquired 100% of the ordinary share
capital of Speirs & Jeffrey Limited ('Speirs &
Jeffrey').
Deferred and contingent payments
The group has now provided for the total cost of deferred and
contingent payments to be made to the vendors for the sale of the
shares of Speirs & Jeffrey. These payments required the vendors
to remain in employment with the group for the duration of the
respective deferral periods. Hence, they were treated as
remuneration for post-combination services and the grant date fair
value was charged to profit and loss over the respective vesting
periods. The group continues to provide for related incentivisation
awards for other staff.
The payments are to be made in shares and are being accounted
for as equity-settled share-based payments under IFRS 2:
- initial share consideration was payable on completion.
However, although the shares were issued on the date of
acquisition, they vested during the prior year at the third
anniversary of the acquisition date.
- earn-out consideration and related incentivisation awards were
subject to the delivery of certain operational and financial
performance targets. The awards were payable in two parts in the
third and fourth years following the acquisition date. The second
earn-out vested during the prior year.
Further details of each of these elements are as follows:
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
-------------------------------------------------- ----------- ----------- ------------
Initial share consideration - 3,461 4,533
Earn-out consideration and incentivisation awards 2,667 3,005 1,430
-------------------------------------------------- ----------- ----------- ------------
2,667 6,466 5,963
-------------------------------------------------- ----------- ----------- ------------
These costs are being reported as staff costs within
acquisition-related costs (see note 6).
Saunderson House Limited
On 20 October 2021, the group acquired 100% of the ordinary
share capital of the Saunderson House group. Full details of the
acquisition are set out in note 8 of the 2021 report and
accounts.
Total consideration comprised an initial cash payment of
GBP87,981,000, and was paid on 20 October 2021. A further
GBP45,208,000 was paid to the vendors on completion to settle debt
of the acquired group. This debt, now payable to Rathbones Group
Plc, was included in the value of net assets acquired.
Deferred cash consideration of GBP10,873,000 is payable on the
first anniversary of the acquisition date to vendors who are not
required to remain in employment with the group.
Other 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 2021
report and accounts.
All of these payments are to be made 100% 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 Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
----------------------------- ----------- ----------- ------------
Initial cash consideration 901 - 358
Deferred share consideration 2,002 - 802
Incentivisation awards 764 - 245
----------------------------- ----------- ----------- ------------
Total consideration 3,667 - 1,405
----------------------------- ----------- ----------- ------------
6 Acquisition-related costs
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 2022 30 June 2021 31 December 2021
GBP'000 GBP'000 GBP'000
------------------------------------------------------------------- -------------- -------------- -----------------
Acquisition of Speirs & Jeffrey 2,866 6,466 6,418
Acquisition of Barclays Wealth's Personal Injury and Court of
Protection business - 2 2
Acquisition of Saunderson House 4,560 402 3,669
------------------------------------------------------------------- -------------- -------------- -----------------
Acquisition-related costs 7,426 6,870 10,089
------------------------------------------------------------------- -------------- -------------- -----------------
Costs relating to the acquisition of Speirs & Jeffrey
The group has incurred the following costs in relation to the
acquisition of Speirs & Jeffrey:
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
------------------------ ----------- ----------- ------------
Acquisition costs:
Staff costs 2,667 6,466 5,964
Legal and advisory fees - - 5
Integration costs 199 - 449
------------------------ ----------- ----------- ------------
2,866 6,466 6,418
------------------------ ----------- ----------- ------------
Non-staff acquisition costs of GBPnil (30 June 2021: GBPnil; 31
December 2021: GBP5,000) and integration costs of GBP199,000 (30
June 2021: GBPnil; 31 December 2021: GBP449,000) have not been
allocated to a specific operating segment (note 4).
Costs relating to the acquisition of Barclays Wealth's Personal
Injury and Court of Protection business
On 3 April 2020, the group acquired the trade and assets of
Barclays Wealth's Personal Injury and Court of Protection business.
The group incurred professional services costs of GBPnil (30 June
2021: GBP2,000; 31 December 2021: GBP2,000) in relation to the
acquisition during the year.
Costs relating to the acquisition of Saunderson House
The group has incurred the following costs in relation to the
acquisition of Saunderson House:
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
------------------------ ----------- ----------- ------------
Acquisition costs:
Staff costs 3,667 - 1,406
Legal and advisory fees - 402 2,263
Integration costs 893 - -
------------------------ ----------- ----------- ------------
4,560 402 3,669
------------------------ ----------- ----------- ------------
Non-staff acquisition costs of GBPnil (30 June 2021: GBP402,000;
31 December 2021: GBP2,263,000) and integration costs of GBP893,000
(30 June 2021: GBPnil; 31 December 2021: GBPnil) have not been
allocated to a specific operating segment (note 4).
7 Staff numbers
The average number of employees, on a full time equivalent
basis, during the period was as follows:
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2022 2021 2021
-------------------------------------- ----------- ----------- ------------
Investment Management:
* investment management services 1,267 1,037 1,096
* advisory services 151 131 137
Funds 50 40 43
Shared services 543 437 463
-------------------------------------- ----------- ----------- ------------
2,011 1,645 1,739
-------------------------------------- ----------- ----------- ------------
8 Taxation
The tax expense for the six months ended 30 June 2022 was
calculated based on the estimated average annual effective tax
rate. The overall effective tax rate for this period was 23.4% (six
months ended 30 June 2021: 22.2%; year ended 31 December 2021:
20.8%).
The effective tax rate reflects the disallowable costs of the
deferred consideration payments in relation to the acquisitions of
Speirs
& Jeffrey and Saunderson House.
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
------------------------ ----------- ----------- ------------
United Kingdom taxation 7,797 11,364 23,463
Overseas taxation 104 218 418
------------------------ ----------- ----------- ------------
Deferred taxation (276) (744) (4,075)
------------------------ ----------- ----------- ------------
7,625 10,838 19,806
------------------------ ----------- ----------- ------------
The underlying UK corporation tax rate for the year ending 31
December 2022 is 19.0% (2021: 19.0%).
The UK Government legislated in the Finance Act 2020 to maintain
the UK corporation tax rate at 19.0% from 1 April 2020, rather than
reducing the rate to 17.0% as previously enacted. The Finance Act
2020 was enacted on 22 July 2020. 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.
The UK Government legislated in the Finance Act 2021 to increase
the UK corporation tax rate to 25.0% in 2023. This has been
reflected in the deferred tax calculations.
9 Dividends
An interim dividend of 28.0p per share was declared on 27 July
2022 and is payable on 4 October 2022 to shareholders on the
register at the close of business on 2 September 2022 (30 June
2021: 27.0p). The interim dividend has not been included as a
liability in this interim statement. A final dividend for 2021 of
54.0p per share was paid on 10 May 2022.
10 Earnings per share
Earnings used to calculate earnings per share on the bases
reported in these condensed consolidated interim financial
statements were:
Unaudited Unaudited Audited
Six months Six months Year to
to to 31 December
30 June 2022 30 June 2021 2021
------------------ ------------------ ------------------
Pre-tax Post-tax Pre-tax Post-tax Pre-tax Post-tax
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- -------- -------- -------- -------- -------- --------
Underlying profit attributable to
equity holders 49,964 39,573 62,863 50,270 120,719 96,987
Charges in relation to client relationships (7,198 (5,830 (15,595 (12,632
and goodwill (note 14) (9,924) (8,038) ) ) ) )
Acquisition-related costs (note 6) (7,426) (6,546) (6,870) (6,483) (10,089) (9,126)
-------------------------------------------- -------- -------- -------- -------- -------- --------
Profit attributable to equity holders 32,614 24,989 48,795 37,957 95,035 75,229
-------------------------------------------- -------- -------- -------- -------- -------- --------
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
58,528,000 (30 June 2021: 54,332,383; 31 December 2021:
56,334,784).
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, employee share options remaining capable of
exercise, and any dilutive shares to be issued under the Share
Incentive Plan, all weighted for the relevant period. The Speirs
and Jeffrey initial share consideration vested during 2021.
Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
-------------------------------------------------------- ---------- ---------- ------------
Weighted average number of ordinary shares in issue
during the period - basic 58,528,000 54,332,383 56,334,784
Effect of ordinary share options/Save As You Earn 571,430 246,546 521,955
Effect of dilutive shares issuable under the Share
Incentive Plan 1,359 182,342 237,776
Effect of contingently issuable ordinary shares
under the Executive Incentive Plan/Executive Share
Performance Plan 633,295 912,730 811,508
Effect of contingently issuable shares under the
Speirs & Jeffrey initial share consideration - 1,006,522 -
Effect of contingently issuable shares under Saunderson
House initial share consideration 272,952 - 272,952
-------------------------------------------------------- ---------- ---------- ------------
Diluted ordinary shares 60,007,036 56,680,523 58,178,975
-------------------------------------------------------- ---------- ---------- ------------
Unaudited Unaudited
Six months Six months Audited
to to Year to
30 June 30 June 31 December
2022 2021 2021
---------------------------------------------------------- ----------- ----------- ------------
Earnings per share for the period attributable
to equity holders of the company:
* basic 42.7p 69.9p 133.5p
* diluted 41.6p 67.0p 129.3p
Underlying earnings per share for the period attributable
to equity holders of the company:
* basic 67.6p 92.5p 172.2p
* diluted 65.9p 88.7p 166.7p
---------------------------------------------------------- ----------- ----------- ------------
Underlying earnings per share is calculated in the same way as
earnings per share, but by reference to underlying profit
attributable to shareholders.
11 Loans and advances to customers
Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
------------------------------------- --------- --------- ------------
Overdrafts 10,425 11,798 7,022
Investment Management loan book 175,500 172,505 167,981
Trust and financial planning debtors 2,047 1,642 3,973
Other debtors 1,988 221 864
------------------------------------- --------- --------- ------------
189,960 186,166 179,840
------------------------------------- --------- --------- ------------
12 Property, plant and equipment
During the six months ended 30 June 2022, the group purchased
assets with a cost of GBP3,182,000 (six months ended 30 June 2021:
GBP1,023,000; year ended 31 December 2021: GBP1,999,000).
13 Right-of-use assets
Property Motor vehicles and equipment Total
GBP'000 GBP'000 GBP'000
---------------------------------------------- -------- ---------------------------- --------
Cost
1 January 2022 58,059 371 58,430
Additions 3,430 - 3,430
Other movements (3,405) (17) (3,422)
---------------------------------------------- -------- ---------------------------- --------
At 30 June 2022 58,084 353 58,437
---------------------------------------------- -------- ---------------------------- --------
Depreciation and impairment
1 January 2022 14,497 38 14,535
Charge in the period 2,780 60 2,840
---------------------------------------------- -------- ---------------------------- --------
Disposals (527) (17) (544)
---------------------------------------------- -------- ---------------------------- --------
At 30 June 2022 16,750 81 16,831
---------------------------------------------- -------- ---------------------------- --------
Carrying amount at 30 June 2022 (unaudited) 41,334 273 41,606
---------------------------------------------- -------- ---------------------------- --------
Carrying amount at 30 June 2021 (unaudited) 42,455 5 42,460
---------------------------------------------- -------- ---------------------------- --------
Carrying amount at 31 December 2021 (audited) 43,562 333 43,895
---------------------------------------------- -------- ---------------------------- --------
14 Intangible assets
Software
Client development Purchased Total
Goodwill relationships costs software intangibles
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- -------- -------------- ------------ --------- ------------
Cost
At 1 January 2022 169,631 302,572 11,640 53,140 536,983
Internally developed in the period - - 834 911 1,745
Purchased in the period - - - - -
Disposals - (1,940) - (31) (1,971)
------------------------------------------- -------- -------------- ------------ --------- ------------
At 30 June 2022 169,631 300,632 12,474 54,020 536,757
------------------------------------------- -------- -------------- ------------ --------- ------------
Amortisation and impairment
At 1 January 2022 1,954 109,003 8,535 41,304 160,796
Charge in the period - 9,924 746 1,807 12,477
Disposals - (1,747) - (14) (1,761)
------------------------------------------- -------- -------------- ------------ --------- ------------
At 30 June 2022 1,954 117,180 9,281 43,097 171,512
------------------------------------------- -------- -------------- ------------ --------- ------------
Carrying value at 30 June 2022 (unaudited) 167,677 183,452 3,193 10,923 365,245
------------------------------------------- -------- -------------- ------------ --------- ------------
Carrying value at 30 June 2021 (unaudited) 96,872 117,408 3,056 11,081 228,417
------------------------------------------- -------- -------------- ------------ --------- ------------
Carrying value at 31 December 2021
(audited) 167,677 193,569 3,105 11,836 376,187
------------------------------------------- -------- -------------- ------------ --------- ------------
The total amount charged to profit or loss in the period, in
relation to goodwill and client relationships, was GBP8,177,000
(six months ended 30 June 2021: GBP6,289,000; year ended 31
December 2021: GBP13,879,000).
Impairment
The recoverable amounts of the groups of CGUs to which goodwill
is allocated are assessed using value-in-use calculations. The
group prepares cash flow forecasts derived from the most recent
financial budgets approved by the board, covering the forthcoming
and future years. Budgets are extrapolated for five years based on
annual revenue and cost growth for each group of CGUs, as well as
the group's expectation of future industry growth rates. A
five-year extrapolation period is chosen as this aligns with the
period covered by the group's 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 group of CGUs.
The pre-tax rate used to discount the forecast cash flows was
11.3% (30 June 2021: 16.0%; 31 December 2021: 12.0%). 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 the group of CGUs operate.
There was no impairment to the goodwill allocated to the
Investment Management group of CGUs during the period. The group
has considered any reasonably foreseeable changes to the
assumptions used in the value-in-use calculation for the Investment
Management group of CGUs. Based on this assessment, no such change
would result in an impairment of the goodwill allocated to this
CGU.
15 Provisions for liabilities and charges
Deferred,
variable
costs Deferred
to acquire and contingent
client consideration
relationship in business Legal
intangibles combinations and compensation Property-related Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ------------- --------------- ----------------- ---------------- --------
At 1 January 2021 3,785 588 594 3,748 8,715
------------------------------------ ------------- --------------- ----------------- ---------------- --------
Charged to profit or loss - - 1,191 (255) 936
Unused amount credited to profit or
loss - - (44) - (44)
------------------------------------ ------------- --------------- ----------------- ---------------- --------
Net charge to profit or loss - - 1,147 (255) 892
Other movements 1,383 - - - 1,383
Utilised/paid during the period (855) (588) (261) - (1,704)
------------------------------------ ------------- --------------- ----------------- ---------------- --------
At 30 June 2021 (unaudited) 4,313 - 1,480 3,493 9,286
------------------------------------ ------------- --------------- ----------------- ---------------- --------
Charged to profit or loss - - 1,087 1,250 2,337
Unused amount credited to profit or
loss - - (111) - (111)
------------------------------------ ------------- --------------- ----------------- ---------------- --------
Net charge to profit or loss - - 976 1,250 2,226
Other movements 6,609 - - - 6,609
Utilised/paid during the period (2,384) - (313) (100) (2,797)
------------------------------------ ------------- --------------- ----------------- ---------------- --------
At 31 December 2021 (audited) 8,538 - 2,143 4,643 15,324
------------------------------------ ------------- --------------- ----------------- ---------------- --------
Charged to profit or loss - - 234 310 544
Unused amount credited to profit or
loss (193) - (21) - (214)
------------------------------------ ------------- --------------- ----------------- ---------------- --------
Net charge to profit or loss (193) - 213 310 330
Other movements - - - - -
Utilised/paid during the period (4,499) - (171) - (4,670)
------------------------------------ ------------- --------------- ----------------- ---------------- --------
At 30 June 2022 (unaudited) 3,846 - 2,185 4,953 10,984
------------------------------------ ------------- --------------- ----------------- ---------------- --------
Payable within one year 1,094 - 2,185 313 3,592
Payable after one year 2,752 - - 4,640 7,392
------------------------------------ ------------- --------------- ----------------- ---------------- --------
At 30 June 2022 (unaudited) 3,846 - 2,185 4,953 10,984
------------------------------------ ------------- --------------- ----------------- ---------------- --------
Deferred, variable costs to acquire client relationship
intangibles
Other movements in provisions relate to deferred payments to
investment managers and third parties for the introduction of
client relationships, which have been capitalised in the
period.
Deferred and contingent consideration in business
combinations
During the prior year, the group settled an incentivisation
award for Speirs & Jeffrey support staff in the value of
GBP588,000.
Legal 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 balance sheet date. The timing of
settlement of provisions for client compensation or litigation is
dependent, in part, on the duration of negotiations with third
parties.
In the ordinary course of business claims against the group for
advice that is deemed unsuitable may be made. As at 30 June, the
group has identified claims of GBP0.5m, which are expected to be
paid within 12 months of the period end, and which would be largely
offset by an insurance recoverable. Both the provision and
insurance asset have not been recognised in the interim statement
at 30 June 2022.
Property-related
Property-related provisions of GBP4,953,000 relate to
dilapidation provisions expected to arise on leasehold premises
held by the group (30 June 2021: GBP3,493,000; 31 December 2021:
GBP4,643,000).
Dilapidation provisions are calculated using a discounted cash
flow model. During the six months ended 30 June 2022, dilapidation
provisions increased by GBP310,000 (30 June 2021: decreased by
GBP255,000; 31 December 2021: increased by GBP895,000). The group
utilised GBPnil (30 June 2021: GBPnil; 31 December 2021:
GBP100,000) of the dilapidations provision held for its properties
during the period.
Amounts payable after one year
Property-related provisions of GBP4,953,000 are expected to be
settled within 11 years of the balance sheet 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 three years of the balance
sheet date.
16 Subordinated loan notes
Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
------------------------ --------- --------- ------------
Subordinated loan notes
* face value 40,000 20,000 40,000
* carrying value 39,892 19,964 39,893
------------------------ --------- --------- ------------
During the prior year, Rathbone Investment Management Limited
repaid its GBP20.0 million 10-year callable subordinated loan
notes, and Rathbones Group Plc issued GBP40.0 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 and at a fixed rate of 4.893% over
Compounded Daily SONIA thereafter. Legal fees of GBP107,000 were
incurred in issuing the notes, which were 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 Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
% p.a. % p.a. % p.a.
-------------------------------------------------------- --------- --------- -------------
Rate of increase of pensions in payment:
* Laurence Keen Scheme 3.60 3.50 3.70
* Rathbone 1987 Scheme 3.20 3.20 3.30
Rate of increase of deferred pensions 3.20 3.30 3.40
Discount rate 3.70 1.90 1.90
Inflation* 3.20 3.30 3.40
Percentage of members transferring out of the schemes
per annum 2.00 3.00 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 14.00 17.00 15.00
* Rathbone 1987 Scheme 18.00 21.00 20.00
-------------------------------------------------------- --------- --------- -------------
* Inflation assumptions are based on the Retail Prices Index
The assumed life expectations of members retiring aged 65
were:
Unaudited 30 June Unaudited 30 June Audited 31 December
2022 2021 2021
------------------- ------------------- ---------------------
Males Females Males Females Males Females
--------------------- -------- --------- -------- --------- -------- -----------
Retiring today 23.4 25.0 23.4 24.9 23.3 24.9
Retiring in 20 years 24.9 26.6 24.9 26.6 24.8 26.5
--------------------- -------- --------- -------- --------- -------- -----------
The amount included in the balance sheet arising from the
group's obligations in respect of the schemes is as follows:
Unaudited 30 June Unaudited 30 June Audited 31 December
2022 2021 2021
-------------------------- -------------------------- --------------------------
Rathbone Laurence Rathbone Laurence Rathbone Laurence
1987 Scheme Keen Scheme 1987 Scheme Keen Scheme 1987 Scheme Keen Scheme
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Present value of defined
benefit obligations (100,054) (8,138) (143,662) (11,263) (144,428) (11,149)
Fair value of scheme assets 114,611 9,468 140,831 12,404 154,883 12,981
---------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Total surplus/(deficit) 14,557 1,330 (2,831) 1,141 10,455 1,832
---------------------------- ------------ ------------ ------------ ------------ ------------ ------------
The group made lump sum contributions into its pension schemes
totalling GBP168,000 during the period (30 June 2021: GBP168,000;
31 December 2021: GBP5,086,000).
18 Share capital and share premium
The following movements in share capital occurred during the
period:
Exercise Share Merger
Number price capital Share premium reserve Total
of shares pence GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ---------- ------------ ------------ ------------- -------- --------
At 1 January 2021 57,486,413 2,874 215,092 71,756 289,722
Shares issued:
* in relation to business combinations 881,737 24.8 44 21,858 - 21,902
1,540.0 -
* to Share Incentive Plan 193,842 1,858.0 10 3,287 - 3,297
* to Save As You Earn scheme 6,532 1,648.0 - 107 - 107
* to Employee Benefit Trust - - - - - -
* on placing 2,840,910 1,760.0 142 48,666 - 48,808
------------------------------------------- ---------- ------------ ------------ ------------- -------- --------
At 30 June 2021 (unaudited) 61,409,434 3,070 289,010 71,756 363,836
------------------------------------------- ---------- ------------ ------------ ------------- -------- --------
Shares issued:
* in relation to business combinations 272,952 1,913.4 14 - 5,209 5,223
1,540.0 -
* to Share Incentive Plan 101,116 2,055.0 5 1,966 - 1,971
1,648.0 -
* to Save As You Earn scheme 2,839 1,977.0 - 50 - 50
* to Employee Benefit Trust 217,000 5.0 11 - - 11
------------------------------------------- ---------- ------------ ------------ ------------- -------- --------
At 31 December 2021 (audited) 62,003,341 3,100 291,026 76,965 371,091
------------------------------------------- ---------- ------------ ------------ ------------- -------- --------
Shares issued:
* in relation to business combinations 229,489 24.8 11 5,689 - 5,700
1,600.0 -
* to Share Incentive Plan 349,298 2,090.0 17 7,089 - 7,106
1,085.0 -
* to Save As You Earn scheme 685 1,813.0 - 9 - 9
* to Employee Benefit Trust 481,500 5.0 24 - - 24
At 30 June 2022 (unaudited) 63,064,313 3,152 303,813 76,965 383,930
------------------------------------------- ---------- ------------ ------------ ------------- -------- --------
On 5 March 2021, the company issued 881,737 shares in respect of
the Speirs & Jeffrey first earn-out consideration relating to
the sellers' 2020 incentivisation award.
On 22 June 2021, the company issued 2,840,910 shares by way of a
placing for cash consideration at GBP17.60 per share, which raised
GBP48,808,000, net of GBP1,192,000 placing costs, offset against
share premium arising on the issue.
On 22 October 2021, the company issued 272,952 shares in respect
of the initial share consideration from the acquisition of
Saunderson House. These shares are being held in own shares until
they vest on the third anniversary of issue. As the share issuance
was in pursuance of the arrangement to acquire the shares in
Saunderson House, the premium on the issuance of these shares was
recognised within the merger reserve.
On 30 March 2022, the company issued 229,489 shares in respect
of the Speirs & Jeffrey second earn-out consideration relating
to the sellers' 2021 incentivisation award.
At 30 June 2022, the group held 4,497,727 own shares (30 June
2021: 3,757,229; 31 December 2021: 3,624,714).
19 Share-based payments
The group recognised total expenses of GBP7,452,000 (30 June
2021: GBP6,474,000, 31 December 2021: GBP13,390,000) in relation to
share-based transactions in the period. This excludes the staff
costs in relation to the acquisitions of Speirs & Jeffrey and
Saunderson House 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.
Level Level Level
1 2 3 Total
At 30 June 2022 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- -------- -------- -------- --------
Financial assets
Fair value through profit or loss:
* equity securities 8,854 - 3,052 11,906
* money market funds - - - -
----------------------------------- -------- -------- -------- --------
8,854 - 3,052 11,906
----------------------------------- -------- -------- -------- --------
Level Level Level
1 2 3 Total
At 30 June 2021 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- -------- -------- -------- --------
Financial assets
Fair value through profit or loss:
* equity securities 7,018 - 2,464 9,482
* money market funds - 103,097 - 103,097
----------------------------------- -------- -------- -------- --------
7,018 103,097 2,464 112,579
----------------------------------- -------- -------- -------- --------
Level Level Level
1 2 3 Total
At 31 December 2021 (audited) GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- -------- -------- -------- --------
Financial assets
Fair value through profit or loss:
* equity securities 7,376 - 2,558 9,934
* money market funds - 20,000 - 20,000
----------------------------------- -------- -------- -------- --------
7,376 20,000 2,558 29,934
----------------------------------- -------- -------- -------- --------
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 value of listed equity securities is their quoted
price. Money market funds are demand securities and changes to
estimates of interest rates will not affect their fair value. The
fair value of money market funds is their daily redemption
value.
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. The fair value of debt securities at 30
June 2022 was GBP830,894,000 (30 June 2021: GBP715,434,789; 31
December 2021: GBP761,763,000) and the carrying value was
GBP829,970,000 (30 June 2021: GBP714,765,000; 31 December 2021:
GBP761,654,000). 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) comprise Tier 2 loan notes.
The fair value of the loan notes at 30 June 2022 was GBP44,968,000
(30 June 2021: GBP19,862,000; 31 December 2021: GBP42,824,000) and
the carrying value was GBP39,892,000 (30 June 2021: GBP19,964,000;
31 December 2021: GBP39,893,000). 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
The group holds 1,809 shares in Euroclear Holdings SA, which are
classed as level 3 in the fair value hierarchy since no observable
market data is available.
In the current period, the valuation of EUR1,985 per share has
been calculated by reference to the most readily available data,
which is the indicative price derived from recent transactions of
the shares in the market. The valuation at the balance sheet date
has been adjusted for movements in exchange rates since the
acquisition date.
A 10% weakening of the euro against sterling, occurring on 30
June 2022, would have reduced equity and profit after tax by
GBP247,000 (30 June 2021: GBP200,000; 31 December 2021:
GBP207,000). A 10% strengthening of the euro against sterling would
have had an equal and opposite effect.
Changes in the fair values of financial instruments categorised
as level 3 within the fair value hierarchy were as follows:
Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
------------------------------------------- --------- --------- ------------
At 1 January 2,558 2,569 2,569
Total unrealised gains/(losses) recognised
in profit or loss 494 (105) (11)
------------------------------------------- --------- --------- ------------
At 30 June 3,052 2,464 2,558
------------------------------------------- --------- --------- ------------
Expected credit loss provision
The movement in the allowance for impairment in respect of
financial assets during the reporting period was as follows:
Cash and Trust
balances Loans Investment and financial
with central and advances Management planning
banks to banks loan book debtors Debt securities Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------------- ------------- ----------- -------------- --------------- --------
Balance at 1 January 2022
(audited) 83 - - 234 28 345
Amounts written off - - - - - -
Net remeasurement of loss
allowance (48) - 1 (207) (8) (262)
-------------------------------- ------------- ------------- ----------- -------------- --------------- --------
Balance at 30 June 2022
(unaudited) 35 - 1 27 20 83
-------------------------------- ------------- ------------- ----------- -------------- --------------- --------
As at 30 June 2022, the impairment allowance in respect of all
financial assets in the table above was measured at an amount equal
to 12 month ECLs, apart from trust and financial planning debtors,
where the impairment allowance was equal to lifetime ECLs.
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/directors of client companies and providing other
services.
(b) Capital expenditure authorised and contracted for at 30 June
2022 but not provided for in the condensed consolidated interim
financial statements amounted to GBP1,441,000 (30 June 2021:
GBP1,300,000; 31 December 2021: GBP988,000).
(c) The contractual amounts of the group's commitments to extend
credit to its clients are as follows:
Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
-------------------------------------------------- --------- --------- ------------
Undrawn commitments to lend of one year or less 30,660 33,027 31,005
Undrawn commitments to lend of more than one year 3,129 9,005 9,270
-------------------------------------------------- --------- --------- ------------
33,789 42,032 40,275
-------------------------------------------------- --------- --------- ------------
(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 have
resulted in significant levies on the industry in recent years. 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 Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
------------------------------------------------- --------- --------- ------------
Cash and balances at central banks 1,680,329 1,414,291 1,460,001
Loans and advances to banks 156,207 158,986 173,589
Investment securities held at fair value through
profit or loss - 103,097 20,000
------------------------------------------------- --------- --------- ------------
1,836,536 1,676,374 1,653,590
------------------------------------------------- --------- --------- ------------
Investment securities held at fair value through profit or loss
are amounts invested in money market funds which are realisable on
demand.
Cash flows arising from issue of ordinary shares comprise:
Unaudited Unaudited
Six months Six months
to to Audited
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
------------------------------------------------- ----------- ----------- ------------
Share capital issued (note 18) 52 196 226
Share premium on shares issued (note 18) 12,787 74,011 75,934
Merger reserve on shares issued (note 18) - - 5,209
Shares issued in relation to share-based schemes
for which no cash consideration was received (5,699) (21,902) (21,902)
Shares issued in relation to share buybacks (10,843) (1,829) (15,132)
------------------------------------------------- ----------- ----------- ------------
(3,703) 50,476 44,335
------------------------------------------------- ----------- ----------- ------------
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 GBP171,000 were paid in the period (six
months ended 30 June 2021: GBP192,000; year ended 31 December 2021:
GBP229,000) in respect of ordinary shares held by key management
personnel.
As at 30 June 2022, the group had provided interest-free season
ticket loans of GBPnil (30 June 2021: GBPnil; 31 December 2021:
GBPnil) to key management personnel.
As at 30 June 2022, key management personnel and their close
family members had gross outstanding deposits of GBP2,366,000 (30
June 2021: GBP743,000; 31 December 2021: GBP634,000) and gross
outstanding loans of GBPnil (30 June 2021: GBPnil; 31 December
2021: GBPnil). 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.
One group subsidiary, Rathbone Unit Trust Management, has
authority to manage the investments within a number of unit trusts.
During the first half of 2022, the group managed 32 unit trusts,
Sociétés d'investissement à Capital Variable (SICAVs) and
open-ended investment companies (OEICs) (together, 'collectives')
(six months ended 30 June 2021: 33 collectives; year ended 31
December 2021: 33 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 Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2022 2020 2021
GBP'000 GBP'000 GBP'000
---------------------- ----------- ----------- ------------
Total management fees 29,900 26,133 68,444
---------------------- ----------- ----------- ------------
Total management fees are included within 'fee and commission
income' in the consolidated interim statement of comprehensive
income.
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
---------------------------------- ----------- ----------- ------------
Management fees owed to the group 5,464 5,273 6,240
Holdings in unit trusts (note 20) 8,854 7,018 7,376
---------------------------------- ----------- ----------- ------------
14,318 12,291 13,616
---------------------------------- ----------- ----------- ------------
Management fees owed to the group are included within 'accrued
income' and holdings in unit trusts are classified as 'fair value
through profit or loss' in the consolidated interim balance sheet.
The maximum exposure to loss is limited to the carrying amount on
the balance sheet 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 Interest in unconsolidated structured entities
As described in note 23, at 30 June 2022, the group owned units
in collectives managed by Rathbone Unit Trust Management with a
value of GBP8,854,000 (30 June 2021: GBP7,018,000; 31 December
2021: GBP7,376,000), representing 0.08% (30 June 2021: 0.06%; 31
December 2021: 0.06%) of the total value of the collectives managed
by the group. These assets are held to hedge the group's exposure
to deferred remuneration schemes for employees of Unit Trusts.
The group's primary risk associated with its interest in the
unit trusts is from changes in fair value of its holdings in the
funds.
The group is not judged to control, and therefore does not
consolidate, the collectives. Although the fund trustees have
limited rights to remove Rathbone Unit Trust Management as manager,
the group is exposed to very low variability of returns from its
management and share of ownership of the funds and is therefore
judged to act as an agent rather than having control under IFRS
10.
25 Events after the balance sheet date
An interim dividend of 28.0p per share was declared on 27 July
2022 (note 9).
There have been no other material events occurring between the
balance sheet date and 27 July 2022.
Regulatory capital
The group is classified as a banking group under the Capital
Requirements Directive (CRD) and is therefore required to operate
within the restrictions on capital resources and banking exposures
prescribed by the Capital Requirements Regulation, as applied by
the Prudential Regulation Authority (PRA).
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 Unaudited Unaudited
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
------------------------------------------------------ --------- --------- ------------
Share capital and share premium 306,967 292,173 294,126
Reserves 351,376 320,704 365,782
Less:
* prudent valuation of assets held at fair value
through profit or loss (12) (113) (30)
* own shares (45,252) (48,407) (36,626)
* intangible assets (net of deferred tax) (334,777) (215,753) (344,762)
* pension asset (15,887) - (12,287)
------------------------------------------------------ --------- --------- ------------
Total Common Equity Tier 1 capital 262,415 348,604 266,203
Tier 2 capital 40,000 9,690 38,508
------------------------------------------------------ --------- --------- ------------
Total own funds 302,415 358,294 304,711
------------------------------------------------------ --------- --------- ------------
Own funds requirements
The group is required to hold capital to cover a range of own
funds requirements, classified as Pillar 1 and Pillar 2.
Pillar 1 - minimum requirement for capital
Pillar 1 focuses on the determination of risk-weighted assets
and expected losses in respect of the group's exposure to credit,
counterparty credit, settlement, market and operational risks and
sets a minimum requirement for capital.
At 30 June 2022, the group's risk-weighted assets were
GBP1,575,706,000 (30 June 2021: GBP1,314,225,000; 31 December 2021:
GBP1,424,500,000).
Pillar 2 - supervisory review process
Pillar 2 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 to reflect
those risks, specific to the firm, which are not fully captured
under the Pillar 1 own funds requirement. These include:
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.
Interest rate risk in the banking book
The potential losses in the non-trading book resulting from
interest rate changes or widening of the spread between Bank of
England base rates and SONIA.
Concentration risk
Greater loss volatility arising from a higher level of loan
default correlation than is assumed by the Pillar 1 assessment.
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 of 2.5% of risk-weighted assets
designed to provide for losses in the event of a stress.
Countercyclical capital buffer (CCyB)
The CCyB is time-varying and is designed to act as an incentive
for banks to constrain credit growth in times of heightened
systemic risk. The amount of the buffer is determined by reference
to rates set by the Financial Policy Committee (FPC) for individual
countries where the group has credit exposures.
The buffer rate is currently set to 0% for the UK. However,
different rates for other countries, where the group has small
relevant credit exposures, result in an overall rate of 0.01% of
risk-weighted assets for the group as at 30 June 2022. An increased
UK rate of 1% will come into effect from December 2022, and a rate
of 2% from July 2023, which has been built into our forecasts.
The group's own funds requirements were as follows:
Unaudited Unaudited Unaudited
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
---------------------------------------------------- --------- --------- ------------
Own funds requirement for credit risk, counterparty
credit risk and settlement risk 63,798 52,753 50,862
Own funds requirement for market risk - - 840
Own funds requirement for operational risk 62,258 52,385 62,258
---------------------------------------------------- --------- --------- ------------
Pillar 1 own funds requirement 126,056 105,138 113,960
Pillar 2A own funds requirement 40,145 40,118 40,073
---------------------------------------------------- --------- --------- ------------
Total Pillar 1 and 2A own funds requirement 166,201 145,256 154,033
---------------------------------------------------- --------- --------- ------------
CRD IV buffers:
* capital conservation buffer (CCB) 39,393 32,856 35,613
* countercyclical capital buffer (CCyB) 158 131 -
---------------------------------------------------- --------- --------- ------------
Total Pillar 1 and 2A own funds requirement and CRD
IV buffers 205,752 178,243 189,646
---------------------------------------------------- --------- --------- ------------
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 Financial
Reporting Standards;
- 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 2022, and as at 30 June
2022, 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
27 July 2022
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 2022 which comprises the income statement,
the balance sheet, the statement of changes in equity, the cash
flow statement, and related notes 1 to 25.
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 2022 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. 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 will be 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 this ISRE (UK), 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 group a conclusion on the
condensed set of financial statement in the half-yearly financial
report. Our conclusion, including our Conclusions 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
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. 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
27 July 2022
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END
IR EALXXAFSAEFA
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