TIDMRAT
RNS Number : 1679H
Rathbones Group PLC
26 July 2023
Rathbones Group Plc
Interim results
Rathbones Group Plc ("Rathbones") announces interim results for
the six months ended 30 June 2023.
Paul Stockton, Group Chief Executive of Rathbones, said:
"After a more positive last half of 2022, the first half of 2023
was a challenging period for investors as markets digested material
changes in inflation expectations and interest rates. Rathbones
FUMA and net operating income have remained resilient, growing by
2.7% and 2.6%, respectively compared with the same period a year
ago.
Gross inflows into our discretionary and managed business were
strong in the first half of the year at an annualised 10.7% of
FUMA, although net inflows in the period were GBP161 million,
representing an annualised growth rate of 0.7%. Outflows were
elevated in our Charities business, including one large client
outflow. Client retention rates remain high at 92.8% albeit
economic conditions have resulted in a marginally higher incidence
of low value outflows from accounts that remain with us.
We are grateful for the strong support from shareholders who in
June 2023 voted convincingly in favour of the Investec Wealth &
Investment ("Investec W&I") combination. Integration plans are
progressing well, and we expect to complete towards the end of the
third quarter of 2023. The transaction presents many exciting
opportunities for all stakeholders and places the enlarged
Rathbones in a strong position to navigate the current markets and
take advantage of future growth opportunities in the sector."
Financial and business highlights:
- Total funds under management and administration grew 2.7% to
GBP60.5 billion at 30 June 2023 from the GBP58.9 billion at 30 June
2022 (31 December 2022: GBP60.2 billion). The MSCI PIMFA Private
Investor Balanced index was 1.6% higher at 1,692 on 30 June 2023
compared to a year ago.
- Underlying net operating income totalled GBP238.0 million in
the six months to 30 June 2023, an increase of 2.6% from the
GBP231.9 million in the corresponding period last year, The average
MSCI PIMFA Private Investor Balanced index was 2% lower than last
year falling to an average of 1,697 in the six-month period to 30
June 2023.
- Fee income and commission in Investment Management totalled
GBP162.5 million in the first six months of 2023, a decrease of
2.3% on the prior period (30 June 2022: GBP166.3 million).
- Fee income in our funds business totalled GBP31.1 million in
the six months ended 30 June 2023, a decrease of 3.1% on the
GBP31.8 million reported in the first half of 2022.
- Net interest income was GBP23.0 million, up from GBP6.1 million in the first half of 2022.
- Although gross organic inflows were strong in the period
(representing an annualised growth rate of 11.4% of opening FUMA),
outflows were elevated reflecting net losses in our Charities
business and increases in lower value outflows from accounts that
remain with us. Total discretionary and managed net inflows were
GBP0.2 billion (H1 2022: GBP0.6 billion) in the period to 30 June
2023 as a result, representing an annualised growth rate of 0.7%
(H1 2022: 2.3%).
- Discretionary service net inflows totalled GBP0.1 billion (H1 2022: GBP0.4 billion).
- Net inflows into our multi-asset fund range (a central part of
our managed offering to the adviser market) were GBP0.1 billion,
equating to annualised net growth for the period of 9.1% (H1 2022:
GBP0.2 billion).
- Single strategy net outflows in our funds business were GBP0.3
billion (H1 2022: GBP0.2 billion).
- GBP1 billion of FUMA has been transferred from Saunderson
House to Rathbones solutions at 30 June 2023. Our propositions
offer improved solutions to clients at lower cost and the migration
is expected to be completed by the end of the first quarter of
2024.
- Underlying profit before tax totalled GBP50.7 million in the
first six months of 2023 (30 June 2022: GBP50.0 million) and
statutory profit before tax for the six months to 30 June 2023
totalled GBP26.0 million (30 June 2022: GBP32.6 million). Statutory
profit before tax included GBP11.2 million of costs relating to our
combination with Investec W&I, largely professional and legal
fees. We now expect the transaction to complete towards the end of
the third quarter of 2023.
- Our ongoing financial resilience allows us to continue to
build the digital and data capabilities that remain critical to
future success. In the first half we completed planned enhancements
to MyRathbones and added functionality to investment and dealing
systems in our Funds business.
- Delivery of our Client Lifecycle Management (CLM) programme
has been slower than anticipated such that the launch is now
expected to be in the first quarter of 2024. This timing is
reflected in the total expenditure on our digital programme in the
first half which at GBP6 million is lower than the GBP8 million
incurred a year ago. We continue to expect total expenditure across
our digital programme to be no more than GBP40 million.
Declaration of interim dividend:
- In line with our progressive dividend policy, we have
increased our interim dividend by 3.6% to 29p (30 June 2022: 28p).
The record date will be 4 August 2023 and the dividend will be paid
on 25 August 2023.
- In light of the upcoming combination with Investec W&I,
and to ensure dividends paid remain appropriately aligned to
earnings, we also expect to bring forward payment of a portion of
the final dividend for FY23 to shareholders on the register shortly
prior to the completion of the combination, by way of a second
interim dividend. The final dividend in respect of FY23 will then
be reduced accordingly.
Board role changes
- After six years Sarah Gentleman is stepping down as Chair of
the Remuneration Committee to focus on her role as Senior
Independent Director. We would like to thank her for her leadership
on remuneration policy over this time and are delighted to appoint
Dharmash Mistry as our new Remuneration Committee Chair, effective
as of 1 September, subject to regulatory approval. Dharmash joined
the board as a non-executive director on 5 October 2021.
Funds under management and administration
(i) Breakdown of FUMA and flows by service level
Service
Opening Level SHL Migrated Closing Ann Net
FUMA Net Flows Transfers(1) Assets FUMA Growth(2)
Market
& investment
6 months ended 30 June Performance
2023 (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (%)
------------------------------ -------- --------- ------------- ------------- ------------- -------- ----------
Discretionary service 44,322 63 (199) 923 193 45,302
Bespoke portfolios 42,894 (39) (714) 419 151 42,711 (0.2)
Managed via in-house
funds 1,428 102 515 504 42 2,591 14.3
------------------------------ -------- --------- ------------- ------------- ------------- -------- ----------
Multi-asset funds 2,159 98 - - 21 2,278 9.1
------------------------------ -------- --------- ------------- ------------- ------------- -------- ----------
Total discretionary
& managed 46,481 161 (199) 923 214 47,580 0.7
------------------------------ -------- --------- ------------- ------------- ------------- -------- ----------
Non-discretionary service 757 (8) (12) - 6 743 (2.1)
------------------------------ -------- --------- ------------- ------------- ------------- -------- ----------
Total wealth management 47,238 153 (211) 923 220 48,323 0.6
------------------------------ -------- --------- ------------- ------------- ------------- -------- ----------
Single-strategy funds 6,474 (279) - - 325 6,520 (8.6)
Execution only & banking 2,404 (87) 211 - 27 2,555 (7.2)
Total group (pre acquisitions) 56,116 (213) - 923 572 57,398 (0.8)
------------------------------ -------- --------- ------------- ------------- ------------- -------- ----------
Saunderson House(3) 4,117 (156) - (923) 97 3,135 (7.6)
------------------------------ -------- --------- ------------- ------------- ------------- -------- ----------
Total group 60,233 (369) - - 669 60,533 (1.2)
------------------------------ -------- --------- ------------- ------------- ------------- -------- ----------
Service
Opening Level SHL Migrated Closing Ann Net
FUMA Net Flows Transfers(1) Assets FUMA Growth(2)
Market
& investment
Performance
Q2 ended 30 June 2023 (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (%)
------------------------------- -------- --------- ------------- ------------ ------------- -------- ----------
Discretionary service 45,207 (177) (106) 571 (193) 45,302
Bespoke portfolios 43,407 (226) (506) 254 (218) 42,711 (2.1)
Managed via in-house
funds 1,800 49 400 317 25 2,591 10.9
------------------------------- -------- --------- ------------- ------------ ------------- -------- ----------
Multi-asset funds 2,231 36 - - 11 2,278 6.5
------------------------------- -------- --------- ------------- ------------ ------------- -------- ----------
Total discretionary
& managed 47,438 (141) (106) 571 (182) 47,580 (1.2)
------------------------------- -------- --------- ------------- ------------ ------------- -------- ----------
Non-discretionary service 743 (8) 8 - - 743 (4.3)
------------------------------- -------- --------- ------------- ------------ ------------- -------- ----------
Total wealth management 48,181 (149) (98) 571 (182) 48,323 (1.2)
------------------------------- -------- --------- ------------- ------------ ------------- -------- ----------
Single-strategy funds 6,529 (128) - - 119 6,520 (7.8)
Execution only & banking 2,452 (11) 98 - 16 2,555 (1.8)
Total group (pre acquisitions) 57,162 (288) - 571 (47) 57,398 (2.0)
------------------------------- -------- --------- ------------- ------------ ------------- -------- ----------
Saunderson House(3) 3,716 (66) - (571) 56 3,135 (7.1)
------------------------------- -------- --------- ------------- ------------ ------------- -------- ----------
Total group 60,878 (354) - - 9 60,533 (2.3)
------------------------------- -------- --------- ------------- ------------ ------------- -------- ----------
(ii) Breakdown of Rathbones Investment Management FUMA and flows
by channel
Service
Opening Level SHL Migrated Closing Ann Net
FUMA Net Flows Transfers(1) Assets FUMA Growth(2)
Market
& investment
6 months ended 30 June Performance
2023 (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (%)
---------------------------- -------- --------- ------------- ------------ ------------- -------- ----------
Total direct 33,639 (200) (195) - 89 33,333 (1.2)
Total financial adviser
linked 10,683 263 (4) 923 104 11,969 4.9
---------------------------- -------- --------- ------------- ------------ ------------- -------- ----------
Total discretionary
service 44,322 63 (199) 923 193 45,302 0.3
Execution only & banking 2,404 (87) 211 - 27 2,555 (7.2)
Non-discretionary service 757 (8) (12) - 6 743 (2.1)
---------------------------- -------- --------- ------------- ------------ ------------- -------- ----------
Total Investment Management 47,483 (32) - 923 226 48,600 (0.1)
---------------------------- -------- --------- ------------- ------------ ------------- -------- ----------
Service
Opening Level SHL Migrated Closing Ann Net
FUMA Net Flows Transfers(1) Assets FUMA Growth(2)
Market
& investment
Performance
Q2 ended 30 June 2023 (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (%)
---------------------------- -------- --------- ------------- ------------ ------------- -------- ----------
Total direct 33,882 (287) (96) - (166) 33,333 (3.4)
Total financial adviser
linked 11,325 110 (10) 571 (27) 11,969 3.9
---------------------------- -------- --------- ------------- ------------ ------------- -------- ----------
Total discretionary
service 45,207 (177) (106) 571 (193) 45,302 (1.6)
Execution only & banking 2,452 (11) 98 - 16 2,555 (1.8)
Non-discretionary service 743 (8) 8 - 0 743 (4.3)
---------------------------- -------- --------- ------------- ------------ ------------- -------- ----------
Total Investment Management 48,402 (196) - 571 (177) 48,600 (1.6)
---------------------------- -------- --------- ------------- ------------ ------------- -------- ----------
1. Service Level Transfers represent client FUMA which has
transferred from one service to another within the group during the
period.
2. Annualised net growth in flows calculated as net
flows/opening FUMA.
3. Total funds under advice by Saunderson House, including those
clients transferred to fellow group companies totalled GBP4.17
billion at 30 June 2023 (30 June 2022: GBP4.24 billion, 31 December
2022: GBP4.18 billion).
(iii) Total Group FUMA
At 30 June At 5 April
-------------------------------------- ------------------------ ---------------
2023 2022 Change 2023 Change
GBPm GBPm % GBPm %
-------------------------------------- ------- ------- ------ ------- ------
Rathbones Investment Management
Gross FUMA 48,600 46,253 5.1 48,402 0.4
Of which: invested in Rathbones
Funds discretionary wrapped funds(4) (3,169) (2,439) 29.9 (2,671) 18.6
Rathbone Funds 12,165 10,888 11.7 11,431 6.4
Saunderson House 3,135 4,243 (26.1) 3,716 (15.6)
Of which: invested in Rathbones
Funds discretionary wrapped funds(5) (198) - - - -
-------------------------------------- ------- ------- ------ ------- ------
Total Group FUMA 60,533 58,946 2.7 60,878 (0.6)
-------------------------------------- ------- ------- ------ ------- ------
4. Discretionary wrapped funds represent funds operated by
Rathbone Funds, managed by both Rathbone Investment Management
teams and Rathbone Funds managers.
5. Discretionary wrapped funds represent funds operated by
Rathbone Funds, managed by both Saunderson House teams and Rathbone
Funds managers.
Interim results presentation
A presentation detailing the 2023 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/6491abc967ddff0c004fd028/odind
) or by dialling in
using the conference call details below:
United Kingdom (Local): +44 20 3936 2999
United Kingdom (Toll-Free): +44 800 358 1035
Participant access code: 887498
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
.
26 July 2023
For further information contact:
Rathbones Group Plc
Paul Stockton, Group Chief Executive Officer
Jennifer Mathias, Group Chief Financial Officer
Sarah Lewandowski, Head of Investor Relations
Tel: 07702605524
Email: sarah.lewandowski@rathbones.com
Camarco
Ed Gascoigne-Pees
Julia Tilley
Tel: 020 3757 4984
Email: ed.gascoigne-pees@camarco.co.uk
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
for everyone's tomorrow has been with us from the beginning and
continues to lead us forward.
Rathbones has over 2,200 employees in 15 UK locations and
Jersey; its headquarters is 8 Finsbury Circus, London, EC2M
7AZ.
www.rathbones.com
Chair and ceo statement
market overview
Although UK equity markets were less volatile in the six months
to 30 June 2023, investor sentiment has been negatively impacted by
the persistent inflationary backdrop and general outlook,
particularly in the UK, where interest rates are at their highest
since the financial crisis with potential to rise further.
This weaker outlook for economic growth has not only exacerbated
the cost-of-living crisis for individuals, but it has also driven
investors to change their short-term asset allocation towards
short-dated fixed income securities and money market
instruments.
Whilst this backdrop may not present a strong current case for
investing in equities, our advice-led model continues to be
focussed on achieving our clients' desired outcomes over the longer
term, and we continue to pursue suitable investment opportunities,
prioritise engagement with them and improve service standards.
The UK wealth management industry remains attractive with
long-term structural drivers still in place, but competition
remains strong, and we continue to pursue the benefits of scale to
generate efficiencies and develop our technology footprint. We have
welcomed the strong support shareholders gave in June for our
transaction with Investec Wealth & Investment ("Investec
W&I"), which remains an opportunity to accelerate our plans and
improve margins.
Performance, FUMA and financial review
Total funds under management and administration (FUMA) for the
group were GBP60.5 billion at 30 June 2023 (H1 2022: GBP58.9
billion, FY 2022: GBP60.2 billion).
Gross organic inflows were strong in the period, representing an
annualised growth rate of 11.4% of opening FUMA. Outflows were
elevated however, representing a disappointing 12.6% on an
annualised basis of opening FUMA. Outflows were largely driven by
our Charities business, including one large client outflow. Our
Charity team continues to focus on investment performance and
improving our ESG proposition, after recently winning a Gold award
for Charity Investment Management Company of the year at the Magic
Circle Awards. Current economic conditions have also resulted in a
marginally higher incidence of low value outflows from accounts
that remain with us, as our clients actively make decisions on
funding lifestyles.
Total discretionary and managed net inflows were GBP0.2 billion
(H1 2022: GBP0.6 billion) in the period to 30 June 2023,
representing an annualised growth rate of 0.7% (H1 2022: 2.3%).
Excluding charity accounts, the equivalent growth rate would have
been 2.3% in the half year to 30 June 2023.
The asset management industry reported net inflows of c.GBP7.1
billion in the first five months of the year, according to data
published by the Investment Association. This was driven primarily
by inflows into global bonds, gilts and money market funds, with
outflows across equities. Reflecting this more cautious investor
sentiment, we also saw outflows in our UK equity funds versus
relatively strong inflows into our multi-asset funds. In our single
strategy funds, net outflows were GBP0.3 billion (H1 2022: net
outflows of GBP0.2 billion). The Pridham report, released in May
2023, ranked Rathbones in 9(th) position for total net retail sales
in the UK in the first quarter of 2023.
Investment Management fee income of GBP138.8 million in the
first half of 2023 was in line with FUMA, comparing directly with
the GBP139.4 million recorded in H1 2022. Fee income
in the Funds business slightly decreased to GBP31.1 million
year-on-year (H1 2022: GBP32.1 million).
Commission income of GBP23.7 million was lower than the first
six months of 2022 (H1 2022: GBP26.9 million), reflecting trading
volumes in the respective periods. Investment management revenue
margin remained robust at 74.2bps in the period, compared with
73.0bps in the first half of 2022.
Net interest income increased significantly to GBP23.0 million
(H1 2022: GBP6.1 million), reflecting the further increases to the
UK base rate. Average client cash balances in the period were
GBP2.5 billion (H1 2022: GBP2.4 billion). We expect net interest
income to continue to increase in 2023, consistent with both recent
and future base rate increases.
Fees from advisory and other services decreased to GBP20.8
million during the first half of 2023 (30 June 2022: GBP26.8
million) with the contribution from Saunderson House falling to
GBP10.5 million (H1 2022: GBP17.0 million) as we go through the
transition process.
Total operating income for the group was GBP238.0 million, up
2.6% year-on-year as increased net interest income more than offset
the reduction in commissions and fees from advisory services.
Underlying operating expenses totalled GBP187.3 million for the
first half (H1 2022: GBP182.0 million). Fixed staff costs of
GBP88.3 million (H1 2022: GBP79.6 million) broadly reflect the
impact of increased headcount last year and salary increases.
Annual average salary increases were c.6%, reflecting the current
inflationary climate and competition for key resources. Increases
were deliberately higher at lower salary levels to reflect the
current cost of living challenges for some colleagues. Variable
staff costs of GBP43.9 million (H1 2022: GBP44.2 million) includes
the impact of lower performance-based awards. Other direct expenses
of GBP55.1 million (H1 2022: GBP58.2 million) include c.GBP6m
planned investment in our digital programme (H1 2022: c.GBP8
million).
Underlying profit before tax totalled GBP50.7 million in H1 2023
(H1 2022: GBP50.0 million) and profit before tax totalled GBP26.0
million (H1 2022: GBP32.6 million).
During the six months to 30 June 2023, we incurred GBP14.9
million acquisition-related costs relating to the combination with
Investec W&I. These costs were primarily due to legal and
professional fees. GBP11.2 million of these costs have been
recognised in profit or loss, and the remainder have been
recognised as an asset at 30 June, as these are incremental costs
related directly to the share issue expected in the second half of
the year.
The underlying operating margin at 30 June 2023 was 21.3% (30
June 2022: 21.5%). Excluding the impact of our digital programme
spend, the underlying operating margin was 23.8%. We retain our
guidance, that after this period of planned expenditure, margins
are expected to return to higher 20s%, 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 17.6% at 30 June 2023 (31 December 2022:
17.9%). Our capital surplus of own funds (excluding year-to-date
post-tax profits) over our regulatory capital requirement was
GBP98.1 million at 30 June 2023 (GBP110.3 million at 31 December
2022).
Interim dividend
In line with our progressive dividend policy, we have increased
our interim dividend by 3.6% to 29p (30 June 2022: 28p), reflecting
the strength of our business and balance sheet. The record date
will be 4 August 2023 and the dividend will be paid on 25 August
2023.
In light of the upcoming combination with Investec W&I, and
to ensure dividends paid remain appropriately aligned to earnings,
we also expect to bring forward payment of a portion of the final
dividend for FY23 to shareholders on the register shortly prior to
the completion of the combination, by way of a second interim
dividend. The final dividend in respect of FY23 will then be
reduced accordingly.
business update
Growing and enabling teams
Our clients value the services we provide, and this is
highlighted in our strong retention level of 92.8% that we continue
to enjoy.
A key part of our effort to support future growth is to keep our
propositions relevant to today's market. We completed a refresh of
our brand in the first half of 2023 which positions us with an
assured look and feel and a marque that translates simply and
clearly in the digital space.
Our new brand has underpinned the launch of a new and upgraded
website that now depicts our services and market positioning much
more clearly. The site is easier to navigate and now operates on a
platform that is much simpler to develop future content. Combining
with our MyRathbones portal, our digital shop window has improved
significantly over the last 12 months and compares favourably
against key competitors. This lays a solid foundation that will
complement the Investcloud capability we are building to drive an
improved client experience.
Consumer duty regulation has supported us in clarifying the
design and positioning of the propositions we offer, supporting
marketing and business development activity that is more clearly
targeted to key client affinity groups. This work has streamlined
what we offer and will form the basis of how Rathbones positions
its services in the future to private clients, third party advisers
and intermediaries and charities.
Having recently streamlined the way in which we work with
external financial advisers in advance of delivering easier digital
capability, we continue to extend our reach into the third-party
advisor market. We currently offer a broad range of investment
solutions to over 280 IFAs utilising our Reliance on Advisor model.
FUMA linked to IFA relationships was GBP4.3 billion at 30 June 2023
(30 June 2022: GBP1.3 billion).
Rathbones Select was designed as a high-quality, 'self-select'
investment service for smaller value portfolios, generally below
GBP150k and now serves almost 3,500 clients up from under 2,500 a
year ago. Select is not only a more suitable investment solution
that uses our multi asset fund capability, but it is much more
efficient for teams to deliver service and creates capacity.
leveraging financial planning
The integration of Saunderson House is progressing well, now
operating under a common management team to deliver a leading range
of advice services to clients.
Our acquisition case for Saunderson House rested upon the
opportunity to offer improved investment solutions to clients at
lower cost to them. Saunderson House now operates as a restricted
advisor from an investment product perspective and c.GBP1 billion
FUMA has been migrated to Rathbones propositions to date. The
migration is expected to be completed by the end of the first
quarter of 2024.
Whilst the asset migration is underway, we have chosen not to
charge activity and investment advisory fees to clients during this
transition which has contributed to total reductions in revenue
from advisory services in the period to GBP20.8 million from
GBP26.8 million in the previous year. Following completion of the
migration, advice revenues will return to more normal levels, as
investment fees will be closely linked to the value of FUMA we
manage, and financial planning teams will operate with a
significantly improved capacity to deliver additional financial
planning services for new and existing clients.
Vision Independent Financial Planning continues to operate
independently as an important part of the group. The network has
now grown to 137 advisers that manage FUMA of GBP2.9 billion (30
June 2022: 128 advisers, GBP2.4 billion).
Across the group at 30 June 2023, Rathbones operated through 209
financial advisers, that work closely with 363 investment managers
to deliver our services.
improving our digital capability
We continue to pursue our digital strategy vigorously,
implementing some important enhancements to MyRathbones that have
added data and allowed clients a greater ability to customise
information. Around c.55% of our clients now receive updates
digitally rather than in hard copy form in accordance with their
preferences.
We have also made further enhancements to Charles River in our
Funds business where we plan to roll out performance measurement,
attribution and risk processes this year, which will significantly
reduce the administrative burden on our team.
Delivery of our Client Lifecycle Management (CLM) programme has
been slower than expected over the first half. This is reflected in
the incidence of expenditure which was c.GBP6 million in the period
(H1 2022: c.GBP8 million), making the total spend to date c.GBP22
million.
We expect delivery to accelerate in the second half as
additional resources are applied, but the full launch of the system
looks likely now to move into the early part of 2024 rather than by
the end of 2023. We reiterate our guidance that the total cost of
digital projects (including the Charles River implementation) will
continue to be no more than GBP40 million.
Inspiring our people
Employee engagement and feedback remains a critical part of how
we measure our success, and we run regular surveys to ensure that
employee engagement remains high. Our Peakon survey in July 2023
produced an engagement score of 8/10 which was 0.2 above the
financial services benchmark, alongside a net promoter score of 37,
which compares favourably at 15 points above the financial services
benchmark.
We will continue to place the well-being of our employees at the
heart of what we do and are committed to offering them future
challenge and opportunity. Our 2022 Annual Report outlined a
practical and action orientated approach to fostering Diversity,
Equality and Inclusion (DE&I) and we are already seeing
positive results from the awareness, network building and training
we have offered. We remain sensitive to the current environment and
the cost-of-living challenges it presents to some colleagues.
Combination with investec W&I
The combination that we announced on 4 April 2023 with Investec
W&I presents us with many opportunities including the chance to
capture the benefits that scale provides. We were grateful for the
overwhelming shareholder support for the transaction in June which
was a positive affirmation of our strategy.
Rathbones and Investec continue to work collaboratively with
regulators, and we expect the transaction to complete towards the
end of the third quarter. Integration planning remains on track,
and we very much look forward to welcoming clients and new
colleagues from Investec W&I to form a significant part of the
enlarged Rathbones group. Our future focus will then move to
integration and delivering benefits to clients, employees and
shareholders.
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 2022 annual report and accounts
have not materially changed. These are in the strategic report and
group risk committee report in pages 59 to 65 and pages 110 to 113
of the 2022 Annual Report.
The risks associated with our combination with Investec W&I
were outlined to shareholders in the prospectus we issued on 1
June. We remain 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
Rathbones has welcomed the new Consumer Duty rules that will
come into force this summer, using them as an opportunity to review
all of our services against the four customer duty outcomes. This
work has helped clarify how these services are sold and described
to clients, and further re-enforced key concepts in training given
to employees.
We remain committed to ensuring that the interests of our
clients are at the forefront of everything we do. Our ongoing
efforts to meet and exceed regulatory requirements are central to
our commitment to client trust and long-term sustainable
growth.
board and executive changes
After six years Sarah Gentleman is stepping down as Chair of the
Remuneration Committee to focus on her role as Senior Independent
Director. We would like to thank her for her leadership on
remuneration policy over this time and are delighted to appoint
Dharmash Mistry as our new Remuneration Committee Chair, effective
as of 1 September, subject to regulatory approval. Dharmash joined
the board as a non-executive director on 5 October 2021.
After 37 years in the industry, and 14 years at Rathbones Mike
Webb, chief executive of RUTM and group distribution, will retire
at the end of this year. His role will be divided between Jayne
Rogers, who will join Rathbones in September as executive chair of
RUTM and chief distribution officer, and Tom Caroll who will run
RUTM day to day as CEO. Jayne joins us after four years at Morgan
Stanley Investment Management where she was EMEA head of strategic
initiatives. Prior to this Jayne held senior roles at Robeco Asset
Management Northern Trust, and KPMG Investment Advisory. Tom joined
RUTM in 2022 as chief investment officer from Sanlam. Both
appointments are subject to regulatory approval.
We were deeply saddened by the recent loss of Anne-Marie
McConnon who suddenly passed away shortly after her arrival as our
first Chief Client Officer of Rathbones. We were very excited to
work with Anne-Marie and continue to see this role as an important
part of the executive team going forward.
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
Whilst market conditions are expected to remain subdued in the
short term, stable revenue margins in our core discretionary fund
management business, and positive performance in our asset
management business, provide a solid platform for the group.
Larger than expected base rate rises to date support net
interest income this year of closer to GBP45 million, up from the
GBP35 million we guided to in our full year results, and we will
maintain expense and recruitment discipline during this
inflationary period.
We look forward to achieving the objectives we set out following
completion of the transaction with Investec W&I, which are
expected to improve medium term underlying operating profit margins
to at least 30%.
Clive C R Bannister Paul Stockton
Group Chief Executive
Chair Officer
25 July 2023
CONSOLIDATED INTERIM Statement OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 JUNE 2023
Unaudited Unaudited
Six months Six months Audited
to to Year to
30 June 30 June 31 December
2023 2022 2022
Note GBP'000 GBP'000 GBP'000
----------------------------------------------- ---- ----------- ----------- ------------
Interest and similar income 65,898 16,368 46,335
Interest expense and similar charges (42,928) (10,271) (28,032)
----------------------------------------------- ---- ----------- ----------- ------------
Net interest income 22,970 6,097 18,303
----------------------------------------------- ---- ----------- ----------- ------------
Fee and commission income 228,502 239,177 462,689
Fee and commission expense (14,119) (13,869) (27,477)
----------------------------------------------- ---- ----------- ----------- ------------
Net fee and commission income 214,383 225,308 435,212
----------------------------------------------- ---- ----------- ----------- ------------
Other operating income 673 535 2,360
----------------------------------------------- ---- ----------- ----------- ------------
Operating income 238,026 231,940 455,875
----------------------------------------------- ---- ----------- ----------- ------------
Charges in relation to client relationships
and goodwill 14 (9,510) (9,924) (19,544)
Acquisition-related costs 6 (15,271) (7,426) (13,462)
Other operating expenses (187,284) (181,976) (358,815)
----------------------------------------------- ---- ----------- ----------- ------------
Operating expenses (212,065) (199,326) (391,821)
----------------------------------------------- ---- ----------- ----------- ------------
Profit before tax 25,961 32,614 64,054
Taxation 8 (6,279) (7,625) (15,070)
----------------------------------------------- ---- ----------- ----------- ------------
Profit after tax 19,682 24,989 48,984
----------------------------------------------- ---- ----------- ----------- ------------
Profit for the period attributable
to equity holders of the company 19,682 24,989 48,984
----------------------------------------------- ---- ----------- ----------- ------------
Other comprehensive income:
Items that will not be reclassified
to profit or loss
Net remeasurement of defined benefit
asset (2,790) 3,315 (7,083)
Deferred tax relating to the net remeasurement
of defined benefit asset 698 961 3,361
----------------------------------------------- ---- ----------- ----------- ------------
Other comprehensive income net of tax (2,092) 4,276 (3,722)
----------------------------------------------- ---- ----------- ----------- ------------
Total comprehensive income for the
period net of tax attributable to equity
holders of the company 17,590 29,265 45,262
----------------------------------------------- ---- ----------- ----------- ------------
Dividends paid and proposed for the
period per ordinary share 9 29.0p 28.0p 84.0p
Dividends paid and proposed for the
period 16,976 16,388 49,317
Earnings per share for the period attributable
to equity holders of the company: 10
* basic 33.6p 42.7p 83.6p
* diluted 32.8p 41.6p 81.6p
----------------------------------------------- ---- ----------- ----------- ------------
Consolidated interim statement of changes in equity
as at 30 June 2023
Share Share Merger Own Retained Total
capital premium reserve shares earnings equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2022 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: -
* cost of share-based payment arrangements 13,786 13,786
* cost of vested employee remuneration and share plans (11,304) (11,304)
* cost of own shares vesting 2,217 (2,217) -
* cost of own shares acquired (10,843) (10,843)
* 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
Profit for the period 23,995 23,995
----------------------------------------------------------- ---- ------- ------- ------- -------- -------- --------
Net remeasurement of defined
benefit asset (10,398) (10,398)
Deferred tax relating to
components of other comprehensive
income 2,400 2,400
----------------------------------------------------------- ---- ------- ------- ------- -------- -------- --------
Other comprehensive income
net of tax - - - - (7,998) (7,998)
Dividends paid (16,553) (16,553)
Issue of share capital 18 18 6,157 6,175
Share-based payments:
* cost of share-based payment arrangements 12,100 12,100
* cost of vested employee remuneration and share plans (1,472) (1,472)
* cost of own shares vesting 461 (461) -
* cost of own shares acquired (7,724) (7,724)
* tax on share-based payments 168 168
----------------------------------------------------------- ---- ------- ------- ------- -------- -------- --------
At 31 December 2022 (audited) 3,170 309,970 76,965 (52,515) 297,244 634,834
Profit for the period 19,682 19,682
----------------------------------------------------------- ---- ------- ------- ------- -------- -------- --------
Net remeasurement of defined
benefit asset (2,790) (2,790)
Deferred tax relating to
components of other comprehensive
income 698 698
----------------------------------------------------------- ---- ------- ------- ------- -------- -------- --------
Other comprehensive income
net of tax - - - - (2,092) (2,092)
Dividends paid (33,414) (33,414)
Issue of share capital 18 2 808 810
Share-based payments:
* cost of share-based payment arrangements 10,714 10,714
* cost of vested employee remuneration and share plans (5,613) (5,613)
* cost of own shares vesting 11,371 (11,371) -
* cost of own shares acquired (6,660) (6,660)
* tax on share-based payments 77 77
----------------------------------------------------------- ---- ------- ------- ------- -------- -------- --------
At 30 June 2023 (unaudited) 3,172 310,778 76,965 (47,804) 275,227 618,338
----------------------------------------------------------- ---- ------- ------- ------- -------- -------- --------
Consolidated interim balance statement
as at 30 June 2023
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
Note GBP'000 GBP'000 GBP'000
----------------------------------------- ---- --------- --------- ------------
Assets
Cash and balances with central banks 1,141,926 1,683,670 1,412,915
Settlement balances 215,119 137,672 65,818
Loans and advances to banks 139,481 186,206 194,723
Loans and advances to customers 11 143,374 189,960 169,766
Investment securities:
* fair value through profit or loss 3,081 11,906 11,214
* amortised cost 1,233,827 829,970 1,045,234
Prepayments, accrued income and other
assets 152,323 124,260 126,687
Property, plant and equipment 12 10,865 14,012 12,687
Right-of-use assets 13 37,268 41,606 39,087
Current tax assets 9,163 6,167 3,475
Intangible assets 14 347,163 365,245 356,193
Retirement benefit asset 17 7,002 15,887 9,401
----------------------------------------- ---- --------- --------- ------------
Total assets 3,440,592 3,606,561 3,447,200
----------------------------------------- ---- --------- --------- ------------
Liabilities
Deposits by banks 17,173 19,587 1,035
Settlement balances 211,188 139,916 69,872
Due to customers 2,377,131 2,582,703 2,516,116
Accruals and other liabilities 98,561 122,799 114,288
Lease liabilities 48,858 52,739 50,484
Current tax liabilities 363 275 247
Net deferred tax liabilities 9,880 11,523 7,525
Provisions for liabilities and charges 15 19,210 10,984 12,907
Subordinated loan notes 16 39,890 39,892 39,891
----------------------------------------- ---- --------- --------- ------------
Total liabilities 2,822,254 2,980,418 2,812,365
----------------------------------------- ---- --------- --------- ------------
Equity
Share capital 18 3,172 3,152 3,170
Share premium 18 310,778 303,813 309,970
Merger reserve 18 76,965 76,965 76,965
Own shares (47,804) (45,252) (52,515)
Retained earnings 275,227 287,465 297,244
----------------------------------------- ---- --------- --------- ------------
Total equity 618,338 626,143 634,834
----------------------------------------- ---- --------- --------- ------------
Total liabilities and equity 3,440,592 3,606,561 3,447,199
----------------------------------------- ---- --------- --------- ------------
The condensed consolidated interim financial statements were
approved by the board of directors and authorised for issue on 25
July 2023 and were signed on its behalf by:
Paul Stockton Jennifer Mathias
Group Chief Executive Officer Group Chief Financial Officer
Company registered number: 01000403
25 July 2023
Consolidated interim statement of cash flows
for the six months ended 30 June 2023
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
Note GBP'000 GBP'000 GBP'000
------------------------------------------------------------- ---- ----------- --------- ------------
Cash flows from operating activities
Profit before tax 25,961 32,614 64,054
Change in fair value through profit
or loss (2) 525 304
Net interest income (22,970) (6,097) (18,303)
Net (recoveries)/impairment charges
on loans and advances (64) 13 (96)
Net charge to income statement for
provisions 15 7,251 330 1,971
Depreciation, amortisation and impairment 17,047 17,564 34,942
Foreign exchange movements 3,886 (6,406) (7,077)
Defined benefit pension scheme charges (223) (117) (258)
Defined benefit pension contributions
paid (168) (168) (3,939)
Share-based payment charges 19 10,714 13,786 25,886
Interest paid (34,542) (2,396) (20,861)
Interest received 49,587 8,437 33,940
------------------------------------------------------------- ---- ----------- --------- ------------
56,477 58,085 110,563
Changes in operating assets and liabilities:
* net decrease/(increase) in loans and advances to
banks and customers 17,283 (10,355) 8,382
* net (increase)/decrease in settlement balance debtors (149,301) (67,922) 3,931
* net (increase)/decrease in prepayments, accrued
income and other assets (14,912) (5,242) 1,871
* net (decrease)/increase in amounts due to customers
and deposits by banks (122,847) 267,210 181,928
* net increase in settlement balance creditors 141,316 79,841 9,797
* net decrease in accruals, provisions and other
liabilities (20,941) (14,592) (5,925)
------------------------------------------------------------- ---- ----------- --------- ------------
Cash (used in)/generated from operations (92,925) 307,026 310,547
Tax paid (8,720) (11,398) (17,613)
------------------------------------------------------------- ---- ----------- --------- ------------
Net cash (outflow)/inflow from operating
activities (101,645) 295,628 292,934
------------------------------------------------------------- ---- ----------- --------- ------------
Cash flows from investing activities
Purchase of property, plant, equipment
and intangible assets (3,694) (9,108) (13,133)
Payment of deferred consideration - - (10,873)
Purchase of investment securities (1,083,928) (555,202) (1,262,476)
Proceeds from sale and redemption of
investment securities 899,582 490,802 984,394
------------------------------------------------------------- ---- ----------- --------- ------------
Net cash used in investing activities (188,040) (73,508) (302,088)
------------------------------------------------------------- ---- ----------- --------- ------------
Cash flows from financing activities
Issue of ordinary shares 22 810 7,140 9,262
Repurchase of ordinary shares 22 (6,660) (10,843) (18,567)
Dividends paid (33,414) (32,054) (48,607)
Payment of lease liabilities (3,872) (4,347) (8,481)
Interest paid (2,577) (2,693) (5,320)
------------------------------------------------------------- ---- ----------- --------- ------------
Net cash used in financing activities (45,713) (42,797) (71,713)
------------------------------------------------------------- ---- ----------- --------- ------------
Net (decrease)/increase in cash and
cash equivalents (335,398) 179,323 (80,867)
------------------------------------------------------------- ---- ----------- --------- ------------
Cash and cash equivalents at the beginning
of the period 1,572,723 1,653,590 1,653,590
------------------------------------------------------------- ---- ----------- --------- ------------
Cash and cash equivalents at the end
of the period 22 1,237,325 1,832,913 1,572,723
------------------------------------------------------------- ---- ----------- --------- ------------
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 on pages 2-4 of the annual report and accounts for
the year ended 31 December 2022 and have not materially changed
since that date.
These condensed consolidated interim financial statements, on
pages 7 to 27, are presented in accordance with United Kingdom
adopted International Accounting Standard 34. 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 2022. The condensed
consolidated interim financial statements should be read in
conjunction with the group's audited financial statements for the
year ended 31 December 2022.
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 2022 are not the group's statutory accounts for
that financial year. The group's financial statements for the year
ended 31 December 2022 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:
- IFRS 17 Insurance Contracts.
- Amendments to IFRS 17.
- Disclosure of Accounting Policies (Amendments to IAS 1 and
IFRS Practice Statement 2).
- Definition of Accounting Estimate (Amendments to IAS 8).
- Deferred Tax Related to Assets and Liabilities Arising from a
Single Transaction - Amendments to IAS 12 Income Taxes.
- Initial Application of IFRS 7 and IFRS 9 - Comparative
Information (Amendments to IFRS 17).
Future new standards and interpretations
The following standards are effective for annual periods
beginning after 1 January 2024 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
------------------------------------------------------- ---------------
Sale or Contribution of Assets between an Investor and Optional
its Associate or Join Venture
(Amendments to IFRS 10 and IAS 28)
Classification of liabilities as current or non-current 01 January 2024
(Amendments to IAS 1)
Lease Liability in a Sale and Leaseback - Amendments 01 January 2024
to IFRS 16
Non-current Liabilities with Covenants (Amendments to 01 January 2024
IAS 1)
------------------------------------------------------- ---------------
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 2022.
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 2022.
In 2021, 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 purchase price payable in respect of the acquisition was
split into a number of different components. The equity-settled
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 Saunderson House management incentive scheme is subject to
the achievement of certain operational and performance targets at
31 December 2024. A profit or loss charge has been recognised in
equity for the expected consideration payable in shares.
Under the terms of the agreements, the award ranges from a
payment of GBPnil to a maximum possible payment in shares of GBP7.2
million, and is dependent on the value of qualifying funds under
management at the test date, as well as other qualitative factors.
Management's best estimate of this award at the period end was
GBP4.7 million.
The maximum award of GBP7.2 million would result in an
additional charge to profit or loss in the period of GBP0.3
million. A payment of GBPnil would result in a reversal of the
accumulated profit or loss charge since commencement of the award
of GBP2.4 million in 2023.
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 2023 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- ----------- -------- --------- ---------
Net investment management fee income 138,822 31,071 - 169,893
Net commission income 23,713 - - 23,713
Net interest income 22,221 749 - 22,970
Fees from advisory services and other
income 21,005 445 - 21,450
-------------------------------------------- ----------- -------- --------- ---------
Operating income 205,761 32,265 - 238,026
-------------------------------------------- ----------- -------- --------- ---------
Staff costs - fixed (59,468) (3,665) (25,112) (88,245)
Staff costs - variable (31,664) (5,280) (6,981) (43,925)
-------------------------------------------- ----------- -------- --------- ---------
Total staff costs (91,132) (8,945) (32,093) (132,170)
Other direct expenses (20,532) (6,334) (28,248) (55,114)
Allocation of indirect expenses(1) (52,990) (7,351) 60,341 -
-------------------------------------------- ----------- -------- --------- ---------
Underlying operating expenses (164,654) (22,630) - (187,284)
-------------------------------------------- ----------- -------- --------- ---------
Underlying profit before tax 41,107 9,635 - 50,742
Charges in relation to client relationships
and goodwill (note 14) (9,510) - - (9,510)
Acquisition-related costs (note 6) (2,199) - (13,072) (15,271)
-------------------------------------------- ----------- -------- --------- ---------
Segment profit before tax 29,398 9,635 (13,072) 25,961
Taxation (note 8) (6,279)
-------------------------------------------- ----------- -------- --------- ---------
Profit for the period attributable
to equity holders of the company 19,682
-------------------------------------------- ----------- -------- --------- ---------
4 / Segmental information continued
Investment
Management Funds Total
GBP'000 GBP'000 GBP'000
--------------------- ----------- -------- ---------
Segment total assets 3,276,012 157,578 3,433,590
Unallocated assets 7,002
--------------------- ----------- -------- ---------
Total assets 3,276,012 157,578 3,440,592
--------------------- ----------- -------- ---------
1. Included within the allocation of indirect expenses are costs
related to the group's digital strategy for activities that are now
live.
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
Year ended 31 December 2022 (audited) GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------- ----------- -------- --------- ---------
Net investment management fee income 274,881 62,158 - 337,039
Net commission income 48,871 - - 48,871
Net interest income 17,779 524 - 18,303
Fees from advisory services and other
income 51,393 269 - 51,662
---------------------------------------------- ----------- -------- --------- ---------
Operating income 392,924 62,951 - 455,875
---------------------------------------------- ----------- -------- --------- ---------
Staff costs - fixed (109,507) (6,938) (42,035) (158,480)
Staff costs - variable (66,915) (11,240) (8,917) (87,072)
---------------------------------------------- ----------- -------- --------- ---------
Total staff costs (176,422) (18,178) (50,952) (245,552)
Other direct expenses (41,494) (9,570) (62,199) (113,263)
Allocation of indirect expenses (104,363) (8,788) 113,151 -
---------------------------------------------- ----------- -------- --------- ---------
Underlying operating expenses (322,279) (36,536) - (358,815)
---------------------------------------------- ----------- -------- --------- ---------
Underlying profit before tax 70,645 26,415 - 97,060
Charges in relation to client relationships
and goodwill (note 22) (19,544) - - (19,544)
Acquisition-related costs (note 9) (10,027) - (3,436) (13,462)
---------------------------------------------- ----------- -------- --------- ---------
Segment profit before tax 41,074 26,415 (3,436) 64,054
Taxation (note 11) (15,070)
---------------------------------------------- ----------- -------- --------- ---------
Profit for the year attributable to
equity holders of the company 48,984
---------------------------------------------- ----------- -------- --------- ---------
Investment
Management Funds Total
GBP'000 GBP'000 GBP'000
---------------------------------------------- ----------- -------- --------- ---------
Segment total assets 3,323,428 114,371 3,437,799
Unallocated assets 9,401
---------------------------------------------- ----------- -------- --------- ---------
Total assets 3,323,428 114,371 3,447,200
---------------------------------------------- ----------- -------- --------- ---------
Included within Investment Management operating income is
GBP774,000 (30 June 2022: GBP1,018,000; 31 December 2022:
GBP1,916,000) 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
Six months Six months Audited
to to Year to
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
---------------------------------------------- ----------- ----------- ------------
Underlying operating expenses 187,284 181,976 358,815
Charges in relation to client relationships
and goodwill (note 14) 9,510 9,924 19,544
Acquisition-related costs (note 6) 15,271 7,426 13,462
---------------------------------------------- ----------- ----------- ------------
Operating expenses 212,065 199,326 391,821
---------------------------------------------- ----------- ----------- ------------
Geographic analysis
The following table presents operating income analysed by the
geographical location of the group entity providing the
service:
Unaudited Unaudited
Six months Six months Audited
to to Year to
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
----------------- ----------- ----------- ------------
United Kingdom 229,734 224,958 441,977
Jersey 8,292 6,927 13,842
Rest of World - 55 56
----------------- ----------- ----------- ------------
Operating income 238,026 231,940 455,875
----------------- ----------- ----------- ------------
The group's non-current assets are substantially all located in
the United Kingdom.
4 / Segmental information continued
Timing of revenue recognition
The following table presents operating income analysed by the
timing of revenue recognition of the operating segment providing
the service:
Unaudited Unaudited Audited
Six months Six months Year to
to to 31 December
30 June 2023 30 June 2022 2022
---------------------------------- --------------------- --------------------- ---------------------
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 16,908 - 30,516 - 41,192 -
Products and services transferred
over time 188,853 32,265 169,557 31,867 351,732 62,951
---------------------------------- ----------- -------- ----------- -------- ----------- --------
Operating income 205,761 32,265 200,073 31,867 392,924 62,951
---------------------------------- ----------- -------- ----------- -------- ----------- --------
Major clients
The group is not reliant on any one client or group of connected
clients for generation of revenues. At 30 June 2023, the group
provided investment management services to 68,629 clients (30 June
2022: 67,171; 31 December 2022: 67,662).
5 / Business combinations
Speirs & Jeffrey
On 31 August 2018, the group acquired 100% of the ordinary share
capital of Speirs & Jeffrey Limited.
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 have been treated as
remuneration for post-combination services and the grant date fair
value has been 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:
- earn-out consideration and related incentivisation awards were
subject to the delivery of certain operational and financial
performance targets. The earn-out awards for the vendors were
payable in two parts in the third and fourth years following the
acquisition date. The second earn-out vested in 2021. The
incentivisation awards for staff will vest in tranches by 31 March
2025.
Further details are as follows:
Unaudited Unaudited
Six months Six months Audited
to to Year to
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
--------------------------------------------- ----------- ----------- ------------
Earn-out consideration and incentivisation
awards 570 2,667 3,497
--------------------------------------------- ----------- ----------- ------------
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.
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 2022
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 deferred share consideration was paid in the prior year to
vendors not required to remain in employment with the group.
The charge recognised in profit or loss for the above elements
is as follows:
Unaudited Unaudited
Six months Six months Audited
to to Year to
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
------------------------------- ----------- ----------- ------------
Initial share consideration 901 901 1,816
Deferred share consideration - 2,002 3,290
Incentivisation awards 728 764 1,423
------------------------------- ----------- ----------- ------------
Total consideration 1,629 3,667 6,529
------------------------------- ----------- ----------- ------------
Investec Wealth & Investment UK
On 4 April 2023, the group announced an all-share acquisition of
Investec Wealth & Investment UK, which is subject to regulatory
approval. See note 6 for detail of the costs incurred in the period
in relation to the acquisition.
6 / Acquisition-related costs
Unaudited Unaudited
Six months Six months Audited
to to Year to
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
---------------------------------------------- ----------- ----------- ------------
Acquisition of Speirs & Jeffrey 570 2866 3497
Acquisition of Saunderson House 3,502 4,560 9,965
Acquisition of Investec Wealth and Investment
UK 11,199 - -
---------------------------------------------- ----------- ----------- ------------
Acquisition-related costs 15,271 7,426 13,462
---------------------------------------------- ----------- ----------- ------------
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
Six months Six months Audited
to to Year to
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
------------------- ----------- ----------- ------------
Acquisition costs:
Staff costs 570 2,667 3,497
Integration costs - 199 -
------------------- ----------- ----------- ------------
570 2,866 3,497
------------------- ----------- ----------- ------------
Integration costs of GBPnil (30 June 2022: GBP199,000; 31
December 2022: GBPnil) have not been allocated to a specific
operating segment (note 4).
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
Six months Six months Audited
to to Year to
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
------------------- ----------- ----------- ------------
Acquisition costs:
Staff costs 1,629 3,667 6,529
Integration costs 1,873 893 3,436
------------------- ----------- ----------- ------------
3,502 4,560 9,965
------------------- ----------- ----------- ------------
I ntegration costs of GBP1,873,000 (30 June 2022: GBP893,000; 31
December 2022: GBP3,436,000) have not been allocated to a specific
operating segment (note 4).
Costs relating to the acquisition of Investec Wealth &
Investment UK
The group incurred legal and advisory costs of GBP11,199,000 in
relation to the acquisition in the six months ended 30 June 2023,
which were recognised in profit or loss. These costs have not been
allocated to a specific operating segment (note 4). An additional
GBP3,669,000 of incremental costs related directly to the expected
share issue in the second half of the year were recognised as an
asset at 30 June 2023.
Of the total costs incurred in the period, GBP6,700,000 of
professional fees, which become payable subject to completion of
the transaction, have been recognised as a provision at 30 June
2023 (note 15).
7 / EMPLOYEE numbers
The average number of employees during the period, on a full
time equivalent basis, was as follows:
Unaudited Unaudited
Six months Six months Audited
to to Year to
30 June 30 June 31 December
2023 2022 2022
-------------------------------------- ----------- ----------- ------------
Investment Management:
* investment management services 1,148 1,084 1,112
* advisory services 345 334 348
Funds 52 50 50
Business support 594 543 543
-------------------------------------- ----------- ----------- ------------
2,139 2,011 2,053
-------------------------------------- ----------- ----------- ------------
8 / Taxation
The tax expense for the six months ended 30 June 2023 was
calculated based on the estimated average annual effective tax
rate. The overall effective tax rate for this period was 24.2% (six
months ended 30 June 2022: 23.4%; year ended 31 December 2022:
23.6%).
The effective tax rate reflects the disallowable costs of the
deferred consideration payments in relation to the acquisitions of
Speirs & Jeffrey and Saunderson House, as well as the legal and
advisory fees incurred in relation to the acquisition of Investec
Wealth and Investment UK.
Unaudited Unaudited
Six months Six months Audited
to to Year to
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
-------------------------------------------- ----------- ----------- ------------
United Kingdom taxation 3,522 7,797 16,467
Overseas taxation 241 104 289
Deferred taxation 2,516 (276) (1,686)
-------------------------------------------- ----------- ----------- ------------
6,279 7,625 15,070
-------------------------------------------- ----------- ----------- ------------
The UK corporation tax rate for the year ending 31 December 2023
is 23.5%. This is a composite rate; the UK Government legislated in
the Finance Act 2021 to increase the UK corporation tax rate to
25.0% from 1 April 2023 (2022: 19.0%). This has been reflected in
the deferred tax calculations. 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.
9 / Dividends
An interim dividend of 29.0p per share is payable on 25 August
2023 to shareholders on the register at the close of business on 4
August 2023. The interim dividend has not been included as a
liability in this interim statement. A final dividend for 2022 of
56.0p per share was paid on 9 May 2023.
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 2023 30 June 2022 2022
---------------------------------- ------------------ ------------------ ------------------
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 50,742 38,847 49,964 39,573 97,060 76,676
Charges in relation to client
relationships and goodwill (note
14) (9,510) (7,274) (9,924) (8,038) (19,544) (15,831)
Acquisition-related costs (note
6) (15,271) (11,891) (7,426) (6,546) (13,462) (11,861)
---------------------------------- -------- -------- -------- -------- -------- --------
Profit attributable to equity
holders 25,961 19,682 32,614 24,989 64,054 48,984
---------------------------------- -------- -------- -------- -------- -------- --------
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
58,538,625 (30 June 2022: 58,528,000; 31 December 2022:
58,618,521).
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, Executive Incentive
Plan and Executive Share Performance 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.
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
-------------------------------------------------- ---------- ---------- ------------
Weighted average number of ordinary shares
in issue during the period - basic 58,538,625 58,528,000 58,618,521
Effect of ordinary share options/Save As You
Earn 558,416 571,430 595,055
Effect of dilutive shares issuable under the
Share Incentive Plan 1,477 1,359 671
Effect of contingently issuable ordinary shares
under the Executive Incentive Plan/Executive
Share Performance Plan 597,431 633,295 563,816
Effect of contingently issuable shares under
Saunderson House initial share consideration 272,952 272,952 272,952
-------------------------------------------------- ---------- ---------- ------------
Diluted ordinary shares 59,968,901 60,007,036 60,051,015
-------------------------------------------------- ---------- ---------- ------------
Unaudited Unaudited
Six months Six months Audited
to to Year to
30 June 30 June 31 December
2023 2022 2022
-------------------------------------------------- ----------- ----------- ------------
Earnings per share for the period attributable
to equity holders of the company:
* basic 33.6p 42.7p 83.6p
* diluted 32.8p 41.6p 81.6p
Underlying earnings per share for the period
attributable to equity holders of the company:
* basic 66.4p 67.6p 130.8p
* diluted 64.8p 65.9p 127.7p
-------------------------------------------------- ----------- ----------- ------------
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
2023 2022 2022
GBP'000 GBP'000 GBP'000
------------------------------------- --------- --------- ------------
Overdrafts 15,080 10,425 6,540
Investment Management loan book 124,554 175,500 159,682
Trust and financial planning debtors 3,625 2,047 3,033
Other debtors 115 1,988 511
------------------------------------- --------- --------- ------------
143,374 189,960 169,766
------------------------------------- --------- --------- ------------
12 / Property, plant and equipment
During the six months ended 30 June 2023, the group purchased
assets with a cost of GBP616,000 (six months ended 30 June 2022:
GBP3,182,000; year ended 31 December 2022: GBP4,371,000).
13 / Right-of-use assets
Motor vehicles
Property and equipment Total
GBP'000 GBP'000 GBP'000
---------------------------------------------- -------- -------------- --------
Cost
1 January 2023 58,096 354 58,450
Additions 796 - 796
Disposals (936) - (936)
At 30 June 2023 57,956 354 58,310
---------------------------------------------- -------- -------------- --------
Depreciation and impairment
1 January 2023 19,224 139 19,363
Charge in the period 2,556 59 2,615
Disposals (936) - (936)
At 30 June 2023 20,844 198 21,042
---------------------------------------------- -------- -------------- --------
Carrying amount at 30 June 2023 (unaudited) 37,112 156 37,268
---------------------------------------------- -------- -------------- --------
Carrying amount at 30 June 2022 (unaudited) 41,334 273 41,606
---------------------------------------------- -------- -------------- --------
Carrying amount at 31 December 2022 (audited) 38,872 215 39,087
---------------------------------------------- -------- -------------- --------
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 2023 169,631 300,927 13,467 54,897 538,922
Internally developed in the period - - 487 - 487
Purchased in the period - 1,564 - 909 2,473
Disposals - (2,000) - - (2,000)
--------------------------------------------- -------- -------------- ------------ --------- ------------
At 30 June 2023 169,631 300,491 13,954 55,806 539,882
--------------------------------------------- -------- -------------- ------------ --------- ------------
Amortisation and impairment
At 1 January 2023 1,954 125,904 10,024 44,847 182,729
Charge in the period - 9,510 817 1,663 11,990
Disposals - (2,000) - - (2,000)
--------------------------------------------- -------- -------------- ------------ --------- ------------
At 30 June 2023 1,954 133,414 10,841 46,510 192,719
--------------------------------------------- -------- -------------- ------------ --------- ------------
Carrying value at 30 June 2023 (unaudited) 167,677 167,077 3,113 9,296 347,163
--------------------------------------------- -------- -------------- ------------ --------- ------------
Carrying value at 30 June 2022 (unaudited) 167,677 183,452 3,193 10,923 365,245
--------------------------------------------- -------- -------------- ------------ --------- ------------
Carrying value at 31 December 2022
(audited) 167,677 175,023 3,443 10,050 356,193
--------------------------------------------- -------- -------------- ------------ --------- ------------
The total amount charged to profit or loss in the period, in
relation to goodwill and client relationships, was GBP9,510,000
(six months ended 30 June 2022: GBP9,924,000; year ended 31
December 2022: GBP19,544,000).
Impairment
The recoverable amounts of the groups of cash-generating units
('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
Internal Capital Adequacy Assessment Process ('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 groups of CGUs.
The pre-tax rate used to discount the forecast cash flows was
13.3% (30 June 2022: 11.3%; 31 December 2022: 14.1%). 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 groups 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 to
acquire
client Legal and
relationship professional,
intangibles and compensation Property-related Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ------------- ----------------- ---------------- --------
At 1 January 2022 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
--------------------------------------- ------------- ----------------- ---------------- --------
Charged to profit or loss - 609 872 1,481
Unused amount credited to profit or
loss 193 - - 193
--------------------------------------- ------------- ----------------- ---------------- --------
Net charge to profit or loss 193 609 872 1,674
Other movements 997 - - 997
Utilised/paid during the period (657) (58) (33) (748)
--------------------------------------- ------------- ----------------- ---------------- --------
At 31 December 2022 (audited) 4,379 2,736 5,792 12,907
--------------------------------------- ------------- ----------------- ---------------- --------
Charged to profit or loss - 7,352 205 7,557
Unused amount credited to profit or
loss - (306) - (306)
--------------------------------------- ------------- ----------------- ---------------- --------
Net charge to profit or loss - 7,046 205 7,251
Other movements 1,564 - - 1,564
Utilised/paid during the period (1,682) (830) - (2,512)
--------------------------------------- ------------- ----------------- ---------------- --------
At 30 June 2023 (unaudited) 4,261 8,952 5,997 19,210
--------------------------------------- ------------- ----------------- ---------------- --------
Payable within one year 4,030 8,952 331 13,313
Payable after one year 231 - 5,666 5,897
--------------------------------------- ------------- ----------------- ---------------- --------
At 30 June 2023 (unaudited) 4,261 8,952 5,997 19,210
--------------------------------------- ------------- ----------------- ---------------- --------
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 previously capitalised.
Legal and PROFESsIONAL, 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 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 group's best
estimate is based on legal advice and management's expectation of
the most likely settlement outcome, which in some cases is
calculated by external professional advisers. The timing of
settlement of provisions for client compensation or litigation is
dependent, in part, on the duration of negotiations with third
parties.
A provision of GBP6,700,000 for advisory fees was recognised in
the period in relation to the acquisition of Investec Wealth and
Investment UK. This is payable within one year of the balance sheet
date, and payment is subject to completion of the transaction.
Property-related
Property-related provisions of GBP5,997,000 relate to
dilapidation provisions expected to arise on leasehold premises
held by the group (30 June 2022: GBP4,953,000; 31 December 2022:
GBP5,792,000).
During the six months ended 30 June 2023, the group utilised
GBPnil in relation to dilapidations (30 June 2022: GBPnil; 31
December 2022: GBP33,000). The impact of discounting led to an
additional charge of GBP205,000 (30 June 2022: additional charge of
GBP310,000; 31 December 2022: additional charge of GBP1,182,000)
being recognised during the period.
Amounts payable after one year
Property-related provisions of GBP5,997,000 are expected to be
settled within 12 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 eight years of the balance
sheet date.
16 / Subordinated loan notes
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
------------------------ --------- --------- ------------
Subordinated loan notes
* face value 40,000 40,000 40,000
* carrying value 39,890 39,892 39,891
------------------------ --------- --------- ------------
Rathbones Group Plc holds GBP39.9 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.
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
2023 2022 2022
% p.a. % p.a. % p.a.
------------------------------------------------- --------- --------- -------------
Rate of increase of pensions in payment:
* Laurence Keen Scheme 3.60 3.60 3.60
* Rathbone 1987 Scheme 3.20 3.20 3.20
Rate of increase of deferred pensions 3.30 3.20 3.20
Discount rate 5.10 3.70 4.70
Inflation* 3.30 3.20 3.20
Percentage of members transferring out of the
schemes per annum 2.00 2.00 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 12.00 14.00 13.00
* Rathbone 1987 Scheme 16.00 18.00 16.00
------------------------------------------------- --------- --------- -------------
* Inflation assumptions are based on the Retail Price Index
The assumed life expectations of members retiring aged 65
were:
Unaudited 30 Unaudited 30 Audited 31 December
June 2023 June 2022 2022
--------------------- -------------- -------------- ---------------------
Males Females Males Females Males Females
--------------------- ----- ------- ----- ------- -------- -----------
Retiring today 23.4 25.0 23.4 25.0 23.3 24.9
Retiring in 20 years 24.9 26.7 24.9 26.6 24.9 26.6
--------------------- ----- ------- ----- ------- -------- -----------
The amount included in the balance sheet arising from the
group's obligations in respect of the schemes is as follows:
Unaudited 30 Unaudited 30 Audited 31 December
June 2023 June 2022 2022
------------------------------ -------------------------- -------------------------- --------------------------
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 (85,863) (6,915) (100,054) (8,138) (87,564) (7,167)
Fair value of scheme assets 91,944 7,836 114,611 9,468 96,019 8,113
------------------------------ ------------ ------------ ------------ ------------ ------------ ------------
Total surplus 6,081 921 14,557 1,330 8,455 946
------------------------------ ------------ ------------ ------------ ------------ ------------ ------------
The group made lump sum contributions into its pension schemes
totalling GBP168,000 during the period (30 June 2022: GBP168,000;
31 December 2022: GBP3,939,000).
18 / Share capital and share premium
The following movements in share capital occurred during the
period:
Share Share Merger
Number Exercise price capital premium reserve Total
of shares pence GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- ---------- ----------------- -------- -------- -------- --------
At 1 January 2022 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
* to Share Incentive Plan 349,298 1,600.0 - 2,090.0 17 7,089 - 7,106
* to Save As You Earn scheme 685 1,085.0 - 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
-------------------------------------------- ---------- ----------------- -------- -------- -------- --------
Shares issued:
* in relation to business combinations 211,767 1,600.0 - 2,090.0 11 4,041 - 4,052
* to Share Incentive Plan 118,261 1,085.0 - 1,813.0 7 2,107 - 2,114
* to Save As You Earn scheme 496 1,813.0 - 9 - 9
-------------------------------------------- ---------- ----------------- -------- -------- -------- --------
At 31 December 2022
(audited) 63,394,837 3,170 309,970 76,965 390,105
-------------------------------------------- ---------- ----------------- -------- -------- -------- --------
Shares issued:
* to Share Incentive Plan 38,544 2,070.0 - 2,160.0 2 808 - 810
At 30 June 2023 (unaudited) 63,433,381 3,172 310,778 76,965 390,915
-------------------------------------------- ---------- ----------------- -------- -------- -------- --------
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.
On 26 October 2022, the company issued 211,767 shares in respect
of the Saunderson House deferred consideration award.
At 30 June 2023, the group held 4,122,553 own shares (30 June
2022: 4,497,727; 31 December 2022: 4,887,294).
19 / Share-based payments
The group recognised total expenses of GBP10,714,000 (30 June
2022: GBP13,786,000, 31 December 2022: GBP25,886,000) in relation
to share-based transactions in the period. This includes 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 1 Level 2 Level 3 Total
At 30 June 2023 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- -------- -------- -------- --------
Financial assets
Fair value through profit or loss:
* equity securities - - 3,081 3,081
----------------------------------- -------- -------- -------- --------
- - 3,081 3,081
----------------------------------- -------- -------- -------- --------
Level 1 Level 2 Level 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
----------------------------------- -------- -------- -------- --------
8,854 - 3,052 11,906
----------------------------------- -------- -------- -------- --------
20 / Financial instruments continued
Level 1 Level 2 Level 3 Total
At 31 December 2022 (audited) GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- -------- -------- -------- --------
Financial assets
Fair value through profit or loss:
* equity securities 8,068 - 3,146 11,214
----------------------------------- -------- -------- -------- --------
8,068 - 3,146 11,214
----------------------------------- -------- -------- -------- --------
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 company previously owned units in collectives managed by
Rathbone Unit Trust Management. These were listed equity securities
classified as fair value through profit or loss. The fair value was
their quoted price. During the period, the group sold its holdings
in the unit trusts.
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, and treasury bills. The fair value of
debt securities at 30 June 2023 was GBP1,234,216,000 (30 June 2022:
GBP830,894,000; 31 December 2022: GBP1,053,460,000) and the
carrying value was GBP1,233,827,000 (30 June 2022: GBP829,970,000;
31 December 2022: GBP1,045,257,000). 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 2023 was GBP37,299,000
(30 June 2022: GBP44,968,000; 31 December 2022: GBP41,211,000) and
the carrying value was GBP39,890,000 (30 June 2022: GBP39,892,000;
31 December 2022: GBP39,891,000). 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 readily
available observable market data is available.
In the current period, the valuation of EUR1,985 per share has
been calculated by reference to the indicative price derived from
the most 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.
Due to movements in the exchange rate used to value these
shares, a 10% weakening of the euro against sterling, occurring on
30 June 2023, would have reduced equity and profit after tax by
GBP236,000 (30 June 2022: GBP247,000; 31 December 2022:
GBP255,000). 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
2023 2022 2022
GBP'000 GBP'000 GBP'000
--------------------------------------------- --------- --------- ------------
At 1 January 3,146 2,558 2,558
Total unrealised gains/(losses) recognised
in profit or loss (65) 494 588
--------------------------------------------- --------- --------- ------------
At 30 June 3,081 3,052 3,146
--------------------------------------------- --------- --------- ------------
20 / Financial instruments continued
Expected credit loss provision
The movement in the allowance for impairment in respect of
financial assets during the reporting period was as follows:
Trust
Loans and
and Investment financial
advances Management planning Debt
Cash and balances with central banks to banks loan book debtors securities Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ----------------------------------------------------------- -------- ---------- --------- ---------- -------
Balance at 1
January 2023
(audited) 36 - 12 121 23 192
Amounts written
off - - - - - -
Net
remeasurement
of loss
allowance (13) - (12) (32) 1 (56)
---------------- ----------------------------------------------------------- -------- ---------- --------- ---------- -------
Balance at 30
June 2023
(unaudited) 23 - - 89 24 136
---------------- ----------------------------------------------------------- -------- ---------- --------- ---------- -------
As at 30 June 2023, 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
2023 but not provided for in the condensed consolidated interim
financial statements amounted to GBP501,000 (30 June 2022:
GBP1,441,000; 31 December 2022: GBP536,000).
(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
2023 2022 2022
GBP'000 GBP'000 GBP'000
----------------------------------------------- --------- --------- ------------
Undrawn commitments to lend of one year or
less 15,917 30,660 17,838
Undrawn commitments to lend of more than one
year 5,550 3,129 4,615
----------------------------------------------- --------- --------- ------------
21,467 33,789 22,453
----------------------------------------------- --------- --------- ------------
(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
2023 2022 2022
GBP'000 GBP'000 GBP'000
----------------------------------- --------- --------- ------------
Cash and balances at central banks 1,139,000 1,680,329 1,408,000
Loans and advances to banks 98,325 156,207 164,723
----------------------------------- --------- --------- ------------
1,237,325 1,836,536 1,572,723
----------------------------------- --------- --------- ------------
Cash flows arising from issue of ordinary shares comprise:
Unaudited Unaudited
Six months Six months
to to Audited
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
--------------------------------------------------- ----------- ----------- ------------
Share capital issued (note 18) 2 52 70
Share premium on shares issued (note 18) 808 12,787 18,944
Shares issued in relation to share-based schemes
for which no cash consideration was received - (5,699) (9,752)
--------------------------------------------------- ----------- ----------- ------------
Proceeds from issue of share capital 810 7,140 9,262
--------------------------------------------------- ----------- ----------- ------------
Shares repurchased and placed into the employee
benefit trust (6,660) (10,843) (18,567)
--------------------------------------------------- ----------- ----------- ------------
Net issue/(repurchase) of ordinary shares (5,850) (3,703) (9,305)
--------------------------------------------------- ----------- ----------- ------------
In the period to 30 June 2022, GBP5,699,000 of shares were
issued for the vesting of the Speirs & Jeffrey second earn-out
consideration. In the second half of 2022, GBP4,053,000 of shares
were issued for the Saunderson House deferred share consideration.
There was no cash consideration received for these
transactions.
During the current period, GBP6,660,000 of shares were
repurchased and placed into the group employee benefit trust (30
June 2022: GBP10,843,000; 31 December 2022: GBP18,567,000).
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 2022: GBP171,000; year ended 31 December 2022:
GBP216,000) in respect of ordinary shares held by key management
personnel.
At 30 June 2023, key management personnel and their close family
members had gross outstanding deposits of GBP2,045,000 (30 June
2022: GBP2,366,000; 31 December 2022: GBP1,769,000). 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 2023, the group managed 26 unit trusts,
Sociétés d'Investissement à Capital Variable (SICAVs) and
open-ended investment companies (OEICs) (together, 'collectives')
(six months ended 30 June 2022: 32 collectives; year ended 31
December 2022: 32 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.
23 / Related party transactions continued
The following transactions and balances relate to the group's
interest in the unit trusts:
Unaudited Unaudited
Six months Six months Audited
to to Year to
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
---------------------- ----------- ----------- ------------
Total management fees 33,779 29,900 68,226
---------------------- ----------- ----------- ------------
Total management fees are included within 'fee and commission
income' in the consolidated interim statement of comprehensive
income.
Unaudited Unaudited
Six months Six months Audited
to to Year to
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
---------------------------------- ----------- ----------- ------------
Management fees owed to the group 5,879 5,464 5,587
Holdings in unit trusts (note 20) - 8,854 8,068
---------------------------------- ----------- ----------- ------------
5,879 14,318 13,655
---------------------------------- ----------- ----------- ------------
The group previously owned units in collectives managed by
Rathbone Unit Trust Management (valued at 30 June 2022:
GBP8,854,000; 31 December 2022: GBP8,068,000). These assets were
held to hedge the group's exposure to deferred remuneration schemes
for employees of unit trusts. As per note 20, these assets were
sold in the period.
Management fees owed to the group are included within 'accrued
income' and holdings in unit trusts were 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 / Events after the balance sheet date
An interim dividend of 29.0p per share was declared on 25 July
2023 (note 9).
There have been no other material events occurring between the
balance sheet date and 25 July 2023.
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).
The decrease in own funds in the period of GBP21.0 million was
largely attributable to reserves, and is due to the impact of group
share plans vesting in the period and declared dividends in excess
of year-to-date profits. This was partly offset by a GBP6.1 million
fall in the group's credit risk requirement, which was driven by a
sale of the group's collective investment undertakings, and a
subsequent fall in the group's CRD IV buffers. This resulted in a
capital surplus at 30 June 2023 of GBP98.1 million, down from
GBP110.3 million at 31 December 2022.
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
2023 2022 2022
GBP'000 GBP'000 GBP'000
------------------------------------------------------ --------- --------- ------------
Share capital and share premium 313,950 306,967 313,140
Reserves 337,295 351,376 374,209
Less:
* prudent valuation of assets held at fair value
through profit or loss (4) (12) (11)
* own shares (47,804) (45,252) (52,515)
* intangible assets (net of deferred tax) (318,628) (334,777) (326,656)
* pension asset (7,002) (15,887) (9,401)
------------------------------------------------------ --------- --------- ------------
Total Common Equity Tier 1 capital 277,807 262,415 298,766
Tier 2 capital 40,000 40,000 40,000
------------------------------------------------------ --------- --------- ------------
Total own funds 317,807 302,415 338,766
------------------------------------------------------ --------- --------- ------------
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 a total risk exposure
amount (also known as 'risk-weighted assets') and expected losses
in respect of the group's exposure to credit, counterparty credit,
market and operational risks, and sets a minimum requirement for
capital.
At 30 June 2023, the group's risk-weighted assets were
GBP1,575,709,000 (30 June 2022: GBP1,575,706,000; 31 December 2022:
GBP1,666,825,000).
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. See note 17 for further detail on the
movement in the year to the net defined benefit pension asset.
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 potential exposure as a result of the concentration of
borrowers located in the UK than other overseas jurisdictions.
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, designed to provide for losses in
the event of a stress, and represents 2.5% (as set by the PRA) of
the group's total risk exposure amount.
Countercyclical capital buffer (CCyB)
The CCyB 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 UK exposures) and other
jurisdictions for our exposures to their locations, and for
individual countries where the group has credit risk exposures.
The buffer rate is currently set by the FPC at 1% for UK
exposures (effective from December 2022). The group has relevant
credit exposures in other jurisdictions, some of which have set
buffer rates for exposures to those countries, resulting in a
weighted buffer rate of 0.9% as at 30 June 2023. An increased UK
rate of 2% came into effect in July 2023, which was built into our
forecasts.
The group's own funds requirements were as follows:
Unaudited Unaudited Unaudited
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
---------------------------------------------------- --------- --------- ------------
Own funds requirement for credit risk, counterparty
credit risk and settlement risk 60,142 63,798 66,289
Own funds requirement for market risk - - 1,142
Own funds requirement for operational risk 65,915 62,258 65,915
---------------------------------------------------- --------- --------- ------------
Pillar 1 own funds requirement 126,057 126,056 133,346
Pillar 2A own funds requirement 39,627 40,145 39,981
---------------------------------------------------- --------- --------- ------------
Total Pillar 1 and 2A own funds requirement 165,684 166,201 173,327
---------------------------------------------------- --------- --------- ------------
CRD IV buffers:
* capital conservation buffer (CCB) 39,393 39,393 41,671
* countercyclical capital buffer (CCyB) 14,654 158 13,501
---------------------------------------------------- --------- --------- ------------
Total Pillar 1 and 2A own funds requirement
and CRD IV buffers 219,731 205,752 228,499
---------------------------------------------------- --------- --------- ------------
Total capital surplus 98,076 96,663 110,267
---------------------- ------ ------ -------
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 Accounting
Standard 34;
- 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 2023, and as at 30 June
2023, 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
25 July 2023
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 2023 which comprises the consolidated
interim statement of comprehensive income, consolidated interim
statement of changes in equity, consolidated interim balance sheet
and consolidated interim statement of cash flows and related notes
1 to 24.
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 2023 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 (ISRE (UK) 2410). 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 are 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 ISRE (UK) 2410; 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 company a conclusion on the
condensed set of financial statements in the half-yearly financial
report. Our Conclusion, including our Conclusion 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
ISRE (UK) 2410. 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
25 July 2023
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END
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