Disposal

RNS Number : 8620F

Rathbone Brothers PLC

15 October 2008

 



15 October 2008

For immediate release

Rathbone Brothers Plc

Sale of Jersey and Singapore offshore trust businesses

Rathbone Brothers Plc ('Rathbones'), a leading provider of discretionary fund management and wealth management services for private investors and trustees, today announces that it has completed the sale of its offshore trust operations in Jersey (comprising Rathbone Trust Company Jersey Limited and Rathbone Jersey Limited) to Hawksford Holdings Limited ('Hawksford'), a company formed by the existing trust management team and Dunedin, the UK mid-market private equity house. 

Rathbones has received an initial cash consideration of £23.5m. In addition, there is deferred consideration of unsecured subordinated loan notes, with an initial issue value of £5m; these will be repaid on the earlier of a future sale or listing of the trust business. (See note 2 for additional information regarding the loan notes). 

Rathbones also announces that it has entered into an agreement with Hawksford to sell its Singapore-based trust company (Rathbone Trust (Singapore) Pte. Limited). On completion of this sale, which is still subject to completion of due diligence and regulatory approval, Rathbones will receive a further cash consideration of £0.5m. 

The proceeds of these transactions will further strengthen the capital resources of Rathbones' core continuing activities.  

In the year ended 31 December 2007, the trust businesses in Jersey and Singapore contributed £4.7m to Rathbones' reported profit before tax.  Their combined gross assets at 31 December 2007 were £38.5m. The deferred consideration has been discounted as required by International Financial Reporting Standards to £3.3m. The resulting total consideration figure for the Jersey business of £26.8m represents a discount of £10.4m against the carrying value of the net assets of £37.2m.  In the year ending 31 December 2008, the transactions are expected to reduce earnings per share by 25.4p in total. (see notes 3 and 4). 

Discussions continue on the most appropriate ownership structure for Rathbones' Swiss and BVI trust operations. A further update will be given, when appropriate.

None of these transactions will affect Rathbones' investment management business in the Channel Islands (Rathbone Investment Management International) or its UK-based tax and trust services (Rathbone Trust Company Limited). 

Rathbones' chief executive Andy Pomfret commented:

'This deal creates one of the largest independent trust companies in Jersey with strong international growth potential.  People are the key asset in offshore trust and tax work and we are therefore delighted that the existing management team will be taking this business forward and providing continuity to the existing clients.  As we stated in the half year results announcement issued in July we believe that in the changing climate for the use of offshore structures and services that these businesses are best owned offshore by their management'. 

'I believe there will be opportunities to work together in the coming years and we wish Hawksford, the staff and clients every success. Our trust and tax services in the UK are not included in this sale and will continue to form an integral part of our offering to clients. In addition the transaction provides us with substantial additional cash resources and further strengthens our capital base. This means we are ideally placed to consider the acquisition opportunities that are likely to be seen by our core investment management business in these turbulent market conditions.'

For further information contact:

Rathbone Brothers Plc	020 7399 0000 (Switchboard)
Andy Pomfret, Chief  Executive
Paul Stockton, Finance Director
Brunswick	020 7404 5959
Kate Holgate
Helen Barnes

Notes to editors

1.	Rathbone Brothers Plc specialises in providing, through its subsidiaries, high quality, personalised investment management and wealth management services for private investors and trustees, including discretionary fund management, unit trusts, tax planning, trust and company management, pension and banking services. It manages £12.0 billion of funds, including £1.5 billion managed by Rathbone Unit Trust Management Limited (as at 30 June 2008).
2.	Unsecured subordinated loan notes of £5m issued at completion will rank behind Hawksford’s senior debt and investor loan notes. These loan notes are interest free for the first 3 years. For the subsequent two years, interest will be accrued on 50% of the principal amount of the loan notes, at the then prevailing Bank of England base rate. From the fifth anniversary of the issue of the loan notes, interest will accrue on 100% of the principal loan amount at the then prevailing Bank of England base rate. In the event that the loan notes are repaid prior to the fifth anniversary of issue, the principal amount to be repaid will be discounted back to the repayment date at an appropriate market discount rate.
3.	In the year ending 31 December 2008, the transactions are expected to reduce earnings per share by 25.4p in total, comprising of an impairment loss of 13.3p (£5.7 million), which has already been recognised in the interim results to 30 June 2008, and a further loss due to market conditions of 12.1p (£5.2 million). Rathbones’ full year earnings per share in 2007 were 87.9p.
4.	This statement should not be taken to mean that earnings per share will necessarily exceed or be lower than historic earnings per share of Rathbones and no forecast is intended or implied.
5.	Statements made in this announcement that look forward in time or that express management's beliefs, expectations or estimates regarding future occurrences are 'forward-looking statements' within the meaning of the United States federal securities laws. These forward-looking statements reflect Rathbones' current expectations concerning future events and actual results may differ materially from current expectations or historical results.

 

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