Interim Management Statement

RNS Number : 9592F

Rathbone Brothers PLC

16 October 2008

 



RATHBONE BROTHERS PLC

INTERIM MANAGEMENT STATEMENT - 15 OCTOBER 2008

Year to date operating income from continuing operations up by 0.7%

Sale of the Jersey and Singapore trust businesses for total consideration of £29 million

Interim Management Statement

This statement is an Interim Management Statement in accordance with the UK Listing Authority's Disclosure and Transparency Rules. It covers the period from 1 July 2008 to 15 October 2008, and includes trading results for the three and nine months ended 30 September 2008. 

Trading update

Rathbone Brothers Plc, a leading provider of high-quality, personalised discretionary fund management and wealth management services for private investors and trustees, announces:

• operating income from continuing operations increased 0.7% to £102.5 million in the nine months ended 30 September 2008 compared to £101.8 million in the comparable period in 2007

• operating income from continuing operation fell 4.1% to £32.4 million in the three months ended
  30 September 2008 compared to £33.8 million in the comparable period in 2007

• funds under management in Rathbone Investment Management were £9.9 billion as at
  30 September 2008, down 5.7% from £10.5 billion as at 30 June 2008. This compares with a 12.9% fall in the FTSE 100 index and a 6.4% decrease in the FTSE APCIMS Balanced index during the same period

• unit trust funds under management have fallen 20% from £1.5 billion at 30 June 2008 to £1.2 billion at 30 September 2008

• cash held in client portfolios was £1.2 billion at 30 September 2008 compared to £0.9 billion as at
  31 December 2007

• sale of the Jersey and Singapore trust businesses for total consideration of £29 million

Mark Powell, chairman of Rathbone Brothers Plc, commented:

'The turmoil in world stock markets created by the crisis of confidence in the Banking Sector has had an inevitable impact on our recent financial performance. It is however attracting further funds to Rathbones which is increasingly recognised as an independent provider of quality investment management and wealth management services. In the first nine months of this year, Rathbone Investment Management achieved a net organic inflow of funds under management of 7.1%, 

Rathbones has a strong balance sheet with minimal borrowings and does not make use of the wholesale market to fund its operations.'  

  Operating income

	3 months ended 30 September				9 months ended 30 September
	2008	2007	Change		2008	2007	Change
	£m	£m	%		£m	£m	%
Investment management
- Fees	13.1	14.4	-9.0%		41.5	42.9	-3.3%
- Commissions	6.0	7.4	-18.9%		21.4	24.8	-13.7%
- Interest & other	5.7	3.7	54.1%		16.2	9.9	63.6%
	24.8	25.5	-2.7%		79.1	77.6	1.9%
Unit trusts	3.1	4.7	-34.0%		10.6	14.0	-24.3%
Trust and tax – continuing	2.4	2.2	9.1%		7.4	6.6	12.1%
Other income	2.1	1.4	50.0%		5.4	3.6	50.0%
Operating income – continuing	32.4	33.8	-4.1%		102.5	101.8	0.7%
Trust and tax – discontinued	3.8	4.0			11.4	11.7
Total operating income	36.2	37.8	-4.2%		113.9	113.5	0.4%

30 September is the third quarterly date at which client account fees for Rathbone Investment Management are calculated and charged during the calendar year. Rathbone Investment Management's other charging dates are 5 April, 30 June, and 31 December.

Funds under management

	30 Sept 2008	30 Jun 2008	Change since 30 Jun 2008		31 Dec 2007	30 Sept 2007
	£bn	£bn	%		£bn	£bn
Investment management	9.9	10.5	-5.7%		11.2	11.1
Unit trusts	1.2	1.5	-20.0%		1.9	2.1
Total funds under management	11.1	12.0	-7.5%		13.1	13.2
FTSE APCIMS Balanced	2553	2727	-6.4%		3024	3019
FTSE 100	4902	5626	-12.9%		6457	6467

The FTSE 100 index closed at 4080 on 15 October 2008 which has reduced the value of funds under management at that date. Fee income in the fourth quarter is dependent upon the value of funds under management at 31 December 2008. Underlying annualised rate of net organic growth in funds under management for Rathbone Investment Management in the nine months ended 30 September 2008 was 7.1% compared to 7.8% in 2007.

Disposal of offshore Trust businesses

As announced on 15 October 2008, the Group has disposed of its offshore trust operations in Jersey (the 'Jersey Trust Business') to Hawksford Holdings Limited ('Hawksford').

The business was sold for cash consideration of £23.5 million and deferred consideration of unsecured subordinated loan notes with an initial issue value of £5 million. The loan notes will be repaid on the earlier of a future sale or listing of the Jersey Trust Business.  Under international accounting standards, the fair value of consideration has been assessed as £26.8 million which, when compared to the disposed business' net assets at disposal of £37.2 million, results in a loss on disposal of £10.4 million.

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

In the year ending 31 December 2008, the above transactions are expected to reduce earnings per share by 25.4p in total, comprising of an impairment loss of 13.3p (£5.7 million) that has already been recognised in the interim results to 30 June 2008, and a further loss of 12.1p (£5.2 million) reflecting recent market conditions. Full year earnings per share in 2007 was 87.9p.

Goodwill held in relation to the Jersey Trust Business and the Singapore Trust Business was £24.2 million at 31 December 2007.

Profit before tax from the Jersey Trust Business and the Singapore Trust Business in the nine months ended 30 September 2008 totalled £3.7 million.  Income from both the Jersey and Singapore businesses has been reported as income from discontinued operations.

Financial Services Compensation Scheme

Our principal trading subsidiary, Rathbone Investment Management, is a participant in the Financial Services Compensation Scheme ('the Scheme') which exists to provide compensation in the event of default by Scheme participants.  In line with other considerably larger UK financial institutions, the recent collapse of a number of banks may result in compensation related charges being levied by the FSA under the terms of the Scheme.

The amount of any ultimate liability for Rathbones will depend upon the amount of any resultant Scheme depositor losses and the future size and circumstances of participants in the Scheme but, based on events to date, any annual charge levied on Rathbones is not expected to be material.

For further information contact:

Rathbone Brothers Plc                           020 7399 0000 (Switchboard)

Andy Pomfret, Chief Executive    

Paul Stockton, Finance Director

Emily Morris, Marketing Director         

Brunswick                                              020 7404 5959

Kate Holgate

Helen Barnes    

Rathbone Brothers Plc

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 £11.1 billion of funds, including £1.2 billion managed by Rathbone Unit Trust Management Limited (as at 30 September 2008). 

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.  

Certain data contained within this announcement has been sourced from management accounts and thus has not been audited.

 

END

 

 

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