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 £161 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 £60.5 billion at 30 June 2023 from the £58.9 billion at 30 June 2022 (31 December 2022: £60.2 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 £238.0 million in the six months to 30 June 2023, an increase of 2.6% from the £231.9 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 £162.5 million in the first six months of 2023, a decrease of 2.3% on the prior period (30 June 2022: £166.3 million).
- Fee income in our funds business totalled £31.1 million in the six months ended 30 June 2023, a decrease of 3.1% on the £31.8 million reported in the first half of 2022.
- Net interest income was £23.0 million, up from £6.1 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 £0.2 billion (H1 2022: £0.6 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 £0.1 billion (H1 2022: £0.4 billion).
- Net inflows into our multi-asset fund range (a central part of our managed offering to the adviser market) were £0.1 billion, equating to annualised net growth for the period of 9.1% (H1 2022: £0.2 billion).
- Single strategy net outflows in our funds business were £0.3 billion (H1 2022: £0.2 billion).
- £1 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 £50.7 million in the first six months of 2023 (30 June 2022: £50.0 million) and statutory profit before tax for the six months to 30 June 2023 totalled £26.0 million (30 June 2022: £32.6 million). Statutory profit before tax included £11.2 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 £6 million is lower than the £8 million incurred a year ago. We continue to expect total expenditure across our digital programme to be no more than £40 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.
For further information contact:
Rathbones Group Plc
Tel: 020 3757 4984