REG - Rathbones Group PLC - Third quarter trading update

RathbonesAnnouncement

19/10/2022 07:00

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RNS Number : 3174D  Rathbones Group PLC  19 October 2022

 

Rathbones Group Plc

Third quarter trading update

 

Rathbones Group Plc ("Rathbones") announces a trading update for the three
months ended 30 September 2022.

Paul Stockton, Group Chief Executive of Rathbones, said:

"Despite challenging investment markets Rathbones has delivered a resilient
quarter, with annualised discretionary and managed net organic growth of 3.3%
and overall group investment performance that compares well against industry
benchmarks. Market movements in investment values to 30 September 2022
adversely impacted total FUMA however, which fell 1.7% in the quarter to
£57.9 billion against the MSCI PIMFA Private Investor Balanced Index, which
fell 3.5% over the same period.

 

We continue to place a high priority on engaging meaningfully with our
clients, both face-to-face and digitally, and are on track to deliver the
first phase of our planned InvestCloud and Charles River implementations by
the end of 2022. Rathbones is well-positioned to take advantage of the future
growth opportunities that can arise both during and after periods of
investment market volatility."

 

Highlights:

-    Total funds under management and administration ('FUMA') were £57.9
billion at 30 September (30 June 2022: £58.9 billion, 31 December 2021:
£68.2 billion).

-      £43.1 billion in the Investment Management business (30 June
2022: £43.8 billion, 31 December 2021: £50.3 billion).

-      £10.6 billion in the Rathbone Funds business (30 June 2022:
£10.9 billion, 31 December 2021: £13.0 billion).

-      £4.2 billion in Saunderson House (30 June 2022: £4.2 billion, 31
December 2021: £4.9 billion).

 

-    Discretionary and managed net inflows were resilient at £0.4 billion
(Q3 2021: £0.6 billion) in the quarter to 30 September 2022, representing an
annualised growth rate of 3.3% (Q3 2021: 4.8%).

-      Discretionary service net inflows totalled £0.3 billion (Q3 2021:
£0.5 billion).

-      Net inflows into our multi-asset fund range (a central part of our
managed offering to the adviser market) were strong, totalling £0.1 billion
and equating to annualised net growth for the period of 17.4% (Q3 2021: £0.1
billion).

-    Despite continued market volatility and significant outflows across
the wider asset management industry, net outflows in our single strategy fund
range remained low at £0.1 billion in the quarter (Q3 2021: net inflows of
£0.4 billion).

 

-    Saunderson House integration is progressing well, with new
propositions launched during the quarter. Net outflows of £0.1 billion (Q3
2021: n/a) were in line with expectations.

 

-    Our digital investment programme is progressing well with planned
releases of InvestCloud and Charles River on track for delivery later this
year. Functionality within MyRathbones, our digital portal and app, has
improved materially in 2022 supporting engagement with both clients and
advisers via easy-to-use data sharing, messaging and reporting capabilities.

 

-    Underlying net operating income was £113.0 million for the three
months ended 30 September 2022, an increase of 6.2% from the £106.4 million
for the three months ended 30 September 2021.

-      Investment Management fees totalled £67.5 million (Q3 2021:
£72.8 million), reflecting lower FUMA on the principal charging date.

-      Commission income totalled £12.1 million, up 12.0% (Q3 2021:
£10.8 million) given increased trading volumes amid market volatility.

-      Net interest income increased materially, as expected, to £5.6
million from £0.9 million in Q3 2021, reflecting UK base rate rises during
the year to date.

-      Fees from advisory services and other income increased to £12.4
million (Q3 2021: £4.9 million), reflecting organic growth and the impact of
the Saunderson House acquisition.

-      Income in Rathbone Funds, which accrues daily, totalled £15.4
million (Q3 2021: £17.0 million).

 

 

Full year results 2022

Results for the 12 months to 31 December 2022 will be announced on 1 March
2023.

 

 

 

 

Detailed financial information

Net operating income:

                                                                                   3 months ended 30 September

                                                                                                                          9 months ended 30 September
                                                                            2022   2021            Change          2022   2021             Change
 Investment Management                                                      £m     £m              %               £m     £m               %
 - Fees                                                                     67.5   72.8            (7.3)           206.9  213.5            (3.1)
 - Commissions                                                              12.1   10.8            12.0            39.0   42.0             (7.1)
 - Net interest income                                                      5.6    0.9             522.2           11.6   3.3              251.5
 - Fees from advisory services(1) & other income                            12.4   4.9             153.1           40.3   15.5             160.0
                                                                            97.6   89.4            9.2             297.8  274.3            8.6
 Rathbone Funds                                                             15.4   17.0            (9.4)           47.1   45.7             3.1
 Net operating income                                                       113.0  106.4           6.2             344.9  320.0            7.8

 MSCI PIMFA Private Investor Balanced Index on principal charging dates(2)  1606   1781            (9.8)

                                                                                                                   1692   1754             (3.5)

 

(1)   Including income from trust, tax, financial planning services, Vision
Independent Financial Planning and Saunderson House.

(2)   The principal charging dates for Investment Management clients are 5
April, 30 June, 30 September and 31 December. Rathbone Funds income accrues on
daily levels of funds under management.

 

Funds under management and administration

(i) Breakdown of FUMA and flows by service level

 Q3 ended 30 September 2022          Opening FUM  Inflows  Outflows  Net Flows  Service Level Transfers  Market Movement (£m)   Closing FUM  Ann Net Growth

(£m)
(£m)
(£m)
(£m)
(£m)
(£m)
(%)
 Discretionary service               42,989       901      (613)     288        (52)                     (749)                  42,476
 Bespoke portfolios                  41,745       851      (584)     267        (82)                     (737)                  41,193       2.6
 Managed via in-house funds          1,244        50       (29)      21         30                       (12)                   1,283        6.8
 Multi-asset funds                   1,931        164      (80)      84         -                        (42)                   1,973        17.4
 Total discretionary & managed       44,920       1,065    (693)     372        (52)                     (791)                  44,449       3.3
 Non-discretionary service           832          4        (29)      (25)       (19)                     (24)                   764          (12.0)
 Total wealth management             45,752       1,069    (722)     347        (71)                     (815)                  45,213       3.0
 Single-strategy funds               6,519        321      (433)     (112)      -                        (159)                  6,248        (6.9)
 Execution only & banking            2,432        31       (109)     (78)       71                       (108)                  2,317        (12.8)
 Total group (pre acquisitions)      54,703       1,421    (1,264)   157        -                        (1,082)                53,778       1.1
 Saunderson House                    4,243        71       (161)     (90)       -                        (2)                    4,151        (8.5)
 Total group                         58,946       1,492    (1,425)   67         -                        (1,084)                57,929       0.5

 

 9 months ended 30 September 2022    Opening FUM  Inflows  Outflows  Net Flows  Service Level Transfers  Market Movement (£m)   Closing FUM  Ann Net Growth

(£m)
(£m)
(£m)
(£m)
(£m)
(£m)
(%)
 Discretionary service               49,249       2,585    (1,920)   665        (158)                    (7,280)                42,476
 Bespoke portfolios                  47,985       2,415    (1,846)   569        (252)                    (7,109)                41,193       1.6
 Managed via in-house funds          1,264        170      (74)      96         94                       (171)                  1,283        10.1
 Multi-asset funds                   1,991        592      (287)     305        -                        (323)                  1,973        20.4
 Total discretionary & managed       51,240       3,177    (2,207)   970        (158)                    (7,603)                44,449       2.5
 Non-discretionary service           1,026        14       (67)      (53)       (77)                     (132)                  764          (6.9)
 Total wealth management             52,266       3,191    (2,274)   917        (235)                    (7,735)                45,213       2.3
 Single-strategy funds               8,316        1,308    (1,621)   (313)      -                        (1,755)                6,248        (5.0)
 Execution only & banking            2,660        149      (340)     (191)      235                      (387)                  2,317        (9.6)
 Total group (pre acquisitions)      63,242       4,648    (4,235)   413        -                        (9,877)                53,778       0.9
 Saunderson House(3)                 4,917        331      (543)     (212)      -                        (554)                  4,151        (5.7)
 Total group                         68,159       4,979    (4,778)   201        -                        (10,431)               57,929       0.4

 

 

(3)   Following a detailed review of Saunderson House flows data, it was
identified that Saunderson House net flows previously reported for H1 2022
were overstated by £72m and market performance was understated by £72m. This
has now been reflected in the YTD table above.

 

(ii) Breakdown of Rathbone Investment Management FUMA and flows by channel

                                 Opening FUM  Inflows  Outflows  Net Flows  Service Level Transfers  Market Movement (£m)   Closing FUM  Ann Net Growth

(£m)
(£m)
(£m)
(£m)
(£m)
(£m)
(%)

 Q3 ended 30 September 2022
 Total direct                    32,814       641      (478)     163        (82)                     (551)                  32,344       2.0
 Total financial adviser linked  10,175       260      (135)     125        30                       (198)                  10,132       4.9
 Total discretionary service     42,989       901      (613)     288        (52)                     (749)                  42,476       2.7
 Execution only & banking        2,432        31       (109)     (78)       71                       (108)                  2,317        (12.8)
 Non-discretionary service       832          4        (29)      (25)       (19)                     (24)                   764          (12.0)
 Total Investment Management     46,253       936      (751)     185        -                        (881)                  45,557       1.6

 

 9 months ended 30 September 2022  Opening FUM  Inflows  Outflows  Net Flows  Service Level Transfers  Market Movement (£m)   Closing FUM  Ann Net Growth

(£m)
(£m)
(£m)
(£m)
(£m)
(£m)
(%)
 Total direct                      37,800       1,739    (1,483)   256        (156)                    (5,556)                32,344       0.9
 Total financial adviser linked    11,449       846      (437)     409        (2)                      (1,724)                10,132       4.8
 Total discretionary service       49,249       2,585    (1,920)   665        (158)                    (7,280)                42,476       1.8
 Execution only & banking          2,660        149      (340)     (191)      235                      (387)                  2,317        (9.6)
 Non-discretionary service         1,026        14       (67)      (53)       (77)                     (132)                  764          (6.9)
 Total Investment Management       52,935       2,748    (2,327)   421        -                        (7,799)                45,557       1.1

 

 

(iii) Total Group FUMA

                                            At 30 September           At 30 June
                                            2022     2021     Change  2022     Change
                                            £m       £m       %       £m       %
 Rathbone Investment Management Gross FUMA  45,557   51,335   (11.3)  46,253   (1.5)
 Of which: discretionary wrapped funds(1)   (2,403)  (2,576)  (6.7)   (2,439)  (1.5)
                                            43,154   48,759   (11.5)  43,814   (1.5)
 Rathbone Funds                             10,624   12,143   (12.5)  10,888   (2.4)
 Saunderson House                           4,151    -        -       4,243    (2.2)
 Total Group FUMA                           57,929   60,902   (4.9)   58,945   (1.7)

1. Discretionary wrapped funds represent funds operated by Rathbone Funds,
managed by both Rathbone Investment Management teams and Rathbone Funds
managers

 

The MSCI PIMFA Private Investor Balanced Index closed at 1597 on 18 October
2022, a decrease of 0.6% since 30 September 2022. Investment Management fee
income in the fourth quarter is dependent upon the value of funds under
management at 31 December 2022.

 

19 October 2022

 

For further information contact:

 

Rathbones Group Plc

Paul Stockton, Group Chief Executive

Jennifer Mathias, Group Chief Financial Officer

Shelly Patel, Head of Investor Relations

 

Tel: 020 7399 0071

email: shelly.patel@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 responsibly has been with us from the
beginning and continues to lead us forward. Our ambition is to be recognised
as the UK's most responsible wealth manager.

 

Rathbones has over 2,000 staff in 14 UK locations and Jersey; its headquarters
is 8 Finsbury Circus, London, EC2M 7AZ.

www.rathbones.com (http://www.rathbones.com)

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