REG - Rathbones Group PLC - Third quarter trading update
17/10/2024 07:00
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RNS Number : 4780I Rathbones Group PLC 17 October 2024
Rathbones Group Plc
THIRD QUARTER TRADING UPDATE
Rathbones Group Plc ("Rathbones" or the "Group") announces a trading update
for the three months ended 30 September 2024
Paul Stockton, Group Chief Executive Officer of Rathbones, said:
"The integration of Investec Wealth & Investment (IW&I) has progressed
at pace throughout the summer, and we remain focused on actions that support
the delivery of the financial goals we set ourselves at the outset. Over 80%
of clients have been asked for their consent to move their accounts to
Rathbones Investment Management from IW&I and response rates are very
positive. Run-rate synergy realisation grew to £25.5 million at the end of
the third quarter, significantly ahead of the first-year post-combination
objective of £15 million.
"Net flows in the quarter reflected the resilience of gross inflows despite
the impacts of managing a significant client consent process. Gross outflows
have been impacted by the completion of Saunderson House migration, alongside
some of the macroeconomic and specific factors we have seen, and which have
impacted the industry this year.
"The potential for taxation changes in the forthcoming Autumn budget has
created a heightened opportunity for us to engage positively with our clients
and Rathbones remains well positioned to support clients to make the decisions
needed to achieve their financial goals."
Financial highlights:
- Funds under management and administration (FUMA) totalled £108.8
billion at 30 September 2024 (30 June 2024: £108.9 billion, 31 December 2023:
£105.3 billion).
- £93.3 billion in the Wealth Management segment (£99.0 billion prior
to the elimination of Wealth Management FUMA invested in the Asset Management
segment of £5.7 billion).
- £15.5 billion in the Asset Management segment.
- Gross inflows were resilient at £2.8 billion in the third quarter (Q2
2024: £3.1 billion) offset by elevated outflows of £3.4 billion in the
period (Q2 2024: £3.2 billion).
- Net inflows in Rathbones Investment Management discretionary &
managed propositions remained positive in the third quarter at £147 million,
(Q2 2024: £135 million), representing an annualised growth rate of 1.1% for
the quarter and 1.7% for the nine months to 30 September (£635 million).
- The migration of former Saunderson House FUMA was completed on 31 July
2024. £245 million of FUMA from clients who did not complete the consent
process has been reported as a net outflow in this quarter.
- Net outflows in IW&I totalled £251 million (Q2 2024: net inflows
of £178 million). Whilst the client consent process continues to progress
well, gross inflows were to an extent impacted by the time required to manage
the process. Investment manager turnover post combination remains very low
such that outflows relating to previous departures were consistent with those
seen in Q2.
- Flows in single strategy funds continue to reflect the challenging
environment for active managers. Net outflows were £157 million in the third
quarter (Q2 2024: outflows of £105 million), limited by first quartile
performance over 1, 2 and 5 years in our largest funds.
- Operating income for the Group totalled £220.6 million (Q2 2024:
£223.8 million), despite the seasonal reduction in commission volumes over
the quieter summer months and lower interest rate conditions combined with
some reduction in client money balances.
- Synergy delivery has increased to £25.5 million per annum on a cash
run-rate basis, largely due to organisational changes and our property
consolidation programme being secured ahead of the planned timeframe.
Full year results 2024:
Results for the 12 months to 31 December 2024 will be announced on 26 February
2025. A Q4 trading update will be published on 16 January 2025.
Detailed financial information(1):
Net Operating Income
3 months ended 30 September
9 months ended 30 September
2024 2023 Change 2024 2023 Change
Wealth Management (£m) (£m) (%) (£m) (£m) (%)
- Fees 144.5 69.0 109.4 429.2 207.8 106.5
- Commissions 20.7 9.5 117.9 67.9 33.2 104.5
- Net interest income 15.5 12.3 26.0 47.3 32.4 46.0
- Fees from advisory services & other income(2) 19.0 12.0 58.3 62.9 35.2 78.7
199.7 102.8 94.3 607.3 308.6 96.8
Asset Management 20.9 17.6 18.8 60.7 49.8 21.9
Net operating income 220.6 120.4 83.2 668.0 358.4 86.4
1. As outlined in Rathbones' Q1 2024 interim management statement published on
9 May 2024, Rathbones included additional profitability metrics to support the
reporting requirements of Investec Plc (Investec). Investec's regulatory
reporting requirements are now such that this is no longer necessary. Investec
will therefore incorporate Rathbones' latest published half year or full year
results in their half year and annual reporting. Consequently, Rathbones has
now reverted to its previous level of disclosure in its quarterly trading
updates.
2. Including income from trust, tax, financial planning services and Vision
Independent Financial Planning. Other income also includes net interest margin
on client money balances, which includes that relating to IW&I. In the
prior year comparative, interest margin on client money balances (£1.0m for
the 3 months ended 30 September 2023 and £3.2m for the 9 months ended 30
September 2023) were classified within net interest income and have now been
reported in Fees from advisory services & other income.
Funds under management and administration
(I) Segment fuma
9 months ended 30 September 2024 Wealth Management Asset Management Intra-group holdings Group FUMA
(£m)
(£m)
(£m) (£m)
Opening FUMA 96,118 13,770 (4,548) 105,340
Gross Inflows 7,059 3,394 (1,557) 8,896
Gross Outflows (7,950) (2,827) 731 (10,046)
Net Flows (891) 567 (826) (1,150)
Transfers (84) 84 - -
Market & Investment Performance 3,870 1,098 (353) 4,615
Closing FUMA 99,013 15,519 (5,727) 108,805
(Ii) Breakdown of FUMA and flows by service level
9 months ended 30 September 2024 Opening FUMA Gross Inflows Gross Outflows Net Flows Transfers(3) SHL Migrated Assets Market & Investment Performance (£m) Closing FUMA Ann Net Growth(4)
(£m)
(£m)
(£m)
(£m)
(%)
(£m) (£m) (£m)
Rathbones Investment Management 48,759 3,672 (3,219) 453 11 1,275 1,857 52,355 1.2
Bespoke portfolios 45,004 3,272 (2,947) 325 (386) 828 1,670 47,441 1.0
Managed via in-house funds 3,755 400 (272) 128 397 447 187 4,914 4.5
Multi-asset funds(5) 2,545 805 (623) 182 84 - 247 3,058 9.5
Rathbones discretionary & managed 51,304 4,477 (3,842) 635 95 1,275 2,104 55,413 1.7
Non-discretionary service 752 18 (34) (16) (58) - 5 683 (2.8)
IW&I 42,267 3,053 (3,705) (652) (249) - 1,677 43,043 (2.1)
Saunderson House(6) 1,590 68 (494) (426) - (1,278) 114 - (35.7)
Single-strategy funds 6,677 1,032 (1,473) (441) - - 498 6,734 (8.8)
Execution only 2,750 248 (498) (250) 212 3 217 2,932 (12.1)
Total group 105,340 8,896 (10,046) (1,150) - - 4,615 108,805 (1.5)
Q3 ended 30 September 2024 Opening FUMA Gross Inflows Gross Outflows Net Flows Transfers(3) SHL Migrated Assets Market & Investment Performance (£m) Closing FUMA Ann Net Growth(4)
(£m)
(£m)
(£m)
(£m)
(%)
(£m) (£m) (£m)
Rathbones Investment Management 51,363 1,302 (1,159) 143 14 650 185 52,355 1.1
Bespoke portfolios 46,727 1,176 (1,053) 123 (80) 555 116 47,441 1.1
Managed via in-house funds 4,636 126 (106) 20 94 95 69 4,914 1.7
Multi-asset funds(5) 2,992 204 (200) 4 - - 62 3,058 0.5
Rathbones discretionary & managed 54,355 1,506 (1,359) 147 14 650 247 55,413 1.1
Non-discretionary service 707 6 (11) (5) (19) - - 683 (2.8)
IW&I 43,277 926 (1,177) (251) (46) - 63 43,043 (2.3)
Saunderson House(6) 820 10 (255) (245) - (651) 76 - (119.5)
Single-strategy funds 6,845 268 (425) (157) - - 46 6,734 (9.2)
Execution only 2,903 89 (139) (50) 51 1 27 2,932 (6.9)
Total group 108,907 2,805 (3,366) (561) - - 459 108,805 (2.1)
(iiI) Breakdown of WEALTH Management FUMA and flows by channel
9 months ended 30 September 2024 Opening FUMA Net Flows Transfers(3) SHL Migrated Assets Market & Investment Performance (£m) Closing FUMA Ann Net Growth(4)
(£m)
(£m)
(£m)
(£m)
(%)
(£m)
Gross Inflows Gross Outflows
(£m) (£m)
Total direct 34,411 2,287 (2,333) (46) (181) 1 1,350 35,535 (0.2)
Total financial adviser linked 14,348 1,385 (886) 499 192 1,274 507 16,820 4.6
Total discretionary service 48,759 3,672 (3,219) 453 11 1,275 1,857 52,355 1.2
Execution only 2,750 248 (498) (250) 212 3 217 2,932 (12.1)
Non-discretionary service 752 18 (34) (16) (58) - 5 683 (2.8)
Total wealth management 52,261 3,938 (3,751) 187 165 1,278 2,079 55,970 0.5
IW&I 42,267 3,053 (3,705) (652) (249) - 1,677 43,043 (2.1)
Total wealth management for enlarged group 94,528 6,991 (7,456) (465) (84) 1,278 3,756 99,013 (0.7)
Q3 ended 30 September 2024 Opening FUMA Net Flows Transfers(3) SHL Migrated Assets Market & Investment Performance (£m) Closing FUMA Ann Net Growth(4)
(£m)
(£m)
(£m)
(£m)
(%)
(£m)
Gross Inflows Gross Outflows
(£m) (£m)
Total direct 35,450 809 (821) (12) (27) 1 123 35,535 (0.1)
Total financial adviser linked 15,913 493 (338) 155 41 649 62 16,820 3.9
Total discretionary service 51,363 1,302 (1,159) 143 14 650 185 52,355 1.1
Execution only 2,903 89 (139) (50) 51 1 27 2,932 (6.9)
Non-discretionary service 707 6 (11) (5) (19) - - 683 (2.8)
Total wealth management 54,973 1,397 (1,309) 88 46 651 212 55,970 0.6
IW&I 43,277 926 (1,177) (251) (46) - 63 43,043 (2.3)
Total wealth management for enlarged group 98,250 2,323 (2,486) (163) - 651 275 99,013 (0.7)
(iV) Total Group FUMA
9 months ended 30 September 2024 Opening FUMA Gross Inflows Gross Outflows Net Flows Transfers(3) SHL Migrated Assets Market & Investment Performance (£m) Closing FUMA Ann Net Growth(4)
(£m)
(£m)
(£m)
(£m)
(%)
(£m) (£m) (£m)
Rathbones Investment Management 52,261 3,938 (3,751) 187 165 1,278 2,079 55,970 0.5
Rathbones Asset Management 13,770 3,394 (2,827) 567 84 - 1,098 15,519 5.5
IW&I 42,267 3,053 (3,705) (652) (249) - 1,677 43,043 (2.1)
Saunderson House(6) 1,590 68 (494) (426) - (1,278) 114 - (35.7)
Total 109,888 10,453 (10,777) (324) - - 4,968 114,532 (0.4)
Group eliminations(7) (4,548) (1,557) 731 (826) - - (353) (5,727) 24.2
Total 105,340 8,896 (10,046) (1,150) - - 4,615 108,805 (1.5)
3. Transfers represent client FUMA which has transferred from one service to
another and other intra-group movements. These are excluded from net inflows.
4. Annualised net growth in flows calculated as net flows/opening FUMA.
5. Net inflows into multi-asset funds include direct flows and flows into
managed solutions via in-house funds.
6. Total funds under advice by Saunderson House, including those clients
transferred to fellow group companies totalled £4.2 billion at 30 September
2024.
7. Group eliminations represent RAM funds that are held within portfolios
managed by RIM (£5.5 billion) and IW&I (£0.2 billion) teams.
Consequently, after excluding the RAM funds, the FUMA of each entity is £50.5
billion in RIM and £42.8 billion within IW&I.
17 October 2024
For further information contact:
Rathbones Group Plc
Paul Stockton, Group Chief Executive Officer
Iain Hooley, Group Chief Financial Officer
Shelly Patel, Head of Investor Relations
Tel: 020 7399 0071
Email: shelly.patel@rathbones.com (mailto:shelly.patel@rathbones.com)
Camarco
Ed Gascoigne-Pees
Julia Tilley
Tel: 020 3757 4980
Email: ed.gascoigne-pees@camarco.co.uk
(mailto:ed.gascoigne-pees@camarco.co.uk)
Rathbones Group Plc
Rathbones provides wealth and asset 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 headquarters is 30 Gresham Street, London, EC2V 7PG.
www.rathbones.com
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