RESULTS STATEMENT
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Rathbones Group Plc (“Rathbones” or the “Group”) announces results for the six months ended 30 June 2024.
Performance headlines:
- Funds under management and administration (FUMA): £108.9 billion, +3.4%
- Significant improvement in net flows in Q2
- Underlying profit before tax: £112.1 million, +120.7%
- Underlying operating margin: 25.1%
- Statutory profit before tax: £65.3 million, +151.2%
- Interim dividend of 30p, +3.4%
- Accelerated delivery of IW&I integration synergies
- Successful first stage implementation of InvestCloud Client Lifecycle Management (CLM) technology platform
- Migration of Saunderson House assets substantially complete
Paul Stockton, Group Chief Executive Officer of Rathbones, said:
“Rathbones has continued to focus on consolidating its position as the leading UK discretionary wealth manager, with total FUMA growing to £108.9 billion at 30 June 2024 (Q1 2024: £107.6 billion, FY 2023: £105.3 billion).
In the first six months of 2024, Rathbones has surpassed both the strategic and financial objectives we set out upon the announcement of the Investec Wealth & Investment (IW&I) combination. We have achieved synergy realisation ahead of target, with run-rate synergies of £20 million delivered to the end of June 2024, well ahead of our year one post-combination objective of £15 million. These synergies have delivered a benefit to underlying operating profit for the six-month period of £8 million and we remain confident in the guidance set out at the time of the combination.
Our office consolidation programme is progressing at pace with six office integrations completed so far, including our London head office move to Gresham Street earlier this month. The remaining two co-located offices will complete during the remainder of 2024. Work to develop our combined service proposition is also advancing well, with several propositions now aligned across the group.
In June, we launched successfully the InvestCloud CLM system into the business in line with the budgeted investment we guided previously. This represents a key milestone for our digital programme and gives us a strong platform from which to build enhanced functionality and improve the client experience.
The migration of Saunderson House assets has been substantially completed, with the advice process to migrate assets to Rathbones investment propositions completed or in progress, with only a small residue of £0.2 billion yet to engage in the migration process.
Our underlying operating margin was 25.1% for the six months to 30 June 2024 (30 June 2023: 21.3%), in line with our target and showing significant progress towards our target of a 30%+ margin. We end the period in a strong position, with confidence in the prospects for our enlarged business and a clear focus on maintaining the momentum of delivery during the second half of the year.”
Financial highlights:
-Total FUMA grew to £108.9 billion at 30 June 2024 (Q1 2024: £107.6 billion, FY 2023: £105.3 billion).
-£93.6 billion in the Wealth Management segment (£99.1 billion prior to the elimination of Wealth Management FUMA invested in the Asset Management segment of £5.5 billion).
-£15.3 billion in the Asset Management segment.
-Statutory profit before tax increased by 151.2% to £65.3 million (30 June 2023: £26.0 million), after expensing amortisation of client relationship intangible assets of £22.0 million (30 June 2023: £9.5 million) and integration related costs of £24.8 million (30 June 2023: £15.3 million) in the period. Underlying profit before tax totalled £112.1 million at 30 June 2024 (30 June 2023: £50.8 million), reflecting the inclusion of IW&I for the current six-month period, with an underlying operating margin of 25.1% (30 June 2023: 21.3%).
-Total operating income for the group increased by 88.0% to £447.4 million (30 June 2023: £238.0 million). Legacy Rathbones operating income grew by 11.6% to £265.7 million on a like-for-like basis, driven by recurring investment management and asset management fees on higher average FUMA, in addition to increased net interest income of £32.7 million (30 June 2023: £23.0 million).
-Total underlying operating expenses for the period were £335.3 million (30 June 2023: £187.2 million) and include the impact of the integration, and £7.1 million planned investment in our digital programme (30 June 2023: £6.0 million) with the remainder of the £15 million guided for the year to be incurred in the second half of the year, completing the £45 million spend of the programme implementation.
-Net FUMA flows improved significantly in the second quarter. While factors which have resulted in elevated outflows remain relevant, a significant reduction in gross outflows combined with continued strength in gross inflows saw net outflows reduce from £0.6 billion in the first quarter to flat in the second quarter.
-Total gross inflows increased by 3.3% in the second quarter to £3.1 billion (Q1 2024: £3.0 billion) while total gross outflows reduced by 8.6% to £3.2 billion (Q1 2024: £3.5 billion) in the same period. Although remaining elevated, reflecting the impact that the prolonged higher interest rate environment has on debt servicing costs and the relative attraction of cash as an asset class, this result offers a greater degree of optimism of returning to more normalised outflow levels.
-Net flows in RIM discretionary & managed propositions remained positive in the second quarter at £0.1 billion, resulting in £0.5 billion of net inflows for the first half of the year (30 June 2023: £0.2 billion), representing an annualised growth rate of 1.9% (30 June 2023: 0.7%).
-Net flows in IW&I also improved significantly, returning to positive territory in the second quarter, with net inflows of £0.2 billion (Q1 2024: net outflows of £0.6 billion), reflecting both a significant reduction in gross outflows related to investment managers who left the business prior to the announcement of the combination and improved gross inflows as client confidence in investment markets improves.
-Our single strategy funds remained resilient, with limited outflows of £0.1 billion in the second quarter (Q1 2024: £0.2 billion), against a challenging industry backdrop (30 June 2023: £0.3 billion).
Declaration of interim dividend:
-In line with our progressive dividend policy, we have increased our interim dividend by 3.4% to 30p (30 June 2023: 29p), reflecting the strength of our business and balance sheet. The record date will be 6 September 2024 and the dividend will be paid on 1 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
Camarco
Ed Gascoigne-Pees
Julia Tilley
Tel: 020 3757 4984
Email: ed.gascoigne-pees@camarco.co.uk
Issued 31 July 2024