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www.rathbones.com Rathbone Brothers Plc Rathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

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Page 1: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.comRathbone Brothers Plc

Rathbone Brothers Plc

Announcement of Interim Results

to 30 June 2005

1 September 2005

Page 2: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 2

Rathbone Brothers PlcInterim Results to June 30, 2005

Mark Powell

Chairman

Andy Pomfret

Chief Executive

Sue Desborough

Finance Director

Paul Chavasse

Chief Operating Officer

The Executive Team

Page 3: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 3

Rathbone Brothers PlcInterim Results to June 30, 2005

Rathbone Brothers Plc

“A more favourable environment in world stock markets has provided the backdrop for solid progress by Rathbones during the first half of 2005.”Mark Powell, Chairman

Page 4: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 4

Rathbone Brothers PlcInterim Results to June 30, 2005

Results HighlightsH1 2005 % increase

Operating income £53.9m 14.0

Operating profit (before Rensburg-related costs) £16.1m 21.1

Operating profit (after Rensburg-related costs) £14.7m 10.5

Earnings per share (after Rensburg-related costs) 25.46p 9.4

Dividend 11.5p 9.5

Funds under management# £8.4bn *9.1

FTSE APCIMS Balanced Index # 2524 5.0

FTSE 100 Index # 5113 6.2

Average FTSE APCIMS Balanced Index on charging dates

2481 9.0

Average FTSE 100 Index on charging dates 5028 12.4

1#as at 30 June 2005*increase since 31 Dec 2004

Page 5: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 5

Rathbone Brothers PlcInterim Results to June 30, 2005

Operating Income

H1 2005 (£m) % increase

Investment management fees 18.8 25.3

Investment management commissions 13.4 -

Bank interest and other income from investment management activity

4.4 15.8

Total investment management income 36.6 13.7

Unit trust income 4.7 51.6

Trust income 10.7 2.9

Bank interest from non-investment management activity 1.9 18.8

Operating income 53.9 14.0

Page 6: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 6

Rathbone Brothers PlcInterim Results to June 30, 2005

Operating Expenses (excluding Rensburg-related costs)

H1 2005 (£m) % increase

Fixed staff costs 19.2 4.9

Variable (including profit-related) staff costs 5.9 18.0

Total staff costs 25.1 7.7

Other costs 12.7 18.7

Operating expenses 37.8 11.2

Page 7: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 7

Rathbone Brothers PlcInterim Results to June 30, 2005

Other Financial Issues

• International accounting standards

• 2004 restatement issued 4 August 2005

• Conversion costs around £0.5m

• Interpretations still developing

• Transitional effects

• Pension fund

• Capital Requirements Directive

Page 8: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 8

Rathbone Brothers PlcInterim Results to June 30, 2005

Investment Management Highlights

• Segregated funds up 7.2% to £7.4bn (APCIMS Balanced up 5.1%)

• Charity funds over £600 million

• Pension funds (predominantly SIPP funds) over £400 million

• New head of pensions

• Continued increase in average size of account

• Collectives – increased use demonstrates investment process

Page 9: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 9

Rathbone Brothers PlcInterim Results to June 30, 2005

Investment ManagementGrowth in segregated funds under management

Six months to 30/6/05

£bn

Year to

31/12/04

£bn

Opening funds under management 6.9 6.3

Market movement (FTSE APCIMS Balanced) 0.3 0.4

Inflow of new money – organic 0.4 0.5

Outflow of money (0.2) (0.2)

Effect of performance relative to market - (0.1)

Closing funds under management 7.4 6.9

Net new money 0.2 0.3

Page 10: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 10

Rathbone Brothers PlcInterim Results to June 30, 2005

Operations: Scaleability

“Rathbones’ existing operations and systems have proved

efficient and robust and, the Rathbones Directors believe,

have the capacity to cope with a significant increase in client

numbers and funds under management.”

Press release: 31 March 2005

Page 11: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 11

Rathbone Brothers PlcInterim Results to June 30, 2005

Operations: Scaleability

Common/scaleable platform

• Investment in core fund management systems - Quasar 6 & Rathbone

Investment Desk (RID)

• Automation of basic processes - order flow, cash payments, corporate

events

• Investment in service enhancements - performance measurement (GIPS),

compliance with client mandate module

• Investment in regulatory compliance and tax reporting – SEC, EUSD

Page 12: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 12

Rathbone Brothers PlcInterim Results to June 30, 2005

Operations: Flexibility and Client Service• Common operational platform allows flexibility in client service:

− Offshore investment

− US clients, EU requirements

− Differing client requirements - SIPPs, ethical investment, charities,

loans

− Flexible range of asset classes - fixed interest, equities,

alternatives, property vehicles

− Deliver individual service to families, trusts, entrepreneurs and

intermediaries

Page 13: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 13

Rathbone Brothers PlcInterim Results to June 30, 2005

Operational ScaleabilityChange in value of client cases1: December 2001 – June 2005

% change

FTSE All Share +0.1%

FTSE APCIMS Balanced +0.5%

Value of total funds under management (ex-RUTM) +19.6%

Number of Rathbones cases banded by value

Total number of Rathbones cases +4.7%

<£100,000 -11.3%

£100,000 - £249,999 +15.8%

£250,000 - £499,999 +26.8%

£500,000 - £999,999 +27.5%

£1million + +37.5%

Cases: a case may be several accounts that are

effectively managed as one mandate. Commonly this is husband and wife,

one or two main accounts and two PEP & ISA

accounts.

Page 14: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 14

Rathbone Brothers PlcInterim Results to June 30, 2005

Trust Division

• Continuing progress on managing legacy issues

• Geneva improving with recent profitable underlying trading

• Continuing solid performance in Jersey

• Profit of £1.5m, being 7.7% above H2 2004 but 24.8% below H1 2004

• Business development opportunities in Jersey and London

Page 15: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 15

Rathbone Brothers PlcInterim Results to June 30, 2005

Unit Trusts• Continued growth in funds under management to over £1 billion

• Good medium to long-term performance across the range of funds

• Maturing team - appointment of two investment managers to sole managership

• Developing distribution

• Fund supermarkets/life companies - proportion of gross sales increasing: Zurich Intermediary Group, AMEX, Skandia, other institutional contacts

• Ratings and awards continue

• Increased sales in smaller funds

Page 16: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 16

Rathbone Brothers PlcInterim Results to June 30, 2005

Conclusion and Current Trading

“World stock markets have maintained their comparative strength since 30 June, despite the political and economic uncertainties which exist. Levels of new business enquiries are encouraging and we look forward with confidence.”Mark Powell, Chairman

Page 17: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 17

Rathbone Brothers PlcInterim Results to June 30, 2005

Appendices

Page 18: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 18

Rathbone Brothers PlcInterim Results to June 30, 2005

Rathbone Brothers Plc: Strategy• To be the leading, independent provider of discretionary investment

management services to the private client in the UK and to provide trust services internationally

• Primary focus will remain on private clients

• Encourage and reward organic growth

• Further acquisitions of businesses and people if demonstrably earnings enhancing in the medium-term, or add to service offered to clients

• Investment management and unit trusts to account for over 80% of activity

• To grow our unit trust business

• Continuing development of the investment process

Page 19: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 19

Rathbone Brothers PlcInterim Results to June 30, 2005

71%

17%

12%

Investment management

Trust

Unit trusts

Analysis of Gross Operating Income6 months to 30 June 2005

Page 20: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 20

Rathbone Brothers PlcInterim Results to June 30, 2005

Analysis of Investment Management Operating Income 6 months to 30 June 2005

51%

37%

12%

Fees

Commission

Net interest and other income

Page 21: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 21

Rathbone Brothers PlcInterim Results to June 30, 2005

49%

16%

4%

6%

3%

8%

4%4%

6% Staff - payroll (excl. profit related)

Staff - profit related

Staff other (non payroll costs)

Premises

Depreciation

Professional

Settlements

IT

Other

Analysis of Expenditure (excluding Rensburg-related costs) 6 months to 30 June 2005

Page 22: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 22

Rathbone Brothers PlcInterim Results to June 30, 2005

Operating Profit (£m) (before Rensburg-related costs)

14

.2

11

.2

11

.4

9.4

13

.3

16

.1

12

.3

9.4

7.0

10

.4

15

.2

26

.5

20

.6

18

.4 19

.7

28

.50

5

10

15

20

25

30

2000 2001 2002 2003 2004 H1 2005

£ m

illio

n 1st Half

2nd Half

Full Year

2000 - H1 2005 After IFRS restatement

Page 23: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 23

Rathbone Brothers PlcInterim Results to June 30, 2005

Investment ManagementMarket movements and growth in Group funds under management

1 Year 3 Years 5 Years

FTSE 100 Index +14.5% +9.8% -19.1%

FTSE APCIMS Balanced Index +11.3% +10.8% -12.8%

Funds Under Management +20.0% +42.4% +68.0%

Page 24: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 24

Rathbone Brothers PlcInterim Results to June 30, 2005

Investment Management (incl. unit trusts)

Market movements and growth Group funds under management

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2000 2001 2002 2003 2004 H1 2005

£ m

illio

ns

Funds under management

FTSE 100

FTSE APCIMS Balanced

FTSE 100 and FTSE

APCIMS Balanced

rebased at 5574 as at

31 December 2000

Emorris
s Balanced rebased at 5575
Page 25: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 25

Rathbone Brothers PlcInterim Results to June 30, 2005

Trust DivisionOperating profit (£m)

H1 H2 Total

2005 1.5

2004 1.9 1.4 3.3

Page 26: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 26

Rathbone Brothers PlcInterim Results to June 30, 2005

0

200

400

600

800

1000

1200

01/04

/199

9

01/07

/199

9

01/10

/199

9

01/01

/200

0

01/04

/200

0

01/07

/200

0

01/10

/200

0

01/01

/200

1

01/04

/200

1

01/07

/200

1

01/10

/200

1

01/01

/200

2

01/04

/200

2

01/07

/200

2

01/10

/200

2

01/01

/200

3

01/04

/200

3

01/07

/200

3

01/10

/200

3

01/01

/200

4

01/04

/200

4

01/07

/200

4

01/10

/200

4

01/01

/200

5

01/04

/200

5

01/07

/200

5

£ m

illi

on

0

500

1000

1500

2000

2500

3000

3500

FT

SE

All

Sh

are

Funds Under Management

FTSE All Share Index

Unit TrustsGrowth of business

Source: Rathbones. Mid price basis. All other data offer price or mid price as applicable to fund pricing structure.

Page 27: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 27

Rathbone Brothers PlcInterim Results to June 30, 2005

Unit TrustsInternal and external FUM

114 160 146255 211 218

83 26 75

226

606

765

0

100

200

300

400

500

600

700

800

900

1000

2000 2001 2002 2003 2004 H1 2005

£ m

illio

ns

External FUM

Internal FUM

Source: Rathbones. Mid price basis. All other data offer price or mid price as applicable to fund pricing structure.

Page 28: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 28

Rathbone Brothers PlcInterim Results to June 30, 2005

Awards2005 – Winner of:-• ‘Specialist Unit Trust Group of the Year 2005’ –Rathbone Unit Trust Management Ltd – What Investment?²

• ‘Most Consistent Unit Trust of the Year 2005’ – Rathbone Special Situations Fund – What Investment? ²

• ‘Best Provider for Ethical Investing’ – Rathbone Investment Management – Euromoney Private Banking Awards 2005¹

• ‘Rathbone Income Fund’ awarded 1st place in 5 year UK Marketed Funds, UK Equity Income sector – Standard & Poor’s Investment Funds Performance Awards 2005²

• ‘Rathbone Smaller Companies Fund’ awarded 1st place in 10 year UK Marketed Funds, Smaller Companies sector – Standard & Poor’s Investment Funds Performance Awards 2005²

2004 - Winner of:-• ‘Winner: UK Income’ awarded to the Rathbone Income Fund by Investment Week Fund Manager of the Year Awards

2004²

• ‘Small Fund Manager of the Year 2004’ awarded to Rathbone Unit Trust Management Ltd in the Financial Adviser Investment Awards 2004²

• ‘Gold Rating - Fund Manager of the Year UK (Group)’ awarded to Rathbone Unit Trust Management Ltd in the Financial Adviser Investment Awards 2004²

• ‘Best UK General Equity Fund 2004’ awarded to the Rathbone Special Situations Fund in the UK All Companies sector by Money Observer²

• ‘Equity UK’ - Standard & Poor’s awarded the Rathbone Special Situations Fund 1st place over 5 years in the UK Marketed Funds sector²

• ‘UK Smaller Companies’ - Standard & Poor’s awarded the Rathbone Smaller Companies Fund 1st place over 10 years in the UK Marketed Funds sector²

1 Awarded to Rathbone Investment Management Limited2 Awarded to Rathbone Unit Trust Management Limited

Page 29: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 29

Rathbone Brothers PlcInterim Results to June 30, 2005

Consolidated balance sheetas at 30 June 2005

Assets30/6/05

£’000

31/12/04

£’000Liabilities

30/06/05

£’000

31/12/04

£’000

Cash and balances at central banks 306 15,840 Deposits by banks 3,718 3,243

Settlement balances 32,939 11,199 Settlements balances 26,630 15,238

Loans and advances to banks 141,634 57,881 Derivative financial instruments - 19

Loans and advances to customers 38,465 41,226 Due to customers 525,302 425,078

Investment securities – available-for-sale 6,203 7,219 Debt securities in issue 170 286

Investment securities – held-to-maturity 403,297 381,119 Accruals, deferred income, provisions 23,360 23,003

Intangible assets 60,120 59,860 Current tax liabilities 4,867 6,067

Property, plant and equipment 4,185 4,480 Retirement benefit obligations 15,603 14,983

Deferred tax asset 5,042 4,379 Called up share capital 2,054 2,043

Prepayments, accrued income, other assets 28,044 22,154 Share premium/other reserves 69,966 69,223

Retained earnings 48,565 46,174

Equity shareholders funds 120,585 117,440

Total assets 720,235 605,357 Total liabilities 720,235 605,357

Page 30: Www.rathbones.comRathbone Brothers Plc Announcement of Interim Results to 30 June 2005 1 September 2005

www.rathbones.com1 September 2005Page 30

Rathbone Brothers PlcInterim Results to June 30, 2005

Notes to Consolidated Balance Sheet

• Equity investments at market value with uplift in ‘Other reserves’

• Pre 1 Jan 2004 goodwill value frozen but must be reviewed for impairment

• Defined benefit pension scheme net liabilities included on balance sheet

Rathbone Brothers Plc

159 New Bond Street

London

W1S 2UD

Telephone +44(0) 20 7399 0000

Facsimile +44 (0) 20 7399 0011

[email protected]

www.rathbones.com