Rathbones Group Annual Report 2008

FY2008 Annual Report · Rathbones Group
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Rathbone Brothers Plc Report and accounts 2008

Rathbone Brothers Plc is a leading
independent provider of high-quality,
personalised investment and wealth
management services for private
investors and trustees. This includes
discretionary investment management, 
unit trusts, tax planning, trust and
company management, pension
advice and banking services.

As at 31 December 2008,
Rathbones managed £10.46 billion
of client funds of which £9.43 billion
are managed by Rathbone
Investment Management. 

Contents

2008 highlights
Chairman’s statement
Chief executive’s statement
Rathbones at a glance
Strategy and key performance indicators
Business review
Directors

Governance
Directors’ report 
Corporate governance report 
Remuneration report
Audit committee report
Nomination committee report
Corporate responsibility report
Directors’ responsibilities

Consolidated accounts
Independent auditors’ report 

to the members of Rathbone Brothers Plc

Consolidated income statement 
Consolidated balance sheet 
Consolidated cash ﬂow statement 
Consolidated statement of 

recognised income and expense
Notes to the consolidated accounts 

Company accounts 
Independent auditors’ report 

to the members of Rathbone Brothers Plc

Company balance sheet 
Statement of total recognised gains and losses
Notes to the individual accounts
Notice of Annual General Meeting
Five year record
Corporate information
Our ofﬁces 

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2008 business highlights

7 January 2008

8 September 2008

Rathbone Investment Management
International expands its investment team
with the appointment of four new 
investment managers.

Rathbones wins the Investment Management
Award at the Charity Times Awards (held in
partnership with the Charity Commission and
the Community Foundation).

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1 April 2008

24 September 2008 

1

Rathbones establishes an ofﬁce in 
Exeter with the acquisition of Citywall
Financial Management Limited.

Paul Stockton joins the Board as 
group ﬁnance director.

21 May 2008

Rathbones extends its specialist ethical
investment service by launching Rathbone
Greenbank Investments in Liverpool.

6 June 2008

Rathbone Unit Trust Management awarded a
mandate from a Canadian mutual fund
company, Stone & Co, to manage its Europlus
Dividend Growth Fund marketed in Canada.

16 June 2008

Rathbones announces the appointment of 
a third senior investment professional to the
charity team within the space of six months.

21 July 2008 

Rathbones opens a new ofﬁce in Birmingham.

15 October 2008

Rathbone Brothers Plc announces that 
it has completed the sale of its offshore 
trust operations in Jersey to Hawksford
Holdings Limited.

1 November 2008

Charity Finance magazine’s annual
investment management survey sees
Rathbones move to 15th place by value 
of funds. Rathbones ranks 3rd by number 
of segregated discretionary funds.

22 December 2008

Giles Coode-Adams retired from the Board.
David Harrel took on the role of senior
independent director and Oliver Corbett
became chairman of the Audit Committee.

2008 ﬁnancial highlights

2008

2007

% change

Funds under management
Operating income (continuing operations)1
Proﬁt before tax (continuing operations)1
Basic earnings per share (continuing operations)1
Basic earnings per share
Dividends per share

£10.46bn
£131.8m
£42.8m
68.47p
44.45p
42.0p

£13.12bn
£134.5m
£47.3m
77.79p
87.88p
41.0p

(20.3)%
(2.0)%
(9.5)%
(12.0)%
(49.4)%
2.4%

1 Continuing operations exclude businesses disposed of and classiﬁed as held for sale (see note 12 to the consolidated ﬁnancial statements)

Rathbone Brothers Plc Report and accounts 2008 

 
Chairman’s statement

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In 2008 we saw extremely volatile and challenging
conditions in ﬁnancial markets. Despite this turmoil,
Rathbones has achieved a net organic growth rate of
7.4% in our core discretionary investment management
business. In October, we successfully completed the
sale of our overseas trust operations in Jersey for 
£28.5 million. 

Results and dividend

Proﬁt before tax from continuing operations for the year to
31 December 2008 was £42.8 million, a decrease of 9.5%
from £47.3 million in 2007. The FTSE 100 Index fell from
6454 at the beginning of 2008 to 4434 by the end of year, 
a fall of 31.3%. Basic earnings per share from continuing
operations fell by 12.0% from 77.79p to 68.47p, including
the impact of a £1.4 million charge relating to the Financial
Services Compensation Scheme.

Basic earnings per share were 49.4% lower at 44.45p,
compared with 87.88p in 2007, including the impact 
of the sale of the overseas trust businesses
(discontinued operations). 

The Board is recommending that the ﬁnal dividend be
increased by 4.0% to 26.0p (2007: 25.0p) making a total 
of 42.0p for the year (2007: 41.0p). This reﬂects our strong
ﬁnancial position and conﬁdence in the ability of the
business to withstand, and take advantage of, testing market
conditions. The ﬁnal dividend will be paid on 13 May 2009.

Market and environment

Early in 2008, the market was faced with considerable
liquidity challenges arising from sub-prime mortgage losses
in the USA. As the year unfolded, the repercussions led 
to the demise of a number of high proﬁle ﬁnancial institutions
and unprecedented levels of government support for 
the ﬁnancial system. Money market fragility and economic
uncertainty continued for the remainder of 2008 driving
stock market indices markedly lower in the second half 
of the year. 

Rathbone Brothers Plc Report and accounts 2008 

Funds under management in Rathbone Investment
Management (including Rathbone Investment Management
International) fell during 2008 by 16.0% to £9.43 billion
(2007: £11.23 billion) compared to a fall in the
FTSE/APCIMS Balanced Index of 20.1%. In spite of these
difﬁcult market conditions, we achieved an underlying 
net organic growth rate in funds under management within
our core discretionary investment management business 
of 7.4% in the year compared to 7.8% in 2007. 

The Board considers that this continued level of growth
reﬂects the increasing reputation of Rathbones’ investment
process and service, where each client is the responsibility
of an individual investment manager.

In contrast, our unit trust business has experienced a
disappointing year, reﬂecting difﬁcult market conditions and
some performance issues.

Composition of the Board

In November we announced the retirement of Giles Coode-
Adams from the Board with effect from 22 December 2008.
Giles ﬁrst joined Rathbones in 1999 and we have beneﬁted
enormously from his contribution over that time, particularly
in his role as chairman of the Audit Committee. In September
we were delighted to welcome Paul Stockton as group
ﬁnance director.

In December David Harrel took on the role of senior
independent director and Oliver Corbett became chairman
of the Audit Committee. Both bring a great deal of
experience and expertise with them, and we look forward 
to the additional value they will bring to us in these roles.

Outlook

In these extremely challenging times, Rathbones will
continue its focus on building strong long-term client
relationships by encouraging direct client contact with
investment managers who provide individual investment
solutions to private investors and trustees. Rathbones is 
well placed to weather the difﬁcult climate and is in a strong
position to take advantage of opportunities we expect to
arise to grow the business. We remain conﬁdent of our 
future prospects.

Mark Powell 
Chairman

3 March 2009

 
There is no doubt that 2008 has been a challenging year 
for all asset classes and we are acutely aware of the effects
this has had on our clients’ portfolios, particularly for those
who rely on income levels. Replicating high levels of income
is, and will continue to be, one of the great challenges of
2009. Rathbones has continued to work hard to search for
investment opportunities for clients in the current climate 
and to enhance screening processes.

We continue to place great emphasis on high levels of
communication between investment managers and their
clients, which we believe is fundamental to our ability to
serve our clients now and over the longer-term.

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Financial performance 

Operating income from continuing operations of 
£131.8 million in 2008 decreased 2.0% (compared to
£134.5 million in 2007). Falls in stock markets were
reﬂected in fee levels in Rathbone Investment Management
(including Rathbone Investment Management International);
however, this was offset by strong levels of net organic
growth and high levels of interest income earned by our
banking operation, which beneﬁted from increasing client
liquidity and exceptionally high credit spreads, especially 
in the ﬁnal three months of the year when LIBOR and base
rate differed substantially. We would not necessarily 
expect such high net interest levels to continue in 2009.

Rathbone Unit Trust Management saw a high level of
outﬂows as disappointing investment performance 
resulted in net redemptions of £234 million that, along 
with falling markets, reduced funds under management to
£1.03 billion at 31 December 2008 (from £1.89 billion at 
31 December 2007). Action has been taken to reduce costs
to a level commensurate with the business’ current size, 
and considerable time is being dedicated to improving
investment performance, notwithstanding that net fund sales
cannot be expected to improve in the short-term. 

Proﬁt before tax for continuing operations of £42.8 million
decreased 9.5% on the £47.3 million in 2007, largely
reﬂecting market conditions and an increase of £1.4 million
in the levy from the Financial Services Compensation
Scheme mainly in relation to the Bradford & Bingley failure.
Expenses were contained by our continued policy that
performance related staff awards substantially reﬂect
changes in bottom line proﬁt before tax levels. We will
continue to monitor cost levels carefully in 2009.

Chief executive’s statement

Key highlights

• Strong ﬁnancial performance and organic growth 

in challenging market conditions

• Disposal of trust businesses

• Improvements to our investment process

• Prudent treasury management

• Opportunities for future growth

Rathbones’ ﬁnancial performance was strong in 2008 in
spite of the turmoil we saw in ﬁnancial markets. Our core
discretionary investment management business added 
£0.8 billion of net new funds from new and existing clients
in the year ended 31 December 2008 (2007: £0.8 billion)
in addition to a further £0.4 billion as a result of business
and team acquisitions (2007: £0.1 billion).

Rathbones’ predominantly discretionary investment
management business is a strong and compelling business
model. Coupled with a very strong balance sheet we are 
well placed in these challenging times.

In 2008 we restructured our business to complement our
core investment management activity. In addition to growing
our core business through the acquisition of Citywall
Financial Management in April, we progressed substantially
in disposing of our offshore trust operations through the
completion in October of the sale of our Jersey trust
operations. In February 2009 we completed the sale of our
Geneva business. The disposals of Singapore and BVI
operations are well advanced. These disposals will complete
our exit from the offshore trust business – a move we started
in 2008. We took the view that the businesses would 
best develop their potential if they were owned offshore by
their management in light of the changing climate for 
the use of offshore structures and services.

We remain committed to our UK trust business and expect
to continue to invest in its growth in 2009.

Rathbone Brothers Plc Report and accounts 2008 

 
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Chief executive’s statement continued

Marketing and business development

The Rathbone Investment Process

We have continued to invest signiﬁcantly in the Rathbone
Investment Process, which guides investment managers
as they tailor individual portfolios to differing client
circumstances. This adds to detailed sector, asset class 
and geographical commentaries, and macroeconomic
analysis to provide internal support and input to our asset
allocation and stock selection committees.

Communication amongst investment managers has been
enhanced to ensure investment ideas and market
opportunities are more effectively shared amongst
investment managers.

Rathbones is committed to its independent stance, which
allows us to look across the whole of the marketplace for the
best available products in which to invest our clients’ assets.
This is something we continue to place great emphasis upon
as managers look increasingly for future value opportunities
in depressed markets and for risk mitigation strategies that
best match client requirements.

Corporate activity

We completed the sale of our Jersey trust operations in
October, and the Geneva business in February 2009. 
The disposals of our Singapore and BVI operations are 
also well advanced. None of these transactions will affect
Rathbones’ investment management business in the
Channel Islands (Rathbone Investment Management
International) or its UK-based tax and trust services
(Rathbone Trust Company Limited).

Regulatory capital

In 2009 we completed our discussions with the Financial
Services Authority (FSA) regarding the amount of capital 
we are expected to hold for regulatory purposes. Our 
£49.6 million capital surplus over a minimum capital
requirement of £63.7 million places us in a strong position 
to take advantage of future market opportunities.

The underlying rate of net organic growth of 7.4% in
investment management funds under management in 2008
has in large part been driven from existing clients or new
clients taken on by investment managers who are not
operating under earn out arrangements. The Rathbones
brand is becoming increasingly known in the marketplace,
and this, together with the instability we have seen in many
other ﬁnancial institutions, has allowed us to beneﬁt from 
the adverse market conditions. 

The number of our charity clients has grown by 9% in the
year and charity funds under management were £1.1billion
at 31 December 2008. It was very satisfying to win the
Investment Management award at the Charity Times Awards
(held in partnership with the Charity Commission and the
Community Foundation) in September and due credit 
goes to the individuals involved.

We have also recognised that IFAs are increasingly turning
to Rathbones for investment management expertise. In 2008
the principles underlying the Retail Distribution Review
placed increased and often unwanted responsibilities on
distributors, who are increasingly looking for a partner to 
help manage their client needs. We still see considerable
potential for growth in this area. The stability of Rathbones
and strength of our systems and investment processes 
has combined well with our ‘whole-of-market’ approach to
investment, creating a strong proposition to IFAs. In October
we launched our online valuations facility. This provides 
web-based portfolio valuations, which very much enhances
our service offering to clients and intermediaries.

We continue to develop our approach to SIPP panels 
and are a recognised provider of discretionary investment
management services through several life company SIPP
products. Our Edinburgh ofﬁce has seen considerable
growth this year, working closely with selected providers.
SIPPs are a very powerful product for retirement planning 
for our typical client and an attractive way of growing funds
under management. The number of SIPPs managed has
grown by 28% in 2008.

Rathbone Pension & Advisory Services separately offers the
Rathbone SIPP and provides a range of independent ﬁnancial
advice, largely to Rathbones clients. This business is growing
well and saw the number of new SIPPs it has advised on
increase by 18.1%. Our highly qualiﬁed pensions advisory
team (which now has chartered planner status) works closely
with many investment managers and their clients.

Rathbone Brothers Plc Report and accounts 2008 

 
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Treasury and ﬁnancing

Regulation

Whilst the fair treatment of clients has always been central 
to Rathbones’ way of doing business, we have further
enhanced our management information, governance and
monitoring processes in this area as a response to 
improved FSA guidance.

We also anticipate that the impact of recent market events
will create a proportionate regulatory response that will
impact our banking operations. We will continue to monitor
developments closely.

Outlook

Financial markets are expected to remain volatile for
some time to come and in addition the economy is expected
to face a prolonged period of very low interest rates.
Whilst these factors will impact on our operating income 
in the short term, our track record for growth is strong and
our continued investment in our people and operations
means that we are in a strong position to take advantage 
of opportunities that may arise to grow our business 
both organically and through acquisition.

Andy Pomfret
Chief executive

3 March 2009

As a net provider of liquidity to the banking markets
Rathbones does not rely on wholesale funding to ﬁnance its
operations and does not anticipate that this will change.

The turmoil in the credit markets has required us to be
especially vigilant. As a regulated deposit taker we are able
to make use of a range of appropriate instruments issued by
a relatively wide number of counterparties with Fitch ratings
of A and above when placing funds in the money markets. 
As liquidity in client portfolios rose to £1.1 billion in the 
year (31 December 2007: £1.0 billion) and credit markets
tightened considerably, we worked hard to set appropriate
exposure limits and monitor counterparty quality throughout
the year to keep within our conservative treasury policy,
which recognises the fundamental importance of ﬁnancial
stability to our clients. Rathbones is virtually ungeared with
borrowings of £9.2 million (2007: £12.5 million).

Investing in people

Staff turnover at Rathbones has continued to be low in 
2008 at 10%, which is very much in line with expectations
and in keeping with our culture of stability and maintaining
longer-term client relationships. Equity ownership by 
staff and former staff remains at approximately 20%, with
UK Share Incentive Plan (‘SIP’) participation at 88% and we
will continue to encourage share ownership by Rathbones
staff in 2009.

We continue to place a high premium on training,
completing our structured graduate training programme and
supplementing core regulatory training with management
and personal development which amounts, on average, to
two full days of training per employee (2007: two days).

Operations and resources 

We have continued to invest in the efﬁciency of the 
business and now complete the vast majority of security
trades and a large proportion of unit trust trades using
electronic settlement platforms on a ‘straight through’ basis.
After detailed consideration of project priorities in light of
current market conditions, we would still expect to invest at
similar levels in 2009 to continue to improve business
efﬁciency and support business growth in the long term. 

We have also aligned lease terms in both our New Bond
Street ofﬁces and we are now a long way through the major
refurbishment programme being conducted by the landlord
of our Liverpool ofﬁces. Although the level of disruption has
been considerable, I would like to thank all of our staff in
Liverpool for their patience in working through the issues
associated with this development.

Rathbone Brothers Plc Report and accounts 2008 

 
Rathbones at a glance

Total Rathbones

Investment Management

The investment management division provides mainly
discretionary investment management services to private
investors and charities with portfolios held in discretionary
accounts, trust structures, ISA accounts or self-invested
personal pensions from offices in the UK and Jersey. 

The majority of clients have a fee-based service with 
securities held in a Rathbone nominee company and 
surplus cash held by Rathbone Investment Management, 
an authorised banking institution.

Rathbone Pension & Advisory Services advises clients on
retirement planning options and offers the Rathbone SIPP.

Principal trading names
• Rathbone Investment Management 
• Rathbone Investment Management International
• Rathbone Pension & Advisory Services 

Direct employees (average full time equivalents)
• 438 (145 investment professionals)

Ofﬁces
• Birmingham
• Bristol
• Cambridge
• Chichester
• Edinburgh
• Exeter
• Jersey
• Kendal
• Liverpool
• London
• Winchester

Business head
• Richard Lanyon

Websites
• General www.rathbones.com
• Offshore services www.rathboneimi.com
• Ethical investment www.rathbonegreenbank.com

Top ten UK private client wealth managers 
(ranked by discretionary assets under management)

£m

Coutts
Brewin Dolphin
Rathbones
Barclays/Gerrard
Rensburg Sheppards
UBS
Merrill Lynch
Morgan Stanley PWM
Goldman Sachs

Discretionary 
AUM

10,368
10,200
9,414
8,193
8,150
7,014
4,590
4,524
4,447

Total
AUM

12,960
18,700
10,460
27,309
11,450
19,483
9,000
11,600
15,883

Source: Canaccord Adams estimates. Private Client Wealth Managers report, 
January 2009.

Funds under management

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Investment Management
Unit Trusts

2008
£bn

9.43
1.03

10.46

2007
£bn

11.23
1.89

13.12

Operating income (continuing operations)

Investment Management
Unit Trusts
Trust and Tax
Central shared services

2008
£m

113.9
12.5
5.4
–

131.8

2007
£m

109.3
18.8
5.1
1.3

134.5

Proﬁt before tax (continuing operations)

Investment Management
Unit Trusts
Trust and Tax
Central shared services

2008
£m

40.4
2.4
0.6
(0.6)

42.8

2007
£m

40.1
6.9
0.1
0.2

47.3

Rathbone Brothers Plc Report and accounts 2008 

 
 
 
Unit Trusts

The unit trusts division has a range of unit trusts which are
distributed mainly through independent ﬁnancial advisers in
the UK.

These funds are purchased through ﬁnancial supermarkets,
life assurance companies and through direct contact with
ﬁnancial advisers.

Funds cover the UK stock market, embracing small, 
medium and large companies to achieve growth and income.
In addition we manage an ethical bond fund and one 
global fund focused on international opportunities.

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Principal trading name
• Rathbone Unit Trust Management

Direct employees (average full time equivalents)
• 31

Ofﬁces
• London

Business head
• Peter Pearson Lund

Website
• www.rutm.com

Trust and Tax

The trust and tax division is based in the UK and provides
taxation services (compliance and planning), probate
services, trust services (trust formation, administration,
accounting and provision of trustees and protectors), and
family ofﬁce services.

Principal trading name
• Rathbone Trust Company

Direct employees in continuing operations 
(average full time equivalents)
• 43

Ofﬁces
• Liverpool, London

Business head
Ian Buckley
•

Website
• www.rathbones.com

Client base breakdown

Discretionary vs non-discretionary 
(by funds under management)

As at 31 Dec 2008

Discretionary
Non-discretionary

%

94.2
5.8

Account type (by funds under management)

As at 31 Dec 2008

Private client
Trust and settlements
ISAs
Charities
Pensions, inc SIPPs
Other

Account size (by value)

As at 31 Dec 2008

Over £1million
£500,000 — £1million
£250,000 — £499,999
£100,000 — £249,999
£50,000 — £99,999
Up to £50,000

%

46.3
17.3
11.7
11.0
9.6
4.1

%

44.7
17.3
17.7
15.2
4.0
1.1

Rathbone Brothers Plc Report and accounts 2008 

 
 
 
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Strategy and key performance indicators

Rathbones operates in the UK wealth management industry,
providing clients with discretionary investment management, unit trust
and advisory services.

Rathbones has three key strategic
objectives which drive the business

Our aim is to be a leading provider
of high-quality, personalised
investment management and trust,
tax and pension advisory services
to private individuals, charities 
and trustees

Key performance indicators
• Total funds under management
• Organic growth rate in funds under

management

• Funds under management per 

investment manager

• Operating margin

Our aim is to provide shareholders
with a growing stream of dividend
income, delivered by steady and
consistent growth in earnings per
share as market conditions allow

Key performance indicators

• Proﬁt before tax by segment
• Earnings per share
• Dividend per share
• Annualised return on funds 

under management

• Growth in funds under 

management vs FTSE 100 and 
APCIMS Balanced indices

• Operating margin

Our business model differentiates us in our marketplace

• Strong focus on providing a fee-based discretionary service

• Client investment is based on an independent whole-of-market approach 

• Clients deal with a named investment manager who manages
their investments

• The Rathbone Investment Process guides stock selection and asset
allocation, and controls use of alternative asset classes

• Complementary trust, tax and pensions advisory services are offered to
private investors, charities, intermediaries and trustees

• Continued investment is made in operations and infrastructure to deliver
timely and meaningful information to investment managers and clients

• A range of unit trust funds is marketed to intermediaries

• Short-term secured loans may also be granted to investment management 
or trust clients of Rathbones

• Flexibility in working with external client advisers

• Investment management performance-related remuneration directly linked
to proﬁt before tax (rather than revenue or business contribution) and new
business generation

• Consistent investment in underlying infrastructure and systems to 
maintain operational efﬁciency and support a wide range of investment 
choices for clients

• Optimal use of automation to realise scale economies and support growth

• Restrict the use of our banking licence to exclude risky activities such as
mortgages or low margin cheque books, credit and debit cards

Our aim is to provide staff with
an interesting and stimulating
career environment, involving a
commitment for all staff to share in
the equity and proﬁts of Rathbones,
and to encourage and reward 
organic growth

• Proﬁt before tax and funds growth-based remuneration structures 
which encourage quality investment business and sustained
growth in funds under management

• High level of employee share ownership

• Vigorous development and defence of our intellectual property

• Geared awards for higher performers

Key performance indicators

• Employee share ownership
• Share incentive plan (SIP) 

participation rates

• Staff turnover
• Investment in training

Rathbone Brothers Plc Report and accounts 2008 

 
 
 
 
Rathbones has a long history of stability, and offers independent,
personalised and whole-of-market investment advice to over 30,000
individual investors, charities and trustees.

Key objectives govern, develop 
and grow the business

Our performance in 2008

• Strongly uphold ‘treating clients 

• The business has generated an 

Proﬁt before tax (£’000)

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underlying annualised rate of organic 
growth in funds under management of 
7.4% in 2008 in spite of market turmoil.
Purchased funds added a further 
3.7% growth

• 2008 proﬁts reﬂected market 

conditions, but also beneﬁtted from
strong growth

• 2008 operating margin has been

consistently maintained in recent years

• Unit trust performance has been

disappointing in 2008

2008: 42,756

2007: 47,302
12006: 44,720
12005: 35,298
12004: 28,492

Operating margin (%)

2008: 33.3

2007: 34.5
12006: 31.8
12005: 31.0
12004: 25.6

• Underlying earnings per share in 2008

fell by 6.4% compared to a 31.3% fall in 
the FTSE 100 and a 20.1% fall in the 
FTSE APCIMS Balanced Index

• Dividend per share has been increased
to 42p in 2008 in spite of challenging
market conditions 

fairly’ principles

• Manage portfolios imaginatively in the 
light of clients’ stated objectives, risk
proﬁle and circumstances, paying regard
to the Rathbone Investment Process

• Maintain high standards of client

communication

• Adhere to standard fee schedules

• Encourage clients with more limited 
sums to invest to collectives on a 
best-of-breed basis

• Purchase institutional units for clients
wherever possible to ensure that unit 
trust purchases maximise value for clients
and charges are transparent

• Deliver upper quartile unit trust

performance

As market conditions allow:

• Maintain a steady and consistent

approach to dividend policy 

• Maintain annualised income returns at 
circa 1% of funds under management

• Deliver net organic growth in funds
under management at 5% or above

• Maintain regulatory capital at prudent levels 

• Maintain a conservative banking and
treasury policy limiting investment 
to straightforward, instruments, rated 
A or above by Fitch over short
investment horizons

• Maximise use of straight through processing

in security and unit trust transactions

• Proactively manage pension beneﬁts to
provide attractive levels of reward for fair
and optimal cost

• Selectively recruit high-calibre individuals

who will complement and strengthen
Rathbones’ culture

• Provide the right level of training for 

staff throughout the business seeking 
the highest possible professional and 
ethical standards

• Rathbones is a stable business that 
actively encourages employee share
ownership as a means of aligning interests
with that of shareholders

• Staff turnover has been consistent 

at around 10% in recent years 

• Investment manager turnover continues

• Share ideas and best practice 

to be very low

through timely and effective employee
consultation and communications 

• Use investment portfolio management tools

and workﬂow systems to enhance the
workplace experience 

• Commitment to acting as a fair employer 

providing equal opportunities to staff 

Rathbone Brothers Plc Report and accounts 2008 

Net organic growth in Investment 
Management funds under management (%)

2008: 7.4

2007: 7.8

2006: 7.2

2005: 5.8

2004: 4.8

Underlying earnings per share (pence)

2008: 70.81

2007: 75.66
12006: 71.28
12005: 59.60
12004: 45.44

Dividend per share (pence)

2008: 42.0

2007: 41.0

2006: 35.0

2005: 30.0

2004: 27.5

Number of shares held by UK SIP participants 

2008: 1,290,392

2007: 1,270,641

2006: 1,136,132

2005: 986,463

2004: 733,688

Staff turnover (%)

2008: 10

2007: 8

2006: 11

2005: 11

2004: 8

1  Figures for 2004 to 2006 include the 
results of discontinued operations

 
 
 
 
Business review

This business review has been prepared in line with guidance provided
by the Accounting Standards Board to provide a balanced picture of
Rathbones’ business and prospects, without prejudicing the conﬁdential
nature of commercially sensitive information.

This business review contains certain forward-looking statements which
are made by the directors in good faith based on the information available
to them at the time of their approval of this review. Statements contained
within the business review should be treated with some caution due to the
inherent uncertainties, including economic, regulatory and business risk
factors, underlying any such forward looking statements. The business
review has been prepared by Rathbone Brothers Plc to provide information
to its shareholders and should not be relied upon by any other party or for
any other purpose.

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Investment Management

Table 1. Key performance indicators for 
Investment Management

Underlying rate of net 
organic growth in investment 
management funds 
under management1

Funds under management 
at 31 December1

Average net operating 
income basis point return2

2008

2007

7.4%

7.8%

£9.43bn

£11.23bn

104 bps

94 bps

1 See Table 3
2 Net operating income (see Table 4) excluding interest on own

reserves divided by the average funds under management on the 
quarterly billing dates (see Table 5)

Business environment

The behaviour of ﬁnancial markets in 2008 has been very
well-publicised as the credit crunch took its toll on all asset
classes and all sectors, particularly in the second half 
of the year. Rathbone Investment Management funds 
under management fell 16.0% over the year from 
£11.23 billion to £9.43 billion compared to falls of 31.3%
and 20.1% in the FTSE 100 and the FTSE APCIMS
Balanced indices respectively.

Table 2. Investment Management – funds 
under management and market levels1

12,000

10,000

8,000

6,000

4,000

2,000

0

2004

2005

2006

2007

2008

Investment Management funds under management
FTSE 100 Index
FTSE APCIMS Balanced Index

1 FTSE APCIMS Balanced and FTSE 100 indices rebased to 6865

Rathbone Brothers Plc Report and accounts 2008 

Organic inﬂows represent the amount of new funds brought
in by our existing fund managers, either from existing clients
or from new clients, and totalled £1.56 billion in the year
ended 31 December 2008, up 7.6% from £1.45 billion in
2007. Net organic growth (stated after fund outﬂows which
naturally occur because clients withdraw capital and/or
income from portfolios to meet other ﬁnancial requirements,
or close their account) was £833 million, which translates
into an annualised rate of 7.4%. This was a strong
performance in difﬁcult market conditions. Investment
managers who joined us recently also added £413 million
of acquired funds under management during the year, which
was exceptional compared to the £150 million in 2007.
Outﬂows of funds continued at normal levels, around 6.5%
of funds under management, and account closures were
also at expected levels in spite of the challenging
market conditions. 

Table 3. Investment Management – funds 
under management

As at 1 January
Inﬂows1

– organic
– acquired

Outﬂows1
Market adjustment2

As at 31 December

Net organic new business3

Underlying rate of net 
organic growth4

2008
£bn

11.23
1.97

1.56
0.41

(0.73)
(3.04)

9.43

0.83

2007
£bn

10.38
1.60

1.45
0.15

(0.64)
(0.11)

11.23 

0.81

7.4%

7.8%

1 Valued at the date of transfer in/out
2 Impact of market movements and relative performance
3 Organic inﬂows less outﬂows
4 Net organic new business as a % of opening funds under management

Rathbones has a signiﬁcant presence in the small to 
medium charity market (ie those charities with less than
£50 million of funds under management) and, according 
to this year’s Charity Finance survey, is placed 15th by 
value of funds (up two places on 2007) and 3rd place
(2007: 3rd) when measured by number of segregated
discretionary funds. In September, Rathbones won the
Investment Management award at the Charity Times Awards
(held in partnership with the Charity Commission and the
Community Foundation). Charity funds under management 
of £1.1billion at 31 December 2008 were at similar 
levels to last year as net inﬂows offset market movements. 
The number of charity clients has grown by 9% in the year.

IFA-sourced growth continued to be strong. In October 
we launched our online valuations facility, allowing access 
to clients portfolios. This signiﬁcantly enhanced our
service offering.

 
Investment Management continued

Table 5. Investment Management – average funds 
under management

The number of SIPPs managed has grown by 28% in the
year ended 31 December 2008. Growth in total SIPP funds
held with Rathbone Investment Management under the
Rathbone SIPP helped to reduce the impact of falling
markets as funds fell by 7.5% to £225.3 million (from £243.6
million in 2007). Our Edinburgh ofﬁce saw considerable
growth this year by working closely with selected providers,
and Rathbone Pension & Advisory Services saw the number
of new SIPPs upon which it has advised increased by 18.1%
to 789 (2007: 668).

The overall basis point return on funds under management
increased in 2008 largely as a result of exceptionally high 
net interest income, itself a consequence of the abnormally 
high credit spreads experienced throughout the year.

Financial performance

Table 4. Investment Management – ﬁnancial 
performance

Net fee income1
Commission
Interest and other income2

Net operating income
Underlying operating 
expenses3

Underlying proﬁt 
before tax
Financial Services 
Compensation Scheme levy

Proﬁt before tax  

2008
£m

54.3
28.2
31.4

2007
£m

57.7
32.5
19.1

113.9

109.3

(72.1)

(69.2)

41.8

(1.4)

40.4

40.1

–

40.1

Underlying operating % margin4

36.7%

36.7%

1 Net fee income is stated after deducting fees and commissions 

expenses paid to introducers

2  Interest and other income is presented net of interest expense paid 

on client accounts

3 See table 6
4  Investment Management proﬁt before tax and exceptional items

divided by net operating income

Net fee income decreased by 5.9% from £57.7 million to
£54.3 million in 2008, largely reﬂecting falls in the average
quarter calendar end FTSE 100 Index (when clients are
billed). An average FTSE of 5227 in 2008 is 19% down 
on the average in 2007. Average funds under management
on the quarterly billing dates of £10.14 billion were 8.8%
down compared to £11.12 billion in 2007. 

Valuation dates for billing
– 5 April 
– 30 June
– 30 September
– 31 December

– Average

2008
£bn

10.75
10.49
9.87
9.43

10.14

2007
£bn

10.93
11.16
11.14
11.23

11.12

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Commission income of £28.2 million in 2008 was 13.2%
lower than the previous year (2007: £32.5 million) as higher
trading levels in the ﬁrst half slowed in the second half due
largely to considerable market uncertainty.

Interest income beneﬁted both from the exceptionally
high credit spreads which were seen throughout the year,
and higher levels of client liquidity which rose to £1.1 billion
at 31 December 2008 from £1.0 billion at 31 December
2007. It is expected that interest income in 2009 will be
adversely impacted by future reduction in credit spreads,
margin erosion and possible regulation, in what will be an
environment of exceptionally low interest rates.

Net operating income for 2008 of £113.9 million
increased 4.2% from £109.3 million in 2007 as market
effects on fees and commission levels were more than 
offset by higher interest income.

Table 6. Investment Management – operating expenses

Staff costs1
– ﬁxed
– variable

Total staff costs1
Other operating expenses 

Underlying operating
expenses
Financial Services 
Compensation Scheme levy

Operating expenses 

2008
£m

24.1
13.6

37.7
34.4

72.1

1.4

73.5

2007
£m

22.8
14.0

36.8
32.4

69.2

–

69.2

Underlying cost/income ratio2

63.3%

63.3%

1 Represents the costs of investment managers and teams directly 

involved in client facing activities

2 Operating expenses before Financial Services Compensation Scheme
costs divided by operating income excluding gains from disposal 
of available for sale securities

Rathbone Brothers Plc Report and accounts 2008 

 
Business review continued

Investment Management continued

Unit Trusts

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Underlying operating expenses for 2008 were £72.1million, 
compared to £69.2 million in 2007, an increase of 4.2%. 
This largely reﬂects inﬂationary salary increases and new
ofﬁce costs offset by lower performance related rewards. 
Full time equivalent headcount was 438 at 31 December 
2008 compared to 405 at 31 December 2007. The
proportion of variable staff costs to proﬁt before tax was
33.7% in 2008 (2007: 34.9%) reﬂecting the fact that
investment managers are largely incentivised based on a
share of proﬁt before tax as well as other schemes which 
are aimed at maintaining and growing the value of funds 
they manage. Whilst the recruitment of investment 
managers will generally result in a decrease in operating
margins until they have attracted sufﬁcient funds to cover
their employment costs, the impact for 2008 has not 
been signiﬁcant.

Other operating expenses include property, depreciation,
settlement, IT, ﬁnance and other central support services
costs. These are largely ﬁxed and were 47.7% of total
operating expenses in 2008 (2007: 46.8%).

The recent arrangements put in place by the Financial
Services Compensation Scheme (‘FSCS’) to protect the
depositors of Bradford & Bingley and other failed deposit-
taking institutions will result in a signiﬁcant increase in the
levies made by the FSCS on the industry. Rathbones has
recorded a provision of £1.4 million in respect of its share 
of the estimated cost of FSCS borrowings; this additional
charge is expected to be billed as part of the 2008/09 
and 2009/10 levy years. Further levy charges are likely to 
be incurred in future years although the ultimate cost
remains uncertain.

Outlook

In spite of recent market conditions, the business
remains strong and continues to beneﬁt from solid growth.
Rathbones’ reputation as one of the leading providers
of discretionary investment management services to 
private investors, charities and trustees remains an important
asset. Whilst 2009 will undoubtedly be a challenging
year, our long-term investment approach together with 
our ongoing investment in efﬁciency and other distribution
sources will see the business well-placed to grow and
take advantage of opportunities that may arise from the
general market instability. 

We will continue to seek to attract new investment managers
to join Rathbones with their clients. We will also continue 
to look for acquisitions which will enhance the overall quality
of our business and take advantage of our operational
efﬁciency and ability to service both small and large clients.

Table 7. Key performance indicators for Unit Trusts

Funds under management 
at 31 December
Underlying rate of net growth 
in funds under management

2008

2007

£1.03bn

£1.89bn

(12.2)%

9.1%

Business environment

The retail asset management sector had a very difﬁcult 
year in 2008 with some high proﬁle names ﬁnding life very
difﬁcult as a result of the fall out effects of market turmoil.
As reported by the Investment Management Association
industrywide outﬂows were circa 17% of industry 
funds under management in the year and typical of an
industry that can be volatile in a downturn as intermediaries
rebalance client portfolios and institutional monies move 
to safer havens. 

Table 8. Unit Trusts – funds under management

As at 1 January
Net (outﬂows)/inﬂows

– inﬂows1
– outﬂows1

Market adjustment2

As at 31 December

2008
£bn

1.89
(0.23)

0.15
(0.38)

(0.63)

1.03

Underlying rate of net growth3

(12.2)%

1 Valued at the date of transfer in/out
2 Impact of market movements and relative performance
3 Net inﬂows as a % of opening funds under management

2007
£bn

1.86
0.17

0.52
(0.35)

(0.14)

1.89

9.1%

Funds managed fell 45.5% in 2008 from £1.89 billion to
£1.03 billion as adverse market movements combined with
total net redemptions of £234 million. These effects not only
reﬂect the general market turbulence, but also our market
positioning, which has historically been largely focused on an
income fund sector which has been generally out of favour
during 2008. 

The performance of the largest fund (the Rathbone Income
Fund) was disappointing, slipping into the fourth quartile
over one year and three years and the third quartile over ﬁve
years. This reﬂects a concentration in small and mid cap
stocks, which have suffered in recent times. Progress has
been made in adjusting the composition of this fund.

Rathbone Brothers Plc Report and accounts 2008 

 
Relationships

“We do not sell products – we offer a service. For us, that is an 
important distinction. 

“We strongly believe that clients value having direct access to the person 
who is managing their investments.

“We aim to build long-term relationships with individuals, their families 
and advisers.”

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Rathbone Brothers Plc Report and accounts 2008

The Boardroom in Rathbones’ Edinburgh ofﬁce.

 
Business review continued

Unit Trusts continued

Table 11. Units Trusts – operating expenses

Staff costs1
– ﬁxed
– variable

Total staff costs1
Other operating expenses 

Operating expenses 

Cost/income ratio

2008
£m

2.8
3.4

6.2
3.9

2007
£m

2.8
4.4

7.2
4.7

10.1

80.8%

11.9

63.3%

1 Represents the costs of investment managers and teams directly 

involved in investment or distribution activities

Fixed staff costs of £2.8 million for the year ended 2008 were
consistent with 2007. Full time equivalent headcount was 27 at
31 December 2008 compared to 31 at 31 December 2007.
The ratio of variable staff costs to proﬁt before tax was 141.7%
in 2008 (2007: 63.8%) largely reﬂecting the way in which costs
of the proﬁt share schemes for this business are accounted for.
As costs of three year bonus schemes are required to be spread
over the employee service period, the effect has been to distort
2008 performance with costs which were derived from higher
proﬁt levels in previous years. The following table demonstrates
the effect this has had.

Table 12. Units Trusts – variable staff costs

Total variable staff costs
Deferred proﬁt share 
adjustment

Variable staff costs excluding 
deferred proﬁt share 

Variable staff costs excluding 
deferred proﬁt share as a % 
of proﬁt before tax and total
variable staff costs

Outlook

2008
£m

3.4

(1.7)

1.7

2007
£m

4.4

1.5

5.9

29.3%

52.2%

2008 has been a difﬁcult year for the unit trust business 
and actions are already underway to maximise proﬁtability.
We expect investor conﬁdence to remain brittle although we
will place considerable focus on improving fund performance
whilst maintaining continuity of service and contact with
advisers and distribution platforms, which should facilitate 
a recovery of new business levels when markets improve in
the medium term.

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Table 9. Units Trusts – fund details

Ethical Bond Fund
Global Opportunities Fund
Income Fund
High Income Fund
Income and Growth Fund
Smaller Companies Fund
Special Situations Fund
Other

Morningstar
Fund Stars

2
4
4
N/A
4
3
2
N/A

31 Dec
2008
£m

36
52
544
16
34
24
54
269

31 Dec
2007
£m

46
60
1,112
25
54
47
164
379

Total

1,029

1,887

Actions are underway to reduce the cost base of the
business and improve future investment performance.

Financial performance 

Table 10. Unit Trusts – ﬁnancial performance

Initial charges net of discounts
Annual management charges
Net dealing proﬁts
Interest and other income

Initial commission payable
Rebates and trail 
commission payable

Net operating income

Operating expenses

Proﬁt before tax

2008
£m

0.9
17.7
0.5
1.3

20.4

(0.1)

(7.8)

12.5

(10.1)

2.4

2007
£m

1.0
26.1
1.7
1.5

30.3

(0.4)

(11.1)

18.8

(11.9)

6.9

Operating % margin1

19.2%

36.7%

1 Unit trust proﬁt before tax divided by net operating income

The 32.2% reduction in annual management charges 
from £26.1million in 2007 to £17.7 million in 2008 is
almost entirely reﬂective of the reduction in funds under
management. Average funds under management in 2008
decreased by 28.6% from £2.1 billion to £1.5 billion. 
Annual management charges as a percentage of average
funds under management remained consistent at 1.2%
(2007: 1.2%).

Rebates and trail commission payable as a percentage of
annual management charge income were 44.1% compared
to 42.5% in 2007. Managers’ box dealing proﬁts constituted
4.0% of net operating income in the year (2007: 9.0%)
largely as a consequence of fund and market movements.
Net operating income as a percentage of average funds
under management was 0.8% in 2008 compared to
0.9% in 2007. 

Rathbone Brothers Plc Report and accounts 2008 

 
Independence

“Rathbones is an independent, listed company.

“This independent status is key to our philosophy. 

“The Rathbone Investment Process guides investment managers’ decision-
making, but their judgement and expertise, along with their knowledge of
their clients’ individual requirements, remain paramount.

“We are not restricted on what investment products and assets we select 
for clients and look across the market at the full universe of opportunities,
including funds and alternative investments.”

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Rathbone Brothers Plc Report and accounts 2008

Rathbones sponsored two boats at Cowes, summer 2008.

 
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Business review continued

Trust and Tax (continuing operations)

Table 13. Key performance indicators for Trust and Tax

Operating % margin1

2008
%

11.1

2007
%

2.0

1 Trust and tax proﬁt before tax from continuing operations divided by

trust and tax net operating income (see Table 15)

Business environment

Following discussions with the management of the respective
offshore trust businesses, Rathbones reviewed the most
appropriate ownership structure for these businesses in
light of the changing focus of regulators and ﬁscal authorities.
This review resulted in the sale of our offshore trust business
in Jersey on 15 October 2008 to Hawksford Holdings
Limited for £28.5 million, consisting of a cash consideration
of £23.5 million and deferred consideration of unsecured
subordinated loan notes with an initial issue value of
£5 million. The loan notes will be repaid on the earlier of a
future sale or listing of the Jersey trust business.

The sale of the Geneva business to its management was
completed on 10 February 2009 and it is anticipated that the
sale of the Singapore and British Virgin Islands businesses
will be completed in the ﬁrst half of 2009.

The resulting impairment charges recognised in the results
for 2008, arising from the disposal of these businesses, is
shown in the table below.

Table 14. Impairment loss on disposals

As at 31 Dec 2008

Planned disposals
– Singapore
– Geneva
– BVI

Completed disposal
– Jersey
Total related 
professional costs

Value of
consideration
£’000

Carrying
value
£’000

Impairment
£’000

48
(16)
186

1,249
190
330

1,201
206
144

1,551

10,678

451

12,680

The continuing business is now concentrated wholly in the
UK and it is closely aligned with our core discretionary
investment management business so as to beneﬁt from
available synergies within the UK client base. Our continuing
operations comprise: 

• the UK trust business which provides advice on tax

planning, including wills and inheritance tax, family ofﬁce
services and trust and estate administration; and 

Rathbone Brothers Plc Report and accounts 2008 

• the taxation services business which prepares tax returns
for individuals and trusts, provides income and capital tax
planning services as well as the ability to assist with tax
investigations. 

Both of these businesses have performed satisfactorily in
2008 with considerable focus being placed on managing
increasingly complex regulation for clients as well as
improving administration processes.

Table 15. Trust and Tax – ﬁnancial performance

Net operating income
Operating expenses

Proﬁt before tax from 
continuing operations
Discontinued operations

Proﬁt before tax

2008
£m

5.4
(4.8)

0.6
2.2

2.8

2007
£m

5.1
(5.0)

0.1
4.9

5.0

Operating % margin1

11.1%

2.0%

1 Trust and tax proﬁt before tax from continuing operations divided 

by net operating income

Operating income increased by 5.9% from £5.1million in 
2007 to £5.4 million in 2008. Changes in inheritance tax
legislation for trusts in the 2006 Finance Act drove increased
activity levels and fees in the ﬁrst half of 2008 as restructuring 
of accumulation and maintenance trusts and life interest 
trusts had to be completed before April 2008.

Table 16. Trust and Tax – operating expenses

Staff costs1
– ﬁxed
– variable

Total staff costs1
Other operating expenses 

Operating expenses 

2008
£m

2.7
0.4

3.1
1.7

4.8

2007
(restated)
£m

3.0
0.4

3.4
1.6

5.0

Cost/income ratio

88.9%

98.0%

1 Represents the costs of fee earning staff and teams involved in client

facing activities

Fixed staff costs of £2.7 million for 2008 reduced by
10.0% due to lower headcount. Full time equivalent
headcount was 44 at 31 December 2008 compared to 
49 at 31 December 2007. Other operating expenses
represent property, depreciation, settlement costs, fees,
IT and other support costs which are largely ﬁxed and 
were 35.4% of total operating expenses in 2008 
(2007: 32.0%).

Outlook

In the UK, proposed changes in legislation for 2009 
appear benign in terms of capital taxation but other changes
in personal taxation may result in an increase in activity 
for private clients. We will continue to seek opportunities 
to grow the business on a selective basis in 2009.

 
Tax

The effective tax rate for the year is 31.5% (2007: 30.0%),
calculated as the total tax charge on continuing operations 
of £13.5 million (2007: £14.2 million) divided by the proﬁt
before income tax on continuing operations of £42.8 million
(2007: £47.3 million).

The effective rate of tax in 2008 is higher than the 
composite UK standard rate of 28.5% due principally to the
effect of disallowable expenditure, a fall in the expected
deduction for share based payments and the release of
certain deferred tax assets held in prior years.

Rathbones has adopted the standardised approach to
calculating its Pillar I credit risk component and the basic
indicator approach to calculating its operational risk
component.

Rathbones is well capitalised and does not rely on the
wholesale market to fund its operations. Whilst susceptible
to market conditions, future earnings are protected
somewhat by variable rewards being closely linked to
proﬁt before tax. It is estimated that Rathbone Investment
Management would in theory be proﬁtable should 
it be faced with a scenario that the FTSE Index remain 
at a level around 2500 for a sustained period.

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A full reconciliation of income tax expense is included in 
note 11 to the consolidated accounts.

Rathbones’ Pillar III disclosure is given on our website at
www.rathbones.com.

Dividend

Treasury and ﬁnancing

An interim dividend of 16p per share was paid to
shareholders on 8 October 2008 and the Board is
recommending a ﬁnal dividend of 26.0p, resulting in a 
total payment of 42.0p (2007: 41.0p). This dividend is
covered 1.1 times by reported basic earnings per share
and 1.7 times by underlying earnings per share.

Capital

A summary of the capital position for the Group at 
31 December 2008 is shown in the table below.

Table 17. Regulatory capital

31 Dec 2008
£m

Tier 1 capital resources
Share capital
Share premium
Other reserves (excluding available for sale reserve)
Retained earnings1
Deduction for intangibles

Total Tier 1 capital

Tier 2 capital resources
Upper Tier 2
– available for sale reserve
– deduction – material holdings

Total Tier 2 capital resources

Total Tier 1 and Tier 2 capital 
resources after deductions

Total capital requirement

Surplus of capital resources 
over capital requirement

1 Excluding £2.2 million in Rathbone Insurance Limited

2.1
29.0
32.6
116.6
(68.2)

112.1

2.1
(0.9)

1.2

113.3

63.7

49.6

Rathbone Investment Management holds most of the
Group’s surplus liquidity on its balance sheet and this
includes clients’ cash that it holds in its capacity as a deposit
taker, which is authorised and regulated by the Financial
Services Authority.

The treasury department of Rathbone Investment
Management, reporting through the banking committee to
the Board, operates in accordance with procedures set out
in an approved treasury manual and monitors exposure to
market, credit and liquidity risk, as set out in note 31 to the
consolidated ﬁnancial statements.

The turmoil in the credit markets has resulted in a
considerable amount of activity for the banking committee
which has continued to manage the Group’s counterparty
risk. Our banking licence allows our treasury department to
make use of a range of appropriate instruments issued by a
relatively wide number of counterparties. Counterparties
must be A rated or higher by Fitch and are regularly reviewed
to prevent ratings being out of date. As liquidity in client
portfolios rose to £1.1 billion (2007: £1.0 billion) during
2008 and credit markets tightened considerably, we 
worked hard to set appropriate exposure limits and monitor
counterparty quality throughout the year to keep within 
our conservative treasury policy, which recognises the
fundamental importance of ﬁnancial stability and continuity
to our clients. No losses have been incurred on treasury
counterparty exposures.

As a net provider of liquidity to the banking markets
Rathbones does not rely on wholesale funding to ﬁnance 
its operations and does not anticipate that this will change.
External borrowings are limited to a term loan facility of 
£9.2 million at 31 December 2008 from Barclays Bank PLC. 
An amount of £3.1 million was repaid during the year. 
The balance is repayable in six-monthly equal instalments
ending on 4 April 2011.

Rathbone Brothers Plc Report and accounts 2008 

 
Business review continued

Cash ﬂow

Operations and resources 

As Group fee income is largely debited directly from client
portfolios, Rathbones operates with modest working capital.
Larger cash ﬂows are principally generated from the Group’s
banking/treasury operations. Excluding these cash ﬂows, the
most signiﬁcant non-operating cash ﬂows during the year
were as follows:

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• Cash outﬂows relating to the payment of dividends 

of £17.5 million.

• £11.3 million of capital expenditure.

• Net cash inﬂows of £16.3 million on the disposal of the

Jersey trust business.

Pensions

Rathbones operates two deﬁned beneﬁt schemes (both 
of which are closed to new members) and a deﬁned
contribution pension scheme. At 31 December 2008, the
combined accounting deﬁcit for the two deﬁned beneﬁt
schemes totalled £5.7 million (2007: £6.5 million). Details 
of the assumptions supporting the accounting valuation are
included in note 28 to the accounts on page 91. The Board
recognises that the calculation of the pension deﬁcit is
subjective. International Accounting Standards require that
pension liabilities be discounted based upon a 15 year AA
rated corporate bond rate. In 2008, credit spreads on
corporate bonds were artiﬁcially high. Following completion
of the triennial review of the Rathbones 1987 Scheme in
2008, and after taking into account the sensitivity of the
valuation to discount rate changes shown in note 28 to the
ﬁnancial statements, the Board has approved a schedule of
contributions of £22.0 million for the next eight years to fund
the scheme deﬁcit.

During the year, the Group made contributions of 
£2.3 million into the Rathbone 1987 Scheme.

A triennial valuation of the Laurence Keen Scheme as at 
31 December 2008 is planned for 2009.

Rathbones’ Information Technology department has
continued to provide a robust operations infrastructure. Our
integrated core systems, comprising 3i’s core Rhymesight
processing engine, the internally developed Rathbone
Investment Desk and Equipos’ STR client reporting package,
operated very successfully during the year. 2008 also saw
us complete our planned transition to a Microsoft desktop.

There have been a large number of different developments 
in our investment systems and our business support systems
to drive forward our business and its efﬁciency. Some of the
more signiﬁcant examples have been:

• signiﬁcant enhancements to the intermediary

and client website;

• an improved data repository for electronic copies 

of valuations and reports, allowing easy access and 
e-mail functionality;

• introduction of market leading contribution analysis 

and attribution software to support existing sophisticated
performance software;

• regulation-driven upgrades eg PEP to ISA migrations,

capital gains tax, Budget and VAT changes;

• further developments to electronic workﬂow for account

opening and account amendment, allowing smooth
handling of record levels of business; and

• launch of a branded ‘white label’ service for an

intermediary, covering documentation, reporting and 
client website.

We have also completed a full migration of our unit 
trust outsourcing contract to IFDS and HSBC
successfully moving the business platform to our own 
core Rhymesight/RID investment platform with new 
direct electronic links to HSBC.

Rathbones’ particular strength is that we offer bespoke
solutions with different approaches for different client needs
through various approaches. In addition we do not aim to
generate ‘index’ returns over short periods but look to
provide longer-term wealth management. From an
investment perspective, this means that we need to provide
a full range of assets to our clients including traditional
equities and bonds, fund of hedge funds, structured
products and investment into areas such as commodities,
private equity and property funds when appropriate. This
requires greater operational capabilities. In the latter part 
of 2008, for example, we adapted a number of operational
processes to ensure that higher volumes of gilt and 
treasury bill orders could be settled efﬁciently.

Rathbone Brothers Plc Report and accounts 2008 

 
Stability

“Rathbones is a long-established, leading investment manager that has 
built a strong reputation for quality and permanence.

“We value our people and are committed to developing their skills.

“Our high staff retention gives clients conﬁdence that the individuals at
Rathbones they know and trust will remain with us for years to come.

“Many of our client relationships are with several members of one family 
and may have lasted for a number of generations.”

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Rathbone Brothers Plc Report and accounts 2008

Rathbones’ Bristol ofﬁce in Queen Square.

 
Business review continued

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Operations and resources continued 

This year we achieved our best ever CREST and overseas
settlement rates, and will continue to invest in our core
processes to secure future efﬁciencies. In 2009 we expect
to begin a two year development of a comprehensive client
documentation and relationship management solution,
review our key market data providers following the recent
decision of Global Topic to withdraw from the market,
upgrade our Microsoft Ofﬁce suite to Ofﬁce 2007 and invest
in our Sun accounting systems.

This year has seen a major refurbishment project in our 
Port of Liverpool Building premises (part of a World Heritage
Site) resulting in a number of operational difﬁculties which
we have worked hard to overcome. The majority of the
project is now complete although some work will inevitably
continue into 2009. Rental rates are ﬁxed at attractive levels
until 2013. 

In London we have now agreed to terms which align
leases on our 159 and 161 New Bond Street premises.
Fit out work in our new Exeter and Birmingham ofﬁces has
been completed and we have relocated to an attractive new
ofﬁce in Bristol. We will continue to work hard to secure
optimal use of space as part of our overall plans to manage
costs carefully.

Risks and uncertainties

The principal risks and uncertainties that face 
Rathbones are:

Financial risks

The principal ﬁnancial risks that the Group faces, together
with the policies and procedures for the monitoring and
management of those risks, are set out in note 31 to the
consolidated ﬁnancial statements.

Non-ﬁnancial risks

The signiﬁcant non-ﬁnancial risks that face 
Rathbones are:

Competition risk
Rathbones operates in a competitive market and therefore
there is a risk of loss of existing clients or failure to gain 
new clients due to poor performance or service, failure to
respond to changes and demands in the marketplace,
inadequate investment in marketing or distribution, or the
loss of key investment professionals.

To mitigate this risk, we continue to invest in the people 
and resources required to ensure the Rathbone Investment
Process remains robust, ﬂexible and capable of meeting 
a variety of needs. The business continuously monitors
developments in the marketplaces in which it operates and
the Group invests in enhancing or broadening the services
offered where we believe it will contribute to growth in
earnings. Investment is maintained in the marketing and
operational resource to continue to develop distribution
channels for all parts of the business.

Recruitment policies stress the importance of recruiting 
high quality staff and, through regular benchmarking, we
ensure that remuneration packages remain appropriate. 
Staff training and development is supported by the
employment of a dedicated training manager and contracts
of employment for all fee earning staff are reviewed 
regularly and updated when necessary.

Reputational risk
Rathbones has a reputation as a high quality provider 
of investment management and wealth management
services. There is a risk that signiﬁcant damage to reputation
could lead to the loss of existing clients and failure to gain
new clients, which would lead to ﬁnancial loss. 

Reputational risk could arise for many reasons including
poor performance or service, and regulatory censure leading
to negative publicity.

This risk is mitigated by preserving and building on
our established culture of seeking the highest possible
professional and ethical standards, and fostering a 
strategic focus, throughout the business, on the provision 
of a ﬁrst class service to our clients. The Group also 
places signiﬁcant emphasis on compliance with all relevant
regulation and statutes, in particular the Training and
Competence regime of the Financial Services Authority and
the principle of Treating Clients Fairly. 

This is monitored by internal auditors as well as the Group’s
compliance department.

Regulatory risk
The ﬁnancial services sector in which we operate is heavily
regulated. Failure to comply with regulatory requirements
could lead to ﬁnes or other disciplinary action. There is also 
a risk that changes in, or additional, regulation could
adversely affect proﬁtability.

We monitor regulatory changes, assess the impact any
changes may have on our business and plan to ensure we
have sufﬁcient resource to implement those changes.

Rathbone Brothers Plc Report and accounts 2008 

 
Focus

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“We are focused on providing high-quality, personalised investment
management and wealth management services to private clients, charities
and trustees.

“Over 30,000 clients entrust their assets to Rathbones because they 
know we have their interests at heart and have grown our business around
their needs.

“We work hard to provide a consistent service cost-effectively for 
transparent, standardised fee rates.

“While investment management services continue to account for 
over 85% of our income, we also offer additional wealth management
services where clients require them. These often increase the strength 
of client relationships.” 

Rathbone Brothers Plc Report and accounts 2008

Rathbones’ Winchester ofﬁce.

 
Business review continued

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Risks and uncertainties continued

Technology risk
The continuing delivery of high quality services to clients 
is to a large extent dependent on a robust and ﬂexible 
IT infrastructure. Failure of IT strategy or implementation
would have an adverse impact on the business.

IT infrastructure is given a high priority. There are a number 
of business led IT-focused steering committees in place 
but overall responsibility for strategy rests with the Group 
IT Steering Committee, chaired by a main board director. 
IT projects are reviewed by the Group committee on a
monthly basis and formal documented procedures exist 
for approving IT changes or developments.

In the UK, we have duplicate core systems in our London
and Liverpool ofﬁces that can be accessed from disaster
recovery sites in Leatherhead and Warrington.

Operational risk
Operational risk arises from the risk of losses resulting from
inadequate or failed internal processes, people and systems,
or from external events.

The Group has implemented policies and procedures,
designed to minimise these risks, that are communicated
to staff and other third parties. The Group also regularly
monitors the performance of its controls and adherence to
these guidelines through the Risk Management Committee.

Key components of the Group control environment include
modelling of operational risk exposure and scenario testing,
management review of activities, documentation of policies
and procedures, contingency planning and embedding
systems and controls within our key processes.

Group risk
The Group will continue to grow in line with its acquisitive
strategy. Where Group entities fail to consider the impact of
their activities on other parts of the Group, or the risks arising
from these activities, there may be a potentially adverse
impact on the Group’s proﬁtability. In addition to reputational
risk, discussed above, there are two other components of
group risk:

Strategic
This is the risk that the Group’s strategy is inappropriate or
that the Group is unable to implement its strategy.

Management stretch
Management stretch is the risk that business growth might
cause the management structure to become overly complex
or existing management resource might not be sufﬁcient to
cope with growth, undermining accountability and control
within the Group, and making the identiﬁcation, analysis and
control of risks more complex.

The Executive Committee, which consists of ﬁve executive
directors, retains close day-to-day contact with key
management throughout the Group’s entities and ensures
that activities are appropriately coordinated and controlled 
in accordance with the Group’s strategy. A clear, hierarchical
monitoring and governance structure is in place to provide
effective oversight throughout the Group and to provide a
transparent mechanism for the escalation of issues.

Rathbone Brothers Plc Report and accounts 2008 

 
Operational excellence

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“We believe that high-quality administration underpins successful long-term
client relationships.

“Private clients are frequently family groups of two or more (sometimes
considerably more) and their investment assets will encompass a wide 
range of structures.

“In order to meet the needs of diverse investment strategies and structures
there is a growing range of options in the investment universe that we 
must support. These include fund of hedge funds, structured products and
investment into areas such as commodities, private equity and property 
funds when appropriate.

“Meeting client expectations efﬁciently at a reasonable cost to the client
remains a challenge and one in which we continue to invest.” 

Rathbone Brothers Plc Report and accounts 2008

Rathbones’ operations department is housed in one of the ‘Three Graces’ 
on Liverpool’s waterfront, a World Heritage site.

 
Directors

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Rathbone Brothers Plc Report and accounts 2008 

3 Ian Buckley*

7 Peter Pearson Lund

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Peter Pearson Lund, aged 61, is the
director responsible for Rathbones’ unit
trust business and is chief executive of
Rathbone Unit Trust Management Limited.
He was appointed to the Board in January
2005. Before joining Rathbones, Peter
worked for Gartmore for 14 years where
he was a group director and managing
director of Gartmore Fund Managers, the
unit trust division. Peter joined Rathbones
in 1999 when the Group decided to
develop its unit trust activities and
promote them externally.

8 Richard Smeeton

Richard Smeeton, aged 44, has, as his
principal responsibility, the management
of the Group’s investment management
business in London and Jersey. He also
manages a large number of client
portfolios. Having trained with County
Bank, he joined Laurence Keen in 1988
prior to its acquisition by Rathbones in
1995. He was appointed to the Board in
November 2000. He chairs the Group’s
Alternative Asset Committee.

9 Paul Stockton*

Paul Stockton, aged 43, is the ﬁnance
director. He qualiﬁed as a chartered
accountant with PricewaterhouseCoopers
in 1992. In 1999 he joined Old Mutual Plc
as group ﬁnancial controller, becoming
director of ﬁnance in 2001 and ﬁnance
director of Gerrard Limited eight months
later. Following the sale of Gerrard to
Barclays in 2003, he left in 2005 and has
since worked for Euroclear in Brussels
and as a division ﬁnance director of the
Pearl Group. He joined Rathbones in
August 2008 and was appointed to the
Board on 24 September 2008. 

* Members of the Executive Committee

Ian Buckley, aged 58, is chief executive of
the Group’s trust and tax business and
the director responsible for its pensions
and advisory business. He is also
chairman of the Group’s IT Steering
Committee and the director responsible
for marketing. He qualiﬁed as a chartered
accountant with Peat, Marwick, Mitchell &
Co. (now KPMG) in 1975. He was chief
executive of Smith & Williamson for ten
years from 1985 to 1995, and
subsequently chief executive of EFG
Private Bank Limited and Tenon Group
Plc. He was appointed to the Board in
December 2001. He is the senior
independent director of NXT Plc.

4 Paul Chavasse*

Paul Chavasse, aged 44, is the chief
operating ofﬁcer responsible for the
Group’s investment operations, IT
infrastructure and facilities. He started his
career working for the institutional fund
management arm of NatWest, which was
later merged with Gartmore. After a
period in the private client businesses of
NatWest and Coutts, his ﬁnal role before
joining the Group in 2001 was as head of
NatWest Portfolio Management in Bristol.
He was appointed to the Board in
September 2001.

5 Richard Lanyon*

Richard Lanyon, aged 57, is the 
director responsible for Rathbones’
investment management business. 
Initially with Laurence Prust, he moved 
to Framlington Group Plc in 1986 where
he was the Board member responsible 
for pension funds. Richard joined the
Group in 1992 to concentrate on 
private client discretionary investment
management and was appointed to 
the Board in March 1996.

6 Andrew Morris

Andrew Morris, aged 44, is the director
responsible for Rathbones’ investment
management business in Liverpool,
Edinburgh, Kendal and Birmingham. He
also manages a large number of client
portfolios. He has spent his entire working
career at Rathbones in private client
investment management and was
appointed to the Board in November
2000. He is chairman of the Group’s
Training and Competence Committee.

Chairman

1 Mark Powell

Mark Powell, aged 63, is the chairman
with principal responsibility for the
strategy of the Group. He moved to a 
non-executive role with effect from 
1 January 2008 and is not considered 
to be independent for the purposes of 
the Combined Code.

He has been involved in investment
management for private clients
throughout his career. From 1968 to
1989 he worked in what became Credit
Lyonnais Securities and was chief
executive of CL-Alexanders Laing &
Cruickshank Holdings. In 1989 he joined
Laurence Keen as chief executive and
was appointed to the Rathbones’ Board
as managing director of the Group
following its acquisition in March 1995.
He was appointed as chairman in May
2003. He is also non-executive chairman
of SVM Active Fund Plc. He is a former
chairman of the Association of Private
Client Investment Managers &
Stockbrokers (APCIMS) and a member 
of the Takeover Panel. He is chairman 
of the Nomination Committee.

Executive directors

2 Andy Pomfret*

Andy Pomfret, aged 48, is the chief
executive. He is chairman of the Executive
Committee which manages the day-to-day
affairs of the Group and of the Group’s
Social and Environmental Committee. 
He qualiﬁed as a chartered accountant
with Peat, Marwick, Mitchell & Co. (now
KPMG). Prior to joining Rathbones in 
July 1999, he spent over 13 years 
with Kleinwort Benson (now Dresdner
Kleinwort) as a corporate ﬁnancier,
venture capitalist and latterly ﬁnance
director of the investment management
and private banking division. He was
appointed to the Board in August 1999
and became chief executive in October
2004. He is also the senior independent
director of Beazley Group plc and a
director of the Association of Private
Client Investment Managers &
Stockbrokers (APCIMS).

Rathbone Brothers Plc Report and accounts 2008 

Directors continued

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Non-executive directors

4 Oliver Corbett

Oliver Corbett, aged 44, is group ﬁnance
director of Novae Group plc. He is a
chartered accountant and worked for 
SG Warburg, Phoenix Securities (later
Donaldson Lufkin Jenrette) and Dresdner
Kleinwort Wasserstein (now Dresdner
Kleinwort), where he was managing
director, emerging companies, before
joining Novae Group (formerly SVB
Holdings PLC) in October 2003. He was
appointed to the Board in March 2006
and is considered to be independent. He
was appointed as chairman of the Audit
Committee on the retirement of Giles
Coode-Adams on 22 December 2008.

5 John May

John May, aged 53, has been an executive
director at Caledonia Investments plc
since 2003. He has over 30 years’
experience in advising, managing and
investing in listed and unlisted companies,
including more than 20 years with 
the Hambros Group, where he was 
joint managing director of Hambro
Countrywide Plc and an executive
director of Hambros Bank, and
subsequently with his own private equity
investment and consultancy business. 
He was appointed to the Board in
December 2007. He is a director of a
major shareholder, Caledonia Investments
plc, and it is recognised that he is not
considered to be independent for the
purposes of the Combined Code.

6 Mark Robertshaw

Mark Robertshaw, aged 40, is 
chief executive ofﬁcer of The Morgan
Crucible Company plc. Prior to joining
Morgan Crucible in 2004 he was 
chief ﬁnancial ofﬁcer of Gartmore
Investment Management Plc for four
years. He previously worked for the
NatWest Group and also spent nine 
years as a management consultant 
with Marakon Associates. He was
appointed to the Board in March 2006
and is considered to be independent.

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1 David Harrel

David Harrel, aged 60, was one of the
founding partners of S J Berwin LLP in
1982, and was made senior partner in
1992. He relinquished this role in 2006
and is now a consultant to the ﬁrm. David
has a variety of other appointments: he is
a non-executive director of Wichford Plc
and chairman of The Kyte Group Limited,
a member of the Board of the English
National Opera and a trustee of the Clore
Dufﬁeld and John Aspinall Foundations.
He was appointed to the Board in
December 2007 and is considered to 
be independent. He was appointed as 
the senior independent director on the
retirement of Giles Coode-Adams on 
22 December 2008.

2 James Barclay

James Barclay, aged 63, has many years’
experience in the ﬁnancial services and
banking sector. As chairman and chief
executive of Cater Allen Holdings Plc, 
he was responsible for creating a market
leader that was ultimately sold to Abbey
National in 1998. Currently, he is 
non-executive chairman of M&G Equity
Investment Trust PLC and a director of
Thos. Agnew’s and Sons Limited, a
leading West End international art dealer.
In 2000 he was appointed as an adviser
to the UK Debt Management Ofﬁce and
was chairman of its audit committee 
for four years. He was appointed to the
Board in November 2003 and is
considered to be independent.

3 Caroline Burton

Caroline Burton, aged 59, is a highly
experienced ﬁgure within the asset
management industry. She spent 
26 years with Guardian Royal Exchange
Plc where she was executive director in
charge of investments from 1990 until
1999. She was also a director of The
Scottish Metropolitan Property Plc until
June 2000 and was a member of the
service authority for the National Crime
Squad and National Criminal Intelligence
Service until March 2006. She is a 
non-executive director of TR Property
Investment Trust Plc. She was
appointed to the Board in November
2003 and is considered to be
independent. She is chairman of the
Remuneration Committee.

Rathbone Brothers Plc Report and accounts 2008 

Governance

Contents

Directors’ report 
Corporate governance report 
Remuneration report
Audit committee report
Nomination committee report
Corporate responsibility report
Directors’ responsibilities

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Directors’ report

Group activities

Rathbone Brothers Plc is the parent company of a group of companies which offers a range of investment management
services and related professional advice to private individuals, trustees, charities, pension funds and the professional
advisers of these clients. The Group also provides ﬁnancial planning, private banking, offshore fund management and trust
administration services.

The Group’s principal activity is discretionary investment management for private clients, carried out by Rathbone
Investment Management Limited from ten ofﬁces in the UK and by Rathbone Investment Management (C.I.) Limited (which
trades as Rathbone Investment Management International) in Jersey.

Rathbone Investment Management Limited is authorised and regulated by the Financial Services Authority and provides
private banking services. The company also offers an ethical investment service (Rathbone Greenbank Investments) and is
the investment adviser to ﬁve venture capital trusts. In addition, the Rathbone Group continues to provide some advisory
stockbroking services.

Rathbones manages nine authorised unit trusts through Rathbone Unit Trust Management Limited and is the Authorised
Corporate Director of four Open Ended Investment Companies (OEICs).

Rathbone Trust Company Limited provides a wide range of trust, company management and taxation services in the UK.
Regarding Rathbone Trust International, the business in Jersey was sold on 15 October 2008 whilst agreement was
reached regarding the sale of the Singapore business on 30 January 2009. A non-binding heads of terms agreement was
also signed on that day in respect of the BVI business. The sale of the offshore trust business in Geneva was completed on
10 February 2009.

Rathbone Pension & Advisory Services Limited offers a pension advice service, SIPP administration and other ﬁnancial
planning services.

Business review

A full review of the Group’s business activities are set out in the Business review on pages 10 to 22. Information about
environmental, employee and social and community issues are set out in the Corporate responsibility report on 
pages 49 to 57.

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Post balance sheet events

Details of events after the balance sheet date are set out in note 36 to the accounts on page 112 .

Group results and Company dividends

The Group proﬁt after taxation for the year ended 31 December 2008 was £19,000,000 (2007: £37,380,000). 
The directors recommend a ﬁnal dividend of 26.0p (2007: 25.0p) payable on 13 May 2009 to shareholders on the register
on 17 April 2009 and this, together with the interim dividend of 16.0p (2007: 16.0p), results in total dividends of 42.0p
(2007: 41.0p) per ordinary share for the year. These dividends amount to £17,984,000 (2007: £17,479,000) 
– see note 13 on page 80 .

Capital structure

The Company’s share capital is comprised of one class of ordinary shares of 5p each. At 31 December 2008, 42,858,196
shares were in issue (2007: 42,689,942). The shares carry no rights to ﬁxed income and each share carries the right to one
vote at general meetings. All shares are fully paid.

There are no speciﬁc restrictions on the size of a shareholding or on the transfer of shares, which are both covered 
by the provisions of the Articles of Association and prevailing legislation.

The Board currently has the authority to allot 14.0 million shares (approximately 33% of the issued share capital at 5 March
2008). Following a recommendation from the Rights Issue Review Group, the Association of British Insurers’ recommended
ceiling on Annual General Meeting share allotment authorities was increased from one third of a company’s issued share
capital to two thirds for fully pre-emptive rights issues of shares in guidance issued in December 2008. In view of this
change, a resolution seeking this additional authority will be proposed at the AGM. 

Rathbone Brothers Plc Report and accounts 2008

 
 
Regarding the appointment and replacement of directors, the Company is governed by the Company’s Articles of
Association, the Combined Code, the Companies Acts and related legislation. Amendment of the Articles of Association
requires a special resolution of shareholders.

Directors and their interests

The directors at the year end and who served during the year, and their interests in the share capital of the Company are
shown in Table 1. There were no changes between 31 December 2008 and 3 March 2009. Details of directors’ share
options are shown in Table 5 on page 42. 

Table 1. Directors’ shareholdings

Number of 5p ordinary shares 
at 1 January 2008*

Number of 5p ordinary shares
at 31 December 2008

Beneﬁcial

Non-beneﬁcial

Beneﬁcial

Non-beneﬁcial

309,167

12,500

302,350

12,500

29,014
20,394
229,900
48,609
11,007
61,565
122,823
–

2,130
2,130
533
–
–
1,533

–
–
–
–
–
–
–
–

–
–
–
–
–
–

31,055
40,865
211,505
41,523
11,612
68,443
115,928
–

2,674
2,674
1,008
8
1,480
2,008

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2

–
–
–
–
–
–
–
–

–
–
–
–
–
–

Chairman
G M Powell

Executive
I M Buckley
P D G Chavasse
R P Lanyon
A T Morris
P G Pearson Lund
A D Pomfret
R I Smeeton
R P Stockton

Non-executive
J C Barclay
C M Burton
O R P Corbett
D T D Harrel
J M May
M Robertshaw

* or date of appointment if later

Executive directors

The directors with executive responsibilities are Andy Pomfret, Ian Buckley, Paul Chavasse, Richard Lanyon, 
Andrew Morris, Peter Pearson Lund, Richard Smeeton and Paul Stockton (who was appointed to the Board on 
24 September 2008). Their biographies are on pages 24 and 25.

Non-executive directors

The directors with non-executive responsibilities are Mark Powell, James Barclay, Caroline Burton, Oliver Corbett, David
Harrel, John May and Mark Robertshaw. Their biographies are on page 26.

The senior independent director, Giles Coode-Adams, retired from the Board on 22 December 2008. Following his
retirement, David Harrel was appointed as the senior independent director and any comment or enquiry regarding the affairs
of the Company may be addressed to him. The Board considers that, with the exception of Mark Powell and John May, all
non-executive directors are independent.

Retirement and re-appointment of directors

Oliver Corbett and Mark Robertshaw retire by rotation at the next Annual General Meeting and, being eligible, offer
themselves for re-election.

Rathbone Brothers Plc Report and accounts 2008

 
 
Directors’ report continued

Substantial shareholdings

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3

At 2 March 2009, the Company had received notiﬁcations in accordance with the Financial Services Authority’s Disclosure
and Transparency Rule 5.1.2 of the following interests of 3% or more in the issued ordinary share capital of the Company.

Table 2. Substantial shareholdings at 2 March 2009

Notiﬁer

Date of notiﬁcation

Direct

Indirect

Direct

Indirect

Number of shares (and voting rights)

% of voting rights

AEGON UK 
Group of Companies

27 Nov 2008

2,005,287

213,983

4.68%

BlackRock Inc.

21 Jan 2009

–

4,301,428

Caledonia Investments plc

5 Feb 2007

4,562,000

Legal & General Group Plc

23 Jan 2009

1,700,574

–

–

Lloyds Banking Group plc

14 Mar 2007

1,347,780

130,032

Prudential plc

24 Apr 2008

1,293,836

Royal Bank of Scotland plc as 
Trustee of the Merrill Lynch 
UK Special Situations Fund

2 Oct 2007

1,290,701

–

–

–

10.79%

3.96%

3.19%

3.02%

3.02%

0.50%

10.03%

–

–

0.31%

–

–

Political and charitable donations

No contributions were made for political purposes during the year (2007: nil). Details of the Company’s charitable donations
can be found in the Corporate responsibility report on page 57.

Employees

Details of the Company’s employment practices, its policy regarding the employment of disabled persons and its employee
involvement practices can be found in the Corporate responsibility report on pages 55 to 56.

Employee share schemes

A settlement created in 2000 between Rathbone Brothers Plc and Investec Trust (Guernsey) Limited holds ordinary shares in
the Company for subsequent transfer to directors receiving Long Term Incentive Plan awards. The trustee does not exercise
voting rights and has waived all dividends payable. At 31 December 2008, the trust held 47,193 shares.

Shares are also held by Equiniti Share Plan Trustees Limited and by Lloyds TSB Offshore Trustees Limited as trustees of the
Rathbone Brothers Plc UK and International Share Incentive Plans (SIPs). Voting rights are only exercised on receipt of
instructions from the beneﬁcial employee shareowner. 

Policy on the payment of creditors

Rathbones does not follow a published code or standard on payment practice. Its policy is to ﬁx terms of payment with each
supplier in accordance with its requirements and ﬁnancial procedures. Rathbones ensures that suppliers are aware of those
terms and abides by them subject to the resolution of any disagreement regarding the supply. In the majority of cases, the
terms agreed with suppliers are for payment within 30 days of their invoice date. Trade creditors of the UK subsidiaries at 31
December 2008 represented 30 days of annual purchases (2007: 27 days). The Company itself has no trade creditors.

Financial instruments and risk management

The risk management objectives and policies of the Group are set out in note 31 to the accounts on pages 97 to 109.

Rathbone Brothers Plc Report and accounts 2008

 
 
Indemniﬁcation of directors

On 6 April 2005 changes to company law came into effect which allowed companies to indemnify its directors and ofﬁcers
against any liability incurred by them to any person (other than the company or associated company) in connection with any
negligence, default, breach of duty or breach of trust (but not criminal ﬁnes or regulatory penalties) in respect of that
company, associated company, pension fund or share scheme. The legislation also permitted the funding of defence costs
(which are repayable if the case is lost).

At the AGM on 2 May 2007, shareholders approved changes to the Company’s Memorandum and Articles of Association to
reﬂect these provisions. Speciﬁc indemnities, which are uncapped, have been granted to all directors and the company
secretary by way of deed.

Share price

The mid market price of the Company’s shares at 31 December 2008 was £8.335 (2007: £10.50) and the range during the
year was £6.965 to £11.34 (2007: £10.29 to £14.20).

Auditors

The Audit Committee reviews the appointment of the external auditors and their relationship with the Group, including
monitoring the Group’s use of the auditors for non-audit services. Note 9 to the ﬁnancial statements sets out details of the
auditors’ remuneration. Having reviewed the independence and effectiveness of the external auditors, the Audit Committee
has recommended to the Board that the existing auditors, PricewaterhouseCoopers LLP, be reappointed.
PricewaterhouseCoopers LLP have indicated their willingness to continue in ofﬁce and ordinary resolutions reappointing 
them as auditors and authorising the directors to set their remuneration will be proposed at the 2009 AGM.

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The directors in ofﬁce at the date of signing of this report conﬁrm that there is no relevant audit information of which the
auditors are unaware and that each director has taken all reasonable steps to make himself aware of any relevant audit
information and to establish that the auditors are aware of that information.

Annual General Meeting

The 2009 Annual General Meeting will be held on Thursday 7 May 2009 at 12.00 noon at 159 New Bond Street, London,
W1S 2UD. The notice of the meeting is on pages 124 to 129 with details of the resolutions proposed and explanatory notes.

Special business

The resolutions proposed include an ordinary resolution classiﬁed by the Articles of Association as non-routine special
business to renew the existing authority to the directors to allot up to 14 million shares (with an aggregate nominal amount of
up to £700,000).

As explained earlier, this authority is being extended, giving the directors the authority to allot up to a further 14 million
shares for fully pre-emptive rights issues of shares.

The Board are also seeking to renew, by special resolution, the existing authorities to waive pre-emption rights and to make
market purchases of ordinary shares under certain stringent conditions (both subject to limits).

It is anticipated that all directors, including the chairmen of the Audit, Remuneration and Nomination Committees, will be at
the AGM and available to answer questions.

By Order of the Board

Richard Loader
Company secretary

3 March 2009

Registered Ofﬁce:
159 New Bond Street
London W1S 2UD

Rathbone Brothers Plc Report and accounts 2008

 
 
Corporate governance report

Corporate governance report

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In relation to compliance with the Combined Code this report together with the Directors’ report states the position at 
3 March 2009.

The Combined Code compliance statement

The revised Combined Code on Corporate Governance (‘the Code’) was issued in June 2006 by the Financial Reporting
Council (‘FRC’) and applies for reporting periods beginning on or after 1 November 2006. Explanations of how the Code
principles and supporting principles have been applied are set out in the Governance sections of the report and accounts. 
The directors believe the Company was in compliance with Section 1 of the Code throughout the year with the following 
two exceptions: 

Independence of the chairman on appointment 

The chairman did not, on appointment, meet the independence criteria set out in the Code since he had been an employee and
executive director of the Company since 1995. 

Composition of the Board

There are currently 15 directors, of which ﬁve (33%) are independent non-executive directors. The Code requires that at least
half the board, excluding the chairman, should be independent non-executive directors. 

The number of senior practitioners from within the operating subsidiaries on the Board does result in a sizeable number of
executive directors, making the achievement of the Code target difﬁcult.

Board meetings

The Board meets a minimum of seven times per annum with one meeting devoted entirely to strategic issues. In months where
no formal Board meeting is scheduled, an informal meeting of the non-executive directors and the chairman and chief executive
is held. The non-executive directors have informal meetings without the chairman or chief executive present.

Board membership

The Board currently consists of a non-executive chairman, eight executive directors and six other non-executive directors. The
roles of chairman, Mark Powell, and chief executive, Andy Pomfret, are separated and are clearly deﬁned in writing and agreed
by the Board. The chairman is primarily responsible for the working of the Board and the chief executive for the running of the
business and implementation of Board strategy and policy. 

The Board considers that ﬁve of the seven non-executive directors are independent, the exceptions being Mark Powell (as
explained above) and John May, who is a director of a major shareholder, Caledonia Investments plc.

The non-executive directors participate fully with their executive colleagues in Board meetings and have access to any
information they need to perform their duties. They bring an independent judgement to bear on Group policies and strategies
as well as management actions and performance, including resourcing and standards of conduct. The senior independent
non-executive director is now David Harrel (following the retirement from the board of Giles Coode-Adams on 
22 December 2008). The senior independent director is available to shareholders if they have concerns that they would rather
not address to the chairman or executive directors or which remain unresolved after an approach through the normal channels. 

The Board has a formal schedule of matters reserved for its attention, which covers key areas of the Group’s business. These
include determination of the Group’s aims and the strategy to be adopted in achieving those aims, reviews of budgets and
ﬁnancial statements, company acquisitions and disposals, major capital expenditure and the review of decisions taken by the
boards of subsidiary companies.

Rathbone Brothers Plc Report and accounts 2008

 
 
Board performance

The Board, Audit and Remuneration Committees carry out appraisals of their operation and performance on an annual basis. In
2008, an internal questionnaire was used. This was developed and executed with assistance from Lintstock Limited, a London
based corporate advisory ﬁrm.

The results were discussed by the full Board and an action plan agreed. Areas for Board focus identiﬁed included the greater
use of short, written executive director reports in Board packs and increased Board exposure to senior staff via a programme
of presentations on key business issues.

Individual appraisal of each director’s performance is undertaken either by the chief executive (for the executive directors) or
chairman (for the non-executive directors) each year and involves meetings with each director on a one-to-one basis. The non-
executive directors, led by the senior independent director, carry out an appraisal of the performance of the chairman.

Board training

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Rathbones is committed to the training and development of all staff to ensure professional standards are maintained and
enhanced. All directors are required to dedicate a certain number of hours to their own development – internally established
standards for this exceed regulatory requirements. Training and development would include activities to keep up to date with
Rathbones’ speciﬁc issues and industry, market and regulatory changes.

New directors are involved in a thorough induction process designed to enable them to become quickly familiar with the
business. This includes meeting staff in a number of key business areas, attendance at routine meetings and demonstrations 
of systems and key business processes.

Board Committees

The four principal Board Committees are the Executive, Audit, Remuneration and Nomination Committees. The Board has
delegated full authority to the Executive Committee, subject to a list of matters which are reserved for decision by the full
Board. The other Board Committees have formal terms of reference, which are reviewed and approved by the Board on an
annual basis. These are available on request from the Company’s registered ofﬁce and on the Company website.

Executive Committee

The Executive Committee is chaired by the chief executive, Andy Pomfret, and comprises Ian Buckley, Paul Chavasse, Richard
Lanyon and Paul Stockton (who joined the Committee on his appointment to the Board on 24 September 2008). The purpose
of the Executive Committee is to monitor every aspect of the Group businesses on a continuing basis and to analyse and plan
all business proposals in detail for submission to and consideration by the Board. The Executive Committee meets monthly
and more frequently when required.

Audit Committee

Current members of the Audit Committee are Oliver Corbett (chairman), James Barclay, Caroline Burton, David Harrel and
Mark Robertshaw. Details of its work are set out in the Audit Committee report.

Remuneration Committee

Current members of the Remuneration Committee are Caroline Burton (chairman), James Barclay, Oliver Corbett,
David Harrel and Mark Robertshaw. Full details of its role are set out in the Remuneration report.

Nomination Committee

Current members of the Nomination Committee are Mark Powell (chairman), James Barclay, Caroline Burton, Oliver Corbett,
David Harrel, Andy Pomfret and Mark Robertshaw. Full details of its role are set out in the Nomination Committee report.

Rathbone Brothers Plc Report and accounts 2008

 
 
 
Corporate governance report continued

Conﬂicts of interest

With effect from 1 October 2008, a director has a duty under the Companies Act 2006 (‘the Act’) to avoid a situation where
he has, or can have, a direct or indirect interest that conﬂicts or possibly may conﬂict with the Company’s interests. The Act
allows the Board to authorise a director’s conﬂict or potential conﬂict of interest where the Articles of Association contain a
provision to this effect and also allows the Articles of Association to contain other provisions for dealing with directors’
conﬂicts of interest to avoid a breach of duty. Shareholders approved the necessary changes to the Company’s Articles of
Association (with effect from 1 October 2008) at the AGM on 7 May 2008.

There are safeguards which apply when directors decide whether to authorise a conﬂict or potential conﬂict. Only independent
directors (those who have no interest in the matter being considered) are able to take the relevant decision, and in taking the
decision the directors must act in a way which they consider, in good faith, will be most likely to promote the Company’s
success. The directors are also able to impose limits or conditions when giving authorisation.

A register of actual or potential conﬂicts notiﬁed and authorised is maintained and reviewed regularly by the Board.

Other Board issues

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The Company has appropriate insurance cover in place in respect of legal action against its directors. Any director has access
to the advice and services of the company secretary and may seek independent professional advice, if necessary, at the
Company’s expense. The company secretary is responsible to the Board for ensuring Board procedures are followed and
compliance with rules and regulations applicable to the Company. Any removal or appointment of the company secretary is
decided by the Board.

Table 1. Board meeting and committee attendance in 2008

Plc Board*

Executive Committee*

Audit Committee

Remuneration Committee*

Nomination Committee

J C Barclay
I M Buckley
C M Burton
P D G Chavasse
J G S Coode-Adams
O R P Corbett
D T D Harrel
R P Lanyon
J M May
A T Morris
P G Pearson Lund
A D Pomfret
G M Powell
M Robertshaw
R I Smeeton
R P Stockton

7/7
7/7
6/7
7/7
6/7
6/7
6/7
6/7
7/7
7/7
7/7
7/7
7/7
6/7
7/7
3/3

–
11/12
–
11/12
–
–
–
11/12
–
–
–
11/12
–
–
–
3/3

5/6
–
5/6
–
6/6
6/6
6/6
–
–
–
–
–
–
4/6
–
–

4/4
–
4/4
–
4/4
4/4
4/4
–
–
–
–
–
–
3/4
–
–

1/2
–
1/2
–
2/2
1/2
1/2
–
–
–
–
1/2
2/2
1/2
–
–

*  This table only shows details of attendance at meetings in the pre-arranged annual meeting calender. Other ad-hoc meetings were held during the year.

Rathbone Brothers Plc Report and accounts 2008

 
 
Shareholder relations

The Company is committed to ensuring that there is effective communication with all shareholders. All regulatory news
announcements, press releases and ﬁnancial reports are available on the Company website. Following the publication of the
interim and full year results, presentations are given to major shareholders, fund managers, analysts and employees. The
presentation packs used and any web-casts are also on the website.

Meetings with major shareholders provide an opportunity to discuss governance and strategy issues and to introduce other
directors including non-executive directors. Feedback from these meetings is reported to the Board. All shareholders have the
opportunity to meet non-executive directors at the AGM. At least 20 business days’ notice of the AGM is given to allow time
for proper consideration of the resolutions by shareholders. Separate resolutions are proposed for each substantially separate
issue. Every effort is made to ensure that all Board members, and in particular committee chairmen, are at the meeting. The
Board welcomes questions and comments from shareholders. 

Votes are taken on a show of hands (unless a poll is requested) and full details of proxy voting ﬁgures are disclosed after the
vote and on the website.

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Risk management and internal control

The Board of directors has overall responsibility for the Group’s systems of internal control. However, such systems 
are designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable
and not absolute assurance against material misstatement or loss. The chairman ensures that Board members receive
sufﬁcient and timely information regarding corporate and business issues to enable them to discharge their duties and
canvasses the views of non-executive directors upon the adequacy of the management information.

The Risk Management Committee reports to the Board and comprises members of the Executive Committee together with the
Group heads of personnel, compliance and internal audit. This committee is an important element in the Group’s overall
control system and undertakes a review of risk within the Group at its quarterly meetings. It reports on a regular basis to the
Board both on the identiﬁcation of risks and the steps being taken to control or mitigate such risks. Risk review procedures
have been in place throughout the year and up to 3 March 2009. 

The other key elements of the Group’s overall control systems include: 

• a formal structure of committees and subsidiary company boards where senior staff oversee the operation of the business

on a regular basis;

• an annual budgeting, regular forecasting and monthly ﬁnancial reporting system for all Group divisions, which enables trends

to be evaluated and variances to be acted upon;

• an internal capital adequacy assessment process (ICAAP) required by FSA prudential rules which requires regular

assessments of the amounts, types and distribution of capital that the Group considers adequate to cover the nature and
level of the risks to which it is or might be exposed;

• a deﬁned set of policies and procedures for treasury operations with limits set by the Banking Committee;

• a conﬁdential reporting policy, which encourages employees to raise serious concerns about a colleague’s or Group

company’s practice; and

• the Audit Committee which, on the Board’s behalf, examines the effectiveness of the systems of control as explained below.

On behalf of the Board, the Audit Committee conﬁrms that it has reviewed the effectiveness of the systems of internal control
in existence in the Group for the year ended 31 December 2008 and has taken account of material developments since the
year end. Necessary actions have been or are being taken to remedy any signiﬁcant failings or weaknesses identiﬁed from that
review. This process meets the requirements of the ‘Guidance on Internal Control (The Turnbull Guidance)’ published in
September 1999 and revised in October 2005.

Rathbone Brothers Plc Report and accounts 2008

 
 
Corporate governance report continued

Going concern

The directors conﬁrm that they are satisﬁed that the Group has adequate resources to continue in operational existence for the
foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts.

The Group is well capitalised, very lowly geared and does not rely on the wholesale market to fund its operations. As explained
on page 17, at 31 December 2008 it had surplus regulatory capital of £49.6 million. 

Regulation

Rathbone Investment Management Limited, Rathbone Stockbrokers Limited, Rathbone Unit Trust Management Limited and
Rathbone Pension & Advisory Services Limited are all authorised and regulated by the Financial Services Authority.

Rathbone Investment Management Limited is registered as an investment adviser with the US Securities and Exchange
Commission.

Rathbone Investment Management (C.I.) Limited is regulated by the Jersey Financial Services Commission.

Rathbone Insurance Limited is regulated by the Guernsey Financial Services Commission.

Rathbone Bank (BVI) Limited is regulated by the BVI Financial Services Commission.

Rathbone Stockbrokers Limited is a member ﬁrm of the London Stock Exchange.

Rathbone Trust Company SA is a member ﬁrm of the Association Romande des Intermédiaries Financiers.

Rathbone Trust (Singapore) Pte. Limited is regulated by the Monetary Authority of Singapore.

The Board together with the Executive Committee and the Audit Committee have implemented systems and procedures to
achieve adherence to the statutes and regulations relevant to each of the Group companies.

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Model Code

The Company has its own internal dealing rules which extend the Financial Services Authority Listing Rules Model Code
provisions to all employees.

Rathbone Brothers Plc Report and accounts 2008

 
 
Remuneration report

The Board presents the Remuneration report for the year ended 31 December 2008.

Remuneration policy for executive directors

The aim of the remuneration policy is to provide a competitive remuneration package, having regard to comparable
companies in the ﬁnancial sector, which is sufﬁcient to attract and retain the quality of director needed to manage and
develop the Company successfully.

The stated policy shall apply in 2009 and, subject to review, in subsequent ﬁnancial years.

Remuneration packages

Remuneration packages are designed to include ﬁxed and variable elements, and to provide rewards for both the long and
short term as follows:

Fixed
Variable

Short term

Long term

Basic salary and beneﬁts
Proﬁt share

Pension
Long Term Incentive Plan 

The Remuneration Committee (the Committee) considers that the key objectives of a remuneration package are to motivate
directors to generate long-term shareholder value and to increase short-term proﬁtability.

The ﬁrst objective is met by long-term incentive plan (LTIP) awards, providing directors with the opportunity to build a
meaningful shareholding in the Company, subject to meeting stretching performance targets. Executive directors are actively
encouraged to build up and maintain a shareholding to the equivalent value of at least one year’s salary within ﬁve years of their
appointment to the Board. The second objective is met by proﬁt share payments.

The Committee does not speciﬁcally take into account corporate performance on environmental, social and governance issues
when considering the remuneration of executive directors but it is satisﬁed that the incentive structure does not increase risks
in these areas by inadvertently motivating irresponsible behaviour. 

In the light of current economic circumstances, the Committee has considered remuneration arrangements and the risk/
reward proﬁle that these present at executive director level, and are comfortable that these arrangements remain appropriate.

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Basic salary and beneﬁts

An executive director’s basic salary is determined by the Committee and any change implemented on 1 January of each 
year or when an individual changes position or responsibility. In deciding appropriate levels, the Committee considers
salaries throughout the Group as a whole and the information obtained on comparable companies in the ﬁnancial sector. 
In view of the difﬁcult trading conditions experienced towards the end of 2008, directors’ basic salaries were not increased
on 1 January 2009. Total board salary and fee costs were broadly unchanged in the year. 

When setting salary levels, use is made of survey data and information provided by the advisers to the Committee. The views
of the chairman and chief executive are also taken into consideration in respect of other Board positions.

All directors are entitled to take part in the Share Incentive Plan (SIP) on the same terms as all other employees. This allows
all employees to purchase shares in the Company and currently these are matched on a one-for-one basis by the Company.
Performance related SIP shares are also offered to employees if there is year on year EPS growth over the rate of inﬂation. 
In addition Rathbones provides a range of beneﬁts, the most signiﬁcant of which is a company car (or cash alternative).
From January 2008 the provision of cars is being phased out.

Proﬁt share

Certain executive directors on the Executive Committee are eligible for a discretionary proﬁt share payment from a pool
based on approximately 1% of Group proﬁt before tax. In 2008, proﬁts for proﬁt sharing purposes were adjusted to exclude
the loss recognised on remeasurement of assets of the disposal group of £12.7 million (see note 12). The Committee
considered that executive directors’ proﬁt share should be based on the results of the continuing business and that they
should not be penalised by the one-off impact of the implementation of this strategic decision initiated by the Board to
create longer term shareholder value. Directors with direct responsibility for investment management, unit trust or trust and
tax departments receive a proﬁt share payment based on the proﬁts of the department concerned. This may be
supplemented by a payment from the pool. Proﬁt share payments are not capped and are not pensionable. Details of
payments for 2008 are shown in Table 1.

Rathbone Brothers Plc Report and accounts 2008

 
Remuneration report continued

Proﬁt share continued

In 2008, the proﬁt share payable to members of the Executive Committee totalled £380,000, 0.89% of continuing 
Group pre-tax proﬁt (2007: £498,000, 1.05%). Total proﬁt share for all executive directors was £1,182,000 , 2.76 % of
continuing Group pre-tax proﬁts (2007: £2,030,500, 4.29%). 

From 2009 onwards, payments will also be made to the head of the Investment Management division, Richard Lanyon, from
an increased central Executive Committee pool, replacing the payment from the Investment Management division. 

The pool will be based on a total of between 1.0% and 2.5% of Group pre-tax proﬁts at the discretion of the Remuneration
Committee, having regard to the contributions of individual participants and the external circumstances in which the
Company has operated. It is anticipated that in a typical year the payment would normally be 1.75% of Group proﬁts.

Table 1. Directors’ remuneration (audited information)

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Chairman
G M Powell

Executive
A D Pomfret (chief executive)
I M Buckley
P D G Chavasse
R P Lanyon
A T Morris
P G Pearson Lund
R I Smeeton
R P Stockton

Non-executive
J C Barclay
C M Burton
J G S Coode-Adams
O R P Corbett
D T D Harrel
J M May
M Robertshaw

Former executive directors
Former non-executive directors

Payments
in lieu of 
pension 
contri-
butions
£’000

Salary 
or fee1
£’000

Proﬁt 
sharing
£’000

Beneﬁts2
£’000

2008
total
£’000

2007
total
£’000

2008
Pension
contri-
butions3
£’000

2007
Pension
contri-
butions3
£’000

165

348
213
232
232
182
191
213
63

35
40
40
35
35
35
35

–
–

2,094

–

–
–
–
–
–
4
–
–

–
–
–
–
–
–
–

–
–

4

–

1

166

415

200
62
100
241
115
182
232
50

–
–
–
–
–
–
–

–
–

1
1
1
1
17
1
1
–

–
–
–
–
–
–
–

–
–

549
276
333
474
314
378
446
113

35
40
40
35
35
35
35

–
–

504
253
329
454
310
1,039
431
–

30
35
35
30
3
3
30

210
58

–

37
24
–
–
–
–
–
8

–
–
–
–
–
–
–

–
–

–

32
21
–
–
–
–
–
–

–
–
–
–
–
–
–

–
–

1,182

24

3,304

4,169

69

53

1 Reviewed annually on 1 January
2 Beneﬁts include the provision of a company car and medical insurance
3 During the year, retirement beneﬁts accrued under money purchase schemes in relation to three directors (2007: two)

Long Term Incentive Plan (LTIP)

At an Extraordinary General Meeting in November 2000, a long-term incentive plan (LTIP) was approved by shareholders to
start in 2001. No awards from the current plan will be made after November 2010.

Executive directors are provisionally awarded rights to acquire ordinary shares at the start of a three-year plan cycle (the
provisional award). The maximum value of a provisional award is 75% of a participant’s basic salary. At the end of each plan
cycle, the Company’s performance is assessed against the performance targets for that cycle. The extent to which the
targets have been achieved determines the actual number of shares (if any) attributable to each participant (the actual
award). The performance targets used to date have been a mixture of growth in earnings per share (EPS) and total
shareholder return (TSR). TSR is a measure of the overall return to shareholders. It reﬂects both the change in the share
price and dividends, and any other cash payments made, assuming that they are reinvested.

Rathbone Brothers Plc Report and accounts 2008

 
Long Term Incentive Plan (LTIP) continued

If a participant ceases to be employed as an executive director by reason of retirement at normal retirement age (or earlier
with the Company’s consent), ill-health, redundancy or death, or any other circumstances which the Committee deems to be
appropriate, the Committee may, at its discretion, recommend to the trustee that any distribution be based on the
performance during the plan cycle as a whole but that the actual award be reduced pro rata to reﬂect the fact that the
participant was not an executive director for the whole plan cycle. Prior to the 2005/07 plan, absolute measures were used.
The performance targets for the 2005/07 plan onwards were changed, replacing the absolute TSR target with a relative
TSR target comparing TSR performance to the FTSE All Share Index. The use of a peer group rather than a broad index was
ruled out due to the small number of similar businesses in the speciality and other ﬁnance sector, and the risk that numbers
would fall still further due to consolidation. The Committee consider that the current targets are as demanding as those put
in place for earlier cycles were considered to be at the time.

On 31 December 2007, the trustee held 74,794 Rathbone Brothers Plc ordinary shares. On 12 March 2008, 27,601 shares
were awarded to 2005/07 Plan participants. 47,193 shares were held as at 31 December 2008. Dividend entitlements in
respect of this holding have been waived and voting rights will not be exercised.

2006/08 plan cycle

Basic EPS, adjusted to exclude the loss recognised on remeasurement of assets of the disposal group of £12.7 million (see
note 12), increased from 60.13p in 2005 to 74.11p in 2008, an increase of 23.25% which triggered a 52.5% award for this
element of the plan.

The TSR for the three-year period was -7.35%, which ranked the Company at the 68th percentile relative to the constituents
of the FTSE All Share Index, triggering a 72.4% award from this element of the Plan. 

Details of the actual awards to be made in March 2009 are shown in Table 4. The Committee may recommend that a
proportion of an award may be paid in cash rather than shares, primarily to enable the director to meet the income tax and
national insurance payable.

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2007/09, 2008/10 and 2009/11 plan cycles

Details of the provisional awards for the 2007/09, 2008/10 and 2009/11 plan cycles are also set out in Table 4.

Were the maximum possible provisional awards to be made in shares to current and former directors, 354,142 ordinary
shares (2007: 331,245) would be awarded, representing 0.8% (2007: 0.8%) of the issued share capital 
at 31 December 2008.

Chart 1. Total Shareholder Return (TSR) over the last ﬁve ﬁnancial years

%
R
S
T

90

80

70

60

50

40

30

20

10

0

31 Dec 2003

31 Dec 2004

31 Dec 2005

31 Dec 2006

31 Dec 2007

31 Dec 2008

Rathbone Brothers Plc – Total Shareholder Return
FTSE All Share – Total Shareholder Return

Source: Datastream

Chart 1 shows the Company’s TSR against the FTSE All Share Index. TSR is calculated assuming that dividends are
reinvested on receipt. The FTSE All Share Index has been selected as a comparator as it is a suitably broad market index
and has been used as a performance comparator for LTIP plan cycles since 2005/07.

Rathbone Brothers Plc Report and accounts 2008

 
 
Remuneration report continued

Long Term Incentive Plan (LTIP) continued

Long term incentive arrangements for Peter Pearson Lund

Following his appointment to the Board, Peter Pearson Lund has continued to participate in the Rathbone Unit Trust
Management Limited (RUTM) deferred proﬁt sharing plan rather than the LTIP.

A deferred proﬁt sharing pool is allocated to participants on the recommendation of a RUTM Plan Committee. Allocations
are held in trust and invested on behalf of participants. The release of an award is conditional on continued employment
(unless the participant is a ‘good’ leaver). Funds are released in two equal tranches two and three years after the period end.

Table 2. Awards held by Peter Pearson Lund under the RUTM Deferred Bonus Plan (audited information)

Year of award

2004
2005
2006
2007
2008

Total

Awards 
outstanding at
1 January 2008
(£value on 
award)

59,592
218,675
317,317
462,557
–

Award
made in 2008
(£value on
award)

–
–
–
–
191,950

Awards vesting in 2008

(£value on 
award)

(£value on
funds released)

Awards
outstanding at
31 December 2008
(£value on
award)

59,592
109,337
–
–
–

69,535
120,757
–
–
–

–
109,338
317,317
462,557
191,950

1,058,141

191,950

168,929

190,292

1,081,162

Table 3. LTIP performance targets (2005/07 and subsequent plans)

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Release dates

2007/08
2008/09
2009/10
2010/11
2011/12

% of award

50%
50%

Shares distributed as % of shares
provisionally awarded in the TSR part

0%
Straight line increase
100%

Shares distributed as % of shares
provisionally awarded in the EPS part

0%
25%
Straight line increase
100%

a TSR over the plan cycle
b EPS growth over the plan cycle 

a TSR

TSR ranking relative to the constituents of the FTSE All Share Index 

Below the 50th percentile
Between the 50th and 75th percentiles 
At or above the 75th percentile

b EPS

EPS growth over the plan cycle

Less than 15%
15%
Over 15% but less than 37.5%
37.5% or greater

Rathbone Brothers Plc Report and accounts 2008

 
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Long Term Incentive Plan (LTIP) continued

Table 4. LTIP actual and provisional awards of ordinary shares (audited information)

Plan cycle
Status
Date of provisional award
End of performance period

I M Buckley
P D G Chavasse
R P Lanyon
A T Morris
A D Pomfret
G M Powell
R I Smeeton
R P Stockton

Former directors

Total
Market value of shares at date of 
provisional award

2006/08
Actual award
31 December 2005
31 December 2008

8,812
8,568
9,303
7,834
11,996
7,507
7,834
–

8,205

70,059

2007/09

2008/10
Maximum provisional award Maximum provisional award
31 December 2007
31 December 2010

31 December 2006
31 December 2009

11,673
13,179
12,364
10,418
17,259
16,317
10,418
–

12,238

14,825
16,220
16,220
12,697
22,151
–
14,825
11,259

–

2009/11
Maximum provisional award
31 December 2008
31 December 2011

18,905
20,685
20,685
16,192
28,247
–
18,905
18,460

–

103,866

108,197

142,079

£9.56

£11.95

£10.75

£8.43

Notes
1 The provisional LTIP awards listed above are the maximum awards achievable assuming all performance targets are met and that the participant is an

executive director for the whole plan cycle. The value of these awards when made was 75% of a participant’s basic salary. The market value of shares at 
the date of the provisional award is the average mid-market price over the 20 dealing days prior to the start of the plan

2 The provisional LTIP award to Paul Stockton for the 2008/10 plan cycle was made in August 2008 and was reduced pro-rata to reﬂect the fact that he 

joined Rathbones part way through the plan cycle

Share options

Historically, share options were granted to senior employees whom it was considered would have a signiﬁcant impact 
on the earnings and proﬁtability of the Group during the following ﬁve years. The Board is of the view that, following the
introduction of International Financial Reporting Standards, share options are increasingly expensive to administer and that
there is a mis-match between their cost to the business and their perceived value to employees. In future, option grants will
only be made in exceptional circumstances. Options are no longer granted to directors after their appointment to the Board.

Options granted prior to 21 June 2004 can be exercised if the earnings per share of the Group during the period from grant
to the date of notiﬁcation of exercise has increased in percentage terms by more than the increase in the Retail Price Index
(RPI) plus 2% per annum (or pro rata for any part thereof).

Options granted after 21 June 2004 can be exercised if the earnings per share of the Group between the accounting period
immediately prior to the option grant and the accounting period immediately prior to the third anniversary of grant has
increased in percentage terms by more than the increase in the RPI plus 3% per annum (or pro rata for any part thereof).

Option grants to a participant in a ten year rolling period are capped at four times remuneration. There is no automatic
waiving of performance conditions in the event of a change of control or the early termination of a participant’s employment.
Options may not normally be exercised before the third anniversary of the date of grant and expire on the tenth anniversary 
of grant.

Details of outstanding options at the start and end of the year together with details of options exercised during the year are
set out in Table 5. The terms and conditions of all options have remained unchanged during the year.

Rathbone Brothers Plc Report and accounts 2008

 
Remuneration report continued

Share options continued

Table 5. Outstanding share options and movements in the year (audited information)

At 1 January 
2008*

Exercised
in 2008

At 31 
December

Latest 
2008  Date of grant  exercise date  exercise date 

Earliest 

Exercise
price 

Exercise 
date 

Market 
value at date
of exercise 

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Grant prior to
Board appointment
P D G Chavasse 
A T Morris
P G Pearson Lund
P G Pearson Lund
P G Pearson Lund
P G Pearson Lund
P G Pearson Lund
R I Smeeton
R P Stockton

Grant on or after
Board appointment
P D G Chavasse
A T Morris
P G Pearson Lund
A D Pomfret
A D Pomfret

15,491
10,000
8,350
9,966
5,000
10,000
10,000
12,000
30,000

33,334
16,667
10,000
50,000
62,500

15,491

– 25/09/01 25/09/04 25/09/11 665.33p 23/12/08 855.00p

10,000 10/04/00 10/04/03 10/04/10 932.50p
8,350 09/09/99 09/09/02 09/09/09 814.17p
9,966 24/04/01 24/04/04 24/04/11 827.50p
5,000 24/04/02 24/04/05 24/04/12 810.00p
10,000 14/03/03 14/03/06 14/03/13 415.00p
10,000 16/03/04 16/03/07 16/03/14 743.50p
12,000 10/04/00 10/04/03 10/04/10 932.50p
30,000 22/08/08 22/08/11 22/08/18 813.50p

33,334 14/03/03 14/03/06 14/03/13 415.00p
16,667 14/03/03 14/03/06 14/03/13 415.00p
10,000 15/03/05 15/03/08 15/03/15 852.00p
50,000 09/09/99 09/09/02 09/09/09 814.17p
62,500 14/03/03 14/03/06 14/03/13 415.00p

* or date of appointment if later.

283,308

15,491 267,817

1 No options lapsed in 2008 or 2007
2 The mid-market closing price of the Company’s shares on 31 December 2008 was £8.335 (2007: £10.50) and the range during the year was 

£6.965 to £11.34 (2007: £10.29 to £14.20)

3 Options granted to directors in 2003 and 2004 will vest in one-third phases, on the third, fourth and ﬁfth anniversaries of grant (subject to the performance

condition being met)

Dilution

Not more than 15% of the issued ordinary share capital of the Company (adjusted for bonus and rights issues) should be
issued for all share incentive schemes operated by the Company in any ten-year period. Of that 15%, not more than 10%
applies to shares allotted under share option schemes and not more than 5% to shares allotted under both the LTIP and SIP.

In the ten years to 31 December 2008, options over 2,649,537 ordinary shares (2007: 2,775,787) have been granted,
which represents 6.2% of the issued share capital at that date (2007: 6.5%). 905,367 ordinary shares (2007: 905,367)
have been allotted in respect of the SIP, representing 2.1% of the issued share capital at 31 December 2008 (2007: 2.1%).
No shares have been allotted for the LTIP to date with awards satisﬁed by market purchased shares held in trust.

Rathbone Brothers Plc Report and accounts 2008

 
Pension arrangements

UK employees who joined Rathbones prior to 1 April 2002 were offered membership of the Rathbone 1987 Pension
Scheme (the Scheme). The Scheme provides for members to retire at the age of 60 with a pension based on ﬁnal
pensionable salary.

Prior to 1 April 2006, the accrual rate was 1/60th for each year of membership. With effect from 1 April 2006, employees
were given the choice of either remaining on a 1/60th accrual rate (but increasing their contribution rate from 5% to 6.5% at
1 April 2006 and to 8% from 1 January 2008) or switching to a 1/70th accrual rate for future pensionable service (but
continuing to contribute at 5%). Details of the Company’s contributions are set out in note 28 to the accounts.

Since1 April 2002, new employees have been offered membership of a Group deﬁned contribution plan, established with
Scottish Widows. In the case of certain directors and senior staff, the Group contributes to their personal pension
arrangements.

Paul Chavasse, Richard Lanyon, Andrew Morris, Peter Pearson Lund and Richard Smeeton are members of the Scheme. 
Ian Buckley, Peter Pearson Lund, Andy Pomfret and Paul Stockton participate in the Scheme for death in service beneﬁts
only. Ian Buckley and Andy Pomfret have arrangements under self-invested personal pension schemes whilst Paul Stockton
is a member of the Group deﬁned contribution plan. Rathbones pays annual contributions of 11.5% of salary to those
schemes, subject to HM Revenue and Customs maximum limits, where applicable.

In the case of Peter Pearson Lund, employer pension contributions and death in service beneﬁts ceased on 31 October
2007. Additional salary payments are now made in lieu with no overall increase in cost to the Company. These are disclosed
separately in Table 1.

The changes in pension entitlements arising in the ﬁnancial year, required to be disclosed by the UK Listing Authority, are
shown in Table 6 . There have been no changes in the terms of directors’ pension entitlements during the year. There are no
unfunded pension promises or similar arrangements for directors.

Following the introduction of the Government’s simpliﬁcation of the pension taxation regime on 6 April 2006 the Company has
taken action, where required, to ensure that the pension arrangements for staff conform to the new regime. Where possible, for
all UK employees, death in service cover has been extended to age 65 for those that stay in service beyond age 60.

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Table 6. Directors’ accrued beneﬁts under deﬁned beneﬁt schemes (audited information)

Age at
31.12.08 
Years 

Years
service at
31.12.08

P D G Chavasse
R P Lanyon
A T Morris
P G Pearson Lund
R I Smeeton

44
57
44
61
44

8
17
20
9
20

1
Accrued 
beneﬁt at
31.12.08
£

26,333
58,222
55,504
23,244
61,444

2
Increase
in accrued
beneﬁts
excluding
inﬂation 
£

4,663
6,140
4,064
750
6,471

3
Increase
in accrued
beneﬁts
including
inﬂation 
£

5,651
8,325
6,147
1,622
8,777

Transfer value 
of 2 less
directors’
contributions
£

Transfer 
value of
accrued
beneﬁts at
31.12.08
£

Transfer 
value of
accrued
beneﬁts at
31.12.07
£

4
Increase in
transfer value
less directors’
contributions
£

26,415

206,971 143,840
816,092
119,961 1,036,507
542,270
432,162
413,073 394,504
507,028 384,541

40,458
29,906
48,838

45,131
202,415
95,548
18,569
104,120

During 2008, ﬁve directors (2007: six) accrued beneﬁts under deﬁned beneﬁt schemes

Notes
1 The pension entitlement shown above for the ﬁve participating directors is that which would be paid annually on retirement at age 60 based on service 

to 31 December 2008 (or normal retirement date, if earlier)
2 The additional pension earned in the year excluding UK inﬂation
3 The additional pension earned in the year including UK inﬂation
4 The increase in transfer value represents the additional capital amount less director’s contributions necessary to fund the increase in the accrued

pension that a director would take with him as part of the total transfer value if he were to leave the Company and move his beneﬁts to another scheme

The directors have the option to take early retirement on or after their 50th birthday, in which case their pension beneﬁts
would reduce by 0.5% per month of early retirement or by other actuarially based rates. Pensions will increase at a rate of
5% per annum (or the lesser of 5% per annum or the rise in the Retail Price Index if less for pension entitlement accrued
after 1 April 2001 or for pension accrued under the Laurence Keen Scheme and being in excess of the Guaranteed
Minimum Pension) after early retirement subject to HM Revenue and Customs limits. There is no undertaking or expectation
for any other pension beneﬁt to be arranged for any director by the Company.

Rathbone Brothers Plc Report and accounts 2008

 
Remuneration report continued

Service contracts for executive directors

The Company has service contracts with its executive directors. It is Company policy that such contracts should not
normally contain notice periods of more than 12 months. Details of the contracts of employment of directors serving during
the year are as follows:

Executive director

I M Buckley
P D G Chavasse
R P Lanyon
A T Morris 
P G Pearson Lund 
A D Pomfret 
R I Smeeton 
R P Stockton

Date of contract

Notice period

27 November 2003
5 December 2002
10 October 1997
1 July 2003 
5 January 2005 
1 October 2004 
9 March 1995
18 August 2008

6 months
6 months
12 months
6 months
6 months
12 months
6 months
6 months

There are no provisions within the contracts to provide automatic payments in excess of payment in lieu of notice upon
termination by the Company and no pre-determined compensation package exists in the event of termination of employment.
Payment in lieu of notice would include basic salary, pension contributions and beneﬁts. There are no provisions for the
payment of liquidated damages or any statements in respect of the duty of mitigation. Compensation payments will be
determined on a case-by-case basis in the light of current market practice. Compensation will include loss of salary and other
contractual beneﬁts but mitigation will be applied where appropriate. In the event of entering into a termination agreement, 
the Board will take steps to impose a legal obligation on the director to mitigate the loss incurred. There are no clauses in
contracts amending employment terms and conditions on a change of control. Executive directors’ contracts of service,
which include details of remuneration, will be available for inspection at the Annual General Meeting.

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Shareholdings

New executive directors are encouraged to build up and maintain a shareholding at least equivalent to the value of one
year’s basic salary within ﬁve years of taking up their appointment.

External appointments

Executive directors are encouraged to take on external appointments as non-executive directors, but are discouraged from
holding more than one position in a major company. Prior approval of any new appointment is required by the Board with
fees generally being payable to the Company. An exception is Ian Buckley, who was appointed to the board of NXT Plc prior
to joining Rathbones. In 2008, Ian Buckley received fees of £25,000 from NXT Plc (2007: £25,000).

Remuneration Committee

The current members of the Remuneration Committee are the independent non-executive directors Caroline Burton
(chairman), James Barclay, Oliver Corbett, David Harrel and Mark Robertshaw. Giles Coode-Adams served on the
Committee until his retirement from the Board on 22 December 2008. The chairman and chief executive, at the invitation of
the Committee, attend the meetings but are not present when their own remuneration is discussed. The Committee had four
scheduled meetings in 2008 but also met on a further three occasions giving a total of seven meetings (2007: ﬁve). Details
of attendance at meetings are shown on page 34.

Rathbone Brothers Plc Report and accounts 2008

 
Advisers to the Remuneration Committee

At a meeting on 19 February 2002, the Remuneration Committee appointed Deloitte & Touche LLP (Deloitte) as advisers to
the Committee. Deloitte attend at least one Remuneration Committee meeting per annum and advise on best practice and
latest developments in senior executive remuneration. Deloitte also advises the Group on share scheme issues, tax planning
and assists on ad hoc internal audit assignments. The appointment is reviewed annually. The Committee is also assisted by
the personnel department and by the company secretary.

Non-executive directors

Non-executive directors do not have contracts of employment but, as with all other directors, are required to stand for
election at the Annual General Meeting following their appointment and thereafter every three years. The effectiveness of the
non-executive directors is subject to an annual assessment. The executive directors are responsible for determining the fees
of the non-executive directors, who do not receive pension or other beneﬁts from the Group and do not participate in any
group incentive scheme, other than the SIP.

The basic non-executive director fee in 2008 was £35,000 per annum with an additional payment of £5,000 per annum
made to the chairmen of the Audit and Remuneration Committees. With effect from 1 January 2009, this additional payment
has been increased to £7,500 for the chairman of the Audit Committee. A fee of £5,000 per annum is now payable to the
senior independent director where he/she is not chairman of the Audit or Remuneration Committees.

Annual General Meeting (AGM)

The Committee considers that, taken together, these various remuneration components help to align the interests of
directors with those of shareholders and conform to the principles laid down in the revised Combined Code on Corporate
Governance published in June 2006 and effective for accounting periods beginning on or after 1 November 2006. The
Board will move at the AGM an ordinary resolution seeking approval of the Directors’ Remuneration report for 2008. Notice
of the AGM is on pages 124 to 129.

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Approved by the Board on 3 March 2009 and signed on its behalf by

Caroline Burton
Chairman of the Remuneration Committee

Rathbone Brothers Plc Report and accounts 2008

 
Audit committee report

Committee members

The current members of the Audit Committee are the independent non-executive directors Oliver Corbett (chairman), James
Barclay, Caroline Burton, David Harrel and Mark Robertshaw. Giles Coode-Adams chaired the Committee from 2002 until
his retirement from the Board on 22 December 2008. 

The Board is satisﬁed that at least one member of the Committee has recent and relevant ﬁnancial experience.The chairman
is a chartered accountant whilst other members have considerable experience of corporate ﬁnancial matters.

The Committee met on six occasions in 2008 (2007: ﬁve). Details of attendance by members are set out on page 34.

Role and responsibilities of the Committee

These are set out in the terms of reference of the Committee, which are reviewed annually. 

Financial reporting

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The Committee considers:
• the signiﬁcant ﬁnancial reporting issues and judgements made in connection with the Company’s ﬁnancial reporting
• the Group’s accounting policies and any proposed changes
• narrative statements and disclosures, to check that they are reasonable and consistent with the reported results.

Internal controls and risk management systems

The review of the effectiveness of the Group’s internal ﬁnancial controls is achieved primarily by reviews of the work 
of the Group internal audit department, reports produced by the compliance functions, the half-year and annual ﬁnancial
statements, the scope and ﬁndings of the annual external audit, and periodic reviews with senior management. 

During 2008, the Committee received a presentation on Data Security in Financial Services following the publication of a
report by the Financial Crime and Intelligence Division of the Financial Services Authority. It also considered new Financial
Reporting Council Guidance on auditor liability limitation agreements and on audit committees. 

A separate Risk Management Committee considers risk management issues (see page 35).

Internal audit

The Group internal audit department reviews Group operations on a continuing basis and the frequency of the reviews is
determined by an internal risk-based audit programme which is approved by the Audit Committee. The Audit Committee also
regularly reviews the resources and authority of the Group internal audit department. 

Rathbone Brothers Plc Report and accounts 2008

 
 
External audit

The Audit Committee is responsible for reviewing external audit arrangements and for any recommendation to the Board
regarding the rotation of audit partner or change of audit ﬁrm. This review includes consideration of the external auditor’s
period in ofﬁce, their compensation and the scope, quality, and cost-effectiveness of their work. The last review and 
re-tendering process was undertaken in 2006 which culminated in the appointment at the 2007 AGM of
PricewaterhouseCoopers (replacing KPMG).

The Audit Committee reviews the independence and the nature of non-audit services supplied and non-audit fee levels
relative to the audit fee. Prior approval by the Audit Committee is required where the fee for an individual non-audit service is
anticipated to exceed £25,000. Fees for non-audit services paid to the auditors should not, in aggregate, exceed 50% of
the audit fee in any year without the prior written approval of the Audit Committee. The Committee recognises that, given
their knowledge of the business, there are often advantages in using the auditors to provide certain non-audit services. The
Committee is satisﬁed that the independence of the auditors has not been impaired by providing these services. Details of
the auditors’ fees are shown in note 9 on page 78. The Committee also reviews the audit engagement letters each year and
has discussions with the auditors with no management present.

Regarding the 2008 audit, presentations were received from the auditors on audit progress, ﬁndings and recommendations
and unadjusted errors. Feedback on the 2007 audit was obtained from Committee members, senior management and
members of the ﬁnance, internal audit and compliance teams.

Whistleblowing

The Audit Committee also approves signiﬁcant changes to the Group’s Public Interest Disclosure Act conﬁdential reporting
(or whistleblowing) policy. 

Other

On invitation, the ﬁnance director, other executive directors, compliance ofﬁcers, senior internal audit staff and the external
auditors attend meetings to assist the Committee to fulﬁl its duties. The Committee can access independent professional
advice if it considers it necessary. The Committee performs an annual review of its performance and this is also reviewed by
the Board.

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Nomination committee report

Committee members

Members of the Nomination Committee are Mark Powell (chairman), James Barclay, Caroline Burton, Oliver Corbett, 
David Harrel, Andy Pomfret and Mark Robertshaw, who all served on the Committee throughout 2008. Giles Coode-Adams
served on the Committee until his retirement from the Board on 22 December 2008.

The Committee met formally on two occasions in 2008 (2007: three). Details of attendance by members are set out on 
page 34. It also had informal discussions on a number of other occasions during the year.

Role of the Committee

The Committee considers and makes recommendations to the Board for the appointment of directors; the Board as a whole
decides upon any such appointment. An external search consultancy and/or open advertising are used when recruiting new
directors. When considering possible candidates, the Committee evaluates the skills, knowledge and experience of the
candidates and, in the case of non-executive appointments, their other commitments.

Regarding the recruitment of a new ﬁnance director, three committee members were closely involved in the process. Six 
ﬁrms of head-hunters were approached in late 2007 and one ﬁrm appointed. A shortlist of candidates was then produced 
and after ﬁrst and second interviews a recommendation was made to the Committee that Paul Stockton be appointed. This
recommendation was approved by the Committee and, subsequently, the Board.

Recognising that having served on the Board for over nine years Giles Coode-Adams was no longer considered independent
by the Combined Code, discussions took place regarding his retirement and the appointment of David Harrel as senior
independent director and Oliver Corbett as chairman of the Audit Committee.

Non-executive committee members are exposed to senior management below Board level during visits to Group ofﬁces, Audit
Committee and strategy day presentations, and attendance at Rathbone Investment Management Limited Board meetings.

All directors are required to seek election by the members at the AGM following their appointment, and re-election every three
years. A non-executive director is not appointed for a ﬁxed term but would not normally serve as a director for more than nine
years. The Committee are mindful of the Combined Code requirement that any term beyond six years for a non-executive
director should be subject to particularly vigorous review and should take into account the need for progressive refreshing of
the Board.

Rathbone Brothers Plc Report and accounts 2008

 
 
Corporate responsibility report

Our social and environmental policy aims to ensure that social, environmental and ethical considerations are taken into
account in all aspects of our activities. The Social & Environmental Committee (SEC) oversees the continual development
and implementation of the Group’s environmental, social and community policies.

Through this work, the SEC is also able to identify and communicate any potential areas of non-ﬁnancial risk. The SEC 
has responsibility for ongoing development of the social and environmental policy framework, and its implementation,
improvement, management and monitoring. The Committee is chaired by the Group’s chief executive; it meets on a quarterly
basis and reports to the Board. The implementation of the social and environmental policy is managed on a day-to-day basis
by committee members and a network of site-based personnel.

During 2008, the SEC appointed Carbon Smart to assist with the collection, veriﬁcation and reporting of carbon footprint
data for its UK ofﬁces. The Committee was pleased to see that our efforts in addressing social, environmental and ethical
challenges continued to be recognised by the FTSE4Good policy committee, and that the Company remains a constituent
of the FTSE4Good Index Series. 

Socially responsible investment (SRI)

We acknowledge that Rathbones’ most signiﬁcant social and environmental impacts arise indirectly as a result of its
investment activities. While the primary consideration is to maximise risk-adjusted returns to clients, we recognise 
that non-ﬁnancial considerations can impact the long-term value of companies.

Although general investment activities are not covered by a formal Socially Responsible Investment (SRI) policy, social,
environmental and ethical considerations are taken into account for speciﬁc mandates throughout the Group, but
particularly by our Bristol-based specialist ethical investment service, Rathbone Greenbank Investments.

In 2008, Rathbones participated as a signatory to the Carbon Disclosure Project’s (CDP) sixth request for information from
the world’s largest companies about their greenhouse gas emissions, together with the risks and opportunities presented by
climate change. Along with other institutional investors, Rathbone Greenbank Investments continues to lend its support to
this project, for which the current iteration began in February 2009.

In November 2008, Rathbones was a signatory to the ‘Investor Statement on a Global Agreement on Climate Change’
produced by an international coalition of institutional investor groups looking to inﬂuence public policy on climate change
and affect decisions on investment.

During 2008, the Group continued to implement its policy on proxy voting, which covers all companies in the FTSE 350 and
those where it holds 3% or more of the issued share capital (with the exception of Rathbone Brothers Plc). Voting is also
undertaken on any company if requested by an underlying shareholder.

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Environment

Policy

Rathbones aims to reduce the environmental impact of its operational activities through a reduction in consumption and the
conservation of resources. Efﬁcient resource usage to deliver environmental beneﬁts and cost savings will be achieved
through using energy and natural resources economically and efﬁciently, and by reducing emissions and waste levels.

Where reducing consumption is not a viable option, we aim to utilise materials derived from sustainable or recycled sources.
We recognise the need to reduce greenhouse gas emissions and support the UK Government’s commitment to do this. We
are demonstrating our commitment to this in our aim to develop systems to monitor energy use, promote more efﬁcient use
of energy in all buildings and encourage practices which reduce energy consumption.

Rathbone Brothers Plc Report and accounts 2008

 
 
Corporate responsibility report continued

Environment continued

Performance

Scope and Boundaries
This report provides a summary of Rathbones’ environmental performance between 1 October 2007 and
30 September 2008. 

This environmental section of this report was prepared with the assistance of external environmental consultants Carbon
Smart and approved by Rathbones’ Social and Environmental Committee and by the Board on 3 March 2009.

The report covers 92% of Group employees at 31 December 2008. The scope of the data collected covers UK operations
only, excluding the new Birmingham ofﬁce (which opened on 21 July 2008) and Kendal ofﬁce due to lack of data availability
and relatively small size of these ofﬁces. 

Data Collection and Calculation
Our long-term goal is to obtain information from all Rathbones’ ofﬁces for all environmental indicators on an annual basis and
to use the ﬁndings for reviewing and improving the Group’s environmental performance.

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The collection of good quality data was difﬁcult in certain areas, particularly where utility costs formed part of landlord
service charges and where travel destinations were not recorded on expense claims. The data collection process included
site visits to London, Bristol and Liverpool, where 90% of employees under the reporting scope are based. 

Data has been calculated and reported following the World Resources Institute (WRI) Greenhouse Gas (GHG) Protocol 
– A Corporate and Accounting Standard and the Department for Environment, Food and Rural Affairs (DEFRA) 2008
Guidelines to GHG Conversion Factors (July 2008).

We have expressed our carbon footprint in terms of CO2 equivalent1 (CO2e) to accommodate conversion factors used for
business travel that include non-CO2 greenhouse gas emissions. 

Our priority this year has been to improve the quality of the data reported. We have measured our performance in three key
areas: carbon footprint, waste and recycling and paper consumption. For the ﬁrst time, we have included emissions from
business travel. 

We have reported our carbon footprint following the World Resources Institute GHG Protocol. Emissions are classiﬁed 
as follows:

Scope 1 – direct emissions from fossil fuels under our direct control (e.g. natural gas, company car fuel)

Scope 2 – indirect emissions from purchased electricity 

Scope 3 – other indirect emissions that we cause but that are not from emission sources that we own 

(e.g. from our supply chain and air travel)

Table 1. Absolute and relative CO2e from Rathbones’ ofﬁces under scope2

Total

Per employee

CO2e (tonnes) CO2e tonnes per employee

Electricity consumption 
Gas consumption
Business travel (air, rail and road3)
Waste
Paper (stationery and print)

1,999,470 kWh
1,455,655 kWh
2,223,556 km
239 tonnes
89 tonnes

2,840 kWh
2,068 kWh
3,158 km
339 kg
N/A

Total

1,074 
300
469
N/A
N/A

1,843

1.5
0.4
0.7
N/A
N/A

2.6

1 Carbon dioxide equivalent is a measure used to compare the emissions from various greenhouse gases, such as nitrogen oxides (NOx), based upon their

global warming potential. For more information consult the IPCC website, www.ipcc.ch

2 Ofﬁces under scope are: London, Liverpool, Edinburgh, Bristol, Cambridge, Winchester, Chichester and Exeter. Total number of employees as of 

31 December 2008: 704. Total ﬂoor area of ofﬁces as of 31 December 2008: 11,061 m2

3 Road travel includes car use including taxis and company cars

Rathbone Brothers Plc Report and accounts 2008

 
 
Environment continued

Chart 1. Carbon footprint by emission source and scope (tonnes CO2e)

Scope 1: 17%
Natural gas
Company cars

Scope 2: 58%
Electricity
Scope 3: 25%

Flights
Non company cars
National rail
Taxis

Total

Tonnes CO2e

300
19

1,074

265
93
87
5

1,843

The majority of our GHG emissions are derived from scope 2 (purchased electricity), followed by scope 1 (natural gas). 
As is typical of the ﬁnancial services industry, scope 3 business travel-related emissions are relatively signiﬁcant. 

Scope 1
Natural gas
Natural gas consumption amounted to 1,455,655kWh, equivalent to 300 tonnes of CO2e. Gas data was difﬁcult to obtain
and the use of industry benchmarks4 was necessary to estimate the consumption for most of the ofﬁces.

Company cars
The company car ﬂeet includes a mixture of both petrol and diesel vehicles. Total distance travelled during the reported year
for business travel purposes amounted to 83,416km, emitting an equivalent of 19 tonnes of CO2e.

To reduce our environmental impact, the Group has continued to phase out the provision of company cars. The number of
cars fell from 35 at the start of the year to 26 at 31 December 2008. 

Scope 2
Electricity
We have compared our performance against benchmarks (Energy Efﬁciency Best Practice Programme for Energy Use in
Ofﬁces5) and identiﬁed those ofﬁces most in need of improvement. We are pleased to see that our London ofﬁce6 shows
alignment with the benchmark for good ofﬁces. This is mostly due to energy efﬁciency investment over the past two years.

Offices under the reported scope used a total of 1,999,470 kWh, generating emissions equivalent to1,074 tonnes of CO2e.

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Chart 2. Electricity use by benchmark (kWh/m2)

0

50

100

150

200

250

Rathbone ofﬁce
Benchmark typical ofﬁce
Benchmark good ofﬁce

London

Liverpool

Other air conditioned
standard Rathbone ofﬁces

Other naturally ventilated
open plan Rathbone ofﬁces

Other naturally ventilated 
cellular Rathbone ofﬁces

4 It was not possible to obtain gas consumption ﬁgures for Liverpool, Cambridge, Bristol (Prince House) and Chichester. Gas consumption was 

calculated using the ofﬁces ﬂoor area and the kWh/m2 benchmark for a typical ofﬁce (Energy Efﬁciency Best Practice Programme for Energy Use in 
Ofﬁces – Guide 19)

5 Ofﬁces are classiﬁed into 4 types: air conditioned prestige, air conditioned standard, naturally ventilated open plan and naturally ventilated cellular
6 Classiﬁed as air conditioned standard

Rathbone Brothers Plc Report and accounts 2008

 
 
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Corporate responsibility report continued

Environment continued

Objectives for 2009
Electricity usage in ofﬁces with higher than expected consumption (relative to the benchmark) will be reviewed. 
An environmental action plan will be prepared with a focus on energy efﬁcient technology, habits in the workplace and
energy management. 

Scope 3
Business travel (excluding company cars)
This year a full assessment of the Group’s business travel activities was conducted, focusing on ﬂights, rail, taxis and car
travel. Travel emissions are dominated by ﬂights. Consequently, our priority for the coming year is to reduce their number.
This will include the continued promotion and use of video conferencing. To improve data collection and travel policy
adherence we plan to move to a single travel provider.

Chart 3. Business travel 2007/08 (tonnes CO2e)

Flights
Non company cars
National rail
Taxis

Total

Tonnes CO2e

265
93
87
5

450

Flights
The most frequent journeys were between London and Edinburgh, UK mainland and Jersey, and London and Geneva. 
Over 77% of ﬂights were UK domestic. We will aim to reduce this over the next 12 months by switching to rail where
possible. Following the sale of our offshore trust businesses, the number of overseas ﬂights should decline. 

Rail
National rail accounts for the majority of business travel journeys. We will continue to promote the use of rail travel 
as the preferred mode of transport between ofﬁces in the UK. We plan to improve the recording of rail journey details in
2009. 

Taxis and non-company cars
The use of taxis and non-company cars may result in signiﬁcant emissions. We plan to monitor staff use of their vehicles for
business travel and will continue to encourage the use of public transport where practical. 

Landﬁll waste and recycling
This year we have improved coverage of our waste and recycling reporting to cover all main ofﬁces in the Group. 

Table 2. Waste and recycling data 2007/08

Paper and cardboard
Secure shredding
Other materials

Total recycling
Residual landﬁll waste

Total waste 

Mass collected (kg)

Proportion of total

Mass/employee (kg)

80,224
67,678
14,118

162,020
76,666

238,686

34%
28%
6%

68%
32%

100%

114
96
20

230
109

339

All ofﬁces have an active recycling programme with high levels of participation that cover at a minimum paper and
cardboard. In most ofﬁces shredded paper, glass, plastic bottles and cans are also recycled. Of the 339kg of waste
produced per employee per annum, it is estimated that 230kg is recycled.

Redundant IT equipment is passed to EOL IT Services (an approved WEEE disposal agent with a zero to landﬁll policy) 
for re-use or recycling. Wherever possible we continue to recycle ﬂuorescent tubes, batteries, toner cartridges and 
mobile telephones.

Rathbone Brothers Plc Report and accounts 2008

 
 
Environment continued

Recycling rates for the business have been calculated from supplier provided data, and sampling. Average recycling rate is
estimated at 68%, with Liverpool, Cambridge, Winchester and Edinburgh ofﬁces achieving rates of over 74%. 

Objectives for 2009
Improving overall recycling rate and coverage of recyclable materials will be a target for Rathbones in 2009. The London ofﬁce
is investigating the possibility of moving to a ‘zero to landﬁll’ waste management approach with residual waste being taken to a
waste to energy plant by specialists Paper Round Ltd.

Paper usage
From this year we will report paper usage within the Group.This will include stationery paper and paper used for printing.

Table 3. Paper usage

100% recycled
Some recycled content
Virgin stock

Total

Stationery purchased
(tonnes)

Printing stock purchased
(tonnes)

Total 
(tonnes)

37
–
6

43

32
8
6

46

69
8
12

89

Total paper consumption amounts to 89 tonnes, which is approximately equivalent to 14 million A4 sheets. Paper is an
energy and carbon intensive product to produce. We aim, where possible, to reduce usage, purchase recycled paper and to
work with our print suppliers to reduce waste in the printing of our reports and brochures.

We are pleased that our paper usage is dominated by recycled stock; this represents 78% of our paper consumption by
weight. The majority of the stationery paper purchased is Evolve brand. We have chosen this as a 100% recycled product
made exclusively from UK post consumer waste. In London our paper recycling waste stream returns to the mills in Kent that
produce Evolve paper. 

Paper usage was unusually high in late 2007 due to the production of new client documentation following the
implementation of the Markets in Financial Instruments Directive.

We have estimated that our paper consumption this year has caused emissions of 175 tonnes CO2e. However, as no agreed
standard currently exists for GHG emissions estimation for paper, we have excluded this from the overall carbon footprint.

Objectives for 2009
A paper usage reduction plan will be developed; this will address three themes: 
• Reduction of paper use in Rathbones’ ofﬁces – better printer management and staff working habits
• Reduction of paper documents used for client communication 
• Improved waste management at our printers

Whilst Financial Services Authority rules require the posting of paper valuations to clients at least twice a year, the
introduction of on-line client access to information regarding their investment portfolio should reduce the printing of 
ad-hoc reports. We will also continue to seek cost effective ways to reduce use of virgin stock where possible.

Conclusions

Rathbones will aim to reduce its carbon footprint over the next few years by, for example, reducing its paper consumption
and, where possible, business travel, particularly by air. We will also be investigating the introduction of carbon offset
arrangements with a view to making Rathbones carbon neutral.

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Rathbone Brothers Plc Report and accounts 2008

 
 
Corporate responsibility report continued

Environment continued

Carbon Smart Opinion Statement

Carbon Smart has been commissioned by Rathbone Brothers Plc to measure Rathbones’ carbon 
footprint for selected UK ofﬁces7 for its 2008 Corporate responsibility report. In addition, Carbon 
Smart has provided Rathbones with guidance with regards to the collection of data and identiﬁcation 
of practical actions for its Environmental Action Plan. Through this engagement Carbon Smart has assured Rathbones 
that the reported carbon footprint is representative of the UK business and that the data presented is credible, coherent 
and compliant with appropriate standards and industry practices. Data has been collected and calculated following the 
WRI GHG Protocol tools and principles. When assessed against the GHG Protocol principles of completeness,
consistency and accuracy, we conclude the following:

7 London, Liverpool, Bristol, Edinburgh, Cambridge, Winchester and Exeter

Relevance
We have ensured the GHG inventory appropriately reﬂects the GHG emissions of the Company and serves the decision-
making needs of users – both internal and external to the Company.

Completeness
Reported environmental data covers 92% of worldwide employees including all entities that meet the criteria of being
subject to control or signiﬁcant inﬂuence of the reporting organisation. Assessment of the data gathering processes reveal
that the completeness of quantitative data reported needs further improvement. 

Consistency
Due to changes in the scope of the review and data quality, it was decided to use 2007/08 data as a new baseline to
improve comparability over time. 

Transparency
Given the limitations in data quality and completeness, we have had to make assumptions in some cases, especially in
business travel. Appropriate references to the accounting and calculation methodologies and data sources have been made
in this report.

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Accuracy
Data is considered accurate within the limits of the quality and completeness of the data provided. 

Carbon Smart has assessed the data quality against the GHG Protocol principles. Data from each emission source has
been rated 1 (poorest) to 5 (best). For this year, overall data quality has been rated 2.6. Rathbones’ goal is to increase this
rating to 4 by 2010 by strengthening its data gathering systems.

Scope

Data quality rating

Comments

Overall 

Scope 1

Scope 2

Scope 3

Paper

Waste and recycling

2.6

2

3

2

4

2

A signiﬁcant portion of gas data was not available and benchmarks had to 
be used. Company car data required minor assumptions and estimates. 

Majority of electricity related data is free from assumptions and estimations.
However, it includes extrapolations and pro rata calculations. 

Flight data quality was good with minor assumptions and estimates. Rail and car
data required signiﬁcant extrapolation. Taxi data was based on cost benchmarks. 

High level of good quality data coverage.

Signiﬁcant level of data sampling and extrapolation required.

About Carbon Smart
Carbon Smart is a carbon and sustainability consultancy headquartered in London. Our team of sustainability, environmental,
business and academic experts cover energy efﬁciency, waste and recycling, green procurement, travel, renewable energy,
carbon offset, carbon management, communications and wider sustainability issues.

London, 3 March 2009.

Signed

Ben Murray
Director
Carbon Smart Limited

Rathbone Brothers Plc Report and accounts 2008

Esther Rodriguez
Associate Director
Carbon Smart Limited  

 
 
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Employees

As with all professional services ﬁrms, Rathbones’ greatest asset is its people. Their health, well-being, development,
remuneration and involvement are all vital to the continuing success of the business. 

Health and welfare

Rathbones is committed to providing a safe and healthy environment in which its employees can work. With the help of
external consultants our health and safety policy for the UK ofﬁces is regularly updated to reﬂect current legislation and best
practice. We provide a range of training courses for those staff with health and safety responsibilities and a steering group
comprising representatives from all our ofﬁces meets quarterly to share knowledge and to ensure that health and safety
standards are maintained.

Upon completion of a qualifying period, all UK employees (and their direct family members) are eligible for private medical
cover paid for by the Company. All UK staff have the opportunity to attend an annual medical examination and a biennial eye
test and Rathbones also provides an independent and conﬁdential employee assistance programme offering advice on
employment, personal and legal concerns. 

Equality and diversity

Rathbones is an equal opportunities employer and it is our policy to ensure that all job applicants and employees are treated
fairly and on merit regardless of their race, gender, marital status, age, disability, religious belief or sexual orientation.

It is our policy and practice to give full and fair consideration to applications for employment by disabled people. 
If employees become disabled during their service with Rathbones, wherever practicable, arrangements and adjustments
are made to continue their employment and training. Should this not be possible we provide support in the form of a
permanent health insurance scheme which pays a monthly income in lieu of salary and pays pension contributions on 
behalf of the employer and employee.

Work-life balance

The review and implementation of our work-life balance policies have continued over the last year. On average, 42 staff now
take advantage of the childcare voucher scheme (up 17% on 2007). Despite the increase to holiday entitlement made for
2008 the popular holiday purchase scheme has again been offered and 115 employees are opting to buy up to ﬁve
additional days of leave to take in 2009, but we are mindful that this can lead to greater pressure on other staff.

Maternity beneﬁts remain considerably in excess of those required under statutory provisions. In 2008, only ﬁve women out
of the 20 due to return from maternity leave chose not to return to work. Career breaks of up to two years are also available
for those with childcare responsibilities. Flexible working policies are offered with a high number of successful applications,
particularly from parents with young children. Expected changes in legislation which will extend the opportunity and right to
apply for ﬂexible working will be incorporated into our policies. On completion of ﬁve years’ service, employees have the
opportunity to take up to three months’ unpaid leave once in every ten years without any loss of service-related beneﬁts such
as pension or death in service cover. 

The uptake and effectiveness of these policies is monitored together with other indicators of staff satisfaction levels such 
as average annual sickness rates and staff turnover. 

Training and development

Professional development
Rathbones is committed to the professional development of its staff. The Company gives full support to those studying 
to achieve professional examinations. This year saw signiﬁcant changes in our chosen qualiﬁcations. The ﬁrst stage for
investment professionals is the Certiﬁcate in Securities – Retail awarded by the Securities and Investment Institute (SII).
This has been enhanced with an additional module on investment and risk. The second signiﬁcant change has been the
move by the SII to streamline their diplomas to give practitioners in the private client investment industry a dedicated
professional qualiﬁcation. The SII Masters Programme (Wealth Management) has been designed in conjunction with the
industry and is entirely relevant to our business. Rathbones is now encouraging its staff to take this qualiﬁcation and there
are already some who are due to complete the course in early 2009. 

The Company has also extended its use of the Chartered Financial Analyst (CFA) examinations beyond the unit trust
business. The increase in numbers of staff taking this internationally recognised qualiﬁcation is to ensure the maintenance 
of capability in ﬁnancial analysis.

Following qualiﬁcation, all regulated staff are required to maintain a high level of continuous professional development by
attending training courses, seminars and to keep up to date through industry related reading. Rathbones has established 
a standard for continuing professional development which is above that recommended by the SII.

Rathbone Brothers Plc Report and accounts 2008

 
 
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Employees continued

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Graduate programme
Our ﬁrst formal graduate programme concluded in 2008 with participants taking up roles during September in investment
management teams. The scheme provided delegates with specialist knowledge and work experience across the business in
both investment and support functions. It is expected that the knowledge gained and the appreciation of the business as a
whole will be beneﬁcial not only for the individuals concerned but also the wider team in which they work.   

Management Development Programmes
Rathbones has continued with its commitment to improving networking, knowledge of the business and engagement with
staff through a formal development programme sponsored by our chief executive. The Rathbone Development Programme,
now in its third year, brings together cross functional, multi-location groups of staff to facilitate their development in skills
such as negotiation, presentation and team working. A signiﬁcant element of the programme involves delegates working on
live business projects. Projects are identiﬁed by senior managers or are business improvement ideas suggested by the
employees on the programme.

IT training
There is now a dedicated IT training team in place, focusing on improving IT skills across the business, both on Rathbones’
speciﬁc investment systems and the widely used Microsoft packages. 

Rewards and beneﬁts

Employees are encouraged to identify and to become involved with the ﬁnancial performance of the Group. We have used
equity as part of the package for investment managers bringing business into the ﬁrm and, in 2001, Rathbones was one of
the ﬁrst companies in the country to launch a Share Incentive Plan (SIP). Under the SIP, which is open to all employees, the
Company matches every share purchased by individual employees with another free of charge. Shares are also given free 
of charge if earnings growth conditions are achieved. Take-up of the SIP is high, with employees at all levels and in all
locations participating. A member of staff who has been in the SIP since launch and has made the maximum monthly
contributions now owns 4,428 shares, which were valued at £36,907 as at 31 December 2008.

To encourage the use of public transport, we offer interest-free loans for season tickets to all staff on satisfactory 
completion of their probationary period. We have introduced a Cycle to Work scheme in 2008 and 19 employees have
taken up the option. 

Rathbones recognises its responsibility to assist in the ﬁnancial welfare of its employees when they reach retirement age
and pays contributions to provide death in service cover and beneﬁts on retirement. The opportunity to sacriﬁce proﬁt share
payments into pension arrangements is now available to staff.

We believe that the beneﬁts provided are generous and worthwhile, and are valued by all permanent employees eligible to
join the schemes available. We continually monitor this area to ensure the provision of beneﬁts and practices remain up-to-
date and in line with rapidly changing legislative requirements.

Employee involvement

Communication with staff takes place through a variety of means including internal email, and a quarterly internal newsletter
to which all staff are actively encouraged to contribute both information and news about business issues, as well as articles
on social, environmental and community issues. Employees have easy access to policies, procedures, organisation charts,
announcements and company news through a web-based shared workspace. Presentations to staff on full and half year
results are given by Board members.

All investment managers across Rathbone Investment Management’s ten ofﬁces in the UK and in Jersey are linked by
telephone for a daily morning meeting to hear key market news and by telephone and video conference weekly for a more 
in-depth discussion of market trends, asset allocation and individual investment matters. Non-investment management staff
are also welcome to attend these meetings.

Consultation with staff takes place when major changes to beneﬁts such as pensions are being considered and 
a range of internal committees and working parties draw in participation from across the ﬁrm on key issues such as IT,
training, business continuity and marketing. We were named as a runner up as Employer of the Year for 2008 by
Executive PA magazine. 

Rathbone Brothers Plc Report and accounts 2008

 
 
Community

Rathbones continues to review community activities, both on a group and a local scale, and supports employees’
participation in a wide range of activities involving both local and international charities.

We encourage employees to take up voluntary and charitable positions, and the Board supports participation in such
activities. For example, the chairman is deputy chairman of Fight for Sight and the chief executive is involved with an
educational charity. Many of our staff are involved with schools, colleges, charities, civic, youth and religious groups in
various capacities.

Donations and fundraising

During the year, the Group made charitable donations of £165,478, representing 0.39% of continuing Group pre-tax proﬁts 
(2007: £205,079, representing 0.43% of continuing Group pre-tax proﬁts). This included £45,000 as part of a four year
commitment totalling £150,000 made to support four Liverpool secondary schools in their bids for Specialist Schools 
and Academies Trust status. 

In addition to this ﬁnancial support, a number of individuals    from our Liverpool ofﬁce sit on the governing bodies of the four
schools, thus helping to forge strong working relationships with each school whilst bringing a range of skills to their
committees. It also provides the members of staff involved with the opportunity to develop their wider professional and
management skills.

A number of initiatives have been implemented with the individual schools to cater to their particular needs and we have
agreed to provide two work experience places for each school annually. Additionally, as part of our contribution to the
celebrations for the 2008 Liverpool Capital of Culture, we hosted a Summer Exhibition of artistic works in conjunction with
the four schools.

In 2008, Help for Heroes and the Roy Castle Lung Cancer Foundation were selected by employee ballot as the charities we
would support for 2008 and 2009. Payments of £250 each were made to 20 charities that were not selected. Employees
were encouraged to support the charities through participating in various events such as sweepstakes, an Oktoberfest
celebration and Christmas party rafﬂes, and in 2008 raised £7,000.

Staff are encouraged to donate to charity in a tax efﬁcient manner through the Give As You Earn (GAYE) payroll giving
scheme. In 2008, Rathbone staff made regular payments totalling £107,783 (2007: £66,879) through this scheme, which is
administered by the Charities Aid Foundation. The Company matched staff donations of up to £200 per month made through
GAYE and in 2008 donated £77,843 (2007: £40,729) to causes chosen by employees through this method. Following the
active promotion of GAYE to staff 115 UK staff (16%) now use this way of donating to charity.

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Sponsorships

As well as direct charitable donations, Rathbones provides support in the form of sponsorship, advertising and 
attendance at events organised by charities and arts organisations. Rathbone Greenbank Investments continues to 
support Schumacher UK in its aims to promote sustainable development through its co-sponsorship of the organisation’s
Bristol series of lectures. Rathbone Greenbank Investments has also maintained its sponsorship of The Funding Network, 
a UK-based organisation which brings people together in a marketplace to help fund charitable projects.

Rathbone Brothers Plc Report and accounts 2008

 
 
Directors’ responsibilities

The directors are responsible for preparing the Annual Report and the Group and Company ﬁnancial statements, 
in accordance with law and regulations.

Company law requires the directors to prepare Group and parent Company ﬁnancial statements for each ﬁnancial year. 
Under that law the directors are required to prepare the Group ﬁnancial statements in accordance with International Financial
Reporting Standards as adopted by the EU (IFRS) and have elected to prepare the parent company ﬁnancial statements in
accordance with UK accounting standards. The Group ﬁnancial statements are required by law and IFRS as adopted by the
EU to present fairly the ﬁnancial position and performance of the Group; the Companies Act 1985 provides in relation to such
ﬁnancial statements that references in the relevant part of that Act to ﬁnancial statements giving a true and fair view are
references to their achieving a fair presentation.

The parent company ﬁnancial statements are required by law to give a true and fair view of the state of affairs of the 
parent company.

In preparing each of the Group and parent Company ﬁnancial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• for the Group ﬁnancial statements, state whether they have been prepared in accordance with IFRS as adopted by the EU;
• for the parent company ﬁnancial statements, state whether applicable UK accounting standards have been followed,

subject to any material departures disclosed and explained in the parent company ﬁnancial statements; and

• prepare the ﬁnancial statements on the going concern basis unless it is inappropriate to presume that the Group and the

parent Company will continue in business.

The directors conﬁrm that they have complied with the above requirements in preparing the ﬁnancial statements.

The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the
ﬁnancial position of the parent company and enable them to ensure that its ﬁnancial statements comply with the Companies
Act 1985. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the
Group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the directors are also responsible for preparing a Directors’ report, Remuneration report
and Corporate governance statement that comply with that law and those regulations.

The directors are responsible for the maintenance and integrity of the corporate and ﬁnancial information included on the
Company’s website. Legislation in the UK governing the preparation and dissemination of ﬁnancial statements may differ from
legislation in other jurisdictions.

In the case of persons who were directors of the Company at the date when this report was approved:
• so far as each of the directors is aware, there is no relevant audit information (as deﬁned in the Companies Act 

1985) of which the Company’s auditors are unaware; and

• each of the directors has taken all the steps that he/she ought to have taken as a director to make himself/herself aware of

any relevant audit information (as deﬁned) and to establish that the Company’s auditors are aware of that information.

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Responsibility Statement

We conﬁrm that to the best of our knowledge:

(1)

(2)

the ﬁnancial statements, prepared in accordance with IFRS, give a true and fair view of the assets, liabilities, ﬁnancial
position and proﬁt or loss of the Company and the undertakings included in the consolidation taken as a whole; and

the Directors’ report, together with information provided in the Chairman’s and Chief executive’s statements, Strategy and
KPIs and Business review includes a fair view of the development and performance of the business and the position of the
Company and the undertakings included in the consolidation taken as a whole, together with the description of the
principal risks and uncertainties they face.

By Order of the Board

A D Pomfret
Chief executive

3 March 2009

Rathbone Brothers Plc Report and accounts 2008

 
Consolidated accounts

Contents

Independent auditors’ report 

to the members of Rathbone Brothers Plc

Consolidated income statement 
Consolidated balance sheet 
Consolidated cash ﬂow statement 
Consolidated statement of 

recognised income and expense
Notes to the consolidated accounts 

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Rathbone Brothers Plc Report and accounts 2008

 
Independent auditors’ report to the members of Rathbone Brothers Plc

We have audited the Group ﬁnancial statements of Rathbone Brothers Plc for the year ended 31 December 2008, which
comprise the Consolidated income statement, the Consolidated balance sheet, the Consolidated cash ﬂow statement, the
Consolidated statement of recognised income and expense and the related notes. These Group ﬁnancial statements have
been prepared under the accounting policies set out therein.

We have reported separately on the parent company ﬁnancial statements of Rathbone Brothers Plc for the year ended
31 December 2008 and on the information in the Remuneration report that is described as having been audited.

Respective responsibilities of directors and auditors

The directors’ responsibilities for preparing the Annual Report and the Group ﬁnancial statements in accordance with
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union are set out in the
Statement of directors’ responsibilities.

Our responsibility is to audit the Group ﬁnancial statements in accordance with relevant legal and regulatory requirements
and International Standards on Auditing (UK and Ireland). This report, including the opinion, has been prepared for and only
for the Company’s members as a body in accordance with Section 235 of the Companies Act 1985 and for no other
purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to
whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

We report to you our opinion as to whether the Group ﬁnancial statements give a true and fair view and whether the Group
ﬁnancial statements have been properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS
Regulation. We also report to you whether in our opinion the information given in the Directors’ report is consistent with the
Group ﬁnancial statements. The information given in the Directors’ report includes that speciﬁc information presented in the
Business review, which is cross referenced from the Business review section of the Directors’ report.

In addition we report to you if, in our opinion, we have not received all the information and explanations we require for our
audit, or if information speciﬁed by law regarding directors’ remuneration and other transactions is not disclosed.

We review whether the Corporate governance statement reﬂects the Company’s compliance with the nine provisions of the
Combined Code (2006) speciﬁed for our review by the Listing Rules of the Financial Services Authority, and we report if it
does not. We are not required to consider whether the Board’s statements on internal control cover all risks and controls, or
form an opinion on the effectiveness of the Group’s corporate governance procedures or its risk and control procedures.

We read other information contained in the Annual Report and consider whether it is consistent with the audited Group
ﬁnancial statements. The other information comprises only the Chairman’s statement, Chief executive’s statement, Business
review, Directors’ report, Corporate governance report and all of the other information listed on the contents page. We
consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with
the Group ﬁnancial statements. Our responsibilities do not extend to any other information.

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Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
 
 
 
 
 
Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing
Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures 
in the Group ﬁnancial statements and the part of the Remuneration report to be audited. It also includes an assessment 
of the signiﬁcant estimates and judgements made by the directors in the preparation of the Group ﬁnancial statements, 
and of whether the accounting policies are appropriate to the Group’s circumstances, consistently applied and 
adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in
order to provide us with sufﬁcient evidence to give reasonable assurance that the Group ﬁnancial statements are free from
material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the
overall adequacy of the presentation of information in the Group ﬁnancial statements.

Opinion

In our opinion:
• the Group ﬁnancial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, 
of the state of the Group’s affairs as at 31 December 2008 and of its proﬁt and cash ﬂows for the year then ended;

• the Group ﬁnancial statements have been properly prepared in accordance with the Companies Act 1985 and Article 4 

of the IAS Regulation; and

• the information given in the Directors’ report is consistent with the Group ﬁnancial statements.

PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
London

3 March 2009

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Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
 
 
 
 
 
Consolidated income statement
for the year ended 31 December 2008 

Interest and similar income
Interest expense and similar charges

Net interest income

Fee and commission income
Fee and commission expense

Net fee and commission income

Dividend income
Net trading income
Net income from sale of available for sale securities
Other operating income

Operating income
Operating expenses

Additional levy for Financial Services Compensation Scheme
Other operating expenses

Profit before income tax from continuing operations
Income tax expense

Profit after income tax from continuing operations

Discontinued operations
Profit before income tax from discontinued operations
Income tax credit/(charge) on profit from discontinued operations
Loss recognised on remeasurement of assets of the disposal group

Net (loss)/profit from discontinued operations

Profit for the year attributable to equity holders of the Company

Dividends paid and proposed for the year per ordinary share (p)
Dividends paid and proposed for the year (£’000)

Earnings per share for the year attributable to equity holders of the Company:
Basic (p)
Diluted (p)

Earnings per share from continuing operations for the year attributable to 
equity holders of the Company:
Basic (p)
Diluted (p)

Note

5

5

6

6

7

8

9

11

12

13

13

14

14

2008
£’000

69,095
(38,035)

31,060

106,656
(8,565)

98,091

134
480
–
1,986

131,751
(88,995)

(1,404)
(87,591)

42,756
(13,489)

29,267

2,215
198
(12,680)

(10,267)

19,000

42.00p
17,984

44.45p
44.09p

2007
£’000
restated (note 1)

51,573
(32,282)

19,291

122,130
(11,499)

110,631

67
1,676
1,297
1,518

134,480
(87,178)

–
(87,178)

47,302
(14,212)

33,090

4,922
(632)
–

4,290

37,380

41.00p
17,479

87.88p
86.46p

68.47p
67.90p

77.79p
76.54p

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Rathbone Brothers Plc Report and accounts 2008

 
 
Consolidated balance sheet
as at 31 December 2008

Assets
Cash and balances at central banks 
Settlement balances
Loans and advances to banks
Loans and advances to customers
Investment securities
– available for sale
– held to maturity
Assets of disposal groups classified as held for sale
Intangible assets
Property, plant and equipment
Deferred tax asset
Prepayments, accrued income and other assets

Total assets

Liabilities
Deposits by banks
Settlement balances
Due to customers
Accruals, deferred income, provisions and other liabilities
Current tax liabilities
Liabilities of disposal groups classified as held for sale
Long term employee benefits

Total liabilities

Equity
Share capital
Share premium
Other reserves
Retained earnings

Total equity

Note

15

16

17

18

18

12

19

20

21

22

23

25

26

12

28

29

29

30

30

2008
£’000

351
15,751
175,973
39,412

81,991
874,979
5,813
68,232
6,816
2,483
38,646

2007
£’000

275
21,573
250,103
39,380

6,948
765,274
–
85,734
8,131
3,528
45,677

1,310,447

1,226,623

9,201
14,048
1,044,351
42,450
6,035
4,008
5,723

1,125,816

2,143
28,957
34,740
118,791

184,631

12,460
19,926
946,608
49,637
6,790
–
6,452

1,041,873

2,134
27,758
54,181
100,677

184,750

Total equity and liabilities

1,310,447

1,226,623

Approved by the Board of directors on 3 March 2009 and signed on its behalf by

A D Pomfret
Chief executive

R P Stockton
Finance director

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Rathbone Brothers Plc Report and accounts 2008

 
 
Consolidated cash ﬂow statement 
for the year ended 31 December 2008

Cash flows from operating activities
Profit before income tax from continuing operations
Net interest income
Net income from sale of available for sale securities
Impairment losses on loans and advances to customers
Profit on disposal of property, plant and equipment
Depreciation and amortisation
Net unrealised gains on foreign exchange
Defined benefit pension scheme charges 
Share based payment charges
Interest paid
Interest received

Changes in operating assets and liabilities
– net decrease in loans and advances to banks and customers
– net decrease/(increase) in settlement balance debtors
– net decrease/(increase) in prepayments, accrued income and other assets
– net increase in amounts due to customers and deposits by banks
– net (decrease)/increase in settlement balance creditors
– net (decrease)/increase in accruals, deferred income, provisions and 

other liabilities

Cash generated from operations
Defined benefit pension contributions paid
Tax paid
Discontinued operations

Net cash inflow from operating activities

Cash flows from investing activities
Acquisition of businesses, net of cash acquired 
Disposal of businesses, net of cash transferred
Purchase of property, equipment and intangible assets
Proceeds from sale of property and equipment
Purchase of investment securities
Proceeds from sale and redemption of investment securities
Discontinued operations

Net cash used in investing activities

Cash flows from financing activities
Purchase of shares for share-based schemes
Issue of ordinary shares
Dividends paid

Net cash used in financing activities

Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Amounts reclassified as assets of businesses held for sale
Effect of exchange rate changes on cash and cash equivalents

Cash and cash equivalents at the end of the year

Note

2008
£’000

2007
£’000
restated (note 1)

42,756
(31,060)
–
58
(45)
4,614
(361)
1,942
1,299
(38,617)
69,150

49,736

33,735
5,822
5,360
89,287
(5,878)

(3,302)

174,760
(2,715)
(10,950)
2,145

163,240

47,302
(19,291)
(1,297)
–
(3)
4,150
(91)
2,554
2,692
(31,525)
46,985

51,476

15,276
(1,945)
(2,129)
280,980
1,848

8,537

354,043
(6,595)
(12,730)
3,481

338,199

(734)
16,340
(11,311)
151
(2,545,080)
2,435,375
(266)

(422)
–
(9,775)
29
(1,276,420)
1,070,811
(409)

(105,525)

(216,186)

(1,728)
1,208
(17,503)

(18,023)

39,692
214,220
(791)
1,109

254,230

(3,210)
2,963
(15,914)

(16,161)

105,852
108,343
–
25

214,220

35

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Rathbone Brothers Plc Report and accounts 2008

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Consolidated statement of recognised income and expense 
for the year ended 31 December 2008

Profit for the year

Exchange translation differences
Actuarial (loss)/gain on long term employment benefits
Revaluation of available for sale investment securities:

– net (loss)/gain from changes in fair value
– net profit on disposal transferred to income during the period

Deferred tax on equity items:

– available for sale investment securities
– actuarial gains and losses
– share-based payments  

Net (expense)/income recognised directly in equity

Recognised income and expense for the year attributable 
to equity holders of the Company

Note

28

18

18

21

2008
£’000

19,000

1,001
(44)

(3,957)
–

(3,957)

1,108
12
(515)

605

(2,395)

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£’000

37,380

14
270

2,069
(1,297)

772

(93)
34
694

635

1,691

16,605

39,071

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Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
 
 
Notes to the consolidated accounts

1  Principal accounting policies

Rathbone Brothers Plc (the ‘Company’) is a public company incorporated in Great Britain.

The consolidated accounts have been prepared in accordance with International Financial Reporting Standards as
adopted by the EU (IFRS). The Company has elected to prepare its individual accounts in accordance with generally
accepted accounting principles in the UK (UK GAAP); these are presented on pages 116 to 123.

Changes in accounting policies and disclosure

The comparative balances have been restated in the Income statement, Cash ﬂow statement and the related notes where
applicable to reﬂect the presentation of certain subsidiary entities as disposal groups in accordance with IFRS 5, 
‘Non-current assets held-for-sale and discontinued operations’. Further details, including the impact on the ﬁnancial
statements,  are given in note 12.

Developments in reporting standards and interpretations

The following interpretations issued by the International Financial Reporting Interpretations Committee (‘IFRIC’) are
effective for the ﬁrst time in the current ﬁnancial year and have been adopted by the Group, although there was no impact
on the consolidated results or ﬁnancial position:

• IFRIC 11, ‘IFRS 2 – Group and treasury share transactions’.

• IFRIC 14, ‘IAS 19 – The limit on a deﬁned beneﬁt asset, minimum funding requirements and their interaction’.

The following standards and interpretations issued by the International Accounting Standards Board (‘IASB’) or the IFRIC
that are mandatory for the Group’s accounting periods beginning on or after 1 January 2009 or later periods but which the
Group has not early adopted and which may, in the opinion of the directors, materially impact the ﬁnancial statements in
the period of initial application:

• IFRS 8, ‘Operating segments’ (effective from 1 January 2009). The new standard requires segment information to be

presented on the same basis as that used for internal reporting purposes. Some amendments to the disclosures made
for segmental performance are likely although it is not expected that the number of reportable segments will change.

• IAS 1 (revised), ‘Presentation of ﬁnancial statements’ (effective from 1 January 2009 subject to endorsement by the

EU). This requires changes to the presentation of ﬁnancial statements and adopts revised titles for the primary
statements, although companies may continue to use the existing titles.

• IFRS 3 (revised), ‘Business combinations’ (effective from 1 January 2009 subject to endorsement by the EU). 

The changes impact on the initial and subsequent valuation of purchase consideration, the calculation of goodwill and
the treatment of transaction costs. The impact of the standard on future acquisitions is not readily determinable.

• IAS 36 (amendment), ‘Impairment of assets’ (effective from 1 January 2009 subject to endorsement by the EU). 

This amendment requires additional disclosures to be provided where fair value less costs to sell is calculated on the
basis of discounted cash ﬂows.

• IAS 19 (amendment), ‘Employee beneﬁts’ (effective from 1 January 2009 subject to endorsement by the EU). 

This clariﬁes and amends certain aspects of accounting for deﬁned beneﬁt schemes. The impact of this amendment 
on the consolidated results or ﬁnancial position has not yet been determined.

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The following standards and interpretations issued by the IASB or the IFRIC that are also mandatory for the Group’s
accounting periods beginning on or after 1 January 2009 or later periods but which the Group has not early adopted 
but which are not likely, in the opinion of the directors, to impact materially the ﬁnancial statements in the period of 
initial application:

• IAS 23 (amendments), ‘Borrowing costs’ (effective from 1 January 2009).

• IFRS 2 (amendment), ‘Share-based payment’ (effective from 1 January 2009).

• IAS 32 (amendment), ‘Financial Instruments: Presentation’/IAS 1 (amendment), ‘Presentation of ﬁnancial statements 

– Puttable ﬁnancial instruments and obligations arising on liquidation’ (effective from 1 January 2009).

• IAS 27 (revised), ‘Consolidated and separate ﬁnancial statements’ (effective from 1 July 2009).

• IFRS 5 (amendment), ‘Non-current assets held-for-sale and discontinued operations’ (effective from 1 July 2009).

• IAS 28 (amendment), ‘Investments in associates’ (effective from 1 January 2009).

Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
1  Principal accounting policies continued

• IAS 39 (amendment), ‘Financial Instruments: Recognition and measurement’ (effective from 1 January 2009).

• IAS 1 (amendment), ‘Presentation of ﬁnancial instruments’ (effective from 1 January 2009).

The following standards and interpretations issued by the IASB or the IFRIC that are also mandatory for the Group’s
accounting periods beginning on or after 1 January 2009 or later periods but which, in the opinion of the directors, are not
relevant to the operations of the Group:

• IFRS 1 and IAS 27 (amendment), ‘First-time Adoption’ and ‘Consolidated and Separate Financial Statements’. 

This amendment is relevant to the Company.

• IAS 38 (amendment), ‘Intangible assets’.

• IAS 16 (amendment), ‘Property, plant and equipment’.

• IFRIC 16 , ‘Hedges of a net investment in a foreign operation’.

• IAS 27 (amendment), ‘Consolidated and separate ﬁnancial statements’.

• IAS 29 (amendment), ‘Financial Reporting in hyperinﬂationary economies’.

• IAS 31 (amendment), ‘Investment in joint ventures’.

• IAS 40 (amendment), ‘Investment Property’.

• IAS 41 (amendment), ‘Agriculture’.

• IAS 20 (amendments), ‘Accounting for government grants’.

• IAS 39 (amendment), ‘Financial instruments: Recognition and measurement’ (effective 1 July 2008). 

• IFRS 7 (amendment), ‘Financial instruments: Disclosures’, on the ‘Reclassiﬁcation of ﬁnancial assets’ 

(effective 1 July 2008).

• IFRIC 15, ‘Agreements for construction of real estates’. 

• IFRIC 17, ‘Distributions of non cash assets to owners’ (effective 1 July 2009).

• IFRIC 18, ‘Transfer of assets from customers’ (effective 1 July 2009).

Basis of consolidation

The consolidated ﬁnancial statements incorporate the ﬁnancial statements of the Company and entities controlled by the
Company (its subsidiaries), together the ‘Group’, made up to 31 December each year.

Subsidiaries are all entities in which the Company has a controlling interest, generally accompanying a shareholding of
more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether an entity is a subsidiary of the Company. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that
control ceases.

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The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an
acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed
at the date of exchange, plus costs directly attributable to the acquisition. Identiﬁable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date,
irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share
of the identiﬁable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net
assets of the subsidiary acquired, the difference is recognised directly in the income statement.

7
6

Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
Notes to the consolidated accounts continued

1  Principal accounting policies continued

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted
by the Group.

The consolidated ﬁnancial statements incorporate the ﬁnancial statements of Rathbone International Finance B.V., which
is effectively controlled by the Company, although the Company does not own any of the entity’s share capital.

Basis of presentation

The ﬁnancial statements have been prepared on the historical cost basis, except for the revaluation of certain ﬁnancial
instruments. The principal accounting policies adopted, which are set out below, have, unless otherwise stated, been
applied consistently to all periods presented in the consolidated accounts.

Impairment

Goodwill and other intangible assets with indeﬁnite useful lives are tested for impairment both when there is an indication
of impairment and annually.  Other ﬁnancial assets are assessed at the reporting date or if there is objective evidence 
of impairment during the accounting period. If any such indication exists, the recoverable amount of the asset is estimated
in order to determine the extent of the impairment loss (if any). Held to maturity investment securities and loans and
receivables are considered individually for impairment. Where an asset does not generate cash ﬂows that are independent
from other assets, the Group estimates the recoverable amount of the cash generating unit to which the asset belongs.

The recoverable amount of non-ﬁnancial assets is the higher of fair value less any cost to sell and value in use. In assessing
value in use, the estimated future cash ﬂows are discounted to their present values using a pre-tax discount 
rate that reﬂects current market assessments of the time value of money and the risks speciﬁc to the asset for which the
estimates of future cash ﬂows have not been adjusted. The recoverable amount of held to maturity investment securities
and loans and receivables is calculated as the present value of estimated future cash ﬂows, discounted at the effective
interest rate of the asset on recognition. Impairment of available for sale securities is calculated as the cumulative loss that
has been previously recognised directly in equity at the time that objective evidence of impairment is identiﬁed.

If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount, the carrying
amount of the asset, except for equity instruments, or cash generating unit is reduced to its recoverable amount.
Impairment losses are recognised as an expense immediately. Where an impairment loss (excluding goodwill)
subsequently reverses, the carrying amount of the asset or cash generating unit is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the asset or cash generating unit in prior years. A reversal of
an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in
which case the reversal of the impairment loss is treated as a revaluation increase.

An impairment loss in respect of a held to maturity security or loans and receivables is reversed if the subsequent increase
can be related objectively to an event occurring after the impairment loss was recognised.

An impairment loss in respect of an investment in equity instruments classiﬁed as available for sale is not reversed 
through proﬁt or loss. If the fair value of a debt instrument classiﬁed as available for sale increases and the increase can 
be objectively related to an event occurring after the impairment loss was recognised in proﬁt or loss, the impairment is
reversed through proﬁt or loss.

Interest income and expense

Interest income and expense are recognised as earned in the income statement for all instruments measured at amortised
cost and for available for sale debt instruments using the effective interest method. Interest payable and receivable on
derivative ﬁnancial instruments and dividends receivable from money market funds are included within net interest income. 

The effective interest method is a method of calculating the amortised cost of a ﬁnancial asset or a ﬁnancial liability and 
of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that
exactly discounts estimated future cash payments or receipts through the expected life of the ﬁnancial instrument or, when
appropriate, a shorter period to the net carrying amount of the ﬁnancial asset or ﬁnancial liability. When calculating the
effective interest rate, the Group estimates cash ﬂows considering all contractual terms of the ﬁnancial instrument but
does not consider future credit losses. The calculation includes all fees and interest paid or received between parties to
the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

Rathbone Brothers Plc Report and accounts 2008

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1  Principal accounting policies continued

Once a ﬁnancial asset or a group of similar ﬁnancial assets has been written down as a result of an impairment loss, 
interest income is recognised using the rate of interest used to discount the future cash ﬂows for the purpose of measuring
the impairment loss.

Dividend income

Dividend income from ﬁnal dividends on equity securities is accounted for on the date the security becomes ex-dividend.
Interim dividends are recognised when paid.

Operating leases

Payments made under operating leases are recognised in the income statement on a straight line basis over the term of
the lease. Lease incentives are recognised in the income statement as an integral part of the total lease expense.

Fees and commissions

Portfolio and other management advisory and service fees are recognised over the period the service is provided. Asset
management fees are recognised rateably over the period the service is provided.

Commissions receivable and payable are accounted for in the period in which they are earned.

To the extent that retained initial charge income received on the sale of units arises from an identiﬁable brokerage service,
the income is recognised on the performance of that service. Other retained initial charges are deferred and recognised as
income on a straight line basis over the estimated average life of the unit holding.

Property, plant and equipment

All property, plant and equipment is stated at historical cost less accumulated depreciation and impairment losses.
Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation is charged so as to write off the cost of assets to their estimated residual value over their estimated useful
lives, using the straight line method, on the following bases:
Leasehold property:
Plant, equipment and computer hardware:

over the lease term
over three to ﬁve years

The assets’ residual lives are reviewed, and adjusted if appropriate, at each balance sheet date.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in
the income statement.

Intangible assets 

a Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair
value of the identiﬁable assets, liabilities and contingent liabilities of a subsidiary at the date of acquisition. 

Goodwill is recognised as an asset and is reviewed for impairment at least annually, or when other occasions or changes
in circumstances indicate that it might be impaired. Any impairment is recognised immediately in the proﬁt and loss and is
not subsequently reversed. Goodwill arising on acquisition is allocated to groups of cash generating units that correspond
with the Group’s segments, as these represent the lowest level within the Group at which management monitor goodwill
for purposes of impairment testing. Cash generating units are identiﬁed as the smallest identiﬁable group of assets that
generates cash inﬂows that are largely independent of the cash inﬂows from other assets or groups of assets.

On disposal of a subsidiary the attributed amount of goodwill that has not been subject to impairment is included in the
determination of the proﬁt or loss on disposal.

Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP
amounts subject to being tested for impairment at that date.

b Computer software and software development costs
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the
speciﬁc software. These costs are amortised on the basis of the expected useful lives (three to four years).

Costs that are directly associated with the production of identiﬁable and unique software products controlled by the
Group, which are expected to generate economic beneﬁts exceeding costs beyond one year, are recognised as intangible
assets. Computer software development costs recognised as assets are amortised using the straight line method over
their useful lives (not exceeding four years).

Rathbone Brothers Plc Report and accounts 2008

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9
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Notes to the consolidated accounts continued

1  Principal accounting policies continued

Intangible assets continued

Costs associated with developing or maintaining computer software programs that are not recognised as assets are
recognised as an expense as incurred.

Client relationships

c
Client relationships acquired are shown at historical cost. Those in respect of business combinations are initially
recognised at fair value. Client relationships have a ﬁnite useful life and are carried at cost less accumulated amortisation.
Amortisation is calculated using the straight line method to allocate the cost of the client lists over their estimated useful
lives (ﬁve to ﬁfteen years).

Financial assets

The Group classiﬁes its ﬁnancial assets in the following categories: ﬁnancial assets at fair value through proﬁt or loss,
loans and receivables, held to maturity investments and available for sale ﬁnancial assets. The classiﬁcation of ﬁnancial
assets is determined at initial recognition.

Financial assets at fair value through proﬁt or loss

a
This category has two sub-categories: ﬁnancial assets held for trading, and those designated at fair value through proﬁt 
or loss at inception. A ﬁnancial asset is classiﬁed in this category if acquired principally for the purpose of selling in the
short term or if so designated. Derivatives are also categorised as held for trading and are reported within other assets 
or other liabilities.

Loans and receivables

b
Loans and receivables are non-derivative ﬁnancial assets with ﬁxed or determinable payments that are not quoted in an
active market. They arise when the Group provides money, goods or services to a debtor or purchases a loan with no
intention of trading the receivable.

c Held to maturity
Held to maturity investments are non-derivative ﬁnancial assets with ﬁxed or determinable payments and ﬁxed maturities
that the Group’s management has the positive intention and ability to hold to maturity, other than those that meet the
deﬁnition of loans and receivables or that the Group has classiﬁed as available for sale or fair value through proﬁt or loss. 

Available for sale

d
Available for sale ﬁnancial assets are non-derivatives that are either designated in this category or not classiﬁed in any of
the other categories. Available for sale investments are those intended to be held for an indeﬁnite period of time, which
may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices. 

Purchases and sales of ﬁnancial assets at fair value through proﬁt or loss, held to maturity and available for sale are
recognised on trade date – the date on which the Group commits to purchase or sell the asset. Loans are recognised
when cash is advanced to the borrowers. Financial assets are initially recognised at fair value plus transaction costs for all
ﬁnancial assets not carried at fair value through proﬁt or loss. Financial assets are derecognised when the rights to receive
cash ﬂows from the ﬁnancial assets have expired or been effectively transferred, or where the Group has transferred
substantially all risks and rewards of ownership.

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0
7

Available for sale ﬁnancial assets and ﬁnancial assets at fair value through proﬁt or loss are subsequently carried at fair
value. Loans and receivables and held to maturity investments are carried at amortised cost using the effective interest
method. Gains and losses arising from changes in the fair value of the ‘ﬁnancial assets at fair value through proﬁt or loss’
category are included in the income statement in the period in which they arise. Gains and losses arising from changes 
in the fair value of available for sale ﬁnancial assets are recognised directly in equity (except for changes arising from
ﬂuctuations in foreign exchange rates, which are recognised as income or expenditure in the income statement for
monetary assets and directly in equity for non-monetary assets), until the ﬁnancial asset is sold, derecognised or impaired
at which time the cumulative gain or loss previously recognised in equity should be recognised in the income statement.
However, interest calculated using the effective interest method is recognised in the income statement. 

The fair values of quoted ﬁnancial instruments in active markets are based on current bid prices. If the market for a ﬁnancial
asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These
include the use of recent arm’s length transactions, discounted cash ﬂow analysis, option pricing models and 
other valuation techniques commonly used by market participants.

Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
1  Principal accounting policies continued

Deposits and borrowings

All deposits and borrowings are initially recognised at the fair value of the consideration received. After initial recognition,
deposits and borrowings are subsequently measured at amortised cost using the effective interest rate method.
Amortised cost is calculated by taking into account any issue costs and any discounts or premia on settlement. Borrowing
costs are recognised as an expense in the period in which they are incurred.

Work in progress

Trust work in progress is included within other assets and is valued at the expected recoverable amount, including an
appropriate portion of proﬁt, calculated by reference to the stage of completion of the service rendered. The
corresponding income is recognised within fees and commissions receivable.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event
which it is probable will result in an outﬂow of economic beneﬁts that can be reliably estimated. Provisions are measured
at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reﬂects
current market assessments of the time value of money and the risks speciﬁc to the obligation. The increase in the
provision due to the passage of time is recognised within interest expense.

Provisions for restructuring costs are recognised when the Group has a detailed formal plan for the restructuring which
has been notiﬁed to affected parties.

Foreign currencies

The Group’s functional and presentational currency is sterling. Transactions in currencies other than the relevant Group
entity’s functional currency are recorded at the rates of exchange prevailing on the dates of the transactions. At each
balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet date. Non-monetary ﬁnancial assets carried at fair value that are denominated in foreign
currencies are translated at the rates prevailing at the date when the fair value was determined.

Gains and losses arising on retranslation are included in net proﬁt or loss for the period, except for exchange differences
arising on non-monetary assets and liabilities where the changes in fair value are recognised directly in equity.

On consolidation, the assets and liabilities of the Group’s overseas operations are translated into the Group’s
presentational currency at exchange rates prevailing on the balance sheet date. Income and expense items are translated
at the average exchange rates for the period. Exchange differences arising, if any, are recognised in equity within the
Group’s translation reserve. Such translation differences are recognised as income or as expenses in the period in which
the operation is disposed.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities 
of the foreign entity and translated at the closing rate. Gains and losses arising on translation are taken to the Group’s
translation reserve. The Group has elected to treat goodwill and fair value adjustments denominated in a currency other
than the Group’s functional currency arising on acquisitions before the date of transition to IFRS as non-monetary 
foreign currency items and they are translated using the exchange rate applied on the date of acquisition.

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Retirement benefit costs

1
7

The cost of providing beneﬁts under deﬁned beneﬁt plans are determined using the projected unit credit method, with
actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in full in the
period in which they occur. They are recognised outside of proﬁt and loss and are presented in the statement of
recognised income and expense. 

Past service cost is recognised immediately to the extent that the beneﬁts are already vested, and otherwise is amortised
on a straight line basis over the average period until the amended beneﬁts become vested.

The amount recognised in the balance sheet represents the present value of the deﬁned beneﬁt obligation reduced by the
fair value of plan assets. Any asset resulting from this calculation is limited to the present value of available refunds and
reductions in future contributions to the plan.

Payments to deﬁned contribution retirement beneﬁt schemes are charged as an expense as they fall due.

Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
Notes to the consolidated accounts continued

1  Principal accounting policies continued

Income tax

Tax on the proﬁt or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except
to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from
differences between the carrying amount of assets and liabilities in the ﬁnancial statements and the corresponding tax
basis used in the computation of taxable proﬁt. In principle, deferred tax liabilities are recognised for all temporary
differences and deferred tax assets are recognised to the extent that it is probable that taxable proﬁts will be available
against which deductible temporary differences may be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from the initial recognition of goodwill (or negative goodwill) for which amortisation is not
deductible for tax purposes or from the initial recognition (other than in a business combination) of other assets and
liabilities in a transaction, which affects neither the tax proﬁt nor the accounting proﬁt.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and
associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.

The carrying amounts of deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is 
no longer probable that sufﬁcient taxable proﬁts will be available to allow all or part of the asset to be recovered.

Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance
sheet date and are expected to apply when the liability is settled or when the asset is realised. Deferred tax is charged 
or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case
the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities on a net basis.

Cash and cash equivalents

Cash comprises cash on hand and demand deposits which may be accessed without penalty.

Cash equivalents comprise short-term highly liquid investments with a maturity of less than three months from the date 
of acquisition.

For the purposes of the Consolidated cash ﬂow statement, cash and cash equivalents consist of cash and cash
equivalents as deﬁned above, net of outstanding bank overdrafts.

Share-based payments

The Group has applied the requirements of IFRS 2 Share-based Payment. In accordance with the transitional 
provisions, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that had not vested as of
1 January 2005.

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The Group engages in equity settled share-based payment transactions in respect of services received from certain
employees. The fair value of the services received is measured by reference to the fair value of the shares or share options
granted on the date of the grant. The cost of the employee services received in respect of the shares or share options
granted is recognised in the income statement over the vesting period, with a corresponding credit to equity.

The fair value of the options granted is determined using option pricing models, which take into account the exercise price
of the option, the current share price, the risk free interest rate, the expected volatility of the Company’s share price over
the life of the option/award and other relevant factors. Except for those which include terms related to market conditions,
vesting conditions included in the terms of the grant are not taken into account in estimating fair value. Non-market vesting
conditions are taken into account by adjusting the number of shares or share options included in the measurement of the
cost of employee services so that ultimately the amount recognised in the income statement reﬂects the number of vested
shares or share options, with a corresponding adjustment to equity. Where vesting conditions are related to market
conditions, the charges for the services received are recognised regardless of whether or not the market related vesting
condition is met, provided that the non-market vesting conditions are met. Shares purchased and issued are charged
directly to equity. 

Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
1  Principal accounting policies continued

Segmental reporting

A business segment is a group of assets and operations engaged in providing services that are subject to risks and
returns that are different from those of other business segments. A geographical segment is engaged in providing services
within a particular economic environment that are subject to risks and returns that are different from those of segments
operating in other economic environments. Direct costs are allocated to the segment that generated the cost. Indirect
costs are allocated to reporting segments so as to reﬂect the proportion of the cost that each segment has generated,
on a pro rata basis.

Fiduciary activities

The Group commonly acts as trustee and in other ﬁduciary capacities that result in the holding or placing of assets on
behalf of individuals, trusts, retirement beneﬁt plans and other institutions. These assets and income arising thereon are
excluded from these ﬁnancial statements, as they are not assets of the Group.

The Group holds money on behalf of some clients in accordance with the Client Money Rules of the Financial Services
Authority. Such monies and the corresponding liability to clients are not shown on the face of the balance sheet as the
Group is not beneﬁcially entitled thereto.

Financial guarantees

Financial guarantees issued by the Group are initially recognised in the balance sheet at fair value. Guarantees are
subsequently measured at the higher of the best estimate of any amount to be paid to settle the guarantee and the amount
initially recognised less cumulative amortisation, which is recognised over the life of the contract.

2

Critical accounting judgements and key sources of estimation and uncertainty

The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next
ﬁnancial year. Estimates and judgements are continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the circumstances. 

Retirement benefit obligations

The Group makes estimates about a range of long-term trends and market conditions to determine the value of the deﬁcit
on its retirement beneﬁt schemes, based on the Group’s expectations of the future and advice taken from qualiﬁed
actuaries. The principal assumptions underlying the reported deﬁcit of £5,723,000 are given in note 28.

Long-term forecasts and estimates are necessarily highly judgemental and subject to risk that actual events may be
signiﬁcantly different to those forecast. If actual events deviate from the assumptions made by the Group then the
reported surplus or deﬁcit in respect of retirement beneﬁt obligations may be materially different. The history of experience
adjustments and information on the sensitivity of the retirement beneﬁt obligation to changes in underlying estimates is set
out in note 28.

Impairment of goodwill

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The Group makes estimates in relation to the value in use of the cash generating units to which goodwill has been
allocated in determining whether goodwill is impaired. The value in use calculation requires the entity to estimate the future
cash ﬂows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value.
The carrying amount of goodwill at the balance sheet date was £47,023,000. The assumptions underlying the value in use
calculation are set out in note 19.

3
7

Share-based payments

In determining the fair value of equity settled share-based awards and the related charge to the income statement, the
Group makes assumptions about future events and market conditions. In particular, judgements must be formed as to the
likely number of shares that will vest, and the fair value of each award granted. The fair value of awards is determined using
a valuation model which is dependent on further estimates, including the Group’s future dividend policy, employee
turnover, the timing with which options will be exercised and future volatility in the price of the Group’s shares. Such
assumptions are based on publicly available information, where available, and reﬂect market expectations and advice
taken from qualiﬁed actuaries. Different assumptions about these factors to those made by the Group could materially
affect the reported value of share-based payments. The assumptions used are set out in note 29.

Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
Notes to the consolidated accounts continued

2

Critical accounting judgements and key sources of estimation and uncertainty continued

Income recognition

Revenue in the Trust and Tax business is calculated by reference to the estimated stage of completion of the service
rendered. Estimates are also made as to the recoverability of work in progress and debtors in relation to this income. 
At the year end, total work in progress and debtors for Trust and Tax services, net of related provisions for impairment,
amounted to £6,300,000, of which £4,545,000 was included within disposal groups (2007: £13,363,000).

Conversely, very little judgement is required in the recognition of income arising from the Investment Management and Unit
Trusts businesses due to the close proximity of billing dates to the year end and the inherently non-judgemental nature of
interest accrual calculations. 

3

Segmental information

a Business segments

For management purposes, the Group is currently organised into three operating divisions: Investment Management, 
Unit Trusts and Trust and Tax. These divisions are the basis on which the Group reports its primary segment information.

Transactions between the business segments are on normal commercial terms and conditions. Intra-segment income
constitutes trail commission. Revenues and expenses are allocated to the business segment that originated the
transaction. Revenues and expenses that are not directly originated by a business segment are reported as unallocated.
Centrally incurred expenses are allocated to business segments on an appropriate pro-rata basis. Segment assets and
liabilities comprise operating assets and liabilities, being the majority of the balance sheet, but exclude items such as
taxation and borrowings.

Trust and Tax Central Shared
Services
£’000

(continuing)
£’000

Total
(continuing)
£’000

Trust and Tax
(dis- 
continued)
£’000

Total
£’000

At 31 December 2008

Investment
Management
£’000

151,723 
Gross external revenues
Fee, commission and interest expense (39,130)
1,284 
Revenues from other segments

Unit Trusts
£’000

20,337 
(6,738)
(1,160)

12,439 
(8,305)
(1,771)

6,291 
(732)
(124)

5,435 
(3,711)
(1,089)

–
–
–

–
(26,390)
25,707 

113,877 
(50,589)
(22,847)

40,441 

2,363 

635 

(683)

178,351 
(46,600)
–

131,751 
(88,995)
–

18,643 
–
–

196,994 
(46,600)
–

18,643 
(16,428)
–

150,394 
(105,423)
–

42,756 
(13,489)
–

2,215 
198 
(12,680)

44,971 
(13,291)
(12,680)

29,267 

(10,267)

19,000 

1,231,678

10,611

31,125

31,220 1,304,634

5,813 1,310,447

1,076,507

5,950

17,155

22,196 1,121,808

4,008 1,125,816

11,018
4,407
1,010
298
4,622

97
72
71
–
–

196
135
145
52
–

–
–
131
–
–

11,311
4,614
1,357
350
4,622

487
529
745
–
480

11,798
5,143
2,102
350
5,102

Operating income
Operating expenses
Recharges

Profit before tax
Taxation
Impairment charge

Profit for the year

Total assets

Total liabilities

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4
7

Other segment items:
Capital expenditure
Depreciation and amortisation
Other non-cash expenses
Provisions charged in the period
Provisions utilised in the period

Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
3

Segmental information continued

a Business segments continued

At 31 December 2007 (restated – note 1)

Investment
Management
£’000

Gross external revenues
141,075
Fee, commission and interest expense (33,368)
1,606
Revenues from other segments

Unit Trusts
£’000

30,303
(9,943)
(1,606)

109,313
(47,810)
(21,411)

18,754
(10,205)
(1,669)

Trust and Tax Central Shared
Services
£’000

(continuing)
£’000

Total
(continuing)
£’000

Trust and Tax 
(dis-
continued)
£’000

Total
£’000

5,586
(470)
–

5,116
(4,011)
(1,019)

1,297
–
–

178,261
(43,781)
–

20,331
(286)
–

198,592
(44,067)
–

1,297
(25,152)
24,099

134,480
(87,178)
–

20,045
(15,123)
–

154,525
(102,301)
–

40,092

6,880

86

244

47,302
(14,212)

4,922
(632)

52,224
(14,844)

33,090

4,290

37,380

1,115,899

27,837

19,828

23,165 1,186,729

39,894 1,226,623

974,760

21,390

13,121

27,261 1,036,532

5,341 1,041,873

Operating income
Operating expenses
Recharges

Profit before tax
Taxation

Profit for the year

Total assets

Total liabilities

Other segment items:
Capital expenditure
Depreciation and amortisation
Other non-cash expenses
Provisions charged in the period
Provisions utilised in the period

9,043
3,711
1,852
1,080
5,512

262
148
256
–
–

593
290
159
58
121

–
–
406
–
–

9,898
4,149
2,673
1,138
5,633

319
574
149
853
801

10,217
4,723
2,822
1,991
6,434

Unallocated external revenues comprise gains on disposal of available for sale securities.

b  Geographical segments

During 2008, the Group’s operations were located in the United Kingdom, Jersey, Switzerland, the British Virgin Islands
and Singapore. The following table provides an analysis of the Group’s revenues by geographical market, by origin 
of the services:

Total gross revenues by geographical market

United Kingdom
Jersey
Rest of the world

2008
£’000

170,924
17,581
8,489

196,994

2007
£’000

171,556
21,686
5,350

198,592

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The following is an analysis of the carrying amount of segment assets, and additions to property, plant and equipment and
intangible assets, analysed by the geographical area in which the assets are located:

5
7

Assets allocated to business segments

United Kingdom
Jersey
Rest of the world

Rathbone Brothers Plc Report and accounts 2008

2008
£’000

1,245,186
8,070
25,971

1,279,227

2007
£’000

1,145,684
37,123
20,651

1,203,458

 
 
 
 
Notes to the consolidated accounts continued

3

Segmental information continued

b  Geographical segments continued

Additions to property, plant and equipment and intangible assets

United Kingdom
Jersey
Rest of the world

c 

Total gross revenues

Interest and similar income
Fee and commission income
Dividend income
Net trading income
Net income from sale of available for sale securities
Other operating income
Discontinued operations

Total gross revenues
Interest expense and similar charges
Fee and commission expense
Discontinued operations

Total operating income (including discontinued operations)

4  Business combinations

2008
£’000

11,297
445
70

11,812

2008
£’000

69,095
106,656
134
480
–
1,986
18,643

196,994 
(38,035)
(8,565)
–

150,394

2007
£’000

9,790
301
126

10,217

2007
£’000
restated (note 1)

51,573
122,130
67
1,676
1,297
1,518
20,331

198,592
(32,282)
(11,499)
(286)

154,525

On 1 April 2008, the Group acquired the entire share capital of Citywall Financial Management Limited for cash
consideration of £1,214,000. Contingent, deferred consideration is also payable dependent on the value of discretionary
funds under management introduced by the business at 5 April 2009 and 30 September 2009. The acquired business’ net
assets at the acquisition date were as follows:

Cash and cash equivalents
Other current assets
Property, plant and equipment
Client relationships
Current liabilities

Net identifiable assets acquired

Goodwill on acquisition

Purchase consideration

Recognised 

Fair value
values adjustments
£’000
£’000

Carrying
amounts
£’000

–
–
–
565
–

565

480
115
10
–
(225)

380

480
115
10
565
(225)

945

664

1,609

Included within the Consolidated income statement for the year is a loss before tax, including acquisition costs, of
£62,000 relating to the acquired business. If the business had been acquired on 1 January 2008, consolidated operating
income from continuing operations would have been £131,986,000 and consolidated profit before income tax from
continuing operations would have been £42,779,000.

The goodwill arising on the acquisition is attributable to the anticipated profitability of incorporating the business into the
Group’s operating model.

Rathbone Brothers Plc Report and accounts 2008

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6
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5  Net interest income

Interest income

Investment securities
Other

Interest expense

Banks and customers

6  Net fee and commission income

Fee and commission income

Investment Management
Unit Trusts
Trust and Tax

Fee and commission expense

Investment Management
Unit Trusts

7  Dividend income

2008
£’000

48,937
20,158

69,095

2008
£’000

38,035

2008
£’000

83,168
18,589
4,899

2007
£’000
restated (note 1)

34,327
17,246

51,573

2007
£’000
restated (note 1)

32,282

2007
£’000
restated (note 1)

90,166
27,057
4,907

106,656

122,130

2008
£’000

1,827
6,738

8,565

2007
£’000

1,559
9,940

11,499

Dividend income comprises income from available for sale equity securities of £134,000 (2007: £67,000).

8  Net trading income

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Unit Trusts net dealing profits
Increase/(decrease) in value of derivative financial instruments (note 24)

2008
£’000

458
22

480

7
7

2007
£’000

1,721
(45)

1,676

Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
Notes to the consolidated accounts continued

9  Operating expenses

Staff costs (note 10)
Depreciation of property, plant and equipment (note 20)
Amortisation of internally generated intangible assets included 
in operating expenses (note 19)
Amortisation of purchased intangible assets included 
in operating expenses (note 19)
Auditor’s remuneration (see below)
Impairment losses on loans and advances (note 17)
Operating lease rentals
Other 

Other operating expenses
Additional levy for Financial Services Compensation Scheme(i)

Total operating expenses

2008
£’000

57,859
2,122

276

2,216
525
58
4,173
20,362

87,591
1,404

88,995

2007
£’000
restated (note 1)

59,378
2,161

228

1,760
550
–
3,572
19,529

87,178
–

87,178

(i) The recent arrangements put in place by the Financial Services Compensation Scheme (‘FSCS’) to protect the

depositors of Bradford & Bingley and other failed deposit-taking institutions will result in a significant increase in the
levies made by the FSCS on the industry. The Group has accrued £1.4 million in 2008 in respect of its share of the cost
of FSCS borrowings; this additional charge is expected to be billed as part of the 2008/9 and 2009/10 levy years.
Further charges are likely to be incurred in future years although the ultimate cost remains uncertain (note 33).

A more detailed analysis of auditor’s remuneration is provided below:

Fees payable to the Company’s auditor for the audit of the Company’s 
annual accounts
Fees payable to the Company’s auditor and their associates for other 
services to the Group:
– audit of the Company’s subsidiaries pursuant to legislation
– other services pursuant to legislation
– tax services
– other services

Total auditor’s remuneration for continuing operations
Discontinued operations

Total

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8
7

10  Staff costs

Wages and salaries
Social security costs
Share based payments
Pension costs (note 28):

– defined benefit schemes
– defined contribution schemes

Rathbone Brothers Plc Report and accounts 2008

2008
£’000

127

248
95
23
32

525
77

602

2008
£’000

48,165
5,472
1,299

1,942
981

2,923

57,859

2007
£’000
restated (note 1)

122

228
94
–
106

550
114

664

2007
£’000
restated (note 1)

47,708
5,686
2,692

2,554
738

3,292

59,378

 
 
 
 
10  Staff costs continued

The average number of employees during the year was as follows:

Investment Management
Unit Trusts
Trust and Tax
Central Shared Services

Continuing operations
Discontinued operations

11  Income tax expense

Current tax
Adjustments in respect of previous years
Deferred tax (note 21)

2008

438
31
43
172

684
126

810

2007
restated (note 1)

409
31
47
157

644
150

794

2008
£’000

11,434
(178)
2,233

13,489

2007
£’000
restated (note 1)

11,942
(32)
2,302

14,212

The tax charge on profit from continuing operations for the year is higher (2007: higher) than the standard rate of
corporation tax in the UK of 28.5% (2007: 30%). The differences are explained below:

Tax on profit from ordinary activities at the standard rate of 28.5% (2007 – 30%)
Effects of:
Disallowable expenses
Share-based payments
Tax on overseas earnings
Underprovision for tax in previous years
Effect of change in corporation tax rate

2008
£’000

12,185

388
273
64
579
–

2007
£’000
restated (note 1)

14,190

596
(854)
(311)
45
546

Income tax expense

13,489

14,212

In addition to the amount charged to the income statement, deferred tax relating to actuarial gains and losses, 
share-based payments and gains and losses arising on available for sale investment securities amounting to £605,000
has been credited directly to equity (2007: £635,000 credited to equity).

The standard rate of corporation tax in the UK applicable for the accounting year ended 31 December 2008 takes
account of the reduction in the UK tax rate to 28% from 30% effective on 6 April 2008.

12  Disposal groups and discontinued operations

On 17 July 2008, the Group announced its intention to exit its international trust businesses.

On 15 October 2008 the Group disposed of its subsidiaries Rathbone Trust Company Jersey Limited and Rathbone
Jersey Limited. On 10 February 2009, the Group disposed of its subsidiary Rathbone Trust Company SA.

On 30 January 2009, agreement was reached regarding the sale of Rathbone Trust (Singapore) Pte. Limited and non-
binding heads of terms were signed with the management of Rathbone Trust Company (BVI) Limited. The sales of these
companies have conditions precedent that remain unfulfilled. 

Rathbone Brothers Plc Report and accounts 2008

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9
7

 
 
 
 
Notes to the consolidated accounts continued

12  Disposal groups and discontinued operations continued

The results of the discontinued operations, which have been included in the consolidated income statement, were 
as follows:

Operating income
Operating expenses

Profit before tax from discontinued operations
Attributable tax credit/(expense)

Profit after tax from discontinued operations

Loss recognised on remeasurement of assets of the disposal group
Attributable tax expense

Loss from discontinued operations

2008
£’000

18,643
(16,428)

2,215
198

2,413

(12,680)
–

(10,267)

2007
£’000

20,045
(15,123)

4,922
(632)

4,290

–
–

4,290

The operations of these businesses are included within Trust and Tax in the segmental analysis in note 3.

The major classes of assets and liabilities comprising the operations classified as held for sale are as follows:

Cash and balances at central banks
Loans and advances to banks
Loans and advances to customers
Intangible assets
Property, plant and equipment
Prepayments, accrued income and other assets

Non-current assets held for sale

Accruals, deferred income, provisions and other liabilities

Non-current liabilities held for sale

Net assets of the disposal group

13  Dividends

 Amounts recognised as distributions to equity holders in the year:
– final dividend for the year ended 31 December 2007 
of 25.0p (2006: 21.5p) per share
– interim dividend for the year ended 31 December 2008 
of 16.0p (2007: 16.0p) per share

Proposed final dividend for the year ended 31 December 2008 
of 26.0p (2007: 25.0p) per share

2008
£’000

21
790
4,153
46
148
655

5,813

4,008

4,008

1,805

2008
£’000

2007
£’000

10,662

6,841

17,503

9,107

6,807

15,914

11,143

10,672

The interim dividend of 16.0p per share was paid on 8 October 2008 to shareholders on the register at the close of
business on 19 September 2008.

The final dividend declared of 26.0p per share is payable on 13 May 2009 to shareholders on the register at the close of
business on 17 April 2009. The final dividend is subject to approval by shareholders at the Annual General Meeting and
has not been included as a liability in these financial statements.

Rathbone Brothers Plc Report and accounts 2008

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0
8

 
 
 
 
14 Earnings per share

Basic earnings per share has been calculated by dividing the proﬁts attributable to shareholders of £19,000,000 
(2007: £37,380,000) by the weighted average number of shares in issue throughout the year of 42,745,197 
(2007: 42,536,821).

Diluted earnings per share is the basic earnings per share, adjusted for the effect of contingently issuable shares under
the Long Term Incentive Plan, employee share options remaining capable of exercise and any dilutive shares to be issued
under the Share Incentive Plan, weighted for the relevant period (see table below).

Weighted average number of ordinary shares in issue during the year – basic
Effect of ordinary share options
Effect of dilutive shares issuable under the Share Incentive Plan
Effect of contingently issuable ordinary shares under the Long Term Incentive Plan

2008

2007

42,745,197
172,845
7,998
172,823

42,536,821
461,167
85,535
148,431

Diluted weighted average number of ordinary shares

43,098,863

43,231,954

Earnings per share from discontinued operations and underlying earnings per share were as follows.

Earnings per share from discontinued operations for the year 
attributable to equity holders of the Company:
Basic (p)
Diluted (p)
Underlying earnings per share from continuing operations for the 
year attributable to equity holders of the Company:
Basic (p)
Diluted (p)

2008

2007

(24.02)p
(23.82)p

70.81p
70.23p

10.09p
9.92p

75.66p
74.44p

Underlying earnings per share has been calculated with reference to the proﬁts after tax from continuing operations,
excluding the post-tax charge arising from the additional levy for the Financial Services Compensation Scheme of
£1,004,000 (2007: £nil) and post-tax gains on disposal of London Stock Exchange Plc shares of £nil (2007: £908,000).

15 Cash and balances at central banks

Cash in hand (note 35)
Mandatory reserve deposits

2008
£’000

3
348

351

2007
£’000

4
271

275

Mandatory reserve deposits, which are held with central banks, are not available for use in the Group’s day to day
operations. Cash in hand, balances with central banks and mandatory reserve deposits are non-interest bearing.

Rathbone Brothers Plc Report and accounts 2008

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1
8

 
 
 
 
Notes to the consolidated accounts continued

16  Loans and advances to banks

Repayable:
– on demand or at short notice
– 3 months or less excluding on demand or at short notice
– 1 year or less but over 3 months

Amounts include loans with:
– variable interest rates
– fixed interest rates
– non interest bearing

2008
£’000

2007
£’000

25,900
150,073
–

175,973

27,188
148,614
171

175,973

101,774
143,329
5,000

250,103

38,794
211,014
295

250,103

The fair value of loans and advances is not materially different to their carrying amount. Fair value has been calculated 
as the discounted amount of estimated future cash flows expected to be received using current market rates.

Loans and advances to banks included in cash and cash equivalents at 31 December 2008 were £175,227,000 
(2007: £214,216,000).

The Group’s exposure to credit risk arising from loans and advances to banks is described in note 31.

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2
8

Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
17  Loans and advances to customers

Repayable:
– on demand or at short notice
– 3 months or less excluding on demand or at short notice
– 1 year or less but over 3 months
– 5 years or less but over 1 year
– over 5 years
Less: allowance for losses on loans and advances

Amounts include loans with:
– variable interest rates
– fixed interest rates
– non interest bearing

2008
£’000

11,243
5,883
14,823
7,155
483
(175)

39,412

25,695
5,887
7,830

39,412

2007
£’000

20,402
11,268
7,835
514
–
(639)

39,380

21,510
4,918
12,952

39,380

The fair value of loans and advances is not materially different from their carrying amount. Fair value has been calculated as
the discounted amount of estimated future cash flows expected to be received using current market rates. Debtors arising
from the Group’s trust and pensions advisory activities are non interest bearing.

No banking loans and advances to customers were impaired as at 31 December 2008 (2007: none impaired). The
allowance for losses on loans and advances relate to debtors for trust and pension services. The total debtors in relation
to trust and pension services included in loans and advances to customers as at 31 December 2008 amount to
£1,021,000 (2007: £11,034,000).

Included within loans and advances to customers repayable within 5 years but after more than 1 year are vendor loan
notes (‘notes’) with a nominal value of £5,000,000 that were issued on disposal of the Company’s holding of two
subsidiaries (see note 12) under a management buy-out (MBO). The notes are repayable on the occurrence of certain
events, principally the refinancing of the businesses disposed of under the MBO.

The notes bear no interest for three years from issue. Interest is then receivable at the Bank of England base rate on half of
the notes’ nominal value (currently £2,500,000) for the following two years. Thereafter, interest is receivable on the notes’
full nominal value at the Bank of England base rate. The carrying value of the notes has been discounted to £3,268,000 
at 31 December 2008 and interest income is recognised over the expected life of the notes under the effective interest
rate method.

Allowance for losses on loans and advances

At 1 January
Exchange rate adjustment
Amounts written off
Charge to the income statement
– continuing operations
– discontinued operations
Transferred on disposal of business
Transferred to non-current assets held for sale

At 31 December

2008
£’000

639
130
(350)

58
732
(427)
(607)

175

2007
£’000

690
13
(194)

–
130
–
–

639

The Group’s exposure to credit risk arising from loans and advances to customers is described in note 31.

Rathbone Brothers Plc Report and accounts 2008

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3
8

 
 
 
 
Notes to the consolidated accounts continued

18  Investment securities

Available for sale securities

Equity securities – at fair value:
– listed
– unlisted
Money market funds
– unlisted

Held to maturity securities

Debt securities – at amortised cost:
– listed
– unlisted

Maturity of debt securities

Due within 1 year
Due after more than 1 year

2008
£’000

1,529
1,462

79,000

81,991

2008
£’000

1,001
873,978

874,979

2008
£’000

849,979
25,000

874,979

2007
£’000

5,934
1,014

–

6,948

2007
£’000

10,061
755,213

765,274

2007
£’000

765,274
–

765,274

Debt securities comprise bank and building society certificates of deposit, Gilts and treasury bills. Certificates of deposit
and Gilts have fixed coupons. Treasury bills are non interest bearing. The fair value of debt securities at 31 December
2008 was £894,968,000 (2007: £780,444,000). Fair value for held to maturity assets is based on market bid prices.

Available for sale securities include money market funds and direct holdings in equity securities. Equity securities do not
bear interest. Money market funds, which declare daily dividends that are in the nature of interest at a variable rate and
which are realisable on demand, have been included within cash equivalents (note 35).

The Group has not reclassified any financial asset from being measured at amortised cost to being measured at fair value
through profit and loss during the year (2007: none reclassified). The Group has not designated at initial recognition any
financial asset as at fair value through profit or loss.

Realised gains on disposal of available for sale securities in the year were £nil (2007: £1,297,000, arising from the sale of
100,000 shares of London Stock Exchange Group Plc). The Group continues to hold 300,000 shares in London Stock
Exchange Group Plc.

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4
8

The movement in investment securities may be summarised as follows:

At 1 January 2007
Exchange rate adjustment
Additions
Disposals (sale and redemption)
Gain from changes in fair value

At 1 January 2008
Additions
Disposals (sale and redemption)
Loss from changes in fair value

At 31 December 2008

Rathbone Brothers Plc Report and accounts 2008

Available for sale
£’000

Held to maturity 
£’000

6,152
24
–
(1,297)
2,069

6,948
369,000
(290,000)
(3,957)

558,368
–
1,276,420
(1,069,514)
–

765,274
2,545,080
(2,435,375)
–

Total
£’000

564,520
24
1,276,420
(1,070,811)
2,069

772,222
2,914,080
(2,725,375)
(3,957)

81,991

874,979

956,970

 
 
 
 
19  Intangible assets

Goodwill
Other intangible assets

Goodwill

Cost
At 1 January
Exchange rate adjustment
Adjustment to goodwill
Transferred to assets held for sale
Additions
Disposals

Accumulated impairment losses
At 1 January
Impairment charge recognised in the year
Transferred to assets held for sale

2008
£’000

47,023
21,209

68,232

2007
£’000

70,536
15,198

85,734

2008
£’000

2007
£’000

70,536
247
–
(887)
677
(23,550)

47,023

–
887
(887)

–

69,965
20
(17)
–
568
–

70,536

–
–
–

–

Net carrying amount of goodwill at 31 December

47,023

70,536

Additions to goodwill include £664,000 arising on the acquisition of Citywall Financial Management Limited (see
note 4) and £13,000 of additional deferred consideration paid following the acquisition of Rathbone Trust Singapore Pte.
Limited on 2 April 2007.

The net book value of goodwill transferred to assets held-for-sale was £nil (note12). 

Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are
expected to benefit from that business combination. The carrying amount of goodwill had been allocated as follows:

Investment Management
Trust and Tax (UK)
Trust and Tax (Jersey)
Trust and Tax (Rest of the World)

2008
£’000

45,069
1,954
–
–

47,023

2007
£’000

44,405
1,954
23,550
627

70,536

The recoverable amounts of goodwill allocated to the CGUs are determined from value in use calculations. The key
assumptions for the value in use calculations are those regarding the discount rates and growth rates during the period.
Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of
money and the risks specific to the CGUs. The growth rates are based on industry growth forecasts. The Group prepares
cash flow forecasts derived from the most recent financial budgets approved by management, covering the forthcoming
year, extrapolated based on a medium to long term growth rate of 2% (2007: 3%). The pre-tax rate used to discount the
forecast cash flows is 11.50% (2007: 10.55%).

Rathbone Brothers Plc Report and accounts 2008

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5
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Notes to the consolidated accounts continued

19  Intangible assets continued

Other intangible assets

Cost
At 1 January 2007
Exchange adjustment
Internally developed in year
Purchased in year
Acquired through business combinations

At 31 December 2007
Exchange adjustment
Internally developed in year
Purchased in year
Acquired through business combinations (note 4)
Disposals
Transferred to non-current assets held for sale (note 12)

At 31 December 2008

Amortisation
At 1 January 2007
Charge for the year
– continuing
– discontinued

At 31 December 2007
Charge for the year
– continuing
– discontinued
Disposals
Transferred to non-current assets held for sale (note 12)

Software 
Acquired client  development
costs
£’000

relationships
£’000

Purchased
software
£’000

Total
£’000

10,023
4
–
4,261
93

14,381
(8)
–
6,317
565
–
(87)

1,100
–
325
–
–

1,425
–
433
–
–
–
–

8,125
–
–
1,235
–

9,360
–
–
1,268
–
(46)
–

19,248
4
325
5,496
93

25,166
(8)
433
7,585
565
(46)
(87)

21,168

1,858

10,582

33,608

507

643

6,815

7,965

974
15

1,496

1,310
26
–
(41)

228
–

871

276
–
–
–

786
–

1,988
15

7,601

9,968

906
–
(46)
–

2,492
26
(46)
(41)

At 31 December 2008

2,791

1,147

8,461

12,399

Carrying amount at 31 December 2008

18,377

711

2,121

21,209

Carrying amount at 31 December 2007

Carrying amount at 1 January 2007

12,885

9,516

554

457

1,759

15,198

1,310

11,283

Purchased software with a cost of £6,756,000 (2007: £5,948,000) has been fully amortised but is still in use.

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Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
20  Property, plant and equipment

Cost
At 1 January 2007
Exchange adjustments
Additions
Acquired through business combinations
Disposals

At 31 December 2007
Exchange adjustment
Additions
Acquired through business combinations (note 4)
Transferred to non-current assets held for sale (note 12)
Disposals

At 31 December 2008

Depreciation
At 1 January 2007
Exchange adjustments
Charge for the year
– continuing
– discontinued
Disposals

At 31 December 2007
Exchange adjustments
Charge for the year
– continuing
– discontinued
Acquired through business combinations
Transferred to non-current assets held for sale (note 12)
Disposals

At 31 December 2008

Carrying amount at 31 December 2008

Carrying amount at 31 December 2007

Carrying amount at 1 January 2007

Short term 
leasehold 
property
£’000

5,184
7
2,429
–
(245)

7,375
74
1,415
–
(245)
(1,982)

6,637

2,020
4

882
38
(243)

2,701
56

697
72
–
(198)
(407)

2,921

3,716

4,674

3,164

Plant and
equipment
£’000

17,439
44
1,967
9
(4,776)

14,683
454
2,365
116
(1,541)
(2,442)

13,635

14,140
38

1,279
521
(4,752)

11,226
419

1,425
431
106
(1,440)
(1,632)

10,535

3,100

3,457

3,299

Total
£’000

22,623
51
4,396
9
(5,021)

22,058
528
3,780
116
(1,786)
(4,424)

20,272

16,160
42

2,161
559
(4,995)

13,927
475

2,122
503
106
(1,638)
(2,039)

13,456

6,816

8,131

6,463

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All property included above is occupied by the Group for its own activities. The fair value of property, plant and 
equipment is not materially different from its carrying value.

7
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Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
Notes to the consolidated accounts continued

21  Deferred tax asset

Deferred income taxes are calculated on all temporary differences under the liability method using an effective tax rate 
of 28% (2007: 28%).

The movement on the deferred tax account is as follows:

`

At 1 January
Adjustments in respect of prior years:
– charged to the income statement
– (charged)/credited directly to equity
Other movements in deferred tax:
– amounts charged to the income statement
– actuarial gains and losses
– share based payments
– available for sale securities:
– fair value measurement
– transfer to net profit

Effect of change in corporation tax rate on deferred tax:
– charged to the income statement
– credited directly to equity
Disposals

At 31 December

Deferred tax assets

Excess of depreciation
Share based payments
Staff related costs
Pensions
Deferred income

Deferred tax liabilities

Available for sale securities
Intangible assets
Unremitted overseas earnings

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8
8

The deferred tax charge in the income statement comprises the following temporary differences:

Excess of depreciation
Share based payments
Staff related costs
Pensions
Unremitted overseas earnings
Intangible assets
Other provisions
Effect of change in corporation tax rate

Discontinued operations

Rathbone Brothers Plc Report and accounts 2008

2008
£’000

(489)
661
754
217
339
678
73
–

2,233
(490)

1,743

2008
£’000

3,528

(87)
(419)

(1,656)
12
(96)

1,108
–

–
–
93

2007
£’000

5,321

(4)
160

(1,977)
(75)
588

(621)
389

(447)
194
–

2,483

3,528

2008
£’000

709
658
1,627
1,602
396

4,992

2008
£’000

824
1,346
339

2,509

2007
£’000

220
1,833
2,381
1,807
461

6,702

2007
£’000

1,926
848
400

3,174

2007
£’000
restated (note 1)

854
117
(449)
1,131
–
136
(34)
547

2,302
126

2,428

 
 
 
 
21  Deferred tax asset continued

Deferred income tax liabilities of £684,000 (2007: £554,000) have not been recognised in respect of unremitted
earnings of certain subsidiaries as such amounts are not expected to be remitted to the UK. Unremitted earnings totalled
£3,804,000 at 31 December 2008 (2007: £3,080,000).

22  Prepayments, accrued income and other assets

Trust work in progress
Prepayments
Accrued income

23  Deposits by banks

2008
£’000

664
5,475
32,507

38,646

2007
£’000

3,661
9,629
32,387

45,677

The Group has drawn down £9,201,000 (2007: £12,267,000) of an unsecured term loan which is repayable in six 
six-monthly instalments ending on 4 April 2011. Interest is payable on the loan at 0.7% above the London Inter-Bank Offer
Rate. At 31 December 2007, deposits by banks also included short term overdraft balances totalling £193,000.

The fair value of deposits by banks was not materially different from the carrying value. Fair value has been calculated as
the discounted amount of estimated future cash flows expected to be paid using current market rates.

24  Derivative ﬁnancial instruments

From time to time, the Group uses over the counter Forward Rate Agreements (FRAs) to manage its net exposure to
interest rate risk. The Group’s interest in these contracts does not meet the requirements of IAS 39 to qualify for hedge
accounting.

No FRAs were outstanding at 31 December 2008 (2007: FRAs with a nominal value of £10,000,000). The total liability
recognised in relation to contracts with a negative fair value at 31 December 2008 was £nil (2007: £22,000) (note 26).

25 Due to customers

Repayable:
– on demand or at short notice
– 3 months or less excluding on demand or at short notice
– 1 year or less but over 3 months
– 5 years or less but over 1 year

Amounts include:
– variable interest rates
– fixed interest rates
– non interest bearing

2008
£’000

2007
£’000

677,056
349,751
13,656
3,888

1,044,351

639,197
394,678
10,476

1,044,351

639,880
305,381
1,302
45

946,608

554,640
382,931
9,037

946,608

The fair value of amounts due to customers was not materially different from their carrying value. The estimated fair value of
deposits with no stated maturity, which includes non interest bearing deposits, is the amount repayable on demand. The
estimated fair value of fixed-interest bearing deposits is based on discounted cash flows using interest rates for new debts
with similar remaining maturity.

Rathbone Brothers Plc Report and accounts 2008

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Notes to the consolidated accounts continued

26 Accruals, deferred income, provisions and other liabilities

Creditors
Derivative financial instruments (note 24)
Accruals and deferred income
Other provisions (note 27)

2008
£’000

8,295
–
25,191
8,964

42,450

2007
£’000

10,097
22
31,359
8,159

49,637

On 5 November 2008, Rathbone Unit Trust Management Limited, a subsidiary of the Group, issued 22,225 ‘B’ Shares.
The ‘B’ Shares entitle the holder to require another subsidiary of the Group to purchase the ‘B’ Shares at a value
determined with reference to the growth in value of Rathbone Unit Trust Management Limited, compared to its value 
at 31 December 2007. At 31 December 2008, £65,000 was included in Creditors, representing the estimated present
value of the future liability. The fair value of the ‘B’ Shares will be updated at each reporting date with changes in value
being taken to profit or loss.

27 Other provisions

At 1 January 2008
Exchange adjustments

Charged to the income statement – continuing
Unused amount credited to the income statement – continuing

Net credit to the income statement(i)
Capitalised during the year(ii)
Utilised/paid during the year
Transferred to non-current liabilities held for sale (note 12)
Transferred on disposal of business

At 31 December 2008

Current
Non-current

Deferred 
contingent 
consideration
£’000

Client
compensation 
and other
£’000

Litigation
related
£’000

5,843
–

–
–

–
6,712
(4,628)
–
–

7,927

5,705
2,222

7,927

1,975
35

298
(940)

(642)
–
(210)
(76)
(75)

1,007

1,007
–

1,007

341
8

52
–

52
–
(264)
(13)
(94)

30

30
–

30

Total
£’000

8,159
43

350
(940)

(590)
6,712
(5,102)
(89)
(169)

8,964

6,742
2,222

8,964

(i)

In addition to the net credit of £590,000 (2007: charge on continuing operations of £1,184,000) to the income
statement in the above table, a net charge of £nil (2007: credit from continuing operations of £119,000) has been
recognised in the income statement during the period in relation to expected insurance recoveries resulting in 
a net credit to the income statement for other provisions of £590,000 (2007: charge on continuing operations 
 of £1,065,000).

(ii) Amounts capitalised during the period comprise £395,000 deferred consideration in relation to the acquisition of

Citywall Financial Management Limited (see note 4) and £6,317,000 in relation to deferred payments to investment
managers under earn-out schemes. The amount of the deferred consideration arising on earn-out schemes is
contingent on the value of funds attracted and is payable in cash.

At 31 December 2008, anticipated insurance recoverables relating to client compensation and litigation related
provisions of £450,000 (2007: £477,000) were included within other assets.

In the ordinary course of business, the Group receives complaints from clients in relation to the services provided.
Complaints are assessed on a case by case basis and provisions for compensation are made where judged necessary.

Provisions have also been made in relation to a number of cases where legal proceedings are expected to result in loss to 
the Group.

Rathbone Brothers Plc Report and accounts 2008

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0
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28 Long term employee beneﬁts

The Group operates a defined contribution group personal pension scheme and contributes to various other personal
pension arrangements for certain directors and employees. The total of contributions made to this scheme during the year
was £952,000 (2007: £697,000). The Group also operates defined contribution schemes for overseas employees, for
which the total contributions were £518,000 (2007: £581,000) of which £489,000 relates to discontinued operations
(2007: £540,000).

The Group operates two funded pension schemes providing benefits based on final pensionable pay for executive
directors and staff employed by the Company in the UK (the Rathbone 1987 Scheme and the Laurence Keen Scheme).
The schemes are currently both clients of Rathbone Investment Management Limited, with investments managed on a
discretionary basis, in accordance with the statement of investment principles agreed by the trustees. Scheme assets 
are held separately from those of the Group.

The trustees of the fund are required to act in the best interest of the fund’s beneficiaries. The appointment of trustees to
the fund is determined by the schemes’ trust documentation and legislation. The Group has a policy that one third of all
trustees should be nominated by members of the fund.

The scheme operated by Rathbone Stockbrokers Limited (the Laurence Keen Scheme) was closed to new entrants 
and future pension accrual for the current membership with effect from 1 October 1999. As from that date all the active
members of the Laurence Keen Scheme were included under the Rathbone 1987 Scheme for accrual of retirement
benefits for further service. The Rathbone 1987 Scheme was closed to new entrants with effect from 31 March 2002.
Both schemes continue on a closed basis with the existing assets remaining invested thereunder.

The Group provides death in service benefits to all employees through the 1987 pension scheme. Third party insurance 
is purchased for the benefits where available and £864,000 of related insurance premia were expensed to the income
statement in the year (2007: £624,000). The estimated present value of the uninsured death in service benefits is
included in long term employee benefits liabilities.

The schemes are valued by independent actuaries every three years using the projected unit credit method which 
looks at the value of benefits accruing over the years following the valuation date based on projected salary to the date 
of termination of services, discounted to a present value using a rate that reflects the characteristics of the liability. 
The valuations are updated at each balance sheet date in between full valuations. The latest full actuarial valuations were
carried out as follows:

Rathbone 1987 Scheme
Laurence Keen Scheme

31 December 2007
31 December 2005

The assumptions used by the actuaries are the best estimates chosen from a range of possible actuarial assumptions
which, due to the timescale covered, by the liability, may not necessarily be borne out in practice. The principal actuarial
assumptions used, which reflect the different membership profiles of the schemes, were:

Rate of increase in salaries
Rate of increase in pensions in payment
Rate of increase in deferred pensions
Discount rate
Expected return on scheme assets
Inflation assumption

* 5% for service prior to April 2001

2008
Laurence Keen Scheme % 

2008
Laurence Keen Scheme % Rathbone 1987 Scheme %

2007

2007
Rathbone 1987 Scheme %

4.05
3.40
2.80
6.15
5.30
2.80

4.55
*3.60
3.30
5.70
6.10
3.30

4.05
2.80
2.80
6.15
6.40
2.80

4.55
*3.20
3.30
5.70
7.10
3.30

The assumed duration of the liabilities for both schemes is 25 years (2007: 25 years). The overall expected return
on scheme assets is a weighted average of the returns expected on each class of asset held by the scheme, as
disclosed below.

Normal retirement age is 65 for members of the Laurence Keen Scheme and 60 for members of the Rathbone 1987
Scheme. The assumed life expectancy for the membership of both schemes is based on the PA00 actuarial tables. In
2008, the assumption for life expectancy was updated to take account of recent and expected future improvements in life
expectancy by using the ‘Medium Cohort’ projection, with a 0.75% underpin for males and a 0.5% underpin for females.
The assumed life expectations on retirement were:

Rathbone Brothers Plc Report and accounts 2008

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1
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Notes to the consolidated accounts continued

28 Long term employee beneﬁts continued

Retiring today

– aged 60
– aged 65
Retiring in 20 years – aged 60
– aged 65

2008
Males

26.7
21.9
28.4
23.5

2008 
Females

29.0
24.1
30.3
25.3

2007
Males

24.7
20.0
25.9
21.1

2007
Females

27.7
22.9
28.7
23.9

The amount included in the balance sheet arising from the Group’s obligations in respect of the schemes is as follows:

Present value of defined benefit obligations
Fair value of scheme assets

Deficit in schemes
Death in service benefit reserve (unfunded)

2008 
Laurence 
Keen 
Scheme
£’000

2008
Rathbone
1987 
Scheme
£’000

2007 
Laurence 
Keen 
Scheme
£’000

2007 
Rathbone 
1987 
Scheme
£’000

2008
Total
£’000

2007
Total
£’000

(9,750)
8,760

(54,243)
50,551

(63,993) (10,301)
59,311
9,708

(60,274)
54,415

(70,575)
64,123

(990)
–

(3,692)
(1,041)

(4,682)
(1,041)

(593)
–

(5,859)
–

(6,452)
–

Total deficit

(990)

(4,733)

(5,723)

(593)

(5,859)

(6,452)

The amounts recognised in the income statement, within operating expenses, are as follows:

Current service cost
Interest cost
Expected return on scheme assets

2008 
Laurence 
Keen 
Scheme
£’000

2008
Rathbone
1987 
Scheme
£’000

2008
Total
£’000

–
579
(615)

2,556
3,435
(4,013)

2,556
4,014
(4,628)

2007 
Laurence 
Keen 
Scheme
£’000

–
532
(551)

2007 
Rathbone 
1987 
Scheme
£’000

3,083
2,897
(3,407)

2007
Total
£’000

3,083
3,429
(3,958)

(36)

1,978

1,942

(19)

2,573

2,554

Actuarial gains and losses have been reported in the statement of recognised income and expense. The actual return on
scheme assets was a fall in value of £1,100,000 (2007: £621,000 increase in value) for the Laurence Keen Scheme and
a fall in value of £7,750,000 (2007: £3,317,000 increase in value) for the Rathbone 1987 Scheme.

The cumulative actuarial gains and losses reported in the statement of recognised income and expense since the adoption
of IFRS is as follows:

At 1 January
Actuarial (losses)/gains recognised in the year

2
9

At 31 December

2008 
Laurence 
Keen 
Scheme
£’000

2008
Rathbone
1987 
Scheme
£’000

593
(888)

(295)

123
844

967

2007 
Laurence 
Keen 
Scheme
£’000

2007 
Rathbone 
1987 
Scheme
£’000

245
348

593

201
(78)

123

2008
Total
£’000

716
(44)

672

2007
Total
£’000

446
270

716

Movements in the present value of defined benefit obligations were as follows:

2008 
Laurence 
Keen 
Scheme
£’000

10,301
–
579
–
(827)
(303)

2008
Rathbone
1987 
Scheme
£’000

60,274
2,556
3,435
1,267
(11,521)
(727)

2008
Total
£’000

70,575
2,556
4,014
1,267
(12,348)
(1,030)

2007 
Laurence 
Keen 
Scheme
£’000

10,423
–
532
–
(278)
(376)

2007 
Rathbone 
1987 
Scheme
£’000

53,982
3,083
2,897
1,030
(12)
(706)

2007
Total
£’000

64,405
3,083
3,429
1,030
(290)
(1,082)

9,750

55,284

65,034

10,301

60,274

70,575

At 1 January
Service cost (employer’s part)
Interest cost
Contributions from members
Actuarial gains
Benefits paid

At 31 December

Rathbone Brothers Plc Report and accounts 2008

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28 Long term employee beneﬁts continued

Movements in the fair value of scheme assets were as follows:

At 1 January
Expected return on scheme assets
Actuarial gains/(losses)
Contributions from the sponsoring companies
Contributions from scheme members
Benefits paid

2008 
Laurence 
Keen 
Scheme
£’000

9,708
615
(1,715)
455
–
(303)

2008
Rathbone
1987 
Scheme
£’000

54,415
4,013
(10,677)
2,260
1,267
(727)

2008
Total
£’000

64,123
4,628
(12,392)
2,715
1,267
(1,030)

2007 
Laurence 
Keen 
Scheme
£’000

8,996
551
70
467
–
(376)

2007 
Rathbone 
1987 
Scheme
£’000

44,646
3,407
(90)
6,128
1,030
(706)

2007
Total
£’000

53,642
3,958
(20)
6,595
1,030
(1,082)

At 31 December

8,760

50,551

59,311

9,708

54,415

64,123

The analysis of the scheme assets, measured at bid prices, and expected rates of return on those assets at the balance
sheet date was as follows:

Laurence Keen Scheme

Equity instruments
Debt instruments
Cash

Rathbone 1987 Scheme

Equity instruments
Debt instruments
Interest rate swap funds
Cash

1.1.08
Expected 
return
%

1.1.07
Expected
return
%

7.35
4.10
2.00

7.60
4.40
4.40

2008
Fair value
£’000

3,494
4,694
572

2007
Fair value
£’000

5,180
4,161
367

8,760

9,708

2008
Current
allocation
%

2007
Current
allocation
%

40
54
6

53
43
4

1.1.08
Expected 
return
%

1.1.07
Expected
return
%

7.35
6.15
4.10
2.00

7.60
5.70
n/a
4.40

2008
Fair value
£’000

33,232
5,431
9,135
2,753

2007
Fair value
£’000

42,099
9,323
–
2,993

50,551

54,415

2008
Current
allocation
%

2007
Current
allocation
%

67
11
16
6

77
17
–
6

On 15 May 2008, the Rathbone 1987 Scheme acquired 496 shares in an interest rate swap fund for £5,000,000. 
The fund is invested in long dated interest rate swaps, the duration of which is intended to broadly align with the duration
of the scheme’s liabilities.

The expected return on equities was assumed to be 3.25% above the return on long dated Gilts (2007: 3.20% above).
The expected rate of return on debt instruments is based on long-term yields at the start of the year, with an adjustment for
the risk of default and future downgrade in relation to corporate bonds. Cash has been assumed to generate a similar
return to short dated government bonds.

The statement of investment principles set by the trustees requires that the assets of the scheme are invested in a
balanced portfolio in the following sectors and proportions:

UK equities
Overseas equities
Fixed interest stocks
Cash deposits

Laurence Keen Scheme

Rathbone 1987 Scheme

35% – 55%
0% – 15%
45% – 65%*
45% – 65%*

43% – 57%
21% – 35%
14% – 28%
0% – 8%

* The total allocation of assets in the Laurence Keen Scheme to fixed interest stocks and cash deposits is expressed as a combined percentage of the two

asset classes in the statement of investment principles.

In the Rathbone 1987 Scheme, not more than 85% of the assets may be held in equities. A maximum of 5% of UK
equities may be invested in companies outside the FTSE 350 and not more than 5% of total equity assets can be invested
in hedge funds.

Rathbone Brothers Plc Report and accounts 2008

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Notes to the consolidated accounts continued

28 Long term employee beneﬁts continued

The sensitivities regarding the principal assumptions used to measure the schemes’ liabilities are set out below:

0.5% increase to:
– Discount rate
– Rate of inflation
– Rate of salary growth
1 year increase to longevity at 60

The history of experience adjustments is as follows:

Laurence Keen Scheme

Present value of defined benefit obligations (£’000)
Fair value of scheme assets (£’000)

Combined Impact on Schemes’ Liabilities

(Decrease)/Increase
£’000

(Decrease)/Increase
%

(6,071)
4,701
2,923
1,620

(9.5)
7.3
4.6
2.5

2008

2007

2006

2005

2004

(9,750) (10,301)
8,760
9,708

(10,423)
8,996

(11,697)
8,118

(9,552)
6,836

Deficit in the scheme (£’000)

(990)

(593)

(1,427)

(3,579)

(2,716)

Experience adjustments on scheme liabilities:
– amount (£’000)
– percentage of scheme liabilities

Experience adjustments on scheme assets:
– amount (£’000)
– percentage of scheme assets

Rathbone 1987 Scheme

248
3%

104
1%

1,592
15%

1,864
16%

1,715
20%

70
1%

85
1%

539
7%

466
5%

359
5%

2008

2007

2006

2005

2004

Present value of defined benefit obligations (£’000)
Fair value of scheme assets (£’000)

(55,284)
50,551

(60,274) (53,982) (50,501) (38,214)
25,947
54,415

44,646

35,370

Deficit in the scheme (£’000)

(4,733)

(5,859)

(9,336)

(15,131)

(12,267)

Experience adjustments on scheme liabilities:
– amount (£’000)
– percentage of scheme liabilities (%)

Experience adjustments on scheme assets:
– amount (£’000)
– percentage of scheme assets (%)

2,937
5%

1,264
2%

3,038
6%

7,138
14%

1,881
5%

10,677
21%

90
–

753
2%

4,297
12%

1,132
4%

The total regular contributions made by the Group to the Rathbone 1987 Scheme during the year were £2,260,000
(2007: £2,238,000) based on 13.9% of pensionable salaries (2007: 13.9%). No additional lump sum contributions were
paid in 2008 (2007: £3,890,000). Following the triennial valuation of the Rathbone 1987 Scheme, the Group has
committed to make additional contributions to the scheme of £2,750,000 per year until 2016. After 31 March 2002 the
Rathbone 1987 Scheme was closed to new entrants and, consequently, the current pension cost will increase as the
members of the Scheme approach retirement.

The total contributions made by the Group to the Laurence Keen Scheme during the year were £455,000 
(2007: 467,000). Annual contributions of £420,000 will continue to be made to the Laurence Keen Scheme. As the
scheme was closed to new entrants with effect from 1 October 1999, the current pension cost will increase as the
members of the scheme approach retirement.

Rathbone Brothers Plc Report and accounts 2008

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29 Share capital

The total authorised number of ordinary shares at 31 December 2008 was 100,000,000 (2007: 100,000,000) with a par
value of £0.05 per share. All issued shares are fully paid.

The following movements in share capital occurred during the period:

At 1 January 2007
Issue of shares in relation to:
– share incentive plan
– exercise of options

At 1 January 2008
Issue of shares in relation to:
– exercise of options

At 31 December 2008

Number of 
shares

42,276,852

Exercise
price
Pence

Share
capital
£’000

Share
premium
£’000

Total
£’000 

2,114

24,518

26,632

55,693
357,397

1,174.0
372.0 – 1,172.0

3
17

651
2,589

654
2,606

42,689,942

2,134

27,758

29,892

168,254

415.0 – 852.0

9

1,199

1,208

42,858,196

2,143

28,957

31,100

Share incentive plan and long term incentive plan

The Group operates a share incentive plan (SIP), which is available to all employees. Employees can contribute up to 
£125 per month to acquire shares which are acquired twice a year at the end of six month accumulation periods. The Group
currently matches employee contributions on a one for one basis to acquire matching shares. 

The Group also provides performance related free shares, with eligible employees receiving shares valued at the rate of
£100 per 1% real increase in EPS up to a maximum of £3,000 per annum. 

For UK employees, SIP dividends are reinvested and used to purchase shares, whilst for overseas employees dividends
are paid in cash.

Details of the general terms of the Long Term Incentive Plan are set out in the Remuneration report on pages 37 to 45.

As at 31 December 2008, the trustees of the Share Incentive Plan held 1,290,392 (2007: 1,275,224) ordinary shares of
5p each in Rathbone Brothers Plc with a total market value of £10,755,417 (2007: £13,389,852). No dividends on these
shares have been waived. Of the total number of shares held by the trustees 412,701 (2007: 505,001) have been
conditionally gifted to employees.

At 31 December 2008, the trustees of the Long Term Incentive Plan held 47,193 (2007: 74,794) ordinary shares of 5p
each in Rathbone Brothers Plc with a total market value of £393,354 (2007: £785,337). Dividends on these shares have
been waived by the trustees.

Equity settled share option scheme

The Company has a share option scheme for all employees of the Group. Under the scheme, certain employees hold
options to subscribe for shares in the Company at prices ranging from 415p to 1172p under the share option schemes
approved by shareholders in 1993 (as amended in 1996), 1996 and 2000. Options are conditional on the employee
completing three years’ service (the vesting period) and are exercisable three years from grant date. The options have a
contractual option term of seven years from the date that they become exercisable. The Group has no legal or constructive
obligation to repurchase or settle the options in cash.

Rathbone Brothers Plc Report and accounts 2008

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Notes to the consolidated accounts continued

29 Share capital continued

Movements in the number of share options outstanding were as follows:

At 1 January
Granted in the year
Forfeited in the year
Exercised in the year

At 31 December

2008
Number of
share 
options

1,049,099
30,000
(3,882)
(168,254)

906,963

2008
Weighted
average
exercise
price
(£)

7.64
8.14
9.07
7.17

7.74

2007
Number of
share
options

1,413,651
–
(7,155)
(357,397)

1,049,099

2007
Weighted
average
exercise
price
(£)

7.56
–
8.45
7.29

7.64

The weighted average share price at the dates of exercise for share options exercised during the year was £9.24 
(2007: £12.76). The options outstanding at 31 December 2008 had a weighted average contractual life of 4.0 years
(2007: 4.9 years). Options exercisable at 31 December 2008 had a weighted average exercise price of £7.11 
(2007: £7.12).

Options with an aggregate estimated fair value of £49,000, determined using a binomial valuation model including 
expected dividends, were granted on 22 August 2008. The inputs into the binomial model for options granted during the
year, as at the date of issue, were as follows:

Share price
Exercise price
Expected volatility
Risk free rate
Expected dividend yield

£8.14
£8.14
26.0%
4.6%
5.0%

The number of share options outstanding at the end of the year, the periods in which they were granted and the periods 
in which they may be exercised are given below:

Year of grant

1998
1999
1999
2000
2001
2001
2001
2001
2002
2003
2004
2004

Exercisable at 31 December 2007
2005

Exercisable at 31 December 2008
2006
2006
2008

Exercise
price (p)

643.30
732.50
814.17
932.50
985.00
827.50
915.80
665.33
810.00
415.00
743.50
690.00

Exercise
period

2001–2008
2002–2009
2002–2009
2003–2010
2004–2011
2004–2011
2004–2011
2004–2011
2005–2012
2006–2013
2007–2014
2007–2014

852.00

2008–2015

1172.00
1116.00
813.50

2009–2016
2009–2016
2011–2018

2008
No.

–
24,550
58,350
101,810
22,500
66,184
38,110
–
71,351
181,528
76,956
–

189,676

831,015
35,948
10,000
30,000

906,963

2007
No.

7,000
34,090
58,350
101,810
22,500
70,059
40,004
20,000
77,851
202,031
90,084
35,000

758,779
243,884

36,436
10,000
–

1,049,099

The Group recognised total expenses of £1,299,000 in relation to equity settled share based payments transactions in
2008 (2007: £2,692,000).

Rathbone Brothers Plc Report and accounts 2008

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30 Reserves and retained earnings

At 1 January 2007
Profit for the year
Translation differences arising in the year
Dividends paid
Actuarial gains and losses
Revaluation of investment securities
Net gains transferred to net profit on disposal 
of available for sale investment securities
Share based payments
– value of employee services
– cost of shares issued/purchased
Tax on equity items

At 1 January 2008
Profit for the year
Translation differences arising in the year
Dividends paid
Actuarial gains and losses
Revaluation of investment securities
Transfer of merger reserve to retained earnings 
on disposal of subsidiary
Share based payments
– value of employee services
– cost of shares issued/purchased
Tax on equity items

Merger  Available for 
reserve sale reserve
£’000

£’000

Translation
reserve
£’000

Total other
reserves
£’000

49,428

4,289

(229) 53,488

14

14

2,069

2,069

(1,297)

(1,297)

(93)

(93)

Retained
earnings
£’000

79,029
37,380

(15,914)
270

2,692
(3,508)
728

49,428

4,968

(215) 54,181 100,677
19,000

1,001

1,001

(17,503)
(44)

(3,957)

(3,957)

(17,593)

(17,593) 17,593

1,108

1,108

1,299
(1,728)
(503)

At 31 December 2008

31,835

2,119

786

34,740 118,791

The Merger Reserve represents share premium that was not recognised on the issue of shares as consideration for an
acquisition prior to the adoption of IFRS on 1 January 2004, in accordance with the Companies Act.

31 Financial risk management

The Group has identified the risks arising from its activities and has established policies and procedures to manage these
items in accordance with its risk appetite, as described in the Group’s Internal Capital Adequacy Assessment Process,
prepared in accordance with the requirements of the Financial Services Authority (the FSA) in its application of the Capital
Requirements Directive. The Group categorises its financial risks into three areas:
(i)
(ii)
(iii) market risk (which includes fair value interest rate risk, cash flow interest rate risk, currency risk and price risk).

credit risk;
liquidity risk; and

The sections below outline the Group’s risk appetite and explain how it defines and manages each category of 
financial risk.

The Group’s risk management policies are designed to identify and analyse the risks that the Group faces, to set
appropriate risk limits and controls and to monitor the risks and adherence to limits by means of reliable and up to date
information systems. The Group regularly reviews its risk management policies and systems to reflect changes in the
business, counterparties, markets and the range of financial instruments that it utilises.

The Group’s overall strategy and policies for monitoring and management of financial risk are set by the board of directors
(the Board). The Board has embedded risk management within the business through the boards of directors of the
Group’s operating subsidiaries and certain of the Board’s standing committees. The principal committees that have
responsibility for the identification, mitigation and management of risks are the Executive Committee, the Audit Committee,
the Risk Management Committee and the Banking Committee, which is a standing committee of the board of directors of
Rathbone Investment Management Limited.

Rathbone Brothers Plc Report and accounts 2008

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Notes to the consolidated accounts continued

31 Financial risk management continued

The Treasury Department, reporting through the Banking Committee, has principal responsibility for monitoring exposure
to credit risk, liquidity risk and market risk. Procedures and delegated authorities are documented in a Group Treasury
Manual and policy documents are in place to cover the management and monitoring of each type of risk. The primary
objective of the Group’s treasury policy is to manage short-term liquidity requirements whilst maintaining an appropriate
level of exposure to other financial risks in accordance with the Group’s risk appetite.

(i) Credit risk

The Group takes on exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when
due, through its Banking, Treasury, Trust and Pensions advisory activities. The principal source of credit risk arises from
placing funds with other banks and holding interest bearing securities. The Group also has exposure to credit risk through
its loan books and guarantees given on clients’ behalf.

It is the Group’s policy to place funds generated internally and from deposits by clients with a range of high quality
financial institutions. Investments are spread to avoid excessive exposure to any individual counterparty. Loans made to
clients are secured against clients’ assets that are held and managed by Group companies.

Exposure to credit risk is managed through setting appropriate ratings requirements and lending limits. Limits are
reviewed regularly, taking into account the ability of borrowers and potential borrowers to meet repayment obligations.

The Group categorises its exposures based on the long-term ratings awarded to counterparties by Fitch Ratings Ltd
(‘Fitch’) or Moody’s Corporation (‘Moody’s’). Each exposure is assessed individually, both at inception and in ongoing
monitoring. In addition to formal external ratings, the banking committee also utilises market intelligence information to
assist its ongoing monitoring.

Settlement balances
Settlement risk arises in any situation where a payment in cash or transfer of a security is made in the expectation of a
corresponding delivery of a security or receipt of cash. The majority of transactions are carried out on a delivery versus
payment basis, which results in securities and cash being exchanged within a very close timeframe. Settlement balances
outside standard terms are monitored on a daily basis.

The Investment Management and Unit Trust businesses have exposure to market counterparties in the settlement of
trades. Settlement balances of £6,322,000 were past due but not impaired at 31 December 2008 (2007: £1,123,000).
No settlement balances were impaired at the balance sheet date (2007: nil).

Loans and advances to banks and debt and other securities
The Group has exposures to a wide range of financial institutions through its treasury portfolio, which includes bank
deposits, certificates of deposit, money market funds and government bonds. These exposures principally arise from the
placement of surplus investment management client cash, which is held under a banking relationship, and the Group’s
own reserves.

The Group’s policy requires that all such exposures are only taken with counterparties that have been awarded a minimum
long-term rating of ‘A’ by Fitch or equivalent rating by Moody’s. Counterparty limits are also in place to limit exposure to an
individual counterparty or connected group of counterparties. Counterparty exposures are monitored on a daily basis and
reviewed by the Banking Committee on a monthly basis. The Banking Committee may suspend dealing in a particular
counterparty, or liquidate specific holdings, in the light of adverse market information.

Loans and advances to customers
The Group provides loans to clients through its Investment Management operations (the Investment Management 
loan book) and via Rathbone International Finance B.V. (the Rathbone International Finance loan book). The Group is 
also exposed to credit risk on trade debtors arising from the trust and tax and pensions advisory businesses (Trust and
Pension debtors).

(a) Overdrafts
Overdrafts on clients’ investment management accounts arise from time to time due to short-term timing differences
between the purchase and sale of assets on clients’ behalf. Overdrafts are actively monitored and reported to the banking
committee on a monthly basis.

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31 Financial risk management continued

(i) Credit risk continued

(b) Investment Management loan book
Loans and short term overdrafts are provided as a service to Investment Management clients who are generally asset rich
but have short to medium term cash requirements. Such loans are normally made on a fully secured basis against
portfolios held in Rathbones’ nominee name and are advanced for a maximum of one year. Extensions to the initial loan
period may be granted if required.

The lending exposure limit for the Investment Management loan book is £25m. The Banking Committee reviews all loans
on a monthly basis and approves all loan extensions. Where necessary, repayment plans are established with clients
before the loan becomes overdue or uncovered.

At 31 December, the total lending exposure limit for the Investment Management loan book was £25,000,000 (2007:
£25,000,000) of which £12,459,000 had been advanced (2007: £11,889,000) and a further £4,555,000 had been
committed (2007: £4,492,000).

(c) Rathbone International Finance loan book
Loans are also provided to non-UK borrowers to assist trust structures where the Group acts as trustee or provides some
form of advisory role. Such loans are backed by loans to the Group from third parties which are on identical repayment and
interest rate repricing terms. Loans are secured either by a legal charge over client cash or other assets under the Group’s
control, or by waiver of right of recall from the third party lender in the event that the borrower is unable to repay.

New loan applications and applications to extend existing facilities under the Rathbone International Finance loan book are
reviewed by the directors of Rathbone International Finance B.V. and require pre-approval by the chief executive of the
trust and tax business.

At 31 December loans outstanding in the Rathbone International Finance loan book totalled £18,323,000 
(2007: £14,343,000).

(d) Trust and Pension debtors
Trust and Pension debtors relate to fees which have been invoiced but not yet settled by clients. The collection and 
ageing of Trust and Pension debtors are reviewed on a monthly basis by the management committees of the Group’s 
trust and pension advisory companies. Impairment provisions are made for any debts which are considered to be 
doubtful for collection.

(e) Other debtors
Other loans and advances to customers is constituted by a vendor loan note made to Hawksford International Holdings
Limited on its acquisition of Rathbone Trust Company Jersey Limited and Rathbone Jersey Limited from the Group on 
15 October 2008 (see note 12).

Derivatives
The Group makes limited use of derivative financial instruments exclusively to manage interest rate risk and not for
speculative purposes (see note 24). The Group maintains control limits on net open derivative positions (i.e. the difference
between purchase and sale contracts), by both amount and term. At any one time, the amount subject to credit risk is
limited to the current fair value of instruments that are favourable to the Group (i.e. contracts with a positive fair value),
which in relation to derivatives is only a small fraction of the notional value of the contract.

Impairment and provisioning policies
Impairment provisions are recognised for financial reporting purposes only for losses that have been incurred at the
balance sheet date, based on objective evidence of impairment.

All credit exposures are reviewed individually, at least annually or more regularly when individual circumstances require.
Impairment allowances on credit exposures are determined by an evaluation of the incurred loss at balance sheet date on
a case-by-case basis. The assessment considers, where applicable, the value of any collateral held, any changes to the
external credit rating and the anticipated receipts for each individual exposure.

Impairment provisions for credit risk, which relate solely to Trust and Pension debtors, are set out in note 17.

Rathbone Brothers Plc Report and accounts 2008

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Notes to the consolidated accounts continued

31 Financial risk management continued

(i) Credit risk continued

Maximum exposure to credit risk

Credit risk relating to on balance sheet exposures:
Settlement balances
Loans and advances to banks
Loans and advances to customers
– Overdrafts
– Investment Management loan book
– International Finance loan book
– Trust and pension debtors
– Other debtors
Investment securities
– Unlisted debt securities and money market funds
– Listed debt securities
Other financial assets
Credit risk relating to off balance sheet exposures:
Loan commitments
Financial guarantees

2008
£’000

2007
£’000

15,751
175,973

4,492
12,483
18,323
1,021
5,000

952,978
1,001
31,731

4,555
859

21,573
250,103

2,753
11,889
14,343
11,034
–

755,213
10,061
35,871

4,492
724

The above table represents the gross credit risk exposure of the Group at 31 December 2008 and 2007, without taking
account of any collateral held or other credit enhancements attached. For on balance sheet assets, the exposures set out
above are based on net carrying amounts as reported in the balance sheet.

As shown above, 17.8% of the total maximum exposure is derived from loans and advances to banks and customers
(2007: 25.9%) and 77.9% represents investments in debt securities (2007: 68.4%).

1,224,167

1,118,056

Loans and advances

Loans and advances are summarised as follows:

Neither past due nor impaired
Past due but not impaired
Impaired

Gross carrying value
Less: allowance for impairment (note 17)

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Net carrying value

2008
Loans 
and advances 
to banks
£’000

175,973
–
–

175,973
–

175,973

2008
Loans
and advances
to customers
£’000

38,627
716
244

39,587
(175)

39,412

2007
Loans 
and advances 
to banks
£’000

250,103
–
–

250,103
–

250,103

2007
Loans
and advances
to customers
£’000

35,241
3,792
986

40,019
(639)

39,380

No loans and advances have been renegotiated (2007: nil).

Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
31 Financial risk management continued

(i) Credit risk continued

(a) Neither past due nor impaired
The credit quality of loans and advances to customers that were neither past due nor impaired at 31 December, which 
are all externally unrated, is analysed below between those loans that remain within the standard lending criteria required
at the inception of the loan, which are described on page 99, and those loans that no longer meet the initial lending
criteria. An exposure is reported as past due when the contractual due date for settlement has passed and the balance
has not been repaid, except in the case of Trust and Pension debtors where a normal settlement period of seven days 
is expected.

At 31 December 2008

Standard lending criteria
Outside standard lending criteria

At 31 December 2007
Standard lending criteria
Outside standard lending criteria

Investment International 
Finance
loan book
£’000

Management
loan book
£’000

Trust and 
Pension
debtors
£’000

Overdrafts 
£’000

4,492
–

12,483
–

14,878
3,224

4,492

12,483

18,102

282
–

282

Investment
Management
loan book
£’000
11,889
–

International 
Finance
loan book
£’000
11,725
2,450

Overdrafts 
£’000
2,753
–

Trust and 
Pension
debtors
£’000
6,424
–

Total
loans and
Other advances to
customers
£’000

debtors
£’000

–
3,268

32,135
6,492

3,268

38,627

Total
loans and
advances to
customers
£’000
32,791
2,450

Other
debtors
£’000
–
–

2,753

11,889

14,175

6,424

–

35,241

The credit quality of loans and advances to banks that were neither past due nor impaired at 31 December is 
analysed below by reference to the long-term credit rating awarded by Fitch, or equivalent rating by Moody’s as at 
the balance sheet date.

AA– to AA+
A to A+
Other 

2008
£’000

71,074
104,481
418

175,973

2007
£’000

159,970
89,999
134

250,103

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Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
Notes to the consolidated accounts continued

31 Financial risk management continued

(i) Credit risk continued

(b) Past due but not impaired
Loans and advances that are past due are not considered impaired unless other information is also available to indicate 
the contrary. The gross amount of loans and advances by class to customers that were past due but not impaired at 
31 December were:

At 31 December 2008

<90 days overdue
90–180 days overdue
180–270 days overdue
270–365 days overdue
>365 days overdue

At 31 December 2007

<90 days overdue
90–180 days overdue
180–270 days overdue
270–365 days overdue
>365 days overdue

Investment International 
Finance
loan book
£’000

Management
loan book
£’000

Trust and 
Pension
debtors
£’000

Overdrafts 
£’000

Total
loans and
Other advances to
customers
£’000

debtors
£’000

–
–
–
–
–

–

–
–
–
–
–

–

–
–
–
–
221

221

Investment
Management
loan book
£’000

International 
Finance
loan book
£’000

Overdrafts 
£’000

–
–
–
–
–

–

–
–
–
–
–

–

–
–
168
–
–

168

221
81
56
25
112

495

Trust and 
Pension
debtors
£’000

1,478
1,016
491
392
247

3,624

–
–
–
–
–

–

221
81
56
25
333

716

Total
loans and
advances to
customers
£’000

Other
debtors
£’000

–
–
–
–
–

–

1,478
1,016
659
392
247

3,792

(c) Impaired
Allowance has been made for individually impaired Trust and Pension debtors. The balance of individually impaired Trust
and Pension debtors is £244,000 (2007: £986,000). There were no other impaired credit exposures at 31 December
2008 (2007: none).

Debt securities
The table below presents an analysis of debt securities by rating agency designation, as at 31 December, based on Fitch’s
or Moody’s long-term rating designation.

2008 
Government

securities market funds
£’000

£’000

2008

2008
Money Certificates
of deposit
£’000

2007 
2008 Government
Total
£’000

2007
Money
securities market funds
£’000

£’000

2007
Certificates
of deposit
£’000

2007
Total
£’000

AAA
AA– to AA+
A to A+

25,759
–
–

79,000

95,351 200,110
– 529,853 529,853
– 224,016 224,016

10,061
–
–

–
10,061
–
– 455,201 455,201
– 300,012 300,012

25,759

79,000 849,220 953,979

10,061

– 755,213 765,274

Concentration of credit risk
The Group has counterparty concentration risk within its treasury assets in that exposure is to a number of similar credit
institutions. The banking committee actively monitors counterparties and may reduce risk by either suspending dealing or
liquidating investments in the light of adverse market information, for example in anticipation of or in response to any formal
Fitch or Moody’s rating downgrade. This may happen in relation to specific banks or banks within a particular country 
or sector.

Rathbone Brothers Plc Report and accounts 2008

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31 Financial risk management continued

(i) Credit risk continued

(a) Geographical sectors
The following table analyses the Group’s credit exposures, at their carrying amounts, by geographical region as at the
balance sheet date. In this analysis, exposures are categorised based on the country of domicile of the counterparty.

At 31 December 2008

Settlement balances
Loans and advances to banks
Loans and advances to customers
– Overdrafts
– Investment Management loan book
– International Finance loan book
– Trust and pension debtors
– Other debtors
Investment securities
– Unlisted debt securities and money market funds
– Listed debt securities
Other financial assets

At 31 December 2007

Settlement balances
Loans and advances to banks
Loans and advances to customers
– Overdrafts
– Investment Management loan book
– International Finance loan book
– Trust and pension debtors
– Other debtors
Investment securities
– Unlisted debt securities and money market funds
– Listed debt securities

Other financial assets

United
Kingdom
£’000 

11,664
47,554

3,482
11,874
–
846
–

Jersey
£’000 

Rest of the 
World
£’000 

Total
£’000

4,087

–
15,751
– 128,419 175,973

470
–
–
–
3,268

540
609
18,323
–
–

4,492
12,483
18,323
846
3,268

476,961
1,001
19,435

– 476,017 952,978
1,001
–
–
31,731
12,228
68

572,817

3,806 640,223 1,216,846

United
Kingdom
£’000 

Jersey
£’000 

Rest of the 
World
£’000 

Total
£’000

20,109
147,387

–

21,573
1,464
1,881 100,835 250,103

1,623
9,329
–
1,271
–

329
359
–
6,176
–

801
2,201
14,343
2,948
–

2,753
11,889
14,343
10,395
–

316,328
10,061

– 438,885 755,213
10,061
–
–

25,813

80

9,978

35,871

531,921

8,825 571,455 1,112,201

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Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
Notes to the consolidated accounts continued

31 Financial risk management continued

(i) Credit risk continued

(b) Industry sectors
The Group’s credit exposures at the balance sheet date, analysed by the primary industry sectors in which our
counterparties operate, were:

At 31 December 2008

Public sector
£’000 

Financial institutions
£’000 

Private clients and other
£’000 

–
–

Settlement balances
Loans and advances to banks
Loans and advances to customers
– Overdrafts
– Investment Management loan book
– International Finance loan book
– Trust and pension debtors
– Other debtors
Investment securities
– Unlisted debt securities and money market funds 24,758
1,001
– Listed debt securities
211
Other financial assets

–
–
–
–
–

15,751
175,973

–
–
–
–
3,268

928,220
–
18,027

25,970

1,141,239

–
–

4,492
12,483
18,323
846
–

–
–
13,493

49,637

At 31 December 2007
Settlement balances
Loans and advances to banks
Loans and advances to customers
– Overdrafts
– Investment Management loan book
– International Finance loan book
– Trust and pension debtors
– Other debtors
Investment securities
– Unlisted debt securities and money market funds
– Listed debt securities
Other financial assets

Public sector
£’000 
–
–

Financial institutions
£’000 
21,573
250,103

Private clients and other
£’000 
–
–

–
–
–
–
–

–
10,061
87

10,148

–
–
–
–
–

755,213
–
19,713

1,046,602

2,753
11,889
14,343
10,395
–

–
–
16,071

55,451

Total
£’000

15,751
175,973

4,492
12,483
18,323
846
3,268

952,978
1,001
31,731

1,216,846

Total
£’000
21,573
250,103

2,753
11,889
14,343
10,395
–

755,213
10,061
35,871

1,112,201

(ii) Liquidity risk

Liquidity risk is the risk that the Group is unable to meet its payment obligations associated with its financial liabilities when
they fall due.

The primary objective of the Group’s treasury policy is to manage short-term liquidity requirements. The treasury
department has primary responsibility for ensuring compliance with the Group’s liquidity policy, which requires that
Rathbone Investment Management (the Bank) maintains a surplus of immediately realisable assets over its liabilities such
that all known and potential cash obligations can be met. Liquidity mismatches are monitored on a daily basis against 
the liquidity limits set by the banking committee and the Financial Services Authority’s liquidity mismatch guidelines.
Liquidity risk is primarily managed by holding cash and marketable instruments which are realisable at short notice. 
The Group operates a strict set of criteria for counterparties to ensure that investments are liquid and are with high 
quality counterparties, defined as those who have been awarded a long-term rating of ‘A’ or above by Fitch or equivalent 
by Moody’s.

The Group does not rely on external funding for its activities. Current market conditions have resulted in an increase in the
level of liquidity in investment management clients’ portfolios as investment managers position assets more defensively.
Consequently, the Group is increasingly a net provider of liquidity to the banking markets.

Rathbone Brothers Plc Report and accounts 2008

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4
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31 Financial risk management continued

(ii) Liquidity risk continued

Non-derivative cash ﬂows
The table below presents the cash flows receivable and payable by the Group under non-derivative financial assets 
and liabilities by remaining contractual maturities at the balance sheet date. The amounts disclosed in the table are the
contractual, undiscounted cash flows, whereas the Group manages the inherent liquidity risk based on expected
undiscounted cash flows.

At 31 December 2008

Cash flows arising from financial assets
Cash and balances at central banks
Settlement balances
Loans and advances to banks
Loans and advances to customers
Investment debt securities and money 
market funds
Other financial assets

On demand
£’000

Not more After 3 months 
but not more 
than 1 year
£’000

than 3
months
£’000

After 1 year 
but not more 
than 5 years
£’000

3
–
25,908
10,497

350
15,751
151,614
6,936

–
–
–
12,838

–
–
–
11,522

After 
5 years
£’000

–
–
–
1,765

Total
£’000

353
15,751
177,522
43,558

79,022
103

631,817
13,792

240,792
6

28,078
23

–
–

979,709
13,924

Cash flows arising from financial assets

115,533

820,260

253,636

39,623

1,765 1,230,817

Cash flows arising from financial liabilities
Deposits by banks
Settlement balances
Due to customers
Other financial liabilities

–
–
677,488
9

1,533
14,048
352,961
25,615

1,901
–
12,685
343

6,516
–
5,857
11,869

–
9,950
14,048
–
– 1,048,991
37,836
–

Cash flows arising from financial liabilities

677,497

394,157

14,929

24,242

– 1,110,825

Net liquidity gap

(561,964)

426,103

238,707

15,381

1,765

119,992

At 31 December 2007

Cash flows arising from financial assets
Cash and balances at central banks
Settlement balances
Loans and advances to banks
Loans and advances to customers
Investment debt securities and money 
market funds
Other financial assets

On demand
£’000

Not more
than 3
months
£’000

After 3 months 
but not more 
than 1 year
£’000

After 1 year 
but not more
than 5 years
£’000

4
–
102,001
7,190

274
21,573
145,154
16,946

–
–
5,132
12,328

11,606
142

509,601
17,352

269,238
193

–
–
–
5,494

–
360

After 
5 years
£’000

–
–
–
856

Total
£’000

278
21,573
252,287
42,814

–
–

790,445
18,047

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Cash flows arising from financial assets

120,943

710,900

286,891

5,854

856 1,125,444

5
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1

Cash flows arising from financial liabilities
Deposits by banks
Settlement balances
Due to customers
Other financial liabilities

193
–
637,991
38

1,534
19,926
300,551
27,610

2,061
–
5,765
340

10,094
–
5,166
10,152

–
–
–
–

13,882
19,926
949,473
38,140

Cash flows from financial liabilities

638,222

349,621

8,166

25,412

– 1,021,421

Net liquidity gap

(517,279) 361,279

278,725

(19,558)

856

104,023

Included within the amounts due to customers due on demand disclosed above are balances that are repayable on demand
or that do not have a contractual maturity date, which historical experience shows are unlikely to be called in the short-term.

Derivative cash ﬂows (derivatives settled on a net basis)
As described in note 24 the Group employs Forward Rate Agreements in managing interest rate risk. The Group’s liquidity
risk in relation to net settled derivative contracts is limited to the fair value of unsettled contracts. There were no unsettled
contracts at 31 December 2008.

Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
Notes to the consolidated accounts continued

31 Financial risk management continued

(ii) Liquidity risk continued

Off balance sheet items
Cash flows arising from the Group’s off balance sheet financial liabilities (note 33) are summarised in the table below.

The contractual value of the Group’s commitments to extend credit to clients and maximum potential value of financial
guarantees are analysed by the duration of the commitment. Future minimum lease payments under non-cancellable
operating leases are reported by their contractual payment dates. Capital commitments are summarised by the earliest
expected date of payment.

After 3 

At 31 December 2008

Loan commitments
Financial guarantees
Operating lease commitments
Capital commitments

Not more months but  After 1 year 
not more but not more 
than 5 years
£’000

than 3
months
£’000

than 1 year
£’000

4,555
850
1,263
150

–
–
3,774
–

–
9
14,813
–

After 
5 years
£’000

–
–
11,984
–

Total
£’000

4,555
859
31,834
150

Total off balance sheet items

6,818

3,774

14,822

11,984

37,398

Not more
than 3
months
£’000

4,492
709
286
1,189

After 3 
months but 
not more
than 1 year
£’000

After 1 year 
but not more 
than 5 years
£’000

–
–
4,438
–

–
15
14,000
–

After 
5 years
£’000

–
–
9,037
–

Total
£’000

4,492
724
27,761
1,189

6,676

4,438

14,015

9,037

34,166

After 3 

On demand
£’000

Not more months but  After 1 year 
not more but not more 
than 5 years
£’000

than 3
months
£’000

than 1 year
£’000

After 
5 years
£’000

Total
£’000

677,497 394,157
–
6,818

–
–

14,929
–
3,774

24,242
–
14,822

– 1,110,825
–
–
37,398
11,984

677,497 400,975

18,703

39,064

11,984 1,148,223

Not more
than 3
months
£’000

After 3 
months but 
not more
than 1 year
£’000

After 1 year 
but not more 
than 5 years
£’000

On demand
£’000

638,222 349,621
22
6,676

–
–

8,166
–
4,438

25,412
–
14,015

After 
5 years
£’000

Total
£’000

– 1,021,421
–
22
34,166
9,037

638,222 356,319

12,604

39,427

9,037 1,055,609

At 31 December 2007

Loan commitments
Financial guarantees
Operating lease commitments
Capital commitments

Total off balance sheet items

Total liquidity requirement

At 31 December 2008

Cash flows arising from financial liabilities
Net derivative cash outflows
Total off balance sheet items

At 31 December 2007

Cash flows arising from financial liabilities
Net derivative cash outflows
Total off balance sheet items

Rathbone Brothers Plc Report and accounts 2008

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6
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31 Financial risk management continued

(iii) Market risk

Interest rate risk
Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes
in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate because
of changes in market interest rates.

The Group’s principal exposure to cash flow interest rate risk arises from the mismatch between the repricing of its financial
assets and liabilities. In particular, customer accounts and loan balances are repriced very shortly after changes in base rates,
whereas the yield on the Group’s interest bearing assets is correlated to the future expectation of base rates and varies
depending on the maturity profile of the Group’s treasury portfolio. The average maturity mismatch is controlled by the
banking committee, which generally lengthens the mismatch when the yield curve is rising and shortens it when the yield
curve is falling.

The tables below and overleaf show the consolidated repricing profile of the Group’s financial assets and liabilities, stated
at their carrying amounts, categorised by the earlier of contractual repricing or maturity dates.

At 31 December 2008

Assets
Cash and balances at central banks
Settlement balances
Loans and advances to banks
Loans and advances to customers
Investment securities
– equity securities
– debt securities and money market funds
Other financial assets

Total financial assets

Liabilities
Deposits by banks
Settlement balances
Due to customers
Other financial liabilities

More than 3
months but
not more

More than
6 months
than but not more
than 1 year
£’000

6 months
£’000

Not more 
than 3 
months 
£’000

More than
1 year but
not more
than 5 years
£’000

More than Non-interest
bearing
£’000

5 years
£’000

Total
£’000

348
–
175,803
23,525

–
–
–
6,911

–
–
–
–

–
–
–
663

–

–
672,217 246,762
–

–

–
10,000
–

–
25,000
–

–
–
–
483

–
–
–

3
15,751

351
15,751
170 175,973
39,412

7,830

2,991

2,991
– 953,979
31,731

31,731

871,893 253,673

10,000

25,663

483

58,476 1,220,188

1,533
–
1,017,440
–

–
–
15,341
–

1,533
–
–
–

6,135
–
663
–

–
–
483
–

9,201
–
14,048
14,048
10,424 1,044,351
37,998
37,998

Total financial liabilities

1,018,973

15,341

1,533

6,798

483

62,470 1,105,598

Nominal value of interest rate derivatives

–

–

–

–

Interest rate repricing gap

(147,080) 238,332

8,467

18,865

–

–

–

–

(3,994) 114,590

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Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
Notes to the consolidated accounts continued

31 Financial risk management continued

(iii) Market risk continued

At 31 December 2007

Assets
Cash and balances at central banks
Settlement balances
Loans and advances to banks
Loans and advances to customers
Investment securities
– equity securities
– debt securities and money market funds
Other financial assets

Total financial assets

Liabilities
Deposits by banks
Settlement balances
Due to customers
Other financial liabilities

Total financial liabilities

More than 3
months but
not more
than
6 months
£’000

Not more
than 3
months 
£’000

More than
6 months
but not more
than 1 year
£’000

More than
1 year but
not more
than 5 years
£’000

More than Non-interest
bearing
£’000

5 years
£’000

Total
£’000

271
–
244,808
25,439

–
–
5,000
602

–

–
500,085 214,173
–

–

–
–
–
67

–
51,016
–

–
–
–
320

–
–
–

770,603 219,775

51,083

320

12,460
–
934,542
–

–
–
2,372
–

947,002

2,372

–
–
245
–

245

–

–
–
45
–

45

–

–
–
–
–

–
–
–

–

–
–
367
–

4
21,573

275
21,573
295 250,103
39,380

12,952

6,948

6,948
– 765,274
35,871

35,871

77,643 1,119,424

–
19,926

12,460
19,926
9,037 946,608
40,447

40,447

367

69,410 1,019,441

–

–

10,000

Nominal value of interest rate derivatives

10,000

–

Interest rate repricing gap

(166,399) 217,403

50,838

275

(367)

8,233 109,983

The banking committee has set an overall pre-tax interest rate exposure limit of £5,000,000 (2007: £5,000,000) for the
total profit or loss resulting from an unexpected, immediate and sustained 2% movement in sterling interest rates for the
Bank, the principal operating subsidiary. The potential total profit or loss is calculated on the basis of the average number
of days to repricing of the interest bearing liabilities compared with the period to repricing on a corresponding amount of
interest bearing assets.

At 31 December 2008, the Bank had £993.4 million (2007: £902.3 million) of sterling interest bearing liabilities
averaging 4 days (2007: 3 days) to repricing which were matched by sterling assets averaging 52 days (2007: 50 days)
to repricing, creating an exposure of 48 days (2007: 47 days). The total potential impact on profit after tax and equity 
was £1,894,000 (2007: £1,650,000) at the balance sheet date for a 2% decrease or increase in interest rates. The
Group held no forward rate agreements at 31 December 2008. The impact of the Group’s forward rate agreements at 
31 December 2007 was to reduce this exposure by £35,000.

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Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
31 Financial risk management continued

(iii) Market risk continued

Foreign exchange risk
The Group monitors its currency exposures that arise in the ordinary course of business on a daily basis and significant
exposures are managed through the use of spot contracts so as to reduce any currency exposure to a minimal amount. 
At 31 December 2008, the Group was also subject to a structural currency exposure on its net investments in overseas
subsidiaries, primarily in Switzerland, Singapore and the British Virgin Islands.

The Group does not have any material exposure to transactional foreign currency risk and, therefore, no sensitivity analysis
is presented. The table below summarises the Group’s exposure to foreign currency translation risk at 31 December.
Included in the table are the Group’s financial assets and liabilities, at carrying amounts, categorised by currency.

At 31 December 2008

Assets
Cash and balances at central banks
Settlement balances
Loans and advances to banks
Loans and advances to customers
Investment securities
– equity securities
– debt securities and money market funds
Other financial assets

Liabilities
Deposits by banks
Settlement balances
Due to customers
Other financial liabilities

Sterling
£’000

US Dollar
£’000

Euro
£’000

Other
£’000

Total
£’000

3
14,689
148,478
20,338

348
579
12,994
99

–
392
11,158
18,972

–
91

351
15,751
3,343 175,973
39,412

3

1,534
953,979
30,906

–
–
20

1,457
–
801

–
2,991
– 953,979
31,731
4

1,169,927

14,040

32,780

3,441 1,220,188

9,201
13,395
1,002,126
36,680

–
232
10,696
103

–
216
28,653
1,202

–
205

9,201
14,048
2,876 1,044,351
37,998

13

Net on balance sheet position

108,525

3,009

2,709

347

114,590

1,061,402

11,031

30,071

3,094 1,105,598

Loan commitments

At 31 December 2007

Total financial assets
Total financial liabilities

Net on balance sheet position

Loan commitments

4,555

–

Sterling
£’000

US Dollar
£’000

–

Euro
£’000

–

4,555

Other
£’000

Total
£’000

1,077,642
982,139

9,869
6,333

26,142
28,408

5,771 1,119,424
2,561 1,019,441

95,503

3,536

(2,266)

3,210

99,983

4,492

–

–

–

4,492

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Price risk
Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market prices (other than those arising from interest rate risk or currency risk). The Group is exposed to price risk through
its holdings of equity investment securities, which are reported at their fair value (note 18).

At 31 December 2008, the fair value of equity securities recognised on the balance sheet was £2,991,000 (2007:
£6,948,000). A 10% fall in global equity markets would, in isolation, result in a pre-tax impact on net assets of £299,000
(2007: £695,000) there would be no impact on profit after tax.

Fair values
The fair values of the Group’s financial assets and liabilities are not materially different from their carrying values, with the
exception of held to maturity investment securities (note 18).

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Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
Notes to the consolidated accounts continued

32 Capital management

Accounting capital is deﬁned as the total of share capital, share premium, retained earnings and other reserves. 
Total capital at 31 December 2008 was £184,631,000 (2007: £184,750,000).

Regulatory capital is derived from the Group Internal Capital Adequacy Assessment Process (ICAAP), which is a
requirement of the Capital Requirements Directive. The ICAAP draws on the Group’s risk management process which 
is embedded within the individual businesses, function heads and executive committees within the Group.

The Group’s objectives when managing capital are:
• to comply with the capital requirements set by the regulators of the banking and other regulated markets where the

entities within the Group operate;

• to safeguard the Group’s ability to continue as a going concern so that it can continue to provide returns for

shareholders and beneﬁts for other stakeholders; and

• to maintain a strong capital base to support the development of its business.

The Group’s regulatory capital is monitored by the treasury department and is divided into two tiers: 

• Tier 1 capital, which is the total of issued share capital, retained earnings and reserves created by appropriations of 

retained earnings, net of the book value of goodwill and other intangible assets; and

• Tier 2 capital, which is unrealised gains arising on the fair valuation of equity instruments held as available for sale.

In calculating the capital requirement, the Group has adopted the standardised approach to credit risk and the basic
indicator approach to operational risk.

The ICAAP was approved by the Rathbone Brothers Plc board in December 2008 and was formally reviewed and agreed
with the Financial Services Authority in February 2009. There have been no capital requirement breaches during the
course of the year. 

33 Contingent liabilities and commitments

(a)

Indemnities are provided to a number of directors and employees in our Trust and Tax division in connection with them 
acting as directors on client structures in the normal course of business.

(b) Capital expenditure authorised and contracted for at 31 December 2008 but not provided in the accounts amounted

to £150,000 (2007: £1,189,000).

(c) The contractual amounts of the Group’s commitments to extend credit to its clients are as follows:

Guarantees
Undrawn commitments to lend of 1 year or less

2008
£’000

859
4,555

5,414

2007
£’000

724
4,492

5,216

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The fair value of the guarantees is £nil (2007: £nil).
(d) The Group leases various offices under non-cancellable operating lease agreements. The leases have varying terms
and renewal rights. The future minimum lease payments under non-cancellable operating leases were as follows:

No later than 1 year
Later than 1 year and no later than 5 years
Later than 5 years

2008
£’000

5,037
14,813
11,984

31,834

2007
£’000

4,724
14,000
9,037

27,761

(e)

In addition to the Financial Services Compensation Scheme levies accrued in the year (note 9) further levy charges
are likely to be incurred in future years although the ultimate cost remains uncertain. 

Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
 
34 Related party transactions

Certain of the directors of Rathbone Trust Company Jersey Limited (disposed of on 15 October 2008, see note 12) 
are also partners of Nigel Harris & Partners. During the year £808,000 (2007: £685,000) was paid to Nigel Harris &
Partners for services supplied to Rathbone Trust Company Jersey Limited for the year ended 31 December 2008.

Certain of the directors of Rathbone Trust Company Jersey Limited (disposed of on 15 October 2008, see note 12) are
also partners of Galsworthy & Stones. During the year, £270,000 (2007: £336,000) was received from Galsworthy &
Stones for services supplied by Rathbone Trust Company Jersey Limited.

The remuneration of the key management personnel of the Group, who are defined as the Company’s directors, is set out
in the audited part of the Remuneration report on pages 37 to 45. At 31 December 2008 key management and their close
family members had gross outstanding deposits of £635,000 (2007: £381,000) and gross outstanding loans of
£396,000 (2007: £181,000), of which £281,000 (2007 £181,000) was secured against portfolios held in Rathbones’
nominee name, that were made on normal business terms. A number of the Company’s directors and their close family
members make use of the services provided by companies within the Group. Charges for such services are made at
various staff rates.

One of the Group’s non-executive directors is an executive director of Novae Group plc, a related entity of which
underwrites part of the Group’s professional indemnity insurance policy.

During the year, an estate, of which one of the Group’s directors is an executor, received and repaid in full a loan of
£511,000 from Rathbone Investment Management Limited on normal business terms.

The Group’s transactions with the pension funds are described in note 28. At 31 December 2008 no monies were owed
to or due from the pension schemes (2007: £3,230, due from the pension schemes).

Rathbone Trust Company Jersey Limited (disposed of on 15 October 2008, see note 12) was the tenant of a property 
in St Helier, Jersey, the freehold of which is owned by a number of the directors of the Company. The lease expired 
on 31 December 2008.

Unless otherwise specified, all amounts outstanding with related parties are unsecured and will be settled in cash. 
No guarantees have been given or received. No provisions have been made for doubtful debts in respect of the amounts
owed by related parties.

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Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
 
Notes to the consolidated accounts continued

35 Consolidated cash ﬂow statement

For the purposes of the cash flow statement, cash and cash equivalents comprise the following balances with less than
three months’ maturity from the date of acquisition.

Cash and balances at central banks (note 15)
Loans and advances to banks (note 16)
Available for sale investment securities (note 18)

Cash flows arising from the issue of ordinary shares in the year comprise:

Share capital issued (note 29)
Share premium on issue of ordinary shares (note 29)
Shares issued in relation to share based schemes 
for which no consideration recieved

Net cash inflow from issue of shares

36 Events after the balance sheet date

2008
£’000

3
175,227
79,000

254,230

2008
£’000

9
1,199

–

1,208

2007
£’000

4
214,216
–

214,220

2007
£’000

20
3,240

(297)

2,963

On 10 February 2009, the Group completed the disposal of Rathbone Trust Company SA, for cash consideration of
£98,000 and deferred consideration, receivable after two years, of up to £98,000. On 10 February 2009, the Group made
an interest free loan to Rathbone Trust Company SA of £1,111,000 which is repayable over three years. At 10 February
2009, the net assets of Rathbone Trust Company SA were £9,000.

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Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
Company accounts

Contents

Independent auditors’ report 

to the members of Rathbone Brothers Plc

Company balance sheet 
Statement of total recognised gains and losses
Notes to the individual accounts
Notice of Annual General Meeting
Five year record
Corporate information
Our ofﬁces 

114
116
117
118
124
130
131
132

Rathbone Brothers Plc Report and accounts 2008
Rathbone Brothers Plc Report and accounts 2008

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Independent auditors’ report to the members of Rathbone Brothers Plc

We have audited the Company ﬁnancial statements of Rathbone Brothers Plc for the year ended 31 December 2008,
which comprise the Company balance sheet, Statement of total recognised gains and losses and the related notes. These
Company ﬁnancial statements have been prepared under the accounting policies set out therein. We have also audited
the information in the Remuneration report that is described as having been audited.

We have reported separately on the Group ﬁnancial statements of Rathbone Brothers Plc for the year ended 
31 December 2008.

Respective responsibilities of directors and auditors

The directors’ responsibilities for preparing the Annual Report, the Remuneration report and the Company ﬁnancial
statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally
Accepted Accounting Practice) are set out in the Statement of directors’ responsibilities.

Our responsibility is to audit the Company ﬁnancial statements and the part of the Remuneration report to be audited in
accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). 

This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance
with Section 235 of the Companies Act 1985 and for no other purpose. We do not, in giving this opinion, accept or
assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it
may come save where expressly agreed by our prior consent in writing.

We report to you our opinion as to whether the Company ﬁnancial statements give a true and fair view and whether the
Company ﬁnancial statements and the part of the Remuneration report to be audited have been properly prepared in
accordance with the Companies Act 1985. We also report to you whether in our opinion the information given in the
Directors’ report is consistent with the Company ﬁnancial statements. The information given in the Directors’ report
includes that speciﬁc information presented in the Business review, which is cross referenced from the Business review
section of the Directors’ report.

In addition we report to you if, in our opinion, the Company has not kept proper accounting records, if we have not
received all the information and explanations we require for our audit, or if information speciﬁed by law regarding directors’
remuneration and other transactions is not disclosed.

We read other information contained in the Annual Report and consider whether it is consistent with the audited
Company ﬁnancial statements. The other information comprises only the Chairman’s statement, Chief executive’s
statement, Business review, Directors’ report, Corporate governance report, the unaudited part of the Remuneration
report and all other information listed on the contents page. We consider the implications for our report if we become
aware of any apparent misstatements or material inconsistencies with the Company ﬁnancial statements. Our
responsibilities do not extend to any other information.

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Rathbone Brothers Plc Report and accounts 2008

 
 
 
 
 
 
 
 
 
Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing
Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in
the Company ﬁnancial statements and the part of the Remuneration report to be audited. It also includes an assessment
of the signiﬁcant estimates and judgements made by the directors in the preparation of the Company ﬁnancial statements,
and of whether the accounting policies are appropriate to the Company’s circumstances, consistently applied and
adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary 
in order to provide us with sufﬁcient evidence to give reasonable assurance that the Company ﬁnancial statements and 
the part of the Remuneration report to be audited are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the
Company ﬁnancial statements and the part of the Remuneration report to be audited.

Opinion

In our opinion:
•  the Company ﬁnancial statements give a true and fair view, in accordance with United Kingdom Generally Accepted

Accounting Practice, of the state of the Company’s affairs as at 31 December 2008;

•  the Company ﬁnancial statements and the part of the Remuneration report to be audited have been properly prepared

in accordance with the Companies Act 1985; and

•  the information given in the Directors’ report is consistent with the Company ﬁnancial statements.

PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
London

3 March 2009

Rathbone Brothers Plc Report and accounts 2008

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Company balance sheet
for the year ended 31 December 2008

Fixed assets
Tangible fixed assets
Investments in subsidiaries
Available for sale equity securities

Total fixed assets

Current assets
Debtors

Amounts owed by subsidiary undertakings
Other debtors
Prepayments and accrued income

Cash at bank and in hand

Total current assets

Creditors: amounts falling due within one year
Bank loans
Amounts owed to subsidiary undertakings
Other taxes and social security costs
Accruals and deferred income

Total current liabilities

Net current assets

Total assets less current liabilities
Pension liability

Net assets

Called up share capital 
Share premium account
Available for sale reserve
Profit and loss account

Equity shareholders’ funds

Note

40

41

41

42

43

44

45

46

46

46

2008
£’000

–
22,562
2,991

25,553

30,103
3,966
841

34,910
13

34,923

(9,201)
(182)
(906)
(330)

(10,619)

24,304

49,857
(4,121)

45,736

2,143
28,957
2,943
11,693

45,736

2007
£’000

7,478
30,856
6,948

45,282

12,639
2,680
81

15,400
54

15,454

(12,267)
(96)
(1,127)
(605)

(14,095)

1,359

46,641
(4,645)

41,996

2,134
27,758
6,900
5,204

41,996

Approved by the Board of directors on 3 March 2009 and signed on its behalf by

A D Pomfret
Chief executive

R P Stockton
Finance director

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Rathbone Brothers Plc Report and accounts 2008

 
 
Statement of total recognised gains and losses
for the year ended 31 December 2008

Profit after taxation for the year
Actuarial (losses)/gains
Share based payments
(Loss)/gain from change in fair value of available for sale equity securities
Deferred tax taken (charged)/credited directly to equity shareholders’ funds

Total recognised gains and losses

Note

38

44

46

41

2008
£’000

24,968
(44)
(429)
(3,957)
(503)

20,035

2007
£’000

7,288
270
(816)
2,069
728

9,539

Rathbone Brothers Plc Report and accounts 2008

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Notes to the individual accounts

37 Signiﬁcant accounting policies

Basis of accounting

The separate financial statements of the Company are presented as required by the Companies Act 1985. They have
been prepared under the historical cost convention, as modified by the revaluation of certain financial instruments, and in
accordance with applicable United Kingdom accounting standards and law.

The Company has taken advantage of the exemption conferred by FRS 29 not to present the disclosures required by that
standard relating to financial risks in the Company’s solus accounts.

The principal accounting policies are summarised below. They have all been applied consistently throughout the year and
the preceding year.

Impairment

Tangible fixed assets are subject to review for impairment in accordance with FRS 11: ‘Impairment of fixed assets and
goodwill’. The carrying values of tangible fixed assets are written down by the amount of any permanent impairment and
the loss is charged as an operating cost to the profit and loss account in the period in which this occurs. The carrying
value of tangible fixed assets may be written up to a value no higher than the original depreciated cost, should an external
event reverse the effects of a previous impairment.

At each balance sheet date the Company reviews the carrying amount of its financial assets to determine whether there is
any indication that those assets have suffered an impairment loss. Where there is objective evidence that an available for
sale security is impaired the cumulative loss that has been recognised in reserves is removed from reserves and
recognised in the profit and loss account. An impairment loss in respect of an investment in equity instruments classified
as available for sale is not reversed through profit or loss. If the fair value of a debt instrument classified as available for
sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised
in the profit and loss account, the impairment is reversed through the profit and loss account.

Fixed assets

Fixed assets are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable
to the acquisition of the items.

Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost, less estimated residual value,
of each asset on a straight line basis over its expected useful life, as follows:

Leasehold premises:
Plant, equipment and computer hardware:

over the lease term
over three to five years

Investments in subsidiaries

Investments in subsidiaries are carried at cost less provisions for impairment.

Available for sale equity securities

Available for sale investments are those intended to be held for an indefinite period of time, which may be sold in response
to needs for liquidity or changes in interest rates, exchange rates or equity prices. 

Equity investments are initially recognised at fair value. For unlisted securities, the Company establishes fair value by using
valuation techniques, including the use of recent arm’s length transactions, discounted cash flow analysis, option pricing
models and other valuation techniques commonly used by market participants.

Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or been
effectively transferred, or where the Company has transferred substantially all risks and rewards of ownership.

Equity investments are subsequently carried at fair value. Gains and losses arising from changes in the fair value are
recognised directly in equity (except for changes arising from fluctuations in foreign exchange rates, which are recognised
as income or expenditure in the profit and loss account for monetary assets and directly in equity for non-monetary
assets), until the financial asset is derecognised or impaired at which time the cumulative gain or loss previously
recognised in equity should be recognised in profit or loss.

Rathbone Brothers Plc Report and accounts 2008

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37 Signiﬁcant accounting policies continued

Share based payments

The Company’s equity settled share option programme allows employees to acquire shares of the Company. The fair value
of options and share awards in relation to the Company’s Share Incentive Plan and Long Term Incentive Plan granted to
employees after 7 November 2002 and not vested as at 1 January 2005 is recognised as an employee expense with a
corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the
employees become unconditionally entitled to the options. The fair value of the options granted is measured using an
option pricing model, taking into account the terms and conditions upon which the options were granted. The amount
recognised as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is only
due to share prices not achieving the threshold for vesting. Share based payment costs in relation to subsidiaries'
directors and staff are recharged to those subsidiaries.

Post-retirement benefits

The Company operates pension schemes providing benefits based on final pensionable pay. The assets of the schemes
are held separately from those of the Company. Pension scheme assets are measured using market values. Pension
scheme liabilities are measured using a projected unit method and discounted at the current rate of return on a high
quality corporate bond of equivalent term and currency to the liability. The pension scheme surplus (to the extent that it is
recoverable) or deficit is recognised in full, net of any related deferred tax asset or liability. The movement in the scheme
surplus/deficit is split between operating charges, finance items and actuarial gains and losses.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Deferred taxation

Full provision, without discounting, is made for deferred taxation arising from timing differences which have arisen but not
reversed at the balance sheet date, except where otherwise required by accounting standards. Deferred tax assets are
recognised to the extent that it is more certain than not that there will be suitable taxable profits from which the future
reversal of the underlying timing differences can be deducted.

Guarantees

Where the Company enters into financial guarantee contracts to guarantee the indebtedness of subsidiaries, the
Company considers these to be insurance arrangements, and accounts for them as such. In this respect, the Company
treats the guarantee contract as a contingent liability until such time as it becomes probable that the Company will be
required to make a payment under the guarantee.

Loans and receivables

Loans and receivables are initially measured at fair value and subsequently carried at amortised cost using the effective
interest rate method. 

38 Proﬁt for the year

As permitted by Section 230 of the Companies Act 1985 the Company has elected not to present its own profit and loss
account for the year. Rathbone Brothers Plc reported a profit after tax for the financial year ended 31 December 2008 of
£24,968,000 (2007: £7,288,000).

Auditor’s remuneration for audit and other services to the Company is set out in note 9.

The average number of employees during the year was as follows:

Investment Management
Unit Trusts
Trust and Tax
Central Shared Services

Rathbone Brothers Plc Report and accounts 2008

2008

430
31
43
172

676

2007

398
31
47
157

633

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Notes to the individual accounts continued

39 Dividends

Details of the Company’s dividends paid and proposed for approval at the Annual General Meeting are set out in note 13.

40 Tangible ﬁxed assets

Cost at 1 January 2008
Disposals

Cost at 31 December 2008

Depreciation at 1 January 2008
Disposals

Depreciation at 31 December 2008

Net book value at 31 December 2008

Net book value at 1 January 2008

Short term 
leasehold
property
£’000

Plant and
equipment
£’000

Total
£’000

5,619
26,603
20,984
(5,619) (20,984) (26,603)

–

–

–

2,520
16,605
(2,520) (16,605)

19,125
(19,125)

–

–

–

–

–

–

3,099

4,379

7,478

With effect from 1 January 2008, the Company transferred all of its tangible fixed assets to its subsidiary undertaking,
Rathbone Investment Management Limited. 

41 Investments

At 1 January 2008
Disposals
Net loss from change in fair value

At 31 December 2008

Investments in
subsidiaries
£’000

Available for
sale equity
securities
£’000

Total
£’000

30,856
(8,294)
–

6,948
–
(3,957)

37,804
(8,294)
(3,957)

22,562

2,991

25,553

On 15 October 2008 the Company disposed of its entire holding in Rathbone Trust Company Jersey Limited and 
Rathbone Jersey Limited to the management of those businesses for £23,500,000 cash and £5,000,000 in vendor loan
notes (see note 42).

At 31 December 2008, the principal subsidiary undertakings, all of which were wholly owned, were as follows:

Subsidiary undertaking

Country of incorporation

Activity and operation

Rathbone Investment Management Limited

Great Britain

Rathbone Bank (BVI) Limited*
Rathbone Investment Management (C.I.) Limited*
Rathbone Trust Company Limited
Rathbone Stockbrokers Limited*
Rathbone Unit Trust Management Limited*
Rathbone Trust Company B.V.
Rathbone Trust Company SA*
Rathbone Trust Company (BVI) Limited*
Rathbone Pension & Advisory Services Limited 
Rathbone Trust (Singapore) Pte. Limited*

* held by subsidiary undertaking

British Virgin Islands
Jersey
Great Britain
Great Britain
Great Britain
The Netherlands
Switzerland
British Virgin Islands
Great Britain
Singapore

Investment management 
and banking services
Banking
Investment management
Trust services
Stockbroking
Unit trust management
Trust services
Trust services
Trust services
Pension advisory services
Trust services

A full list of the Company’s subsidiaries will be included in the Company’s annual return to Companies House.

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42 Other debtors

Deferred tax asset
Corporation tax debtor
Loans and receivables

2008
£’000

658
40
3,268

3,966

2007
£’000

2,539
141
–

2,680

Deferred income taxes are calculated on all temporary differences under the liability method using an effective tax rate of
28% (2007: 28%).

The movement on the deferred tax account is as follows:

At 1 January
Charged to the profit and loss account
Taken to equity – share based payments

The deferred tax asset is attributable to the following items:

Excess of depreciation
Share based payments

2008
£’000

2,539
(1,366)
(515)

658

2008
£’000

–
658

658

2007
£’000

2,103
(258)
694

2,539

2007
£’000

705
1,834

2,539

Loans and receivables comprise vendor loan notes (‘notes’) with a nominal value of £5,000,000 that were issued on
disposal of the Company’s holding of two subsidiaries (see note 41) under a management buy out (MBO). The notes are
repayable on the occurrence of certain events, principally the refinancing of the businesses disposed of under the MBO.
The notes are expected to be repaid after more than one year.

The notes bear no interest for three years from issue. Interest is then receivable at the Bank of England base rate on half of
the notes’ nominal value (currently £2,500,000) for the following two years. Thereafter, interest is receivable on the notes’
full nominal value at the Bank of England base rate.

43 Bank loans

The Company has drawn down a term loan of £9,201,000 (2007: £12,267,000) which is repayable in six six-monthly
instalments ending on 4 April 2011. Interest is payable on the loan at 0.7% above the London Inter-Bank Offer Rate.

44 Pension liability

Details of the defined benefit pension schemes operated by the Company and changes thereto are materially similar to
those of the Group, which are provided in note 28 to the consolidated accounts.

The pension liability reported for the Company is stated net of related deferred tax. 

Gross pension liability (note 28)
Related deferred tax (note 21)

Rathbone Brothers Plc Report and accounts 2008

2008
£’000

5,723 
(1,602)

4,121 

2007
£’000

6,452
(1,807)

4,645

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Notes to the individual accounts continued

45 Share capital

Details of the share capital of the Company together with changes thereto, options thereon and share based payments
are provided in note 29 to the consolidated accounts.

46 Reserves

At 1 January 2008
Profit for the year
Dividends paid 
Shares issued
Actuarial gains and losses
Revaluation of investment securities
Share based payments
– value of employee services
– cost of shares issued/purchased
Tax on equity items

At 31 December 2008

47 Reconciliation of movements in shareholders’ funds

Opening shareholders’ funds

Profit for the year
Dividends paid
Other recognised gains and losses relating to the year
Share based payments
Share capital issued

Net addition to/(reduction in) shareholders’ funds for the year

Closing shareholders’ funds

48 Contingent liabilities and commitments

The Company’s obligations under operating leases are borne by a subsidiary undertaking.

Share
premium
£’000

Available
for sale
Profit and
reserve loss account
£’000

£’000

27,758

6,900

1,199

(3,957)

5,204
24,968
(17,503)

(44)

1,299
(1,728)
(503)

28,957

2,943

11,693

2008
£’000

41,996

24,968
(17,503)
(4,504)
(429)
1,208

3,740

45,736

2007
£’000

46,408

7,288
(15,914)
1,076
(122)
3,260

(4,412)

41,996

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49 Related party transactions

The Company has taken advantage of the exemption given by FRS 8 not to disclose transactions and balances with 
its subsidiaries.

The remuneration of the key management personnel of the Company, who are defined as the directors, is set out in 
the audited part of the Remuneration report on pages 37 to 45. At 31 December 2008, key management and their close
family members had gross outstanding deposits of £635,000 (2007: £381,000) and gross outstanding loans of
£396,000 (2007: £181,000), of which £281,000 (2007: £181,000) was secured against portfolios held in Rathbones
nominee name, that were made on normal business terms. A number of the Company’s directors and their close family
members make use of the services provided by companies within the Group. Charges for such services are made 
at various staff rates.

One of the Company’s non-executive directors is an executive director of Novae Group plc, a related entity of which
underwrites part of the Company’s professional indemnity insurance policy.

During the year, an estate, of which one of the Company's directors is an executor, received and repaid in full a loan of
£511,000 from Rathbone Investment Management Limited on normal business terms.

The Company’s transactions with the pension funds are described in note 28 to the consolidated financial statements.
At 31 December 2008 no monies were owed to or due from the pension schemes (2007: £3,230, due from the 
pension schemes).

Unless otherwise specified, all amounts outstanding with related parties are unsecured and will be settled in cash. No
guarantees have been given or received. No provisions have been made for doubtful debts in respect of the amounts
owed by related parties.

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Notice of Annual General Meeting

Notice is hereby given that the thirty-eighth Annual General Meeting of the Company will be held at 159 New Bond Street,
London W1S 2UD on Thursday 7 May 2009 at 12.00 noon to consider and, if thought ﬁt, pass the following resolutions.

Resolutions 1 to 10 are ordinary resolutions requiring a majority of more than 50%. Resolution 10 is an ordinary resolution
but is classiﬁed by Article 61 of the Articles of Association of the Company as non-routine, special business.

Resolutions 11 to 14 are special resolutions requiring a majority of 75% or more.

2008 Report and Accounts

1

2

To adopt the Report of the directors and the Audited Accounts for the year ended 31 December 2008.

To approve the Remuneration report for the year ended 31 December 2008.

The Remuneration report can be found on pages 37 to 45 . Part 15 of the Companies Act 2006 requires the preparation 
of this report which must be approved by shareholders in general meeting. This does not affect the directors’ entitlements 
to remuneration and the result of this resolution is advisory only.

Final dividend

3

To approve the ﬁnal dividend of 26p per share for the year ended 31 December 2008.

The payment of the ﬁnal dividend requires the approval of shareholders in general meeting.

Election and re-election of directors

4

5

6

To elect Mr R P Stockton as a director of the Company.

To re-elect Mr O R P Corbett as a director of the Company.

To re-elect Mr M Robertshaw as a director of the Company.

Biographical details of the directors seeking election or re-election can be found on pages 24 to 26 . Paul Stockton was
appointed to the Board on 24 September 2008. Article 95 of the Articles of Association of the Company requires that each
director who has not been elected or re-elected by the members at either of the two immediately previous Annual General
Meetings shall retire from ofﬁce and seek election or re-election. Following formal performance evaluation by the Board and
individual appraisal by the Chairman, the Board conﬁrms that all directors seeking election or re-election continue to be
effective and demonstrate commitment to the role.

Auditors

7

To appoint PricewaterhouseCoopers LLP as auditors until the conclusion of the next Annual General Meeting before
which accounts are laid.

8

To authorise the directors to agree the remuneration of the auditors.

The auditors of a public company must be appointed for each ﬁnancial year at the meeting at which the accounts for the
previous ﬁnancial year are laid.

Political donations

9

That in accordance with section 366 of the Companies Act 2006 the Company and any company which is or becomes
a subsidiary of the Company during the period to which this resolution relates be and is hereby authorised:
(a)

to make political donations to political parties, political organisations or independent 
election candidates; and
to incur political expenditure,

(b)

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Political donations continued

Provided that:

(i)

(ii)

(iii)

the authority conferred by this resolution shall commence on the date on which it is passed and expire 15 months
after the passing of this resolution or, if earlier, on the date of the next Annual General Meeting (or adjournment
thereof) after the passing of this resolution;

the aggregate amount of such donations and expenditure shall not exceed £50,000 and the amount authorised
under each of paragraphs (a) and (b) above shall also be limited to such amount; and

in this resolution the expressions ‘political donation’, ‘political parties’, ‘political organisation’, ‘political expenditure’
and ‘independent election candidate’ have the meanings set out in Part 14 of the Companies Act 2006.

Part 14 of the Companies Act 2006 prohibits the Company and its subsidiaries from making donations of more than 
£5,000 in any twelve month period to a political party or other political organisations or to an independent election
candidate unless they have been authorised to make donations by the Company’s shareholders.

The Company has a policy that it does not make donations to political parties, political organisations or independent 
election candidates and the Board will not use these authorities, if given, to do so. However, the Companies Act 2006
includes broad and ambiguous deﬁnitions of political donations and expenditure, which may have the effect of covering
some normal business activities, and therefore presents potential for inadvertent or technical breach. The Board therefore
considers that it would be prudent to obtain shareholder approval for the Company to make donations to political parties,
political organisations and independent election candidates and to incur political expenditure up to the speciﬁed limit 
in the forthcoming year.

Authority to allot relevant securities

10 (a)  That the directors be and they are hereby generally and unconditionally authorised in accordance with 

section 80 of the Companies Act 1985 (the ‘Act’) to exercise all the powers of the Company to allot:

(i)

relevant securities (as deﬁned in section 80 of the Act) up to an aggregate nominal amount of £700,000; and

(ii) equity securities (as deﬁned in section 94 of the Act) up to a further aggregate nominal amount of £700,000 

in connection with an offer by way of a rights issue, 

such authorities to expire 15 months after the passing of this resolution or, if earlier, on the date of the next 
Annual General Meeting (or adjournment thereof) after the passing of this resolution. Notwithstanding such expiry,
the authorities shall in each case still permit the Company to make allotments of relevant securities in respect of
offers or agreements made before such expiry, which would or might require relevant securities to be allotted after
such expiry. All previous authorities to directors pursuant to section 80 of the Act are hereby revoked without
prejudice to any allotment of securities pursuant thereto.

(b) For the purposes of this resolution ‘rights issue’ means an offer to ordinary shareholders in proportion (as nearly as
may be practicable) to their existing holdings (and, if applicable, to the holders of any other class of equity security
in accordance with the rights attached to such class) to subscribe further securities by means of the issue of a
renounceable letter (or other negotiable document) which may be traded for a period before payment for the
securities is due, subject to such exclusions or other arrangements as the directors may deem necessary or
expedient in relation to (i) fractions of such securities, (ii) the issue, transfer and/or holding of any securities in
certiﬁcated form or in uncertiﬁcated form, (iii) the use of one or more currencies for making payments in respect 
of such offer, (iv) any such shares or other securities being represented by depositary receipts, (v) treasury shares
or (vi) any legal or practical problems arising under the laws of, or the requirements of any regulatory body or any
stock exchange, in any territory.

Paragraph (a)(i) of this resolution is proposed annually in order to provide a measure of authority to the directors to allot
ordinary shares, limited to approximately 33% of the issued share capital of the Company at 3 March 2009, in
circumstances deﬁned by the resolution so as to enable them to respond, in the interests of the Company, to any
appropriate opportunities that may arise.

In addition, this resolution seeks to authorise the directors to allot more ordinary shares, limited to the amount set out in
paragraph (a)(ii) being approximately a further 33% of the issued share capital of the Company at 3 March 2009. This
authority may be used for fully pre-emptive rights issues and is consistent with guidance issued by the Association of British
Insurers on 31 December 2008.

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Notice of Annual General Meeting continued

Power to waive pre-emption rights

11 (a) That the directors be and they are hereby empowered in accordance with section 95 of the Companies Act 1985
(the ‘Act’) to allot equity securities (as deﬁned in section 94 of the Act), payment for which is to be wholly in cash:

(i) pursuant to the authority given by paragraph (a)(i) of resolution 10 in the notice of this meeting:

(A) in connection with any rights issue, open offer or other pre-emptive offer, open for acceptance for a period

determined by the directors, to the holders of ordinary shares on the register on any ﬁxed record date in proportion
to their holdings of ordinary shares (and, if applicable, to the holders of any other class of equity security in
accordance with the rights attached to such class), subject to such exclusions or other arrangements as the
directors may deem necessary or expedient in relation to (i) fractions of such securities, (ii) the issue, transfer
and/or holding of any securities in certiﬁcated form or in uncertiﬁcated form, (iii) the use of one or more currencies
for making payments in respect of such offer, (iv) any such shares or other securities being represented by
depositary receipts, (v) treasury shares or (vi) any legal or practical problems arising under the laws of, or the
requirements of any regulatory body or any stock exchange in, any territory; and

(B) other than pursuant to paragraph (a)(i)(A) above, up to an aggregate nominal amount of £100,000; and

(ii) pursuant to the authority given by paragraph (a)(ii) of resolution 10 in the notice of this meeting in connection 

with a rights issue:

as if section 89(1) of the Act did not apply to any such allotment. References herein to the allotment of
equity securities shall include the sale of treasury shares (within the meaning of section 162A of the Act).

(b) The powers given by this resolution shall expire 15 months after the passing of this resolution or, if earlier,

on the date of the next Annual General Meeting (or adjournment thereof) after the passing of this resolution.
Notwithstanding such expiry, the authority shall still permit the Company to make allotments of equity securities
in respect of offers or agreements made before such expiry which would or might require equity securities to 
be allotted after such expiry. All previous disapplications of section 89(1) of the Act are hereby revoked without
prejudice to any allotment of securities pursuant thereto.

(c) For the purposes of this resolution ‘rights issue’ has the same meaning as in resolution 10 in the notice of 

this meeting.

This ﬁrst special resolution seeks authority, limited to approximately 5% of the issued share capital of the Company at 
3 March 2009, regarding allotments, other than to members proportionately to their respective shareholdings and for which
payment is to be wholly in cash. Additionally, the resolution seeks authority for the Company to sell or otherwise deal with
treasury shares (being shares acquired and held by the Company) without necessarily involving shareholders. Over the
three years to 31 December 2008, shares with a nominal value of £79,594 were allotted for cash, representing 3.7% 
of the issued share capital at that date. This compares with institutional shareholder guideline limits of 7.5% in any 
three-year period.

Renewal of this limited authority will enable the directors to issue shares, in the interests of the Company, in response 
to any appropriate opportunities that may arise. For transactions of a substantial nature involving the allotment of shares, 
it is normal for the UK Listing Authority or company law to require shareholder approval for the speciﬁc transaction
notwithstanding this general authority.

Authority to purchase ordinary shares

12 That the directors be and they are hereby granted pursuant to Article 12 of the Articles of Association of the Company
general and unconditional authority to make market purchases (as deﬁned by section 163(3) of the Companies Act
1985) of any of its ordinary shares of 5p each upon and subject to the following conditions:

(a)

the maximum number of ordinary shares in the Company hereby authorised to be acquired is 2,000,000 shares
(being approximately 5% of the issued share capital of the Company at 3 March 2009);

(b)

the minimum price which may be paid for an ordinary share is 5p;

Rathbone Brothers Plc Report and accounts 2008

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Authority to purchase ordinary shares continued

(c)

(d)

the maximum price which may be paid for an ordinary share is the higher of (i) an amount equal to 105% of 
the average of the middle market quotations for an ordinary share taken from the London Stock Exchange Daily
Ofﬁcial List for the ﬁve business days immediately preceding the day on which the share is purchased and (ii) the
amount stipulated by Article 5(i) of the Buy-back and Stabilisation Regulation 2003 (in each case, exclusive of
expenses); and

the authority hereby conferred shall (unless previously renewed) expire 15 months after the passing of this
resolution or, if earlier, on the date of the next Annual General Meeting (or adjournment thereof) after the passing of
this resolution except that the Company may at any time prior to the expiry of such authority enter into a contract for
the purchase of ordinary shares which would or might be completed wholly or partly after the expiry of such
authority and may complete a purchase of ordinary shares in pursuance of any such contract.

This second special resolution is to renew the authority granted to the directors at the Annual General Meeting on 7 May
2008 to purchase the Company’s own ordinary shares under certain stringent conditions. The authority will be used only
when the directors consider that it would be advantageous to the Company and the effect would be to enhance earnings
per share. Shares purchased will be held as treasury shares as deﬁned in section 162A of the Companies Act 1985. 

At 3 March 2009 there were options outstanding to subscribe for 906,963 new ordinary shares in the Company. 
This represents approximately 2.1% of the issued ordinary share capital of the Company at that date and would represent
approximately 2.2% if the authority to buy back shares under this resolution were used in full.

Authority for the convening of general meetings of the Company on 14 clear days' notice

13 That any general meeting of the Company, other than an Annual General Meeting, may be convened by the giving of not

less than 14 clear days' notice.

This third special resolution is required to reﬂect the proposed implementation in August 2009 of the Shareholder Rights
Directive. The regulation implementing this Directive will increase the notice period for general meetings of the Company to
21 days. The Company is currently able to call general meetings (other than an Annual General Meeting) on 14 clear days’
notice and would like to preserve this ability. In order to be able to do so after the implementation of the Directive,
shareholders must have approved the calling of meetings on 14 days’ notice. Resolution 13 seeks such approval. The
approval will be effective until the Company’s next Annual General Meeting, when it is intended that a similar resolution will
be proposed. The Company will also need to meet the requirements for electronic voting under the Directive before it can
call a general meeting on 14 days' notice.

Amendment to the Articles of Association

14 That with effect from 00.01 a.m. on 1 October 2009:

(a)  the Articles of Association of the Company be amended by deleting all the provisions of the Company’s 

Memorandum of Association which, by virtue of section 28 of the Companies Act 2006, are to be treated as 
provisions of the Company’s Articles of Association; and

(b)  the Articles of Association produced to the meeting and initialled by the Chairman of the meeting for the 

purpose of identiﬁcation be adopted as the Articles of Association of the Company in substitution for, and to 
the exclusion of, the existing Articles of Association.

It is proposed in special resolution 14 to adopt new Articles of Association (the ‘New Articles’) in order to update the
Company’s current Articles of Association to take account of changes in applicable company law brought about by the
Companies Act 2006 (the ‘2006 Act’). The 2006 Act is being implemented in phases with additional provisions being
brought into force on 1 October 2009. Accordingly, the resolution adopting the New Articles will only become effective on 
1 October 2009. The principal changes introduced in the New Articles are summarised below:

(i) The Company's objects

The provisions regulating the operations of the Company are currently set out in the Company’s Memorandum and Articles
of Association. The Company’s Memorandum contains, among other things, the objects clause which sets out the scope of
the activities which the Company is authorised to undertake. This is drafted to give a wide scope.

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Notice of Annual General Meeting continued

Amendment to the Articles of Association continued

The 2006 Act signiﬁcantly reduces the constitutional signiﬁcance of a company’s memorandum. The 2006 Act provides that
a memorandum will record only the names of subscribers and the number of shares each subscriber has agreed to take in
the company. The objects clause and all other provisions which are currently contained in a company’s memorandum will be
deemed to be contained in a company’s articles of association with effect from 1 October 2009. The Company can remove
these provisions by special resolution. 

Further, the 2006 Act abolishes the need for companies to have objects clauses. For this reason the Company is proposing
to remove its objects clause together with the other provisions of its Memorandum which will be deemed to be contained in
its Articles of Association with effect from 1 October 2009. Resolution 14(a) conﬁrms the removal of these provisions for
the Company. As the effect of this resolution will be to remove the statement currently in the Company’s Memorandum of
Association regarding limited liability, the New Articles also contain an express statement regarding the limited liability of the
shareholders.

(ii) Authorised share capital and unissued shares

The 2006 Act abolishes the requirement for a company to have an authorised share capital and the New Articles reﬂect this.
Directors will still be limited as to the number of shares they can at any time allot because allotment authority continues to be
required under the 2006 Act, save in respect of employee share schemes.

The New Articles showing all the changes to the existing Memorandum and Articles of Association are available for
inspection, as noted on page129 of this document.

By Order of the Board

Richard Loader
Company secretary

31 March 2009

Registered Ofﬁce:
159 New Bond Street
London W1S 2UD

Notes

1

Pursuant to Regulation 41 of the Uncertiﬁcated Securities Regulations 2001 and subject to the provisions for 
proxies, the Company speciﬁes that only those shareholders registered in the register of members of the Company 
as at 6.00pm on 5 May 2009 (or, if the meeting is adjourned, 6.00pm on the day two days prior to the day ﬁxed for the
adjourned meeting) shall be entitled to attend or vote at the meeting in respect of the number of shares registered 
in their name at that time. Subsequent changes to the entries on the register will be disregarded in determining the
rights of any person to attend or to vote at the meeting.

2 Members entitled to attend, speak and vote are entitled, if they so wish, to appoint one or more proxies to attend, 

speak and vote in their stead provided that each proxy is appointed to exercise the rights attached to a different share 
or shares held by that member. A proxy need not be a member. Proxy forms should be completed and returned to the
Company’s Registrars, Equiniti, at Aspect House, Spencer Road, Lancing, West Sussex BN99 6ZL by no later than
12.00 noon on 5 May 2009. The completion and return of the form of proxy will not prevent you from attending and
voting at the Annual General Meeting if you so wish.

The ‘vote withheld’ option is provided on the proxy card to enable you to abstain on any particular resolution. However, 
it should be noted that a ‘vote withheld’ is not a vote in law and will not be counted in the calculation of the proportion 
of votes ‘for’ and ‘against’ a resolution.

3 CREST members who wish to appoint a proxy or proxies through CREST electronic proxy appointment service may 
do so for the Annual General Meeting to be held on Thursday 7 May 2009 and any adjournment thereof by using the
procedures described in the CREST Manual. CREST personal members or other CREST sponsored members, and
those CREST members who have appointed a voting service provider, should refer to their CREST sponsor or voting
service provider, who will be able to take the appropriate action on their behalf.

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Notes continued 

In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST
message (a ‘CREST Proxy Instruction’) must be properly authenticated in accordance with the specifications of
CREST’s operator, Euroclear UK & Ireland Limited (‘Euroclear’) and must contain the information required for such
instructions, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment 
of a proxy or an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be
transmitted so as to be received by Equiniti (ID RA19) by no later than 12.00 noon on 5 May 2009. No message
received through the CREST network after this time will be accepted. For this purpose, the time of receipt will be taken
to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which
our registrars are able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this
time, any change of instructions to proxies appointed through CREST should be communicated to the appointee
through other means.

CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear
does not make available special procedures in CREST for any particular messages. Normal system timings and
limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST
member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has
appointed a voting service provider, to procure that his CREST sponsor or voting service provider take) such action 
as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time.
In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are
referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system
and timings.

The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the
Uncertiﬁcated Securities Regulations 2001.

4  Any person to whom this notice is sent who is a person nominated under section 146 of the Companies Act 2006 
to enjoy information rights (a ‘Nominated Person’) may, under an agreement between him/her and the shareholder 
by whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the
Annual General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise 
it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of 
voting rights.

5  The statement of rights of members in relation to the appointment of proxies in paragraphs 2 and 3 above does 

not apply to Nominated Persons. The rights described in these paragraphs can only be exercised by shareholders 
of the Company.

6  As at 4 March 2009 (being the last practicable date prior to the printing of this Notice) the Company’s issued share
capital consists of 42,858,196 ordinary shares, carrying one vote each. Therefore, the total voting rights in the
Company as at 4 March 2009 are 42,858,196.

7  A memorandum of the terms of all contracts of service between Directors and the Company (or any of its subsidiaries)

is available for inspection at the Registered Ofﬁce during business hours on any weekday (public holidays excluded).
The memorandum will also be available for inspection at the place of the Annual General Meeting for at least 15 minutes
prior to the meeting and during the meeting. In addition, a copy of the proposed new Articles of Association of the
Company and a copy of the existing Memorandum and Articles of Association of the Company marked to show the
changes being proposed by resolution 14 will be available for inspection at the Registered Ofﬁce during business hours
on any weekday (public holidays excluded) from 31 March 2009 to the date of the meeting, and at the place of the
Annual General Meeting for at least 15 minutes prior to the meeting, and during the meeting.

8 

In order to facilitate voting by corporate representatives at the meeting, arrangements will be put in place at the meeting
so that (i) if a corporate shareholder has appointed the Chairman of the meeting as its corporate representative to vote
on a poll in accordance with the directions of all of the other corporate representatives for that shareholder at the
meeting, then on a poll those corporate representatives will give voting directions to the Chairman and the Chairman
will vote (or withhold a vote) as corporate representative in accordance with those directions; and (ii) if more than one
corporate representative for the same corporate shareholder attends the meeting but the corporate shareholder has not
appointed the Chairman of the meeting as its corporate representative, a designated corporate representative will be
nominated, from those corporate representatives who attend, who will vote on a poll and the other corporate
representatives will give voting directions to that designated corporate representative. Corporate shareholders are
referred to the guidance issued by the Institute of Chartered Secretaries and Administrators on proxies and corporate
representatives (www.icsa.org.uk) for further details of this procedure.

Rathbone Brothers Plc Report and accounts 2008

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Five year record

Total revenue
Operating income
Operating profit
Exceptional items
Profit before tax
Tax
Profit after tax
Equity dividends paid and proposed

Basic earnings per share

Diluted earnings per share

Net dividends per ordinary share

IFRS
2008
£’000

178,351
131,751
44,160
(1,404)
42,756
(13,489)
29,267
(17,984)

68.47p

67.90p

42.0p

IFRS
2007
£’000

178,261
134,480
47,302
–
47,302
(14,212)
33,090
(17,479)

77.79p

76.54p

41.0p

IFRS
2006
£’000

163,348
133,686
44,720
–
44,720
(12,582)
32,138
(14,786)

76.62p

74.71p

35.0p

IFRS
2005
£’000

135,064
113,185
36,679
(1,381)
35,298
(10,617)
24,681
(12,351)

60.13p

58.84p

30.0p

IFRS
2004
£’000

110,280
95,527
28,492
–
28,492
(8,540)
19,952
(11,221)

48.99p

48.07p

27.5p

Equity shareholders’ funds

184,631

184,750

159,149

130,417

117,440

Total funds under management

£10.46bn

£13.12bn

£12.24bn

£9.48bn

£7.68bn

The amounts disclosed for 2004 to 2006 include the results of operations that were discontinued in 2008.

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Corporate information

Company secretary and registered office

R E Loader FCA
Rathbone Brothers Plc
159 New Bond Street
London W1S 2UD

Company No. 1000403
www.rathbones.com
richard.loader@rathbones.com

Registrars and transfer office

Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA

www.equiniti.com

Rathbone Brothers Plc Report and accounts 2008

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Port of Liverpool Building
Pier Head
Liverpool L3 1NW
Tel +44 (0)151 236 6666
Fax +44 (0)151 243 7001

Fiennes House
32 Southgate Street
Winchester
Hampshire SO23 9EH
Tel +44 (0)1962 857 000
Fax +44 (0)1962 857 001

Rathbone Investment Management (C.I.) Limited

Rathbone House, 15 Esplanade
St Helier
Jersey JE1 2RB
Channel Islands
Tel +44 (0)1534 740500
Fax +44 (0)1534 740599

Unit trusts

Rathbone Unit Trust Management Limited

159 New Bond Street
London W1S 2UD
Tel +44 (0)20 7399 0399
Fax +44 (0)20 7399 0057

Trust offices

Rathbone Trust Company Limited

159 New Bond Street
London W1S 2UD
Tel +44 (0)20 7399 0000
Fax +44 (0)20 7399 0011

Port of Liverpool Building 
Pier Head
Liverpool L3 1NW
Tel +44 (0)151 236 6666
Fax +44 (0)151 243 7001

Our offices

Head office

159 New Bond Street
London W1S 2UD
Tel +44 (0)20 7399 0000
Fax +44 (0)20 7399 0011

Investment management offices

Rathbone Investment Management Limited

159 New Bond Street
London W1S 2UD
Tel +44 (0)20 7399 0000
Fax +44 (0)20 7399 0011

Temple Point
1 Temple Row
Birmingham B2 5LG
Tel +44 (0)121 233 2626
Fax +44 (0)121 236 7966

10 Queen Square
Bristol BS1 4NT
Tel +44 (0)117 929 1919
Fax +44 (0)117 929 1939

West Wing, Freemasons Hall
Bateman Street
Cambridge CB2 1NA
Tel +44 (0)1223 345 370
Fax +44 (0)1223 307 500

5 North Pallant
Chichester
West Sussex PO19 1TJ
Tel +44 (0)1243 775 373
Fax +44 (0)1243 776 103

Charlotte House
2 South Charlotte Street
Edinburgh EH2 4AW
Tel +44 (0)131 247 8100
Fax +44 (0)131 247 8200

The Senate
Southernhay Gardens
Exeter EX1 1UG
Tel +44 (0)1392 201 000
Fax +44 (0)1392 201 001

The Stables
Levens Hall
Kendal
Cumbria LA8 0PB
Tel +44 (0)1539 561 457
Fax +44 (0)1539 561 367

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Rathbone Brothers Plc Report and accounts 2008

 
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Designed and produced by Linnett Webb Jenkins.

Rathbone Brothers Plc
159 New Bond Street
London W1S 2UD

Tel +44 (0)20 7399 0000
Fax +44 (0)20 7399 0011

www.rathbones.com