Rathbone Brothers Plc
Report and accounts 2009
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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 2009,
Rathbones managed
£13.10 billion of client funds
of which £12.16 billion
are managed by Rathbone
Investment Management.
Financial highlights
2009
2008
% change
£116.8m £131.2m (11.0)%
Funds under management £13.10bn £10.46bn 25.2%
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
67.57p (30.6)%
2.5%
44.45p
–
42.0p
£29.5m £42.3m (30.3)%
46.87p
45.55p
42.0p
1 Continuing operations exclude businesses disposed of and classified as
held for sale (see note 10 to the consolidated financial statements)
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Relationships
We do not sell products –
we offer a service. For us, that is
an important distinction.
Page 13
Independence
Rathbones is an independent,
listed company.
Page 15
Operational excellence
We are focused on providing
high-quality, personalised investment
management and wealth management
services to private clients, charities
and trustees.
Page 17
Stability
Rathbones is a long-established,
leading investment manager that has
built a strong reputation for quality
and permanence.
Page 19
Skill
The Rathbone Investment
Process provides structure and
well-researched guidance for
investment managers to draw on.
Page 21
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Chairman’s statement
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Mark Powell
Chairman
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In this very challenging environment,
Rathbones has achieved net organic growth
in funds under management of 6.7%. In the
last quarter of the year we entered into an
agreement with Lloyds Banking Group which
had, to 31 December 2009, brought some
2,000 clients and £381 million of funds under
management to Rathbones.
Total growth in funds under management,
excluding market movements was 12.5%
in the year.
Extremely low base rates make it very difficult
for Rathbones to benefit from net interest
income on client deposits. During the year,
net interest income fell by 40.3% from £31.0
million in 2008 to £18.5 million in 2009.
In the same period, funds under management
in Rathbone Unit Trust Management fell 8.7%
from £1.03 billion at the beginning of the
year to £0.94 billion at 31 December 2009
as net redemptions outweighed positive
market movements.
Results and dividends
Composition of the Board
Profit before tax from continuing operations for
the year to 31 December 2009 were
£29.5 million compared with £42.3 million
in 2008. This figure is struck after charging
£0.8 million in connection with the Lloyds
Banking Group transaction in 2009 and a
Financial Services Compensation Scheme
levy cost of £0.2 million (2008: £1.4 million).
2009 basic earnings per share were 45.55p
compared with 44.45p in 2008. Basic earnings
per share from continuing operations were
46.87p (2008: 67.57p) reflecting the sale
of our overseas businesses in that year.
In our interim statement we announced that
Peter Pearson Lund, a director of the Company
and chief executive of Rathbone Unit Trust
Management Limited, was planning to retire
in 2010. He will leave us on 31 March 2010
when Mike Webb takes charge as chief
executive of Rathbone Unit Trust Management
Limited. Peter has led the establishment of
our unit trust business over the last ten years
and has done so with great flair. He leaves a
business which has contributed to the growth
and reputation of Rathbones and has the
potential to develop further.
The Board recommends that a second interim
dividend of 26.0p per share be paid in place
of a final dividend. This makes an unchanged
total dividend per share of 42.0p for the year
and reflects our strong balance sheet and
regulatory capital position. The second interim
dividend will be paid on 31 March 2010, and
there will be no final dividend.
Market and environment
Financial markets ended on a high in 2009,
after experiencing extreme volatility during
the year. Having fallen by 31.3% in 2008, the
FTSE 100 Index fell by a further 13.6% by
early March. It had subsequently recovered by
41.3% at the year end, a rise of 22.1% year on
year. Interest rates have remained at extremely
low levels despite the alarming increase in the
Public Sector Borrowing Requirement and the
uncertainty of an election year in 2010.
Funds under management in Rathbone
Investment Management (including Rathbone
Investment Management International) rose by
29.0% to £12.16 billion (2008: £9.43 billion).
This compares with a rise in the FTSE APCIMS
Balanced Index of 12.7% and the FTSE 100
Index of 22.1%. The average level of the
FTSE 100 Index on Rathbones’ key quarterly
charging dates was 4706 compared with
5227 in 2008, down 10.0%.
James Barclay who has been a non-executive
director for the past six years has decided
that he will not stand for re-election. Mark
Robertshaw has decided that he can no longer
devote the time he considers is appropriate
and will also not stand for re-election.
Peter, James and Mark have made important
and valuable contributions to our Board and we
thank them.
In January we announced the appointment
of Kate Avery and Kathryn Matthews as new
non-executive directors who bring valuable and
relevant experience of investment management
and the financial sector generally.
Outlook
The outlook for 2010 remains uncertain as
the UK faces an environment of exceptionally
low interest rates and a general election
before June 2010. The considerable benefits
of the transaction with Lloyds Banking Group
are expected to arise in 2011 and meanwhile
Rathbones continues to grow organically and
remains well-capitalised.
Mark Powell
Chairman
23 February 2010
Chief executive’s statement
Key highlights
Given a background of a FTSE 100 Index
at 4434 at the start of 2009 and the
considerable uncertainty regarding the future
of the UK economy, our full year profit from
continuing operations of £29.5 million is of
great credit to the hard work of all our staff.
Importantly in these difficult times we
have continued to grow our business
both organically and through a reasonably
substantial transaction with Lloyds Banking
Group towards the end of the year. We first
considered this transaction back in 2008,
which gives some indication of just how long
it can be before some growth opportunities
come to fruition. The transaction demonstrates
our ability to make acquisitions that fit
with our overall strategy and allow us to
spread operational and regulatory costs
across a larger business.
We have continued to watch our cost base very
closely, and for the second year running we
have limited overall pay inflation such that our
2010 payroll will increase by less than 2.0%
annualised compared to 2009. We believe it
is important to maintain our focus on costs and
to reward people through awards linked to
profit and growth.
We continue to invest in the business so that
we are better placed to take advantage of
growth opportunities as they arise. Early in
2010, we opened a new office in Aberdeen,
and this, coupled with the significant increase
in the size of our Edinburgh office as a result
of the Lloyds Banking Group transaction, will
substantially enlarge our presence in Scotland.
The Edinburgh office is now our second
largest office (as measured by funds under
management) and we anticipate moving
to larger premises in Edinburgh during 2010.
In addition to the ever-increasing cost of
regulation, we also continue to invest in
improving our systems and greatly improving
our online offering to Independent
Financial Advisers.
Although corporate acquisitions tend to make
the headlines, we have continued quietly to
recruit individual investment managers and
their clients. What we call net acquired growth
(either from new investment managers or
acquisitions) was £546 million in 2009. This,
together with net organic growth (where our
existing investment managers attract additional
client funds) of £631 million, represents a total
growth rate of over 12%.
With profit attributable to equity holders of
£19.6 million (2008: £19.0 million) the
dividend of 42.0p per share is 1.1 times
covered, reflecting our confidence in
the business.
Financial performance
Net operating income fell to £116.8 million
in 2009 from £131.2 million in 2008. Fees
in the second half recovered from a very
difficult first half and commission levels were
in line with 2008. The most noticeable income
shortfall was on interest margin. Following the
dramatic fall in interest rates in 2008 it is no
surprise that the interest margin in 2009 was
considerably lower than in previous years. Net
interest income fell to £18.5 million in 2009
from £31.0 million in 2008 with only £5.7
million earned in the second half of the year.
This reflects the full impact of exceptionally
low interest rates which have continued into
2010. We have also continued to be very
cautious about where we have placed our cash
as we have not wanted to take inappropriate
counterparty risks. By definition, this limits
our ability to achieve high interest rates on
the client money that is held by us as banker
and placed by us in the money markets.
Operating expenses fell 1.8% from
£88.9 million in 2008 to £87.3 million in
2009, but excluding intangible asset
amortisation, Financial Services Compensation
Scheme levies and Lloyds Banking Group
transaction costs, other operating expenses
were down 2.2%.
Rathbone Unit Trust Management Limited has
continued to experience net outflows of funds,
albeit mostly in the first half of 2009 following
a period of poor performance. Towards the
end of 2009 we have seen some signs of
improvement, although it will take a while to
rebuild momentum. Mike Webb joined us in
February 2010 and will be taking over as
chief executive of Rathbone Unit Trust
Management with effect from 1 April 2010.
We look forward to working with him to develop
this important part of Rathbones.
Our overall financial performance has also
been impacted by a number of specific
items. Government borrowing costs, which
largely drive levies payable to the Financial
Services Compensation Scheme, have been
lower than expected, so the profit and loss
charge for 2009 of £0.2 million is much more
favourable than the £1.4 million charged in
2008. Operating expenses in 2009 include
£0.8 million of costs arising from the Lloyds
Banking Group transaction. Intangible asset
amortisation was £2.0 million in 2009
compared with £1.3 million in 2008.
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Andy Pomfret
Chief executive
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Marketing and business development
For four years we have invested selectively in
background advertising in the national press
to increase awareness of Rathbones nationally.
We will continue to use advertising in this
way – not least where we make acquisitions.
Existing clients remain our best source of
referrals and the number of clients for whom
we now act has increased by some 8%
over the year to just below 34,000 at
31 December 2009.
green issues, so I expect the business to
continue to grow.
In addition to our practitioner-led investment
committee structure, we continue to dedicate
a small central team to researching both fund
of hedge funds and structured products to
ensure that those products that we approve
for investment are suitable for our clients. As
products become more complex, this becomes
an increasingly challenging role and one to
which additional resources will need to be
devoted in the future.
As indicated last year, the Retail Distribution
Review is causing many IFAs to review their
arrangements for discretionary investment
management, and we have arrangements
in place with a number of the larger and
more sophisticated IFAs, the most visible
with Cavanagh. This relationship alone has
added over £90 million to our funds under
management, and we are keen to see more
relationships develop as the implementation
of the RDR moves closer.
We have endeavoured to increase the appeal
of our products and our service for IFAs,
and launched two unitised multi asset funds
(a strategic growth portfolio fund targeting
inflation +5%, and a total return fund targeting
LIBOR +2%) accessed through a discretionary
mandate with Rathbone Investment
Management Limited. In line with our aim
to be a ‘one-stop-shop’ for IFAs looking to
outsource the investment management
of private client portfolios, we have launched
new marketing literature for IFAs which
outlines the more structured approach we
offer to selected firms. In the coming year
we will be running more IFA seminars (we
held nine during 2009) as we believe this
approach has and will bring us business
that we might otherwise not have seen.
Our charities team continues to grow, with
funds under management increasing to
nearly £1.4 billion at 31 December 2009
(2008: £1.1 billion), reflecting a combination
of good investment performance, energetic
marketing and continued high standards
of client service. The charities team won its
second Charity Times award and plans to hold
its first symposium for existing clients at the
Royal Society in London in September 2010.
Our ethical investment service, Rathbone
Greenbank Investments, has had a particularly
good year, growing funds under management
from £0.32 billion to £0.38 billion in the year.
It held some successful events in 2009, and
sponsored the Schumacher lecture in Bristol
to enhance its local profile. Investors continue
to become increasingly aware of ethical and
Corporate activity
In October 2009 we acquired some business
from Lloyds Banking Group through a
transaction consisting of three elements.
The Portfolio Management Service (‘PMS’)
of the Bank of Scotland had been through
considerable change over the last few years,
as the merger of Halifax and Bank of Scotland
to form HBOS was soon followed by the
takeover of HBOS by Lloyds TSB late in 2008.
The business had some £800 million of funds
under management, and over 2,500 former
clients have now consented to transfer their
portfolios to Rathbones, representing some
65% of the total number and nearly
£500 million of funds under management.
Of these funds, £381 million are included
in reported funds under management at
31 December 2009. We expect to employ
at least 12 individuals from the 50 or so who
worked at PMS to help provide our new
clients with stability and a high quality
investment service.
The second part of the transaction was to
acquire two legacy books of Lloyds’ clients
seeking an investment portfolio with a direct
investment in securities, something Lloyds
no longer wish to provide to clients with less
than £2 million invested. These two books of
business will migrate to us over the coming
year, but no staff will transfer from Lloyds
with them. This gives us an opportunity to
add funds under management to a number
of our offices.
Finally, Lloyds have agreed to refer to us all
of their clients who do not wish to subscribe
to their unitised service. Initially, this
arrangement has a five year term and we
are looking forward to developing this
relationship with Lloyds.
For all three parts of this acquisition, we will
only be paying for clients that sign up to
Rathbone standard terms, subject to some
minimum consideration levels in respect of
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the Lloyds legacy business. Our teams have
worked hard to ensure that the client migration
process runs smoothly. The investment in
systems, people and infrastructure that we
have made over several years has been
validated by the speed with which we have
been able to move clients on to our systems.
Other corporate activity involved the completion
of the sales of our offshore trust operations in
Geneva, Singapore and the BVI – each to their
management teams. We are currently finalising
the return of the BVI banking licence which
was used to facilitate transactions for a small
number of offshore trust clients. When that
happens early in 2010 we will have completed
all disposals relating to our former offshore
trust division. The sale of these businesses
has proved timely as the continued regulatory
pressure on offshore jurisdictions would
have made it more difficult for these
businesses to thrive under our ownership.
I am pleased that we have been able to
expand the UK trust business as part of
our overall strategy to develop a family office
service for a number of wealthy families.
This business continues to provide a means
to strengthen our relationships with a number
of investment management clients.
Treasury and financing
The acquisition from Lloyds will be funded
from our own internal resources. As noted last
year, we held significant amounts of surplus
regulatory capital following the sale of our
Jersey-based trust business and it is helpful
from an earnings perspective to put this to
good use. Our level of external borrowings
was £6.2 million at 31 December 2009
(2008: £9.2 million).
Our treasury team has continued to invest
very cautiously, selecting counterparties that
have an A rating (or above) from Fitch. Client
liquidity has reduced from £1.1 billion to
approximately £0.8 billion at 31 December
2009 as investment managers have
reinvested funds.
Investing in our business
Staff remain our most important asset; they
present the face of Rathbones to our clients.
Notwithstanding our pay restraint over the past
two years, our staff turnover rate remains low.
We operate a Share Incentive Plan into which
over 84% of our staff contribute on a monthly
basis. We have recently introduced a tax
efficient Save As You Earn scheme. This helps
to further our underlying desire to increase
staff shareholding in the business.
We continue to invest in staff training.
As the business has grown, we continue
to upgrade and improve the premises we
occupy (property being our second largest
cost element). During 2009 we moved to a
new office in Chichester and in early 2010
we opened in Aberdeen. We anticipate
moving to a new office in Edinburgh to
accommodate expansion in 2010.
Capital expenditure of £2.3 million on
software, property, plant and equipment
was 54% down on the £5.0 million spent
in 2008 largely as a result of cost focus
and project prioritisation in 2009 combined
with some £1.0 million of Liverpool office
refurbishment costs in 2008. We would
expect the level of investment to revert to
more normal levels in 2010 and beyond.
Regulation
We work hard to maintain good relationships
with our regulators. The burden of regulation
is increasing and we are very much aware that
we may face additional regulations that are
aimed at much larger banks.
Over the year we have worked on a number of
‘Treating Clients Fairly’ projects – most notably
undertaking a survey of our existing clients.
Overall, the feedback received was positive
but there will be a number of lessons that we
can learn so that we are able to improve our
services in the future.
Outlook
Overall 2009 was a challenging year for
the business, albeit ending on a rather more
positive note. Markets in 2010 may well be as
volatile and unpredictable.
The business is well capitalised, we have
demonstrated we can make acquisitions, and
our organic growth continues. We are well
placed for the future.
I take this opportunity to thank all our staff
who have worked so hard in very difficult
circumstances. I also thank our clients who
have remained very supportive throughout
the year.
Andy Pomfret
Chief executive
23 February 2010
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Rathbones at a glance
Total Rathbones
Investment Management
Funds under management
Investment Management
Unit Trusts
2009
£bn
12.16
0.94
13.10
2008
£bn
9.43
1.03
10.46
Operating income (continuing operations)
Investment Management
Unit Trusts
Trust and Tax
2009
£m
104.3
7.7
4.7
116.7
2008
£m
113.9
12.4
4.9
131.2
Profit before tax (continuing operations)
Investment Management
Unit Trusts
Trust and Tax
2009
£m
29.2
0.1
0.2
29.5
2008
£m
39.7
2.4
0.2
42.3
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
• Aberdeen (opened in January 2010)
• Birmingham
• Bristol
• Cambridge
• Chichester
• Edinburgh
• Exeter
• Jersey
• Kendal
• Liverpool
• London
• Winchester
Head of Investment Management
• Richard Lanyon
Websites
• General: www.rathbones.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
Total
AUM
10,368
10,200
9,414
8,193
8,150
7,014
4,590
4,524
4,447
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 (the latest published edition)
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Investment Management
Unit Trusts
Client base breakdown
Discretionary vs non-discretionary (by funds
under management)
As at 31 Dec 2009
Discretionary
Non-discretionary
Account type (by funds under management)
As at 31 Dec 2009
Private client
Trust and settlements
ISAs
Charities
Pensions, including SIPPs
Other
Account size (by value)
As at 31 Dec 2009
Over £1million
£500,000 – £1million
£250,000 – £499,999
£100,000 – £249,999
£50,000 – £99,999
Up to £50,000
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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.
Principal trading name
• Rathbone Unit Trust Management
Direct employees (average full time equivalents)
• 24
Offices
• London
Head of Unit Trusts
• Peter Pearson Lund (until 31 March 2010)
• Mike Webb (from 1 April 2010)
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)
• 40
Offices
• Liverpool
• London
Head of Trust and Tax
•
Ian Buckley
Website
• www.rathbones.com
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%
93.9
6.1
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46.2
16.0
12.3
11.4
10.7
3.4
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48.1
18.4
17.0
12.7
3.0
0.8
Strategy and business performance
Clients
How we achieve it
Our aim is to be a leading provider
of high-quality, personalised
investment management, trust,
tax and pension advisory services
to private individuals, charities
and trustees
• Continued focus on providing discretionary investment
services to clients at a competitive cost
• Selecting from the full range of available investment
opportunities, minimising investment costs for clients
• Structured investment processes which provide support
to investment managers in making their investment decisions
• In-house control of client cash balances using our UK
banking licence
• Continual investment in systems and people to enhance
client service, improve business efficiency and manage
regulatory change
• Receiving encouraging regular feedback from our clients
• A complementary range of unit trusts tailored to private
client investment
• Tax, trust and financial planning services offered to our
private clients
Shareholders
How we achieve it
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
• Deliver on client acquisition opportunities which enhance
earnings per share within two years and fit our culture
• Aspire to earn average revenue margins of approximately
1% on funds under management
• Closely manage cost growth in line with steady growth
in the business over time
• Continue to invest in systems and IT to deliver ongoing
cost efficiency
• Conservatively manage treasury assets within clear risk
based guidelines
• Maintain optimal capital levels having regard to market
and regulatory pressures and growth opportunities
Employees
How we achieve it
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
• Implement executive and investment manager remuneration
structures which are structured to manage business risk and
deliver shareholder value
• Offer share-based incentives to staff across the business
• Provide extensive training for all levels of staff seeking the
highest professional standards
• Share ideas and best practice throughout the organisation
through timely consultation and communication
• Act as a fair employer to all staff
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Highlights in 2009
Key performance indicators
• Total funds under management as at 31 December 2009 were
£13.10 billion, up 25.2% compared with 31 December 2008
• Funds managed by Rathbone Investment Management
Limited were £12.16 billion as at 31 December 2009, up
29.0% from 31 December 2008 (FTSE 100 Index up 22.1%
and FTSE APCIMS Balanced Index up 12.7%)
• Total net organic and acquired growth rates of 12.5% in
Rathbone Investment Management in spite of difficult market
conditions in the first half
– Net organic growth of 6.7%
– Acquired funds under management growth of 5.8% including
£381 million from a transaction with Lloyds Banking Group
• Growth of 8.3% in the number of Rathbone Investment
Management clients to just under 34,000
• Appointment of Mike Webb as chief executive of
Rathbone Unit Trust Management with effect from
1 April 2010
Net organic growth in
investment management
funds under management1
%
Total net organic and
acquired growth in
investment management
funds under management2
%
2009: 6.7
2008: 7.4
2007: 7.8
2006: 7.2
2005: 5.8
2009: 12.5
2008: 11.0
2007: 9.2
2006: 18.1
2005: 5.8
Investment management
funds under management
£bn
2009: 12.16
2008: 9.43
2007: 11.23
2006: 10.38
2005: 8.28
Highlights in 2009
Key performance indicators
• Completed a transaction with Lloyds Banking Group
in October
• Achieved an operating margin of 25.2% in 2009 vs 32.3%
in 2008 following an expected reduction in net
interest margin
• Reduced other operating expenses by £1.8 million from
£86.1 million in 2008 to £84.3 million
• Restructured defined benefit pension benefits to a
Career Average Prevalued Earnings basis for service
after 1 July 2009 and moved the normal retirement
date to 65
• Invested £3.3 million in capital expenditure to support
business efficiency and client service
• Earnings per share from continuing operations down 30.6%
to 46.87p in 2009 from 67.57p in 2008
• Maintained dividend per share at 42p in spite of
market volatility
Profit before tax from
continuing operations
£’000
Operating margin3
%
2009: 29,468
2008: 42,306
2007: 47,302*
2006: 44,720*
2005: 35,298*
2009: 25.2
2008: 32.3
2007: 35.2*
2006: 33.5*
2005: 31.2*
Earnings per share from
continuing operations
Pence
Dividend per share
Pence
2009: 46.87
2008: 67.57
2007: 77.79*
2006: 76.62*
2005: 60.13*
2009: 42
2008: 42
2007: 41
2006: 35
2005: 30
Highlights in 2009
Key performance indicators
• Staff turnover of 3% in 2009 vs 6% in 2008
• 11,000 hours of training delivered in 2009, consistent
with 2008
• Introduced an SAYE scheme in addition to the existing
Share Incentive Plan (SIP)
• Continuing very low investment manager turnover
Number of shares held by
SIP participants
Investment manager
staff turnover4
%
2009: 1,346,948
2008: 1,290,392
2007: 1,270,641
2006: 1,136,132
2005: 986,463
All staff turnover
%
2009: 0.0
2008: 1.8
2007: 1.3
2006: 3.4
2005: 2.7
1 Net organic new funds under management as a % of opening funds
under management
2 Net new funds under management as a % of opening funds under management
3 Profit before tax from continuing operations as a % of operating income
4 Staff leavers, excluding redundancies and retirements as a % of opening
full time equivalent staff
* 2007 includes results of operations discontinued in 2009, 2005 and 2006
include results of operations discontinued in 2008 and 2009
2009: 3
2008: 6
2007: 8
2006: 11
2005: 11
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Business review
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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.
Investment Management
Table 1. Key performance indicators for
Investment Management
2009
2008
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
6.7%
7.4%
£12.16bn £9.43bn
95bps
104bps
See Table 2
1
2 Net operating income (see Table 3) excluding interest on own
reserves divided by the average funds under management on the
quarterly billing dates (see Table 4)
Business environment
As an investment manager, Rathbone
Investment Management’s results are
correlated with trends in financial markets.
The first half of 2009 was highly volatile as
markets struggled to digest the uncertainties
of the banking crisis. The FTSE 100 Index
reached highs of around 4600 and lows
around 3500 in the period. The second half
of 2009 proved more positive with a strong
market rally driving the FTSE 100 Index to
5413 at 31 December 2009.
Investment Management funds under
management grew 29.0% over the year to
£12.16 billion, recovering back to levels last
seen at the beginning of 2008. This compares
to 22.1% and 12.7% increases in the
FTSE 100 and the FTSE APCIMS Balanced
Indices respectively.
Table 2. 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
2009
£bn
9.43
1.86
1.31
0.55
(0.68)
1.55
12.16
0.63
2008
£bn
11.23
1.97
1.56
0.41
(0.73)
(3.04)
9.43
0.83
6.7%
7.4%
Value at the date of transfer in/out
Impact of market movements and relative performance
1
2
3 Organic inflows less outflows
4 Net organic new business as a % of opening funds under management
Organic inflows represent the amount of
new funds brought in by existing investment
managers, either from existing clients or
from new clients. Gross organic inflows
of £1.31 billion were 16.0% down on the
£1.56 billion in 2008 which was a very
creditable performance given market
conditions. Net organic growth (stated after
fund outflows which naturally occur because
clients withdraw capital and/or income from
portfolios to meet other financial requirements,
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or close their account) was £631 million,
which translates into an annualised growth
rate of 6.7%. Acquired growth from investment
managers who joined us recently added
£165 million (2008: £413 million) of funds
under management during the year, in addition
to the £381 million from the Lloyds Banking
Group transaction. Outflows of funds continued
at normal levels and account closures
were also at expected levels in spite of the
challenging market conditions.
We are continuing to see growth across
all parts of our business. Charity funds
under management were £1.5 billion at
31 December 2009 compared to £1.1 billion
at the same time last year.
IFA-sourced growth continued to be strong,
with the number of IFA-linked accounts
growing to 4,276 from 3,406 at the end
of 2008.
SIPP business was undoubtedly impacted by
changes to taxation rules for high earners in
the Budget, however the number of portfolios
managed grew by 4.4% in the year ended
31 December 2009. The value of SIPP funds
held with Rathbone Investment Management
under the Rathbone SIPP increased by
24.0% to £279 million at 31 December 2009
from £225 million at the start of the year.
Growth remains positive and our participation
in a number of key provider panels remains an
important part of our growth strategy in this
area. Rathbone Pension & Advisory Services
saw the number of new SIPPs upon which
it has advised increase by 4.2% to 941
(2008: 903).
The overall basis point return on funds under
management decreased in 2009. This is
largely as a result of exceptionally high net
interest income in 2008 which, as expected,
has not repeated in 2009.
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Financial performance
Table 3. Investment Management
– financial performance
Net fee income1
Commission
Interest and other income2
Net operating income
Underlying operating
expenses3
Underlying profit
before tax
Amortisation of client relationships
Transaction costs
Financial Services
Compensation Scheme levy
Profit before tax
2009
£m
55.8
28.7
19.8
2008
£m
54.3
28.2
31.4
104.3
113.9
(72.1)
(71.5)
32.2
(2.0)
(0.8)
(0.2)
29.2
42.4
(1.3)
–
(1.4)
39.7
Underlying operating % margin4
30.9%
37.2%
1 Net fee income is stated after deducting fees and commission expenses
2
3
4
paid to introducers
Interest and other income is presented net of interest expense paid
on client accounts
See Table 5
Investment Management profit before tax and exceptional items divided
by net operating income
Net fee income increased by 2.8% from
£54.3 million in the year ended 31 December
2008, to £55.8 million in 2009. This largely
resulted from positive net inflows of funds
under management throughout the year which
offset lower market levels. The average
FTSE 100 Index of 4706 in 2009 (based on
when clients are billed) was 10.0% down on
the average of 5227 in 2008, whilst average
funds under management on the same
quarterly billing dates was £10.55 billion, some
4.0% up compared to £10.14 billion in 2008.
Table 4. Investment Management
– average funds under management
Valuation dates for billing
– 5 April
– 30 June
– 30 September
– 31 December
– Average
2009
£bn
2008
£bn
9.11
9.69
11.23
12.16
10.75
10.49
9.87
9.43
10.55
10.14
Commission income of £28.7 million in
2009 was marginally higher than last year
(2008: £28.2 million) with both years seeing
the sort of volatility that generates a greater
number of trading opportunities.
Interest income in the first half of 2009
remained strong, benefiting from the three
emergency base rate cuts made by the
Bank of England. Second half income was
exceptionally low though reflecting the
unprecedented interest rate environment we
continue to see. Client liquidity fell to
£0.8 billion at 31 December 2009 compared
to £1.1 billion at 31 December 2008 and
returns on shareholder cash remain very low.
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Average full time equivalent headcount was
438 in 2009 compared to 429 in 2008.
Other operating expenses include property,
depreciation, settlement, IT, finance and other
central support services costs. These are
largely fixed and were 43.9% of total operating
expenses in 2009 (2008: 44.9%).
Financial Services Compensation Scheme
costs were lower in 2009 following additional
guidance on expected levies for the 2008/9
and 2009/10 years, which disclosed lower
costs of Government borrowing than was
originally expected. Further levy charges are
likely to be incurred in future years and the
ultimate cost remains uncertain.
Outlook
In spite of recent market conditions, the
business remains strong and continues to
benefit from solid growth. Rathbone Investment
Management’s reputation as one of the
leading providers of discretionary investment
management services to private investors,
charities and trustees remains an important
asset. Whilst 2010 will undoubtedly be a
challenging year given interest rate conditions,
we continue to see opportunities for growth
organically. The full effect of the recent
transaction with Lloyds Banking Group will be
seen in 2011.
Unit Trusts
Table 6. Key performance indicators for
Unit Trusts
2009
2008
£0.94bn
£1.03bn
(22.3)% (12.2)%
Funds under management
at 31 December
Underlying rate of net growth
in funds under management1
1
See Table 7
Business environment
The retail asset management sector
continued to suffer in the early part of 2009
as redemption levels remained high and
investors lost a lot of confidence in equity
markets. However, the market recovered
somewhat significantly in the second half as
asset values climbed.
Investment Management continued
Cash represented 6.3% of client portfolios
at 31 December 2009 compared to 10.4%
at 31 December 2008 as cash was reinvested
into other asset classes in the latter half of
the year.
Net operating income for 2009 of
£104.3 million decreased 8.4% from
£113.9 million in 2008 almost wholly as
a result of lower net interest income.
Table 5. Investment Management
– operating expenses
Staff costs1
– fixed
– variable
Total staff costs1
Other operating expenses
Underlying operating expenses
Financial Services
Compensation Scheme levy
Amortisation of client relationships
Transaction costs
2009
£m
2008
£m
25.2
13.9
39.1
33.0
72.1
0.2
2.0
0.8
24.6
13.6
38.2
33.3
71.5
1.4
1.3
–
Operating expenses
75.1
74.2
Underlying cost/income ratio2
69.1%
62.8%
1 Represents the costs of investment managers and teams directly
involved in client facing activities
2 Operating expenses before Financial Services Compensation Scheme
levy, amortisation of client relationships and transaction costs
divided by operating income
Total operating expenses in Rathbone
Investment Management for 2009 were
£75.1 million, compared to £74.2 million in
2008, an increase of 1.2%. Costs in 2009
included £0.8 million of transaction costs
associated with the Lloyds transaction, and a
£0.7 million increase in the intangible asset
amortisation charge resulting from strong
acquired growth levels in 2008. 2008 costs
included £1.4 million in respect of FSCS levies
(2009: £0.2 million). Adjusting for these items
means that underlying business costs have
been kept at 2008 levels in spite of
business growth.
Controls over salary increases have restricted
fixed staff cost increases to minimal levels
as increases year-to-year reflect business
expansion. Some variable staff costs
decreased as expected in line with lower profit
levels, however this positive effect was offset
by higher awards in schemes designed to
reward strong levels of organic growth and
outperformance against the FTSE APCIMS
Index. Funds-based growth awards include
a performance element against the FTSE
APCIMS Index. In 2008, performance was
lower than expected as a result of difficult
corporate bond markets in the last quarter
which materially reduced bond values against
gilts. This effect has largely reversed in 2009,
which has increased the cost of the scheme.
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Relationships
“We do not sell products – we
offer a service. For us, that is
an important distinction.
“Private clients want to be treated
as individuals and trust us to
manage their investments in
their best interests.
“We strongly believe that clients
value having direct access to the
person who is managing their
investments and we aim to build
long-term relationships with
individuals, their families
and advisers.”
“ At Rathbones we
are free to source
investments from the
best providers across
all asset classes. This
enables us to build
portfolios that really
meet our clients’ needs.”
David Bassett
Investment Manager
020 7399 0088
david.bassett@rathbones.com
Discretionary investment management
Rathbones is one of the UK’s largest and longest-
established providers of high-quality, personalised
discretionary investment management services.
www.rathbones.com
London Birmingham Bristol Cambridge Chichester
Edinburgh Exeter Kendal Liverpool Winchester
Rathbone Investment Management Limited is authorised
and regulated by the Financial Services Authority.
Registered offi ce: Port of Liverpool Building, Pier Head,
Liverpool L3 1NW. Registered in England number 1448919.
Rathbones’ 2009
advertising campaign
Rathbones’ advertising campaign
in 2009 aimed to build on this
theme with a range of executions
in The Times, The Daily Telegraph,
Charity Finance and the
Financial Times that featured
investment managers and their
views on Rathbones’ key strengths.
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Unit Trusts continued
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
Operating % margin1
2009
£m
1.0
11.6
0.4
0.1
13.1
(0.1)
(5.3)
7.7
(7.6)
0.1
2008
£m
0.9
17.7
0.5
1.3
20.4
(0.1)
(7.8)
12.5
(10.1)
2.4
1.3%
19.2%
1 Unit Trusts profit before tax divided by net operating income
Annual management charges fell 34.5%
from £17.7 million in the year ended
31 December 2008 to £11.6 million in
2009. This change is in line with the 39.3%
reduction in average funds under management
to £0.88 billion in 2009 from £1.45 billion
in 2008. Annual management charges
as a percentage of average funds under
management rose slightly to 1.3%
(2008: 1.2%) reflecting the loss of the
mandates in the first half of 2009.
Rebates and trail commission payable as a
percentage of annual management charge
income was 45.7% compared to 44.1%
in 2008, reflecting the continued pricing
pressure from fund supermarkets. Managers’
box dealing profits constituted 5.2% of net
operating income in the year (2008: 4.0%)
as a consequence of continued redemptions
in the funds. Net operating income as
a percentage of average funds under
management was 0.9% in 2009 compared
to 0.9% in 2008.
Table 11. Unit Trusts – operating expenses
Staff costs1
– fixed
– variable
Total staff costs
Other operating expenses
Operating expenses
2009
£m
2008
£m
2.1
1.8
3.9
3.7
7.6
2.8
3.4
6.2
3.9
10.1
Cost/income ratio2
98.7%
80.8%
1 Represents the costs of investment managers and teams directly
involved in investment or distribution activities
2 Operating expenses as a % of net operating income (see Table 10)
Table 7. Unit Trusts – funds under management
As at 1 January
Net outflows
– inflows1
– outflows1
Market adjustments2
As at 31 December
2009
£bn
1.03
(0.23)
0.11
(0.34)
0.14
0.94
2008
£bn
1.89
(0.23)
0.15
(0.38)
(0.63)
1.03
Underlying rate of net growth3
(22.3)% (12.2)%
Valued at the date of transfer in/out
Impact of market movements and relative performance
1
2
3 Net inflows as a % of opening funds under management
Funds managed fell 8.7% to £0.94 billion at
31 December 2009 from £1.03 billion at the
start of the year. Positive market movements
of £0.1 billion offset some £0.2 billion of net
redemptions, which largely occurred in the
first half following the loss of two mandates
totalling £130 million.
Table 8. Unit Trusts – fund details
Morningstar
Fund Stars
31 Dec
2009
£m
31 Dec
2008
£m
Ethical Bond Fund
Global Opportunities Fund
Income Fund
High Income Fund
Income and Growth Fund
Blue Chip Income and
Growth Fund
Smaller Companies Fund
Special Situations Fund
Recovery Fund
Other
1
3
3
42
76
503
4
52
36
52
544
16
34
24
54
n/a
n/a
69
193
935
269
1,029
Performance of the largest fund (the Rathbone
Income Fund) improved slightly, demonstrating
second quartile performance for the one
year period.
In the summer, the funds were restructured
and rebalanced. The Rathbone High Income
Fund was merged into the Rathbone Blue
Chip Income and Growth Fund. The Rathbone
Smaller Companies Fund and the Rathbone
Special Situations Fund were merged to create
the relaunched Rathbone Recovery Fund. The
fund restructurings were well received by the
market, and performance overall is showing
some early signs of improvement.
Table 9. Unit Trusts – fund performance
Quartile ranking over:
1 year
3 years
5 years
Blue Chip Income
and Growth Fund
Ethical Bond Fund
Global Opportunities Fund
Income Fund
Recovery Fund*
2
1
1
2
n/a
3
4
1
4
n/a
3
4
1
4
n/a
*
Performance data for the Rathbone Recovery Fund is not yet available
as the fund was launched on 13 July 2009
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Independence
“Rathbones is an independent,
listed company.
“This independent status is key
to our philosophy.
“We pride ourselves on being free
to make investment decisions on
our clients’ behalf with no obligation
to buy them particular products.
“ 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.”
Guide to Discretionary
Investment Management
Unrestricted investment choice will
continue to be a key theme for the
provision of investment services in
2010 as the issues raised by the
Retail Distribution Review highlight
which firms have a genuine ability
to offer this.
Rathbones’ offers a Guide to
Discretionary Investment Management
that explains what the options
for investors are – and it has been
awarded the Clear English Standard
seal of approval.
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Unit Trusts continued
Trust and Tax
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Fixed staff costs of £2.1 million for the
year ended 2009 were 25% lower than the
£2.8 million in 2008, largely as a result of
redundancies made in the latter part of 2008
and the early part of 2009. Average full time
equivalent headcount was 24 during 2009
compared to 31 last year.
Variable staff costs include costs in relation
to prior year profit share schemes which are
spread over the service periods of relevant
employees. The effect has been to distort
2009 costs as awards were significantly higher
in previous years when profits were greater.
The following table demonstrates the impact
of deferred profit share awards on 2009
variable costs.
The effect of spreading prior year awards is
expected to reduce after 2009 as most of the
cost of awards from more profitable years had
been recognised by the end of 2009.
Table 12. Unit Trusts – variable staff costs
2009
£m
1.8
2008
£m
3.4
(1.4)
(1.7)
0.4
1.7
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
Table 13. Key performance indicators for
Trust and Tax
Operating % margin1
2009
%
4.3
2008
%
4.1
1
Trust and Tax profit before tax from continuing operations divided by
Trust and Tax net operating income (see Table 14)
Business environment
The sale of our Geneva trust operation to its
management was completed on 10 February
2009 and the sale of the Singapore and British
Virgin Islands trust operations were completed
on 31 March 2009.
On 12 November 2009, the Group ceased to
control Rathbone International Finance B.V.
and the loan book contained within Rathbone
International Finance B.V. was disposed of.
The continuing business is concentrated
wholly in the UK and closely aligned with our
core discretionary investment management
business. It comprises:
•
which provides advisory services to
the family office service based in London
substantial family groups including trustee
administration and taxation planning;
•
the taxation services business, based in
Liverpool which prepares tax returns for
individuals and trusts, provides income and
capital tax planning services.
21.1%
29.3%
Both of these businesses have performed
satisfactorily in 2009.
Other operating expenses in 2009, which
have reduced by 5.1% from £3.9 million in
2008, include £0.5 million of costs in relation
to fund mergers, redundancies and recruitment
fees in the year. Excluding these items, other
operating costs have fallen 17.9% compared
to 2008.
Outlook
Successful actions have been taken in the
business in 2009 to manage profitability
in line with revenue loss and the business
is now on a stable footing to develop.
The appointment of Mike Webb as chief
executive with effect from 1 April 2010
is an exciting new development for the
business which has the ability to grow in
the medium-term.
Table 14. Trust and Tax – financial performance
Net operating income
Operating expenses
Profit before tax from
continuing operations
Discontinued operations
Loss before tax
2009
£m
4.7
(4.5)
0.2
(0.6)
(0.4)
2008
£m
4.9
(4.7)
0.2
(10.0)
(9.8)
Operating % margin1
4.3%
4.1%
1
Trust and Tax profit before tax from continuing operations divided by net
operating income
Operating income fell from £4.9 million in
2008 to £4.7 million in 2009 reflecting slightly
lower levels of activity based fees.
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Operational excellence
“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. We believe
that high-quality administration
underpins successful long-term client
relationships and meeting client
expectations efficiently at a reasonable
cost to the client remains a challenge
and one in which we continue to invest.”
Discretionary
Investment
Management
Services
Services
for advisers
A flexible service
Managing our administration in house
allows us a greater degree of control
over the way we serve our clients
and the maintenance of high quality
standards. We have been able to
adapt rapidly to changing needs of
the marketplace, such as working with
an increasing number of third party
SIPP and bond providers which are
important for the growth of our
IFA relationships.
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1
Trust and Tax continued
Dividend
An interim dividend of 16.0p per share was
paid to shareholders on 7 October 2009 and
the Board is recommending that a second
interim dividend of 26.0p be paid on 31 March
2010 which will replace the final dividend.
This results in a total payment of 42.0p (2008:
42.0p) for the year. This dividend is covered
1.1 times by reported basic earnings per share
and 1.2 times by underlying earnings per share
(see note 12).
Capital
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 remains well capitalised and does
not rely on the wholesale market to fund
its operations.
Intangible assets created by the acquisition
of funds under management, such as for the
Lloyds Banking Group transaction, are not
allowable for capital resource purposes so do
reduce capital headroom as soon as they are
reported in the balance sheet. Intangible assets
of £11.7 million have been recorded at 31
December 2009 in respect of the acquisition
of £381 million of funds under management
from Lloyds Banking Group.
Rathbones’ Pillar III disclosure is given on our
website at www.rathbones.com.
Table 15. Trust and Tax – operating expenses
Staff costs1
– fixed
– variable
Total staff costs1
Other operating expenses
Operating expenses
2009
£m
2008
£m
2.5
0.3
2.8
1.7
4.5
2.8
0.4
3.2
1.5
4.7
Cost/income ratio
95.7%
95.9%
1 Represents the costs of fee earning staff and teams involved
in client facing activities
Fixed staff costs of £2.5 million for 2009
compare to costs of £2.8 million in 2008.
Average full time equivalent headcount was
40 compared to 43 in 2008. Other operating
expenses represent property, depreciation,
settlement, finance, IT and other support
costs which are largely fixed, and were 37.8%
of total operating expenses in 2009
(2008: 31.9%).
Outlook
We anticipate continuing to develop and invest
in family office services and seek to grow our
taxation services business organically.
Taxation
The effective tax rate for the year is 31.5%
(2008: 31.7%), calculated as the total tax
charge on continuing operations of £9.3 million
(2008: £13.4 million) divided by the profit
before income tax on continuing operations
of £29.5 million (2008: £42.3 million).
The effective rate of tax in 2009 is higher than
the composite UK standard rate of 28.0%
due principally to the effect of disallowable
expenditure, arising on the acquisition of client
funds from Lloyds and adjustments in respect
of prior years.
A full reconciliation of income tax expense
is included in note 9 to the consolidated
accounts.
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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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9
1
Established 1742
Rathbones continues to benefit
from an extremely low turnover
of both investment management
professionals and clients. We believe
that the strength of Rathbones’
brand has served us well in a period
of uncertainty and volatility and that
investors are attracted by the quality
of our name.
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Treasury and financing
Pensions
As a licensed deposit taker, Rathbone
Investment Management holds the Group’s
surplus liquidity on its balance sheet together
with any clients’ cash not held on a segregated
client money basis.
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 28 to the consolidated
financial statements.
The treasury department invests in 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 ensure ratings remain
appropriate.
Rathbones operates two defined benefit
pension schemes (both of which are closed
to new members) and a defined contribution
pension scheme. At 31 December 2009,
the combined accounting deficit for the two
defined benefit schemes totalled £9.4 million
(2008: £5.7 million). Spreads on 15 year AA
rated corporate bonds were very high at the
end of 2008, which artificially reduced the
reported IFRS deficits. Spreads are at more
normal levels currently, such that valuations
prepared for both reporting and funding
purposes are more closely aligned. The
deficit at 31 December 2009 has benefited
from the significant equity market recovery
in the second half of 2009. Details of the
assumptions supporting the accounting
valuation and associated sensitivities
are included in note 25 to the accounts
on page 88.
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 £6.2 million at 31 December 2009 from
Barclays Bank PLC (2008: £9.2 million). The
balance is repayable in six-monthly equal
instalments ending on 4 April 2011.
The Board has approved a schedule of
contributions of £3.1 million annually for
the next seven years to fund the scheme’s
deficit, in addition to £0.4 million per
annum over the next four years previously
committed. During the year, the Group made
regular contributions of £3.6 million
(2008: £2.3 million) into the Rathbone
1987 Scheme.
Cash flow
As fee income is largely collected 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:
• Cash outflows relating to the payment of
dividends of £18.1 million
(2008: £17.5 million)
• £3.3 million of capital expenditure
(2008: £11.3 million)
In order to manage the increasing costs of the
1987 defined benefit scheme, scheme benefits
were amended with effect from 1 July 2009.
From that date benefits for future service will
no longer accrue based upon a member’s
final salary, but on a Career Average Revalued
Earnings (CARE) basis. The normal retirement
age of the scheme was also changed from 60
to 65. Benefits in relation to service prior to
1 July 2009 were unaffected by the changes.
A triennial valuation of the Laurence Keen
Scheme was substantially completed in the
year and forms the basis of assumptions
used at 31 December 2009.
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Skill
“The Rathbone Investment Process
provides structure and well-researched
guidance for investment managers
to draw on, but is non prescriptive
allowing investment managers the
latitude to decide on the best structure
for individual clients.
“The Process supports managers
in their choice of a growing range
of investment options, including
alternative investments as well as
more traditional investment choices.
“Internal performance monitoring and
risk control processes ensure that
the appropriate quality of service
and fulfilment of client objectives
are achieved.”
Strategic asset allocation committee
Alternative
assets
committee
• Hedge funds
• Structured
products
• Commodities
• Private equity
• Property
Stock selection
committee
• UK equities
• Fixed income
Management
funds
committee
• Investment
trusts
• Unit trusts
The Rathbone Investment Process
We have continued to invest in the
Rathbone Investment Process which
combines the intellectual capital
of all our investment managers.
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Operations and resources
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, were upgraded significantly
in 2009 to provide capacity for business
expansion and increased data demands
on the system.
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:
• MS Office 2007 – a major project to
upgrade core Microsoft systems across
the business
• Dealing Infrastructure Review – the
successful introduction of new dealing
mechanisms (DMA and Algorhythmic
trading) with new counterparties, which
keep us up with an evolving market
• Significant background work on a new client
documentation management system
• A telephone recording capability to meet
FSA requirements
•
our new unitised multi asset service
•
Infrastructure support for the launch of
Investment into client reporting, with new
layout, charts, e-mail capacity, and more
facilities for IFAs
Increasing investment in data security
•
by locking down USB access and
improving firewalls
• Upgrading our Sun accounting system.
Operations teams have been working hard to
ensure that the transfer of new clients from
the Portfolio Management Service of Lloyds
Banking Group into Rathbones happens
smoothly, and our thanks go out to all involved
in this project for their continued commitment.
Rathbones offers bespoke solutions for
different client needs, and does not aim to
generate ‘index’ returns over short periods. This
means that we 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. Operationally, we continue
to support the ever increasing complexity
associated with this approach to ensure that
we are able to provide clients with a whole of
market investment choice.
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 2010 we plan to complete a major upgrade
in our Voice over IP telephone technology in
London and Liverpool and significantly upgrade
our Microsoft Exchange server capacity.
We will continue to work hard to secure optimal
use of space as part of our overall plans to
manage costs carefully. Having relocated
our Chichester office in June, we expect
to consider our London location in 2010 in
advance of lease break opportunities in 2012.
Risks and uncertainties
Financial risks, together with the policies
and procedures for the monitoring and
management of those risks, are set out in
note 28 to the consolidated financial
statements.
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 training manager and
contracts of employment for all fee earning
staff are reviewed regularly and updated
when necessary.
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Reputational risk
Going concern basis
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.
The Group’s business activities, together
with the factors likely to affect its future
development, performance and position are
set out in the business review. The financial
position of the Group, its cash flows, liquidity
position and borrowing facilities are also
described in the business review on pages
10 to 23. In addition, note 29 to the financial
statements includes the Group’s objectives and
policies for managing its capital and note 28 to
the financial statements explains the Group’s
financial risk management objectives, details
of its financial instruments and its exposure to
credit risk and liquidity risk.
The Company is regulated by the FSA and
performs annual capital adequacy assessments
which include the modelling of certain extreme
stress scenarios. The Company publishes
Pillar 3 disclosures annually. Note 21 to the
financial statements shows that the Company
has an unsecured term loan of £6.2 million at
31 December 2009 which represents 3.4% of
total equity (2008: £9.2 million). The Company
is not reliant on the renewal of debt facilities to
continue to finance its operations.
In 2009, the Group has continued to
generate organic growth in client funds under
management in spite of the recent market
turmoil, and this is expected to continue.
The directors believe that the company is
well placed to manage its business risks
successfully despite the current uncertain
economic and political outlook.
As the directors have a reasonable expectation
that the Company has adequate resources
to continue in operational existence for the
foreseeable future, they continue to adopt the
going concern basis of accounting in preparing
the annual financial statements. In forming
their view, the directors have considered the
Company’s prospects for a period exceeding
12 months.
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Directors
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3
6
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11
12
13
14
15
Directors at 31 December 2009
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Chairman
1 Mark Powell
Mark Powell, aged 64, 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 49, 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 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).
3 Ian Buckley*
Ian Buckley, aged 59, is chief executive of the
Group’s Trust and Tax business and the director
responsible for its pensions and advisory business.
He is the director responsible for risk management
and marketing and is also chairman of the Group’s
IT Steering Committee. 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 a committee
member of Family Assurance Friendly Society and
chairman of NXT Plc.
4 Paul Chavasse*
Paul Chavasse, aged 45, 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 58, 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. He 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 45, is the director responsible
for Rathbones’ Investment Management business
in Aberdeen, Birmingham, Edinburgh, Kendal and
Liverpool. 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 Business Continuity
and Training and Competence Committees.
7 Peter Pearson Lund
Peter Pearson Lund, aged 62, 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 in 1999, he worked
for Gartmore for 14 years where he was a group
director and managing director of Gartmore Fund
Managers, the unit trust division. He is retiring from
the Board on 31 March 2010.
8 Richard Smeeton
Richard Smeeton, aged 45, 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 44, 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 in September 2008.
* Members of the Executive Committee
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Non-executive directors
14 John May
10 David Harrel
David Harrel, aged 61, 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 in December 2008.
John May, aged 54, 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.
11 James Barclay
15 Mark Robertshaw
Mark Robertshaw, aged 41, 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. He will be stepping
down from the Board after the Annual General
Meeting on 5 May 2010.
James Barclay, aged 64, has many years’ experience
in the financial services and banking sector as
chairman and chief executive of Cater Allen Holdings
Plc. In 2000 he was appointed as an adviser to the
UK Debt Management Office and was chairman
of its audit committee for four years. 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.
He was appointed to the Board in November 2003
and is considered to be independent. He will be
retiring from the Board after the Annual General
Meeting on 5 May 2010.
12 Caroline Burton
Caroline Burton, aged 60, 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.
13 Oliver Corbett
Oliver Corbett, aged 45, 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, where he was managing director,
emerging companies, before joining Novae Group
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 in December 2008.
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Governance
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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 fi nancial planning, private banking, offshore fund management and trust administration services.
The Group’s principal activity is discretionary investment management for private clients, charities and trusts carried out by Rathbone
Investment Management Limited from eleven offi ces in the UK and by 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 fi ve venture capital trusts. In addition, the Rathbone Group continues to provide some advisory stockbroking services.
Rathbones manages seven authorised unit trusts through Rathbone Unit Trust Management Limited and is the Authorised
Corporate Director of a number of Open Ended Investment Companies (OEICs) including the Rathbone Multi Asset Portfolio,
a Non UCITS Retail Scheme.
Rathbone Trust Company Limited provides a wide range of trust, company management and taxation services in the UK. The sale
of Rathbones’ offshore trust businesses was completed in early 2009 with completion of the sale of the offshore trust businesses
in Geneva on 10 February 2009 and in Singapore and BVI on 31 March 2009.
Rathbone Pension & Advisory Services Limited offers a pension advice service, SIPP administration and other fi nancial
planning services.
Business review
A full review of the Group’s business activities are set out in the business review on pages 10 to 23. Information about
environmental, employee and social and community issues are set out in the Corporate responsibility report on pages 47 to 55.
Post balance sheet events
Details of events after the balance sheet date are set out in note 33 to the accounts on page 106.
Group results and Company dividends
The Group profi t after taxation for the year ended 31 December 2009 was £19,628,000 (2008: £19,000,000).
The directors do not recommend the payment of a fi nal dividend (2008: 26.0p). The fi rst interim dividend of 16p (2008: 16.0p) was
paid on 7 October 2009 and a second interim dividend of 26.0p (2008: 0.0p) is payable on 31 March 2010 to shareholders on the
register on 5 March 2010. This results in total dividends of 42.0p (2008: 42.0p) per ordinary share for the year. These dividends
amount to £18,159,000 (2008: £17,984,000) – see note 11 on page 78.
Capital structure
The Company’s share capital is comprised of one class of ordinary shares of 5p each. At 31 December 2009, 43,296,330 shares
were in issue (2008: 42,858,196). The shares carry no rights to fi xed income and each share carries the right to one vote at
general meetings. All shares are fully paid.
There are no specifi c 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 one-third of the issued share capital at
3 March 2009) with the authority to allot a further 14.0 million shares by way of fully pre-emptive rights issues in line with
guidance issued by the Association of British Insurers on 31 December 2008. The Board currently has the authority to buy back
up to 2.0 million shares under certain stringent conditions.
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.
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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 2009 and 23 February 2010. Details of directors’ share options are
shown in Table 6 on page 41.
Table 1. Directors’ shareholdings
Number of 5p ordinary shares
at 1 January 2009*
Number of 5p ordinary shares
at 31 December 2009
Benefi cial
Non-benefi cial
Benefi cial
Non-benefi cial
302,350
12,500
251,397
12,500
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
–
–
–
–
–
–
–
–
–
–
–
–
–
–
33,056
51,411
212,052
50,070
27,159
91,490
116,475
379
3,183
3,183
1,437
8
1,480
2,437
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–
–
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–
–
–
–
–
–
–
–
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. Their biographies are on page 25. Peter Pearson Lund is to retire from the
Board on 31 March 2010.
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.
Kate Avery and Kathryn Matthews were appointed to the Board on 6 January 2010 whilst James Barclay and Mark Robertshaw are
to step down from the Board at the Annual General Meeting on 5 May 2010.
Kate Avery’s career began with Barclays Plc, where she worked for some eighteen years, and was managing director of Barclays
Bank Trust Company and Barclays Stockbrokers. She subsequently joined Legal and General Group Plc and served on its main
board for eight years until January 2009, latterly as group executive director for wealth management. She also served as a non-
executive director with Kelda Group plc until its sale to an infrastructure fund in 2008. She is currently chairman of Openwork
Holdings Limited.
Kathryn Matthews’ entire career has been in investment management, most recently as chief investment offi cer, Asia Pacifi c
(ex Japan) for Fidelity International. Prior to that, she held senior appointments with William M Mercer, AXA Investment Managers,
Santander Global Advisers and Baring Asset Management. She is a non-executive director of Hermes Fund Managers Limited and
of Fidelity Asian Values Plc.
The senior independent director is David Harrel 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
Caroline Burton, Richard Lanyon Andrew Morris, Andy Pomfret and Richard Smeeton retire by rotation at the next Annual General
Meeting and, being eligible, offer themselves for re-election.
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Substantial shareholdings
At 23 February 2010, the Company had received notifi cations 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 voting rights of the Company.
Table 2. Substantial shareholdings at 23 February 2010
Date of notifi cation
Ordinary shares
% of voting rights
Notifi er
BlackRock Inc.
Caledonia Investments plc
Lindsell Train Ltd.
Legal & General Group Plc
Lloyds Banking Group plc
Mawer Investment Management Ltd.
2 February 2010
9 December 2009
17 November 2009
23 January 2009
15 March 2007
13 October 2009
6,358,765
3,817,000
2,173,950
1,700,574
1,477,812
1,344,818
1,314,465
14.69%
8.82%
5.04%
3.96%
3.50%
3.12%
3.04%
BlackRock UK Emerging Companies Hedge Fund
18 February 2010
Royal Bank of Scotland plc as Trustee of the
BlackRock UK Special Situations Fund
2 October 2007
1,290,701
3.02%
Political and charitable donations
No contributions were made for political purposes during the year (2008: nil). Details of the Company’s charitable donations can be
found in the Corporate responsibility report on page 55.
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 53 to 55.
The Company encourages the involvement of its employees in its performance through both a Share Incentive Plan launched in
2001 and a Save As You Earn Scheme which was approved by shareholders on 19 November 2009.
Policy on the payment of creditors
Rathbones does not follow a published code or standard on payment practice. Its policy is to fi x terms of payment with each
supplier in accordance with its requirements and fi nancial 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 2009
represented 13 days of annual purchases (2008: 30 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 28 to the accounts on pages 93 to 104.
Indemnifi cation of directors
On 6 April 2005 changes to company law came into effect which allowed companies to indemnify its directors and offi cers 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 fi nes 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
refl ect these provisions. Specifi c indemnities, which are uncapped, have been granted to all directors and the company secretary
by way of deed.
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Share price
The mid market price of the Company’s shares at 31 December 2009 was £8.00 (2008: £8.335) and the range during the year
was £6.68 to £9.60 (2008: £6.965 to £11.34).
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 7 to the fi nancial 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, KPMG Audit Plc be reappointed.
KPMG Audit Plc were appointed as auditors following the resignation of PricewaterhouseCoopers LLP on 27 May 2009 KPMG
Audit Plc have indicated their willingness to continue in offi ce and ordinary resolutions reappointing them as auditors and authorising
the directors to set their remuneration will be proposed at the 2010 AGM.
The directors in offi ce at the date of signing of this report confi rm 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 2010 Annual General Meeting will be held on Wednesday 5 May 2010 at 12.00 noon at 159 New Bond Street, London,
W1S 2UD. The notice of the meeting is on pages 114 to 120 with details of the resolutions proposed and explanatory notes.
Special business
The resolutions proposed include an ordinary resolution classifi ed by the Articles of Association as non-routine special business to
renew the existing authority to the directors to allot up to 14.2 million shares (with an aggregate nominal amount of up to £710,000)
and to allot up to a further 14.2 million shares for fully pre-emptive rights issues.
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). The annual special resolution seeking the
authority to convene a general meeting (other than the AGM) with not less than 14 days’ notice is proposed as is the adoption of
new Articles of Association following the full implementation of the Companies Act 2006.
A technical irregularity regarding the historic payment of dividends by the Company has been identifi ed.
Distributions made by a company must not exceed the distributable profi ts as reported in the last set of ‘relevant accounts’ of the
company. For the purposes of the Companies Acts the ‘relevant accounts’ are either a company’s last annual audited accounts or its
latest interim accounts. In order to rely on interim accounts to pay a dividend a company must fi le those interim accounts with the
Registrar of Companies. Whilst the Company has always been satisfi ed that it had suffi cient reserves at the date of the payment of
the dividend to shareholders, it has not always fi led the requisite interim accounts with the Registrar of Companies. The appropriate
‘relevant accounts’ for each dividend payment would therefore be deemed to be the Company’s prior annual accounts and a number
of dividend payments made have exceeded the distributable profi ts of the Company reported in those annual accounts.
This technical non-compliance with the terms of the Companies Acts could, in theory, result in a right for the Company to claim
for repayment of the relevant dividends from shareholders who received those dividend payments and/or from the directors who
approved the payments. In order to put the shareholders and directors into the position in which they were always intended to be
the Company proposes to release and waive any such claims. Resolutions will be put to shareholders at the AGM to approve such
release and waiver and to protect directors and shareholders against any future claim.
To avoid a similar issue with the payment of the second interim dividend for 2009 on 31 March 2010, interim accounts of the
Company to 28 February 2010 will be fi led at Companies House in accordance with Section 838 of the Companies Act 2006.
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
23 February 2010
Registered Offi ce: 159 New Bond Street, London W1S 2UD
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Corporate governance report
Corporate governance report
In relation to compliance with the Combined Code this report together with the Directors’ report states the position at
23 February 2010.
The Combined Code compliance statement
The revised Combined Code on Corporate Governance (‘the Code’) was issued in June 2008 by the Financial Reporting Council
(‘FRC’) and applies for reporting periods beginning on or after 29 June 2008. 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 which applied
throughout the year:
Independence of the chairman on appointment (Provision A.2.2)
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 (Provision A.3.2)
There are currently 17 directors, of which seven (41%) 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 diffi cult.
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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 eight other non-executive directors.
The roles of chairman, Mark Powell, and chief executive, Andy Pomfret, are separated and are clearly defi ned in writing and agreed
by the Board. The chairman is primarily responsible for the working of the Board and its development of strategy and the
chief executive for the running of the business and implementation of Board strategy and policy.
The Board considers that seven of the nine 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 David Harrel who 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 fi nancial
statements, company acquisitions and disposals, major capital expenditure and the review of decisions taken by the boards of
subsidiary companies.
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Board performance
The Board, Audit and Remuneration Committees carry out appraisals of their operation and performance on an annual basis. In
2009, an internal questionnaire was used. This was developed and executed with assistance from Lintstock Limited, a London
based corporate advisory fi rm. This year’s questionnaire followed up on points raised in the 2008 review as well as considering the
acquisition of business from the Lloyds Banking Group and the oversight of the board during the ‘credit crunch’ of late 2008 and
early 2009.
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
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’ specifi c 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 offi ce 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. 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), Kate Avery, James Barclay, Caroline Burton, David Harrel,
Kathryn Matthews 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), Kate Avery, James Barclay, Oliver Corbett,
David Harrel, Kathryn Matthews 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), Kate Avery, James Barclay, Caroline Burton,
Oliver Corbett, David Harrel, Kathryn Matthews, Andy Pomfret and Mark Robertshaw. Full details of its role are set out in the
Nomination Committee report.
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Confl icts of interest
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 confl icts or possibly may confl ict with the Company’s interests. The Act allows the Board to authorise a director’s
confl ict or potential confl ict 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’ confl icts of interest to avoid a breach of duty.
Shareholders approved the necessary changes to the Company’s Articles of Association at the AGM on 7 May 2008.
There are safeguards which apply when directors decide whether to authorise a confl ict or potential confl ict. 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 confl icts notifi ed and authorised is maintained and reviewed regularly by the Board.
Other Board issues
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 2009
Plc Board*
Executive Committee#
Audit Committee
Remuneration Committee
Nomination Committee
7/7
7/7
6/7
7/7
7/7
7/7
7/7
7/7
6/7
7/7
7/7
7/7
7/7
7/7
7/7
J C Barclay
I M Buckley
C M Burton
P D G Chavasse
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
* Scheduled bi-monthly meeting
# Scheduled monthly meeting
Shareholder relations
–
12/12
–
11/12
–
–
11/12
–
–
–
12/12
–
–
–
12/12
5/7
–
7/7
–
7/7
6/7
–
–
–
–
–
–
6/7
–
–
4/5
–
5/5
–
5/5
5/5
–
–
–
–
–
–
4/5
–
–
1/2
–
2/2
–
2/2
2/2
–
–
–
–
1/2
2/2
1/2
–
–
The Company is committed to ensuring that there is effective communication with all shareholders. All regulatory news
announcements, press releases and fi nancial 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 webcasts 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 fi gures 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 suffi cient 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.
Ian Buckley is the director with specifi c responsibility for risk management. He chairs the Risk Management Committee which
reports to the Board and comprises all 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 identifi cation 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 23 February 2010.
The other key elements of the Group’s overall control systems include:
(cid:129) a formal structure of committees and subsidiary company boards where senior staff oversee the operation of the business on
a regular basis;
(cid:129) an annual budgeting, regular forecasting and monthly fi nancial reporting system for all Group divisions, which enables trends
to be evaluated and variances to be acted upon;
(cid:129) 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;
(cid:129) a defi ned set of policies and procedures for treasury operations with limits set by the Banking Committee;
(cid:129) a confi dential 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.
(cid:129)
On behalf of the Board, the Audit Committee confi rms that it has reviewed the effectiveness of the systems of internal control in
existence in the Group for the year ended 31 December 2009 and has taken account of material developments since the year
end. Necessary actions have been or are being taken to remedy any signifi cant failings or weaknesses identifi ed 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.
Going concern
The company’s business activities, fi nancial performance in 2009 and the fi nancial position at 31 December 2009 are summarised
in the business review on page 23. Note 28 summarises how the Group manages its fi nancial risk.
The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the
foreseeable future (at least 12 months from the date the accounts are signed). For this reason, they continue to adopt the going
concern basis in preparing the accounts.
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 International Limited is regulated by the Jersey Financial Services Commission.
Rathbone Insurance Limited is regulated by the Guernsey Financial Services Commission.
Rathbone Stockbrokers Limited is a member fi rm of the London Stock Exchange.
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.
Model code
The Company has its own internal dealing rules which extend the Financial Services Authority Listing Rules Model Code provisions
to all employees.
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Remuneration report
The Board presents the Remuneration report for the year ended 31 December 2009.
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 fi nancial sector, which is suffi cient to attract and retain the quality of director needed to manage and develop the
Company successfully.
2009 saw the publication of ‘A review of corporate governance in UK banks and other fi nancial industry entities’ by
Sir David Walker and a FSA policy statement titled ‘Reforming remuneration practices in fi nancial services’. The Remuneration
Committee (the Committee) has reviewed current remuneration arrangements in light of these reports and is making some changes
for 2010 onwards which are explained below.
Remuneration packages
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Remuneration packages are designed to include fi xed and variable elements, and to provide rewards for both the long and short
term. The Committee considers that the key objectives of a remuneration package are to motivate directors to generate long-term
shareholder value and to increase profi tability.
The fi rst 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 fi ve years of their appointment
to the Board. The second objective is met by profi t share payments. The proposed introduction of a deferred profi t share element
supports both objectives.
The Committee does not specifi cally take into account corporate performance on environmental, social and governance issues
when considering the remuneration of executive directors but it is satisfi ed 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
profi le that these present at executive director level, and are comfortable that, with the changes to the profi t share proposed,
these arrangements remain appropriate.
Basic salary and benefi ts
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 fi nancial sector.
In view of the trading conditions experienced in late 2008 and in 2009, directors’ basic salaries were not increased on
1 January 2009 or 1 January 2010.
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.
In addition Rathbones provides a range of benefi ts including life, private medical and permanent health insurance. The provision
of company cars is being phased out as lease contracts end.
Profi t share
For 2009, the following arrangements were in place:
(cid:129) Paul Chavasse, Richard Lanyon, Andy Pomfret and Paul Stockton were eligible for a discretionary profi t share payment from a
pool of between 1.0% and 2.5% of Group pre-tax profi ts 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 was anticipated that
in a typical year the payment would normally be 1.75% of Group profi ts.
In 2009 £502,000 was paid representing 1.7% of continuing Group pre-tax profi t (2008: £591,000, 1.4%)
(cid:129) Directors with direct responsibility for investment management, unit trust or trust and tax departments (Ian Buckley,
Andrew Morris, Peter Pearson Lund and Richard Smeeton) received a profi t share payment based on the profi ts of the
department concerned which may be supplemented by a payment from the pool referred to above.
In 2009 £345,000 was paid representing 1.2% of continuing Group pre-tax profi t (2008: £591,000, 1.4%)
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Profi t share continued
For 2010, changes to the structure will be made. The Committee’s view was that payments based on a share of current year profi ts
(and not revenue) remained appropriate and in accordance with best practice. Whilst the danger of excessive risk taking in generating
those profi ts was considered low, it was agreed that a signifi cant element of deferral should be introduced.
Awards to all executive directors will be made from one pool of profi ts of 3-5% of Group profi t before tax with an expectation that in a
normal year the percentage would be around 4%. This compares with the total award of 2.9% for 2009, the increase recognising that
up to two-thirds of the award will be paid in Rathbone Brothers Plc shares three years after the end of the relevant accounting period.
The cash element may be increased but the total award will be reduced by up to a maximum of one-third if the total award is taken in
cash. Individual awards will be capped at 200% of basic salary.
No performance criteria are attached to the deferred award. The Committee’s view was that share price movements refl ect the
performance of the business and that further performance conditions were not necessary. Half of the deferred award will lapse if a
director is a bad leaver whilst deferred shares will attract the monetary equivalent of declared dividends over the deferral period.
The Committee is comfortable that the overall remuneration opportunity is moderate when compared with the market.
Table 1. Directors’ remuneration (audited information)
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
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
contributions
£’000
Salary or
1
fee
£’000
Profi t
sharing
£’000
2
Benefi ts
£’000
2009 total
£’000
2008 total
£’000
2009
Pension
3
contributions
£’000
2008
Pension
3
contributions
£’000
165
311
212
232
231
182
134
212
219
35
40
43
40
35
35
–
–
–
–
–
–
–
–
19
–
–
–
–
–
–
–
–
–
–
–
1
166
166
155
57
76
195
85
–
203
76
–
–
–
–
–
–
–
–
1
1
1
1
18
1
1
1
–
–
–
–
–
–
–
–
467
270
309
427
285
154
416
296
35
40
43
40
35
35
–
–
549
276
333
474
314
378
446
113
35
40
35
35
35
35
–
40
–
37
24
–
–
–
–
–
21
–
–
–
–
–
–
–
–
–
37
24
–
–
–
–
–
8
–
–
–
–
–
–
–
–
1 Reviewed annually on 1 January
2 Benefi ts include the provision of a company car and medical insurance
3 During the year, retirement benefi ts accrued under money purchase schemes in relation to three directors (2008: three)
2,126
19
847
26
3,018
3,304
82
69
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Equity incentives
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. New arrangements (which will require shareholder
approval) are currently being developed.
Under the current LTIP arrangements, 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 refl ects both the change in the share price and dividends,
assuming that they are reinvested.
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 refl ect the fact that the participant was not an executive director
for the whole plan cycle. In all other circumstances, any provisional award would lapse on cessation of employment.
For all awards made since 2005, relative TSR performance has been measured against 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
fi nance sector, and the risk that numbers would fall still further due to consolidation.
On 31 December 2008, the trustee held 47,193 Rathbone Brothers Plc ordinary shares. On 12 March 2009, 4,500 shares were
awarded to 2006/08 Plan participants. 42,693 shares were held as at 31 December 2009. Dividend entitlements in respect of
this holding have been waived and voting rights will not be exercised.
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Table 2. LTIP performance targets (2005/07 and subsequent plans)
a TSR over the plan cycle
b EPS growth over the plan cycle
a TSR
% of award
50%
50%
TSR ranking relative to the constituents of the FTSE All Share Index
Shares distributed as % of shares provisionally awarded in the TSR part
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
2007/09 plan cycle
0%
Straight line increase
100%
Shares distributed as % of shares provisionally awarded in the EPS part
0%
25%
Straight line increase
100%
No actual awards were made for the 2007/09 plan cycle. The TSR for the three-year period was -24.84%, which ranked the
Company at the 38th percentile relative to the constituents of the FTSE All Share Index. Basic EPS decreased from 76.62p
in 2006 to 45.55p in 2009.
2008/10, 2009/11 and 2010/12 plan cycles
Details of the provisional awards for the 2007/09, 2008/10 and 2009/11 plan cycles are also set out in Table 3. Were the
maximum possible provisional awards to be made in shares to current and former directors, 393,346 ordinary shares
(2008: 354,142) would be awarded, representing 0.9% (2008: 0.8%) of the issued share capital at 31 December 2009.
In practice, awards under the LTIP are intended to be satisfi ed using market purchased shares held in trust. Expected actual
awards are diffi cult to predict with any accuracy.
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Equity incentives continued
Table 3. LTIP actual and provisional awards of ordinary shares (audited information)
Plan cycle
Status
Date of provisional award
End of performance
I M Buckley
P D G Chavasse
R P Lanyon
A T Morris
A D Pomfret
R I Smeeton
R P Stockton
Total
Market value of shares at
date of provisional award
Notes
2007/09
Actual award
31 December 2006
31 December 2009
2008/10
Maximum provisional award
31 December 2007
31 December 2010
2009/11
Maximum provisional award
31 December 2008
31 December 2011
2010/12
Maximum provisional award
31 December 2009
31 December 2012
–
–
–
–
–
–
–
–
14,825
16,220
16,220
12,697
22,151
14,825
11,259
18,905
20,685
20,685
16,192
28,247
18,905
18,460
16,904
21,187
21,187
16,585
28,933
19,365
18,909
108,197
142,079
143,070
£11.95
£10.75
£8.43
£8.23
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 refl ect the fact that he joined
Rathbones part way through the plan cycle
Chart 1. Total Shareholder Return (TSR) over the last fi ve fi nancial years
%
R
S
T
60
50
40
30
20
10
0
31 Dec 2004
31 Dec 2005
31 Dec 2006
31 Dec 2007
31 Dec 2008
31 Dec 2009
Rathbone Brothers Plc – Total Shareholder Return
FTSE All Share – Total Shareholder Return
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.
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 profi t sharing plan rather than the LTIP.
A deferred profi t 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 4. Awards held by Peter Pearson Lund under the RUTM Deferred Bonus Plan (audited information)
Year of award
2005
2006
2007
2008
2009
Total
Awards
outstanding at
1 January 2009
(£value on award)
109,338
317,317
462,557
191,950
–
1,081,162
Awards vesting in 2009
Award made
in 2009
(£value on award)
Awards vesting
in 2009
(£value on award)
(£value of
funds released)
Awards
outstanding at
31 December 2009
(£value on award)
–
–
–
–
48,050
48,050
109,338
158,658
–
–
–
127,306
176,178
–
–
–
–
158,659
462,557
191,950
48,050
267,996
303,484
861,216
Release dates
2008/09
2009/10
2010/11
2011/12
2012/13
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Equity incentives continued
Share Incentive Plan (SIP) and Savings Related Share Option Plan (Save As You Earn)
All directors are entitled to take part in the 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 infl ation. SIP shares are included in the table of
directors’ share interests on page 29.
Executive directors may also participate in the HM Revenue & Customs approved Rathbones Savings Related Share Option Plan
(commonly know as a Save As You Earn or SAYE Plan) which was approved by shareholders on 19 November 2009. An option
grant was made on 23 December 2009 at £6.96 (being the closing mid-market price on the three dealing days preceding the date
of invitation less a 20% discount). Details of grants to directors are shown in Table 5.
Table 5. The Rathbone Brothers Savings Related Share Option Plan 2009 (audited information)
At
1 January
2009*
Granted in
2009
Exercised in
2009
Lapsed in
2009
At
31 December
2009
Date of
grant
Earliest
exercise date
Latest
exercise date
Exercise
price
–
–
–
–
–
–
–
–
1,303
1,303
1,303
651
1,303
1,303
651
7,817
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,303 23/12/09 01/02/13 01/08/13
1,303 23/12/09 01/02/13 01/08/13
1,303 23/12/09 01/02/13 01/08/13
651 23/12/09 01/02/13 01/08/13
1,303 23/12/09 01/02/13 01/08/13
1,303 23/12/09 01/02/13 01/08/13
651 23/12/09 01/02/13 01/08/13
696.00p
696.00p
696.00p
696.00p
696.00p
696.00p
696.00p
7,817
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I M Buckley
P D G Chavasse
R P Lanyon
A T Morris
A D Pomfret
R I Smeeton
R P Stockton
Share options
Option grants are only now be made in exceptional circumstances and 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 notifi cation 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 6. The terms and conditions of all options have remained unchanged during the year.
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Equity incentives continued
Table 6. Outstanding share options and movements in the year (audited information)
Grant prior to
Board appointment
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
P D G Chavasse
A T Morris
P G Pearson Lund
A D Pomfret
A D Pomfret
At
1 Jan
2009*
Exercised in
2009
Lapsed in
2009
At
31 Dec
2009 Date of grant
Earliest
exercise date
Latest
exercise date
Exercise
price
Exercise
date
Market
value at date
of exercise
10,000
8,350
9,966
5,000
10,000
10,000
12,000
30,000
8,000
25,334
16,667
10,000
50,000
62,500
5,000
10,000
10,000
8,000
25,334
16,667
50,000
62,500
8,350
10,000 10/04/00 10/04/03 10/04/10
– 09/09/99 09/09/02 09/09/09
9,966 24/04/01 24/04/04 24/04/11
– 24/04/02 24/04/05 24/04/12
– 14/03/03 14/03/06 14/03/13
– 16/03/04 16/03/07 16/03/14
12,000 10/04/00 10/04/03 10/04/10
30,000 22/08/08 22/08/11 22/08/18
932.50p
814.17p
827.50p
810.00p 06/11/09
415.00p 24/03/09
743.50p 06/11/09
932.50p
813.50p
£8.720
£7.440
£8.720
– 14/03/03 14/03/06 14/03/13
– 14/03/03 14/03/06 14/03/13
– 14/03/03 14/03/06 14/03/13
10,000 15/03/05 15/03/08 15/03/15
– 09/09/99 09/09/02 09/09/09
– 14/03/03 14/03/06 14/03/13
415.00p 31/07/09
415.00p 26/11/09
415.00p 24/03/09
852.00p
814.17p 08/05/09
415.00p 24/03/09
£7.315
£8.790
£7.440
£8.805
£7.440
or date of appointment if later
*
(a) The mid-market closing price of the Company’s shares on 31 December 2009 was £8.00 (2008: £8.335) and the range during the year was £6.68 to £9.60
267,817
187,501
8,350
71,966
(2008: £6.965 to £11.34)
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 (including the SAYE Plan) and not more than 5% to shares allotted under both the LTIP
and SIP.
In the ten years to 31 December 2009, options over 2,508,122 ordinary shares (2008: 2,649,537) have been granted, which
represents 5.8% of the issued share capital at that date (2008: 6.2%). 1,071,167 ordinary shares (2008: 905,367) have been
allotted in respect of the SIP, representing 2.5% of the issued share capital at 31 December 2009 (2008: 2.1%). No shares have
been allotted for the LTIP to date with awards satisfi ed by market purchased shares held in trust.
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 fi nal 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%). With effect from 1 July 2009, future service benefi ts will be based on career average revalued earnings (CARE) with a
normal retirement age of 65 rather than 60.
Details of the Company’s contributions are set out in note 25 to the accounts.
Since 1 April 2002, new employees have been offered membership of a Group defi ned 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,
Andy Pomfret and Paul Stockton participate in the Scheme for death in service benefi ts only. Ian Buckley and Andy Pomfret have
arrangements under self-invested personal pension schemes whilst Paul Stockton is a member of the Group defi ned 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 benefi ts ceased on 31 October 2007.
Additional cash payments are now made by way of a salary supplement in lieu with no overall increase in cost to the Company.
These are disclosed separately in Table 1.
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Pension arrangements continued
The changes in pension entitlements arising in the fi nancial year, required to be disclosed by the UK Listing Authority, are shown in
Table 7. 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. The increases in transfer values are mainly due to changed assumptions for infl ation,
post-retirement discount rates and future mortality.
Following the introduction of the Government’s simplifi cation 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.
Table 7. Directors’ accrued benefi ts under defi ned benefi t schemes (audited information)
P D G Chavasse
R P Lanyon
A T Morris
P G Pearson Lund
R I Smeeton
Age at
31.12.09
Years
Years of
service at
31.12.09
Accrued
benefi t at
31.12.091
Increase
in accrued
benefi ts
excluding
infl ation2
Increase
in accrued
benefi ts
including
infl ation3
Transfer value
of 2 less
directors’
contributions
Transfer value
of accrued
benefi ts at
31.12.09
Transfer value
of accrued
benefi ts at
31.12.08
Increase
in transfer
value less
directors’
contributions4
45
58
45
62
45
9
18
21
10
21
32,271
65,992
60,896
23,772
69,933
5,306
6,373
4,060
–
7,014
5,938
52,095 429,967 206,971 204,396
7,770 139,834 1,640,578 1,036,507 585,471
397,937
49,095 954,767 542,270
5,392
528
83,876
– 496,949 413,073
507,028 425,937
8,489
78,278 949,965
During 2009, fi ve directors (2008: fi ve) accrued benefi ts under defi ned benefi t schemes
Notes
1 The pension entitlement shown above for the fi ve participating directors is that which would be paid annually on retirement at age 60 or 65 based on service to
31 December 2009 (or normal retirement date, if earlier)
2 The additional pension earned in the year excluding UK infl ation
3 The additional pension earned in the year including UK infl ation
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 benefi ts to another scheme
The directors have the option to take early retirement on or after their 50th birthday, in which case their pension benefi ts 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 benefi t to be arranged for
any director by the Company.
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 benefi ts. 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 benefi ts 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 fi ve 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 2009, Ian Buckley received
fees of £41,250 from NXT Plc (2008: £25,000). Following his appointment as a committee member of the Family Assurance
Friendly Society on 14 December 2009, whilst he retains the fee paid of £27,350 per annum, his Rathbones salary has been
reduced accordingly.
Remuneration Committee
The current members of the Remuneration Committee are the independent non-executive directors Caroline Burton (chairman),
James Barclay, Oliver Corbett, David Harrel, Mark Robertshaw, Kate Avery and Kathryn Matthews (who both joined the Committee
on their appointment to the Board on 6 January 2010).
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 met on fi ve occasions in 2009 (2008: seven). Details of attendance at meetings are
shown on page 34.
Advisers to the Remuneration Committee
The Remuneration Committee has appointed Deloitte 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 provides occasional ad-hoc advice, particularly on share scheme issues, and supplies tax compliance software. 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 benefi ts from the Group and do not participate in any group incentive scheme, other
than the SIP.
The basic non-executive director fee in 2009 was £35,000 per annum with additional payments of £7,500 and £5,000 per annum
to the chairmen of the Audit and Remuneration Committees respectively. An additional fee of £5,000 per annum is payable to the
senior independent director where he or 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 2009. Notice of the AGM is on pages 114 to 120.
Approved by the Board on 23 February 2010 and signed on its behalf by
Caroline Burton
Chairman of the Remuneration Committee
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Audit committee report
Committee members
The members of the Audit Committee who served throughout 2009 are the independent non-executive directors Oliver Corbett
(chairman), James Barclay, Caroline Burton, David Harrel, and Mark Robertshaw. Kate Avery and Kathryn Matthews joined the
Committee on their appointment to the Board on 6 January 2010.
The Board is satisfi ed that at least one member of the Committee has recent and relevant fi nancial experience. The chairman is
a chartered accountant whilst other members have considerable experience of fi nancial matters.
The Committee met on seven occasions in 2009 (2008: six). 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
The Committee considers:
(cid:129)
(cid:129)
(cid:129) narrative statements and disclosures, to ensure that they are reasonable and consistent with the reported results.
the signifi cant fi nancial reporting issues and judgements made in connection with the Company’s fi nancial reporting;
the Group’s accounting policies and any proposed changes;
Internal controls and risk management systems
The review of the effectiveness of the Group’s internal fi nancial controls is achieved primarily by the assessment of the work of the
Group internal audit department, reports produced by the compliance functions, the half-year and annual fi nancial statements,
the scope and fi ndings of the annual external audit and periodic reviews with senior management.
During 2009, the Committee considered an independent review by Grant Thornton of risk governance arrangements and
the risk governance framework. It reviewed the Group structure and a programme of rationalisation; and the accounting policy
for acquisitions. Committee members visited offi ces in Bristol, Edinburgh, Liverpool and Winchester (as well as London). It
also considered new Financial Reporting Council Guidance on challenges for audit committees arising from current
economic conditions.
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. The frequency of 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.
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External audit
The Audit Committee is responsible for reviewing external audit arrangements and for any recommendation to the Board regarding
change of audit fi rm. This review includes consideration of the external auditor’s period in offi ce, their compensation and the scope,
quality and cost-effectiveness of their work.
PricewaterhouseCoopers LLP resigned as auditors on 3 June 2009 as they were unable to agree mutually acceptable audit
fees for the 2009 audit with the Company. The Board appointed KPMG Audit Plc to fi ll the vacancy arising on the resignation of
PricewaterhouseCoopers LLP on the recommendation of the Audit Committee. A full tender process was not undertaken as a
full review had been undertaken in 2006. The Committee’s view was that there were a limited number of fi rms with the skill and
experience needed to audit a Group with a banking subsidiary.
The Audit Committee reviews the independence and the nature of non-audit services supplied by the auditors 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
expected 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 satisfi ed that the
independence of the auditors has not been impaired by providing these services. Details of the auditors’ fees are shown in note 7 on
page 75. The Committee also reviews the audit engagement letters each year and has discussions with the auditors with
no management present.
Regarding the 2009 audit, presentations were received from the auditors on audit progress, fi ndings and recommendations and
unadjusted errors.
Whistleblowing
The Audit Committee also approves signifi cant changes to the Group’s Public Interest Disclosure Act confi dential reporting
(or whistleblowing) policy.
Other
On invitation, the fi nance director, other executive directors, compliance offi cers, senior internal audit staff and the external auditors
attend meetings to assist the Committee to fulfi l 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
The members of the Nomination Committee who served throughout 2009 are Mark Powell (chairman), James Barclay,
Caroline Burton, Oliver Corbett, David Harrel, Andy Pomfret and Mark Robertshaw. Kate Avery and Kathryn Matthews joined the
Committee on their appointment to the Board on 6 January 2010.
The Committee met formally on two occasions in 2009 (2008: two). 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
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4
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.
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 fi xed 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. Towards the end of 2009, a fi rm of headhunters was approached regarding the recruitment of new non-executive
directors. From a long list, a shortlist of candidates was then produced and interviewed. Three candidates were then interviewed
by the Committee whose recommendation to the Board was that Kate Avery and Kathryn Matthews be appointed.
The 2008 Board evaluation process highlighted a desire to increase non-executive committee members exposure to senior
management below Board level. This has been done by visits to Group offi ces, the holding of a Board meeting in our Edinburgh
offi ce for the fi rst time and the introduction of a programme of Board presentations on important business areas or issues.
9
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Corporate responsibility report
Introduction
This year we have decided to report in accordance with the criteria set in the Connected Reporting Framework, an initiative launched
by the Prince of Wales’s Accounting for Sustainability Project1.
In line with the principles outlined in the Framework, we have:
(cid:129) Reported on sustainability issues that are material to Rathbones
(cid:129) Discussed our sustainability trends in the short term
(cid:129) Reported against our 2008 objectives and outlined our objectives for 2010
(cid:129) Reported our indirect carbon emissions through our supply chain for travel and paper consumption
(cid:129) Followed international carbon reporting standards to enable comparability
(cid:129) Estimated our carbon intensity
In future, we hope to be able to consider how sustainability issues can be further integrated into our business model and our
sustainability trends in the medium and long term.
Our sustainability issues
As a provider of investment and wealth management services with offi ces in the UK and Jersey, we consider that our exposure to
sustainability issues is relatively small compared to other high impact sectors or larger fi nancial services providers. We consider our
sustainability issues to be mainly:
Socially responsible investment
Whilst the primary consideration is to maximise risk-adjusted returns to clients, we recognise that non-fi nancial considerations can
impact the long-term value of companies.
Environment – Carbon related costs
Although we do not fall under the Carbon Reduction Commitment legislation, we recognise that increasing energy bills, paper usage,
travel costs and waste will reduce profi ts as well as increasing our carbon footprint and should be minimised.
Employees – Access to skills
As a fi nancial company our employees are our most valued asset. We believe that a motivated and satisfi ed workforce leads to better
fi nancial performance.
Community – Involvement and engagement
Positive engagement with the communities around us is considered important for both the local communities and the
employees involved.
The Social & Environmental Committee (SEC) is responsible for ensuring that Rathbones effectively manages its sustainability
issues. The Committee is formed by members of staff from key functions such as facilities management, personnel, marketing,
IT and investment management. The Committee is chaired by our chief executive, meets on a quarterly basis and reports directly
to the Group Executive Committee.
With regard to environmental, social and governance (ESG) matters as they affect our business, the Board believes that the Group
Social & Environmental Committee has identifi ed and assessed the signifi cant risks to the Company’s short- and long-term value.
Socially responsible investment
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 specifi c mandates throughout the Group, but particularly by our specialist
ethical investment service, Rathbone Greenbank Investments.
Increasing media coverage and general consumer awareness of social and environmental issues (especially climate change) have
undoubtedly led to greater awareness of the concept of ‘ethical’ or ‘socially responsible’ investment. Whilst a great deal of focus
tends to be on products and services such as SRI unit or investment trusts, ethical banking, or mortgages, less space is given to the
opportunity for private investors to invest in companies at the forefront of climate change mitigation through bespoke
portfolio management.
1 For more information go to: www.accountingforsustainability.org
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Socially responsible investment continued
Through Rathbone Greenbank Investments and Rathbone Unit Trust Management’s Ethical Bond Fund, the Company is able to
provide investment services appropriate to clients’ interest in these areas. Where appropriate, the Company is also able to participate
in new share issues offered by companies offering environmentally and socially benefi cial products or services on behalf of clients
with specifi c interests in these areas. As a group, Rathbone Brothers Plc has been a signatory to the Carbon Disclosure Project
since 2006 and became a signatory to the UN Principles for Responsible Investment in September 2009.
Environment
From the point of view of commercial risk, Rathbones considers itself to be at limited risk from any change in regulation or
government policy on issues such as climate change as they might relate to restrictions on emissions of major greenhouse gases.
The Company is not a large emitter of such gases, nor is it an excessive consumer of resources. Unless future regulations impose
restrictions on universal business environmental issues such as resource use, building procurement and business travel, then we do
not consider that there would be any signifi cant impact on our business.
The need to comply with any future tightening of energy effi ciency standards would be of greater impact. However, Rathbones
considers that the steps it has already taken in the course of the refurbishment of its Liverpool and London offi ces have largely
addressed any reasonable measures it could be expected to take.
Our direct environmental impacts
Our direct environmental impacts are those typical of an offi ce based business, for example, energy consumption of buildings, travel
related emissions, resource consumption and waste generation.
How we manage our environmental impacts
Based on our carbon emissions during baseline year 2007/08, our overall goal is to reduce our carbon footprint where possible. In
order to achieve this goal, we have agreed a series of actions focused on addressing carbon intensive activities. These include:
(cid:129) Monitor and reduce the energy consumption of our offi ces through improved energy effi ciency, management and
staff engagement
(cid:129) Further reduce the need for travel through the use of video conferencing systems
In addition, we are currently evaluating the business case for offsetting some of our carbon emissions.
Our environmental performance
Scope and boundaries
The information provided in this report was approved by the Social & Environmental Committee and the Board on
23 February 2010. It relates to the period from 1 October 2008 to 30 September 2009.
To enable comparability, the scope and boundaries of the data collected are unchanged, covering the UK operations excluding
Birmingham and Kendal2. This represents approximately 92% of Group employees as at 31 December 2009.
Data collection and calculation3
Data has been collected and calculated in accordance with the requirements set in the following standards: the World Resources
Institute (WRI) Greenhouse Gas (GHG) Protocol (revised version), DEFRA Guidance on How to Report GHG Emissions
(September 2009) and ISO 14064 - part 1.
Our base year is 1 October 2007 to 30 September 2008. Base year fi gures have been recalculated following the identifi cation
of unreported consumption for the London offi ce. We have improved the quality of the energy consumption data reported for our
larger offi ces through the introduction of an energy tracking tool.
2 Offi ces under scope are in Bristol, Cambridge, Chichester, Edinburgh, Exeter, London, Liverpool, and Winchester
3 Data sources: most of our electricity and gas use data comes from meter readings or invoices. Data for Exeter was not available; therefore a Government
benchmark was used. In most cases data did not account for the full reporting year and had to be extrapolated. In the case of Liverpool, gas data was only
available for the whole building and had to be adjusted pro-rata to give estimated fi gures for the space occupied by Rathbones. Travel data: approximately 40%
of train journeys were estimated based on cost. Waste data: The majority of waste data was estimated based on offi ce samples. Paper data: Paper consumption
was based on paper purchased and printing records
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Our environmental performance continued
Our carbon footprint
We have reported our carbon footprint in scopes 1–3 defi ned by the World Resources Institute (WRI) GHG Protocol in
Chart 1 and in Table 1.
Our total carbon footprint for this year is 2,390 tonnes of CO2e4. (2007/08: 2,392 tonnes).
Chart 1 – Tonnes of CO2e by emissions source
Air
Rail
Taxis
Non-company cars
Electricity
Company cars
Gas
Total
2008/09
10,6955
699
1,243,539
254
64,889
13
267
3,060,113
1,665
2,905,584
458
2,390
3.4
0.18
213
98
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4
Tonnes CO2e
273
102
6
77
1,665
13
254
2,390
2007/08
(Base year)
10,727
704
1,455,655
300
83,416
19
319
2,984,736 6
1,603 7
2,701,346
4708
2,392
3.4
0.18
2269
9810
Table 1. Absolute and relative CO2e from Rathbones’ offi ces under scope
Offi ce square metres (m2)
Number of employees as at 31 December
Scope 1
Gas use (kWh)
Gas (CO2e tonnes)
Company cars (km)
Company cars (CO2e tonnes)
Total CO2e (tonnes)
Scope 2
Electricity (kWh)
Total CO2e (tonnes)
Scope 3
Business travel (km)
Total CO2e (tonnes)
Total CO2e (tonnes)
CO2e (tonnes) per employee
Electricity and gas CO2e tonnes/m2
Waste (tonnes)
Paper (tonnes)
4 We have expressed our carbon footprint in terms of CO2 equivalent (CO2e) to accommodate non-CO2 greenhouse gas emissions
5 Bristol has moved offi ces which has resulted in a small change in the total fl oor area for the group
6 Electricity consumption has been re-baselined for 2007/08. We previously reported 1,999,470 kWh but we have added an additional 985,266 kWh following the
identifi cation of unreported consumption in London
7 Data re-baselined (see above). 1,074 tonnes CO2e was previously reported
8 Data extrapolated to allow comparison with the complete data coverage of fl ight data for this year and to maintain consistency of approach
9 A small change in the estimated waste volume refl ecting better data quality
10 Data re-baselined to include previously excluded envelopes
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Our environmental performance continued
For the fi rst time this year, and in line with the Accounting for Sustainability model, we have decided to report our carbon intensity
against our operating income and funds under management.
Table 2. Carbon intensity
Operating income
Funds under management (FUM)
1 Tonnes CO2e per £m of operating income or FUM
Performance analysis
2009
(£m)
116.8
13,100
2008
(£m)
131.2
10,460
Carbon intensity1
2009
20.5
0.18
2008
18.2
0.23
Scope 1
Natural gas
Natural gas consumption has decreased by 15% over the past year. Last year, Liverpool gas consumption was calculated using a
Government benchmark. Upon the introduction of energy tracking we found out that in fact energy consumption was 24% lower
than originally estimated.
Company cars
The phasing out of company cars has continued as leases end.
Scope 2
Electricity
Our total electricity consumption has increased by 3% compared to the previous year. All of our offi ces with the exception of
Liverpool and Bristol reported a drop in consumption. Bristol’s increase is due to an offi ce move to new premises that only operates
with electricity.
Scope 3
Business travel (excluding company cars)
Overall, we have reported a decrease of 2% in CO2e emissions from the baseline year. We are pleased to report that we have
completed our consolidation of business travel bookings which has resulted in increased confi dence in the quality of data we report,
although the full benefi ts will be recognised in 2009/10.
Flights
Our travel CO2e emissions are dominated by fl ights which generate 60% of emissions. We are pleased to report a reduction of 4% in
both kilometres travelled and CO2e emissions in 2008/09.
Rail
National rail travel increased by 23% in 2008/09 from 1.36m km to 1.67m km due in part to the expansion of the regional offi ce
network in Exeter, Birmingham and Edinburgh.
Taxis and non-company cars
Our use of taxis has decreased by 11% to 25,391 km. However, relative CO2e emissions have increased by 1 tonne CO2e
due to changes in DEFRA emission factors. Non-company car use has decreased signifi cantly.
Objectives for 2010
We will continue to encourage the use of public transport where practical.
Landfi ll waste and recycling
All offi ces have an active recycling programme with high levels of participation that cover at a minimum paper and cardboard. In most
offi ces shredded paper, glass, plastic bottles and cans are also recycled. Of the 305kg of waste produced per employee per annum,
it is estimated that 254kg is recycled.
Redundant IT equipment is passed to EOL IT Services (an approved WEEE disposal agent with a zero to landfi ll policy) for re-use or
recycling. Wherever possible we continue to recycle fl uorescent tubes, batteries, toner cartridges and mobile telephones.
We have carried out wide sampling of our waste streams in our main offi ces and have improved the quality of data received from our
suppliers. We continue to improve our recycling level, achieving an estimated average 83% recycling level across the business.
In London and Liverpool we have also seen waste to energy initiatives implemented and now send half of our non-recycled waste to
energy production. As a result, in London we have achieved our objective of sending no waste to landfi ll.
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Our environmental performance continued
Table 3. Waste and recycling data
Paper and cardboard
Secure shredding
Other materials
Total recycling
Waste to energy
Residual landfi ll waste
Total waste
Per employee
Mass collected
(2008–09
)
)
(tonnes
64
104
9
177
18
18
213
0.3
%
30%
48%
4%
82%
9%
9%
100%
Mass collected
(2007–08
)
)
(tonnes
79
68
14
161
–
65
226
0.3
%
35%
30%
6%
71%
0%
29%
100%
Paper usage
Total paper consumption amounts to 98 tonnes, which is approximately equivalent to 14.1 million A4 sheets. Paper is an energy and
carbon intensive product to produce. We aim, where possible, to reduce usage, to purchase recycled paper and to work with our
print suppliers to reduce waste in the printing of our reports and brochures.
Table 4. Paper usage
Paper weight (tonnes)
Recycled paper
Virgin paper
2008–09
Stationery
2008–09
Print
2008-09
Total
2007–08
Stationery
2007–08
Print
2007–08
Total
27
5
32
50
16
66
77
21
98
37
6
43
40
15
55
77
21
98
65% of our paper consumption by weight is recycled stock. The majority of the stationery paper purchased is Evolve brand, a
100% recycled product made exclusively from UK post consumer waste.
We have managed to reduce our stationery paper use by approximately 3 million sheets. Paper use for printing has increased
from year to year due in part to printing layout changes for client valuation packs and increased demand for other printed stationery.
We have estimated that our paper consumption this year has caused emissions of 208 tonnes CO2e. However, as no agreed
standard currently exists for GHG emissions for paper, we have excluded this from the overall carbon footprint.
Objectives for 2010
We remain focused on improved paper management in our offi ces and will increase efforts to reduce our printed paper use. Where
possible, a summary of deals is now sent to clients with their periodic valuations rather than posting a contract note at the time of
each deal. We will also continue to seek cost effective ways to reduce use of virgin stock where possible.
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Our environmental performance continued
Table 5. Performance versus our objectives
Our objective for 2009
Review energy
intensive offi ces
Reduce our travel carbon
footprint by encouraging
the use of rail rather
than fl ights
Performance
On track
Achieved
Implement a zero-to-landfi ll
policy in our London and
Liverpool offi ces
Achieved
Paper use: Reduce paper
use in our offi ces and for
client communication
Not achieved
Comment
Energy audit for Liverpool offi ce
in November 2009
Our objective for 2010
Energy audit in Bristol
We have reported an increase in the
number of rail journeys and a reduction in
the number of fl ights. Our scope 3
emissions have decreased by 2.6%
Our zero-to-landfi ll programme has been
successfully initiated in our London and
Liverpool offi ces
We have seen a signifi cant decrease
(2 million A4 sheets) in our offi ce paper
use. However we have seen a large
increase in printed paper
We will review our travel policy
and seek ways of increasing
the use of video conferencing
Seek ways of reducing waste
in other offi ces
Seek ways to reduce printed
stationery use, particularly for
client communication
Improve data collection
systems for energy,
fl ights and rail
On track
Our data quality has improved. However
40% of rail data is estimated based on
cost data
Enhance the central travel
booking system with on-line
access
Carbon Smart Opinion Statement
This statement provides Rathbones and its stakeholders with a third party assessment of the quality and
reliability of Rathbones’ carbon footprint data for the reporting period 1 October 2008 to 30 September 2009.
It does not represent an independent third party assurance of Rathbones’ management approach to
sustainability.
Carbon Smart has been commissioned by Rathbone Brothers Plc to measure Rathbones’ carbon footprint for selected UK offi ces
for its 2009 Corporate responsibility report. 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 ISO 14064 – part 1 standard
and verifi ed against the WRI GHG Protocol principles of completeness, consistency and accuracy.
Our work has included interviews with key Rathbones’ personnel, a review of internal and external documentation, interrogation
of source data and data collection systems including comparisons with the previous year and a site visit to Liverpool.
We have concluded the following:
Relevance
We have ensured the GHG inventory appropriately refl ects 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 over 90% of total employees including all entities that meet the criteria of being subject to
control or signifi cant infl uence of the reporting organisation. We recommend that Rathbones continues to improve data collection
efforts for its most material emissions.
Consistency
In order to ensure comparability, we have used the same calculation methodologies and assumptions as last year. We have
re-baselined data to account for changes in the emissions under scope.
Transparency
Where relevant, we have included appropriate references to the accounting and calculation methodologies, assumptions,
estimations and re-baselining performed.
Accuracy
To our knowledge, 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 3.2, an improvement compared to last year (2.6). Rathbones’
goal is to increase this rating to 4 by 2010 by strengthening its data gathering systems.
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Our environmental performance continued
Scope
Overall
Scope1
Scope 2
Scope 3
Paper
Waste and recycling
Data quality rating
2008-09
% Carbon footprint
2008-09
Data quality rating
2007-08
Comments
3.2
2
4
3
4
3
2.6
11%
2 A signifi cant portion of gas data was not available
and benchmarks had to be used. Company car data
required minor assumptions and estimates
70%
3 Majority of electricity related data is free from
assumptions and estimations. There are some minor
extrapolations and pro rata calculations
19%
2
Flight data quality was good with minor
assumptions and estimates. Rail and car data
required moderate extrapolation. Taxi data was
based on cost benchmarks
n/a
n/a
4 High level of good quality data coverage
2 Waste data has improved signifi cantly in key
London and Liverpool offi ces
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About Carbon Smart
Carbon Smart is a carbon and sustainability consultancy headquartered in London. Our team of sustainability, environmental,
business and academic experts meet the IRCA criteria for Lead Sustainability Assurance Practitioner.
London, 23 February 2010.
Signed
Ben Murray
Director
Carbon Smart Limited
Esther Rodriguez
Associate Director
Carbon Smart Limited
Employees
As with all professional services fi rms, 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 offi ces is regularly updated to refl ect 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 offi ces 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 Rathbones also provides
an independent and confi dential 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.
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Employees continued
Work-life balance
Rathbones recognises the importance of an appropriate work-life balance both to the health and welfare of employees and to the
business. Holiday entitlements are 25 days increasing to 30 days after fi ve years’ service. Employees are able to buy up to fi ve
additional days of leave with the agreement of their manager.
Maternity benefi ts remain in excess of those required under statutory provisions. 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. On completion of fi ve 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 benefi ts 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
It is vital that all staff continuously improve their skills, keep up to date with developments in their area of expertise and meet
regulatory requirements. We support this by helping individuals to fi nd the most appropriate development opportunities. There are
a number of options provided including attending external courses or conferences, internal seminars, development programmes, on
the job training and coaching.
During 2009 we have continued to develop some long term development programmes as well as launching some new initiatives.
New initiatives
A two day refresher course, ‘The Application of Financial Ratios to Stock Selection’ was attended by the majority of our fund
managers. This course was tailored for our business and designed to be immediately relevant back at the desk. We aim to deliver
more of this type of training during 2010.
A new long term programme was launched to help to further improve business development skills with an initial focus on handling
client meetings. The aim of this is to ensure that the Rathbone proposition is fully and persuasively explained.
Retail Distribution Review – professional standards
The professional standards element of the FSA’s Retail Distribution Review (RDR) aims to raise the professional standards of those
giving fi nancial advice across the sector. As a result a small number of our staff will have to complete an additional qualifi cation.
The RDR also places a greater emphasis on continuous professional development (CPD) and whilst Rathbones has a long standing
CPD process we will look to enhance this and ensure that targeted development opportunities continue to be available.
Rathbone Development Programme
The Rathbone Development Programme has continued this year with the aim of improving networking, professional skills and
increasing involvement in the business. A signifi cant part of this has involved working on live business issues including:
(cid:129) A client survey to ensure that we are treating clients fairly
(cid:129) Standardising documentation across the business to ensure a consistent image
(cid:129)
Implementation of a single provider for business travel
This has proved to be a good opportunity for delegates to get to know more about the business outside of their area of
responsibility and to develop project management skills.
At the conclusion of this programme the delegates create individual development plans with the help of feedback from senior
managers and fellow participants.
Management Skills
At the beginning of the year 15 of our managers and team leaders successfully completed an introductory level qualifi cation
awarded by the Chartered Management Institute. This was the culmination of a nine month training programme focusing on the
techniques of management. Eight delegates have chosen to take higher level qualifi cations and will complete these during 2010.
Secretarial Training Programme
Now in its second year, the programme of quarterly meetings comprise communication of key business initiatives, training in new
skills, networking and input from a range of staff to enable greater understanding of roles across the business. This initiative has
increased the engagement of this group of staff.
IT Skills
A very comprehensive training programme involving all staff was implemented to support the upgrade to a new version of Microsoft
Offi ce. This enabled a smooth transition and provided an opportunity for many to upgrade their skills.
Investment
Rathbones continues to invest in staff training. In 2009 we spent £326,790 on development, an average of £476 per person.
An average of 2.3 days per person was spent attending training courses.
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Employees continued
Rewards and benefi ts
Employees are encouraged to identify and to become involved with the fi nancial performance of the Group. The Share Incentive Plan
(SIP) remains popular with 670 employees participating at 31 December 2009 holding an average of 2,010 shares. 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. A member of staff who has been in the SIP since its launch and who has made the maximum
monthly contributions now owns 4,975 shares, which were valued at £39,800 as at 31 December 2009.
On 19 November 2009, shareholders approved the launch of an approved Savings Related Share Option Plan. This was launched on
26 November 2009 with an option exercise price of £6.96. Take-up was strong with 238 employees participating saving an average
of £156 per month.
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 and offer a cycle to work scheme.
Rathbones recognises its responsibility to assist in the fi nancial welfare of its employees when they reach retirement age and pays
contributions to provide death in service cover and benefi ts on retirement. Following a consultation process, the future accrued
benefi ts of employees in the defi ned benefi t scheme were reduced by an increase in the retirement age from 60 to 65 and a move
to career average revalued earnings (CARE) with effect from 1 July 2009. The changes were made to reduce the cost of the
scheme and to bring the cost more into line with that of the defi ned contribution scheme.
Employee involvement
Communication with staff takes place through a variety of means including internal email and an internal newsletter. 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 offi ces 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 benefi ts such as pensions are being considered and a range of internal
committees and working parties draw in participation from across the fi rm on key issues such as IT, training, business continuity
and marketing.
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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.
During the year, 20 employees assisted at Personal Finance Education Group (PFEG) events for school children in London and
Liverpool whilst 16 employees in Liverpool worked on-site for a day helping build 32 award winning Habitat for Humanity homes
in Liverpool.
Donations and fundraising
During the year, the Group made total charitable donations of £174,098, representing 0.59% of continuing Group pre-tax profi ts
(2008: £165,478, representing 0.39% of continuing Group pre-tax profi ts).
Staff are encouraged to donate to charity in a tax effi cient manner through the Give As You Earn (GAYE) payroll giving scheme.
In 2009, Rathbone employees made payments totalling £384,273 (2008: £107,783) 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 2009
donated £81,109 (2008: £77,843) to causes chosen by employees through this method.
£30,000 was donated as part of a four year commitment made to support four Liverpool secondary schools in their bids for
Specialist Schools and Academies Trust status. A number of employees from our Liverpool offi ce sit on the respective governing
bodies, helping to maintain working relationships with each school whilst bringing a wide range of skills and business experience to
the various committees. The members of staff involved are, as a result, given opportunities to develop their wider professional and
management skills. A number of initiatives have been implemented with the individual schools including CV workshops, Business
Enterprise days and pupil mentoring, all designed to enhance capability and future employability. We also provide two work
experience places for each school each year and offer a small number of sixth form pupils paid summer work.
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. During 2009, £9,497 has been raised by staff for these two charities.
9
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6
5
Statement of directors’ responsibilities in respect of the
report and accounts
The directors are responsible for preparing the Annual Report and the Group consolidated accounts and Company accounts, in
accordance with applicable law and regulations.
Company law requires the directors to prepare Group consolidated accounts and Company accounts for each fi nancial year. Under
that law the directors are required to prepare the Group consolidated accounts in accordance with IFRSs as adopted by the EU and
applicable law and have elected to prepare the Company accounts in accordance with UK Accounting Standards and applicable law
(UK Generally Accepted Accounting Practice).
Under company law the directors must not approve the fi nancial statements unless they are satisfi ed that they give a true and fair
view of the state of affairs of the Group and Company and of their profi t or loss for that period. In preparing each of the Group and
Company fi nancial statements, the directors are required to:
(cid:129) select suitable accounting policies and then apply them consistently;
(cid:129) make judgements and estimates that are reasonable and prudent;
(cid:129) for the Group consolidated accounts, state whether they have been prepared in accordance with IFRS as adopted by the EU;
(cid:129) for the Company accounts, state whether applicable UK Accounting Standards have been followed,
(cid:129) subject to any material departures disclosed and explained in the Company accounts; and
(cid:129) prepare the fi nancial statements on the going concern basis unless it is inappropriate to presume that the Group and the
Company will continue in business.
The directors are responsible for keeping adequate accounting records that are suffi cient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the fi nancial position of the Company and enable them to ensure
that its fi nancial statements comply with the Companies Act 2006. 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 fi nancial information included on the
Company’s website. Legislation in the UK governing the preparation and dissemination of fi nancial 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:
(cid:129) so far as each of the directors is aware, there is no relevant audit information (as defi ned in the Companies Act 2006) of which
the Company’s auditors are unaware; and
(cid:129) 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 defi ned) and to establish that the Company’s auditors are aware of that information.
Responsibility statement
We confi rm that to the best of our knowledge:
(1) the fi nancial statements, prepared in accordance with the relevant fi nancial reporting framework, give a true and fair view of the
assets, liabilities, fi nancial position and profi t or loss of the Company and the undertakings included in the consolidation taken
as a whole; and
(2) the Directors’ report, together with information provided in the Chairman’s and Chief executive’s statements, Rathbones at a
glance, Strategy and business performance and the 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
23 February 2010
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Consolidated accounts
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Independent auditors’ report to the members of Rathbone Brothers Plc
We have audited the fi nancial statements of Rathbone Brothers Plc for the year ended 31 December 2009 set out on pages 60
to 113. The fi nancial reporting framework that has been applied in the preparation of the Group accounts is applicable
law and International Financial Reporting Standards (IFRSs) as adopted by the EU. The fi nancial reporting framework that has
been applied in the preparation of the Company accounts is applicable law and UK Accounting Standards
(UK Generally Accepted Accounting Practice).
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to
state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members, as a body, for our audit work, for this report, or for
the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ responsibilities statement set out on page 56, the directors are responsible for the
preparation of the fi nancial statements and for being satisfi ed that they give a true and fair view. Our responsibility is to audit the
fi nancial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards
require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the fi nancial statements
A description of the scope of an audit of fi nancial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/UKP.
Opinion on fi nancial statements
In our opinion:
the fi nancial statements give a true and fair view of the state of the Group’s and of the Company’s affairs as at
(cid:129)
31 December 2009 and of the Group’s profi t for the year then ended;
(cid:129)
the Group accounts have been properly prepared in accordance with IFRSs as adopted by the EU;
the Company accounts have been properly prepared in accordance with UK Generally Accepted
(cid:129)
Accounting Practice;
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(cid:129)
8
5
the fi nancial statements have been prepared in accordance with the requirements of the Companies Act 2006; and, as regards
the Group accounts, Article 4 of the IAS Regulation.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
(cid:129)
the part of the Remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006; and
the information given in the Directors’ report for the fi nancial year for which the fi nancial statements are prepared is consistent
(cid:129)
with the fi nancial statements.
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Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
(cid:129) adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from
branches not visited by us; or
the Company fi nancial statements and the part of the Remuneration report to be audited are not in agreement with the
(cid:129)
accounting records and returns; or
(cid:129) certain disclosures of directors’ remuneration specifi ed by law are not made; or
(cid:129) we have not received all the information and explanations we require for our audit.
Under the Listing Rules we are required to review:
(cid:129)
the directors’ statement, set out on page 56, in relation to going concern; and
the part of the Corporate governance report relating to the Company’s compliance with the nine provisions of the
(cid:129)
June 2008 Combined Code specifi ed for our review.
I Cummings (Senior Statutory Auditor)
for and on behalf of KPMG Audit Plc, Statutory Auditor
Chartered Accountants
8 Salisbury Square, London EC4Y 8BB
23 February 2010
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Consolidated income statement
for the year ended 31 December 2009
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
Other operating income
Operating income
Additional levy for Financial Services Compensation Scheme
Amortisation of client relationships
Transaction costs
Other operating expenses
Operating expenses
Profi t before tax from continuing operations
Taxation
Profi t after tax from continuing operations
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Discontinued operations
(Loss)/profi t before tax from discontinued operations
Income tax credit on (loss)/profi t before tax from discontinued operations
Loss recognised on re-measurement of assets of the disposal group
Net loss from discontinued operations
Profi t for the period 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 period attributable to equity
holders of the Company:
– basic
– diluted
Earnings per share from profi t from continuing operations for
the period attributable to equity holders of the Company:
– basic
– diluted
The accompanying notes form an integral part of the Consolidated accounts.
Note
4
5
6
6
6
7
17
17
7
9
10
11
12
12
2009
£’000
21,502
(3,006)
18,496
103,735
(7,351)
96,384
80
358
1,439
116,757
(229)
(1,967)
(782)
(84,311)
(87,289)
29,468
(9,271)
20,197
(391)
33
(211)
(569)
19,628
42.00p
18,159
45.55p
45.53p
46.87p
46.85p
2008
£’000
restated (note1)
68,115
(37,140)
30,975
106,656
(8,565)
98,091
134
480
1,486
131,166
(1,404)
(1,310)
–
(86,146)
(88,860)
42,306
(13,421)
28,885
2,666
129
(12,680)
(9,885)
19,000
42.00p
17,984
44.45p
44.09p
67.57p
67.02p
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Consolidated statement of comprehensive income
for the year ended 31 December 2009
Profi t for the year
Other comprehensive income:
Exchange translation differences
Actuarial loss on retirement benefi t obligation
Revaluation of available for sale investment securities:
– net loss from changes in fair value
Deferred tax relating to components of other comprehensive income:
– available for sale investment securities
– actuarial gains and losses
Other comprehensive income for the year, net of tax
Total comprehensive income for the year, net of tax
attributable to equity holders of the Company
Note
25
16
19
2009
£’000
19,628
(182)
(8,626)
(59)
17
2,415
(6,435)
2008
£’000
19,000
1,001
(44)
(3,957)
1,108
12
(1,880)
13,193
17,120
Consolidated statement of changes in equity
for the year ended 31 December 2009
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Share
capital
£’000
Share
premium
£’000
Merger
reserve
£’000
Note
Available
for sale
reserve
£’000
Translation
reserve
£’000
Total
other
reserves
£’000
Retained
earnings
£’000
Total
equity
£’000
2,134 27,758 49,428
4,968
(215) 54,181 100,677 184,750
At 1 January 2008
Total comprehensive income
for the period
Dividends paid
Issue of share capital
Share-based payments:
– value of employee services
– costs of shares issued/purchased
– tax on share-based payments
Transfer of merger reserve to retained
earnings on disposal of subsidiary
At 1 January 2009
Total comprehensive income for
the period
Dividends paid
Issue of share capital
Reclassifi cation of translation reserve
on disposal of subsidiaries
Share-based payments:
– value of employee services
– transfer to liabilities for cash
settled awards
– costs of shares issued/purchased
– tax on share-based payments
11
26
8
19
11
26
8
19
9
1,199
(2,849)
1,001
(1,848) 18,968
(17,503)
17,120
(17,503)
1,208
1,299
(1,728)
(515)
1,299
(1,728)
(515)
(17,593)
(17,593)
17,593
–
1
6
2,143 28,957
31,835
2,119
786
34,740 118,791 184,631
22
2,799
(42)
(182)
(224)
13,417
(18,066)
13,193
(18,066)
2,821
(359)
(359)
359
–
1,219
1,219
(119)
(1,096)
(94)
(119)
(1,096)
(94)
At 31 December 2009
2,165 31,756
31,835
2,077
245
34,157 114,411 182,489
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Consolidated balance sheet
as at 31 December 2009
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 classifi ed 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 classifi ed as held for sale
Retirement benefi t obligations
Total liabilities
Equity
Share capital
Share premium
Other reserves
Retained earnings
Total equity
Note
13
14
15
16
16
10
17
18
19
20
21
22
23
10
25
26
26
2009
£’000
315
17,305
92,661
26,745
86,932
694,000
–
81,973
5,676
1,603
29,878
2008
£’000
351
15,751
175,973
39,412
81,991
874,979
5,813
68,232
6,816
2,483
38,646
1,037,088
1,310,447
7,379
22,157
766,361
46,875
2,414
–
9,413
854,599
2,165
31,756
34,157
114,411
182,489
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
Total liabilities and equity
1,037,088
1,310,447
Approved by the Board of Directors on 23 February 2010
A D Pomfret
Chief executive
R P Stockton
Finance director
Company registed number: 1000403.
The accompanying notes form an intergral part of the Consolidated accounts.
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Consolidated cash fl ow statement
for the year ended 31 December 2009
Cash fl ows from operating activities
Profi t before income tax from continuing operations
Net interest income
Impairment losses on loans and advances
Profi t on disposal of plant and equipment
Depreciation and amortisation
Defi ned benefi t pension scheme charges
Share-based payment charges
Interest paid
Interest received
Changes in operating assets and liabilities:
– net (increase)/decrease loans and advances to banks and customers
– net (increase)/decrease in settlement balance debtors
– net decrease prepayments, accrued income and other assets
– net (decrease)/increase in amounts due to customers and deposits by banks
– net increase/(decrease) in settlement balance creditors
– net decrease in accruals, deferred income, provisions and other liabilities
Cash (used in)/generated from operations
Defi ned benefi t pension contributions paid
Tax paid
Discontinued operations
Net cash (outfl ow)/infl ow from operating activities
Cash fl ows 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 generated from/(used in) investing activities
Cash fl ows from fi nancing activities
Purchase of shares for share-based schemes
Issue of ordinary shares
Dividends paid
Net cash used in fi nancing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the period
Note
15
8
8
25
32
16
16
32
11
32
2009
£’000
29,468
(18,496)
22
(20)
5,340
1,852
1,219
(3,889)
33,819
49,315
(42,557)
(1,554)
3,436
(265,751)
8,109
(8,723)
(257,725)
(6,788)
(9,625)
(1,522)
(275,660)
–
(1,341)
(3,319)
65
(1,796,282)
1,977,261
(4)
176,380
(468)
2,193
(18,066)
(16,341)
(115,621)
255,021
(356)
139,044
2008
£’000
restated (note1)
42,306
(30,975)
52
(45)
4,614
1,942
1,299
(37,970)
68,147
49,370
33,169
5,822
4,914
90,162
(5,878)
(2,911)
174,648
(2,715)
(10,940)
2,247
163,240
(734)
16,340
(11,311)
151
(2,545,080)
2,435,375
(266)
(105,525)
(1,728)
1,208
(17,503)
(18,023)
39,692
214,220
1,109
255,021
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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 108 to 115.
Changes in accounting policies and disclosure
The comparative balances have been restated in the Consolidated income statement, Consolidated cash fl ow statement and the
related notes where applicable to refl ect the disposal or planned discontinuation of certain subsidiary entities in accordance with
IFRS 5. As required by the Standard, the comparative balances for the Consolidated balance sheet have not been restated. Further
details, including the impact on the fi nancial statements, are given in note 10.
Developments in reporting standards and interpretations
In the current year the following new and revised standards have been adopted and have affected the amounts reported in these
fi nancial statements.
IAS 1 (revised 2007), ‘Presentation of fi nancial statements’. IAS 1(2007) has introduced a number of changes in the format
(cid:129)
and content of the fi nancial statements. As a result the Group presents in the Consolidated statement of changes in equity
all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of
comprehensive income.
IFRS 8, ‘Operating segments’. The new standard requires segment information to be determined and presented on the same
(cid:129)
basis as the information that internally is reported to the Group Executive Committee, which is the Group’s chief operating
decision maker. The new standard has not required the Group to change its reported operating segments.
(cid:129) Amendments to IFRS 7, ‘Financial instruments disclosures’. The amendments to IFRS 7 expand the disclosure required in
respect of fair value measurements and liquidity risk.
The following standards and interpretations are effective for the fi rst time in the current fi nancial year and have been adopted by
the Group, although there was no impact on the consolidated results or fi nancial position:
(cid:129)
(cid:129)
(cid:129)
IAS 36 (amendment), ‘Impairment of assets’
IAS 23 (amendments), ‘Borrowing costs’
IFRS 2 (amendment), ‘Share based payments’
IAS 32 (amendment), ‘Financial Instruments: Presentation’/ IAS 1 (amendment). Presentation of fi nancial statements
(cid:129)
– ‘Puttable fi nancial instruments and obligations arising on liquidation’
(cid:129)
(cid:129)
(cid:129)
IAS 39 (amendment), ‘Financial Instruments: Recognition and measurement’
IFRIC 15, ‘Agreements for the construction of real estate’
IFRIC 16, ‘Hedges of a net investment in a foreign operation’
The following standards and interpretations are also mandatory for the Group’s accounting periods beginning on or after
1 January 2010 or later periods and have not been early adopted by the Group. They are not likely, in the opinion of the directors,
to impact materially the fi nancial statements in the period of initial application:
(cid:129)
(cid:129)
IFRS 3 (revised 2008), ‘Business combinations’
IAS 27 (revised 2008), ‘Consolidated and separate fi nancial statements’
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 2010 or later periods but which, in the opinion of the directors, are not relevant to the
operations of the Group:
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IFRIC 17, ‘Distributions of non-cash assets to owners’
IFRIC 18, ‘Transfers of assets from customers’
(cid:129)
(cid:129)
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Principal accounting policies continued
Basis of consolidation
The consolidated fi nancial statements incorporate the fi nancial 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.
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. Identifi able 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 identifi able 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.
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 fi nancial statements incorporate the fi nancial statements of Rathbone International Finance B.V., which was
effectively controlled by the Company, through representation on the board, until 12 November 2009. The Company did not own,
directly or indirectly, any of the entity’s share capital.
Basis of presentation
The fi nancial statements have been prepared on the historical cost basis, except for the revaluation of certain fi nancial instruments.
The principal accounting policies adopted are set out below. The accounting policies set out below have, unless otherwise stated,
been applied consistently to all periods presented in the consolidated accounts.
The directors have, at the time of approving the fi nancial statements, a reasonable expectation that the Company and the Group have
adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern
basis of accounting in preparing the fi nancial statements. Further detail is contained in the business review on page 23.
Impairment
Goodwill and other intangible assets with indefi nite useful lives are tested for impairment both when there is an indication of
impairment and annually. Intangible assets with fi nite lives are tested for impairment where there is an indication of impairment.
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 fl ows 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-fi nancial 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 fl ows are discounted to their present values using a pre-tax discount rate that refl ects current
market assessments of the time value of money and the risks specifi c to the asset for which the estimates of future cash fl ows
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 fl ows, 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 identifi ed.
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 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, except for equity
instruments, 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.
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Principal accounting policies continued
An impairment loss in respect of held to maturity securities 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 classifi ed as available for sale is not reversed through profi t
or loss. If the fair value of a debt instrument classifi ed as available for sale increases and the increase can be objectively related
to an event occurring after the impairment loss was recognised in profi t or loss, the impairment is reversed through profi t or loss.
Net interest income
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
fi nancial 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 fi nancial asset or a fi nancial 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 fi nancial instrument or, when appropriate,
a shorter period to the net carrying amount of the fi nancial asset or fi nancial liability. When calculating the effective interest rate,
the Group estimates cash fl ows considering all contractual terms of the fi nancial 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.
Once a fi nancial asset or a group of similar fi nancial 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 fl ows for the purpose of measuring the
impairment loss.
Dividend income
Dividend income from fi nal dividends on equity securities is accounted for on the date the security becomes ex-dividend. Interim
dividends are recognised when paid.
Operating leases
Lease agreements which do not transfer substantially all of the risks and rewards of ownership of the leased assets to the
Group are classifi ed as 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 expense recognised in the income statement is adjusted for the impact
of any lease incentives.
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 identifi able 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 fi ve 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.
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Principal accounting policies continued
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
identifi able 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 profi t 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 identifi ed as the smallest identifi able group of assets that generates cash infl ows
that are largely independent of the cash infl ows 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 profi t 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 specifi c
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 identifi able and unique software products controlled by the Group are
recognised as intangible assets when the recognition requirements of IAS 38 are met. Computer software development costs
recognised as assets are amortised using the straight-line method over their useful lives (not exceeding four years).
Costs associated with developing or maintaining computer software programs that are not recognised as assets are recognised
as an expense as incurred.
c Client relationships
Client relationships acquired are initially recognised at historical cost. Those in respect of business combinations are initially
recognised at fair value. Client relationships have a fi nite 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 relationships over their estimated useful
lives (ten to fi fteen years).
Financial assets
The Group classifi es its fi nancial assets in the following categories: fi nancial assets at fair value through profi t or loss, loans and
receivables, held-to-maturity investments and available for sale fi nancial assets. The classifi cation of fi nancial assets is determined
at initial recognition. Financial assets are initially recognised at fair value.
a Financial assets at fair value through profi t or loss
This category has two sub-categories: fi nancial assets held for trading, and those designated at fair value through profi t or loss
at inception. A fi nancial asset is classifi ed in this category if acquired principally for the purpose of selling in the short term or if
so designated. Derivatives, which are categorised as fair value through profi t or loss, are also categorised as held for trading and
reported within other assets or other liabilities.
b Loans and receivables
Loans and receivables are non-derivative fi nancial assets with fi xed 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. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.
c Held-to-maturity
Held-to-maturity investments are non-derivative fi nancial assets with fi xed or determinable payments and fi xed maturities that the
Group’s management has the positive intention and ability to hold to maturity, other than those that meet the defi nition of loans and
receivables or that the Group has classifi ed as available for sale or fair value through profi t or loss. Held to maturity investments are
measured at amortised cost using the effective interest method, less any impairment, with revenue recognised on an effective
yield basis.
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Principal accounting policies continued
d Available for sale
Available for sale fi nancial assets are non-derivatives that are either designated in this category or not classifi ed in any of the
other categories. Available for sale investments are those intended to be held for an indefi nite 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 fi nancial assets at fair value through profi t 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 fi nancial assets not carried at fair
value through profi t or loss. Financial assets are derecognised when the rights to receive cash fl ows from the fi nancial assets have
expired or been effectively transferred, or where the Group has transferred substantially all risks and rewards of ownership.
Available for sale fi nancial assets and fi nancial assets at fair value through profi t 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 ‘fi nancial assets at fair value through profi t 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 fi nancial assets are recognised directly in equity, until the fi nancial 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 fi nancial instruments in active markets are based on current bid prices. If the market for a fi nancial 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 fl ow analysis, option pricing models and other valuation techniques commonly
used by market participants.
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.
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 outfl ow of economic benefi ts 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 refl ects current market assessments
of the time value of money and the risks specifi c 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
notifi ed to affected parties.
Foreign currencies
The Company’s functional and the Group’s 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 fi nancial 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 profi t 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 transferred to equity 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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Principal accounting policies continued
Retirement benefi t obligations
The cost of providing benefi ts under defi ned benefi t 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, in the statement of comprehensive income.
Past service cost is recognised immediately to the extent that the benefi ts are already vested, and otherwise is amortised on a
straight-line basis over the average period until the amended benefi ts become vested.
The amount recognised in the balance sheet represents the present value of the defi ned benefi t 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.
Death in service benefi ts are provided to all employees through the pension schemes. The amount recognised in the balance sheet
for death in service benefi ts represents the present value of the estimated obligation, reduced by the extent to which any future
liabilities will be met by insurance policies.
Payments to defi ned contribution retirement benefi t schemes are charged as an expense as they fall due.
Taxation
Tax on the profi t 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 fi nancial statements and the corresponding tax basis used in the
computation of taxable profi t. 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 profi ts will be available against which deductible temporary differences
may be utilised. Such assets and liabilities are not recognised if the temporary difference arises:
(a) from the initial recognition of goodwill for which amortisation is not deductible for tax purposes; or
(b) from the initial recognition of other assets and liabilities in a transaction, which affects neither the tax profi t nor the
accounting profi t, other than in a business combination.
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 the Group’s intention not to reverse the
temporary difference 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 suffi cient taxable profi ts 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 substantively 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 fl ow statement, cash and cash equivalents consist of cash and cash equivalents as
defi ned above, net of outstanding bank overdrafts.
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Principal accounting policies continued
Share-based payments
The Group engages in share-based payment transactions in respect of services received from certain employees. In relation to
equity settled share-based payments, 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 refl ects 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.
For cash settled share-based payments, a liability is recognised for the services received, measured initially at the fair value of the
liability. At the date on which the liability is settled, and at each balance sheet date between grant date and settlement, the fair value
of the liability is remeasured with any changes in fair value recognised in profi t or loss for the year.
Segmental reporting
The Group determines and presents operating segments based on the information that is provided internally to the Group Executive
Committee, which is the Group’s chief operating decision maker. An operating segment is a component of the Group that engages
in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to
transactions with any of the Group’s other components, whose operating results are reviewed regularly by the Group Executive
Committee to make decisions about resources allocated to the segment and assess its performance, and for which discrete
fi nancial information is available.
Operating segments are organised around the services provided to clients, a description of the services provided by each segment
is given in Rathbones at a glance on page 6. No operating segments have been aggregated in the Group’s fi nancial statements.
Transactions between operating segments are reported within the income or expenses for those segments. Indirect costs are
allocated between segments in proportion to the principal cost driver for each category of indirect costs that is generated by
each segment.
Fiduciary activities
The Group commonly acts as trustee and in other fi duciary capacities that result in the holding or placing of assets on behalf of
individuals, trusts, retirement benefi t plans and other institutions. Such assets, and income arising thereon, are excluded from these
fi nancial 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 amounts due to clients are not shown on the face of the balance sheet as the Group is not
benefi cially 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.
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2
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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 fi nancial
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.
Vendor loan notes
As described in note 15, the Group has issued vendor loan notes (‘notes’) with a nominal value of £5,000,000 to the acquirer
of the Group’s Jersey trust operations in 2008. The notes are repayable on the occurrence of certain events, principally the
refi nancing of the operations disposed of.
The carrying value of the notes has been calculated as £3,267,000 using a discounted cash fl ow model based on the estimated
repayment date. In the year, management’s estimate of the likely repayment date has been put back from 2013 to 2015, based on
the likely impact of the economic turmoil on the Jersey business. Changing the estimated repayment date of the notes by one year
would result in a change in their carrying value of approximately £140,000.
Retirement benefi t obligations
The Group makes estimates about a range of long-term trends and market conditions to determine the value of the defi cit on its
retirement benefi t schemes, based on the Group’s expectations of the future and advice taken from qualifi ed actuaries. The principal
assumptions underlying the reported defi cit of £9,413,000 are given in note 25.
Long-term forecasts and estimates are necessarily highly judgemental and subject to risk that actual events may be signifi cantly
different to those forecast. If actual events deviate from the assumptions made by the Group then the reported surplus or defi cit in
respect of retirement benefi t obligations may be materially different. The history of experience adjustments and information on the
sensitivity of the retirement benefi t obligation to changes in underlying estimates is set out in note 25.
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i
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s
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1
7
9
0
0
2
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3
Segmental information
a Operating segments
For management purposes, the Group is currently organised into three operating divisions: Investment Management, Unit Trusts
and Trust and Tax Services. These segments are the basis on which the Group reports its performance to the Executive Committee.
Certain items of income are presented within different categories of operating income in the fi nancial statements compared to
the presentation for internal reporting. The information presented in this note follows the presentation for internal reporting to the
Group Executive Committee.
31 December 2009
Net fee income
Net commission
Net interest and other income
Operating income
Staff costs – fi xed
Staff costs – variable
Total staff costs
Other direct expenses
Allocation of indirect expenses
Operating expenses
Profi t before tax from continuing operations
Discontinued operations
Profi t/(loss) before tax attributable to equity holders
of the Company
Income tax expense from continuing operations
Income tax credit from discontinued operations
Profi t for the year attributable to equity holders
of the Company
Segment total assets
Unallocated assets
Total assets
Investment
Management
£’000
Unit Trusts
£’000
Trust and Tax
Services
£’000
Total
(continuing
£’000
)
55,784
28,740
19,789
7,590
–
130
4,657
–
67
68,031
28,740
19,986
104,313
7,720
4,724
116,757
(25,170)
(13,900)
(39,070)
(12,686)
(23,406)
(2,086)
(1,852)
(3,938)
(2,155)
(1,479)
(2,483)
(315)
(29,739)
(16,067)
(2,798)
(465)
(1,292)
(45,806)
(15,306)
(26,177)
(75,162)
(7,572)
(4,555)
(87,289)
29,151
–
148
–
169
(602)
29,468
(602)
29,151
148
(433)
28,866
(9,271)
33
19,628
Investment
Management
£’000
Unit Trusts
£’000
Trust and Tax
Services
£’000
Total
(continuing
£’000
)
1,002,284
15,947
9,472 1,027,703
9,385
1,037,088
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i
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o
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s
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t
o
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2
7
9
0
0
2
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u
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3
Segmental information continued
a Operating segments continued
31 December 2008 restated (note 1)
Net fee income
Net commission
Net interest and other income
Operating income
Staff costs – fi xed
Staff costs – variable
Total staff costs
Other direct expenses
Allocation of indirect expenses
Operating expenses
Profi t before tax from continuing operations
Discontinued operations
Profi t/(loss) before tax attributable to equity holders
of the Company
Income tax expense from continuing operations
Income tax credit from discontinued operations
Profi t for the year attributable to equity holders
of the Company
Segment total assets
Unallocated assets
Total assets
Investment
Management
£’000
54,313
28,157
31,375
Unit Trusts
£’000
11,149
–
1,290
Trust and Tax
Services
£’000
4,882
–
–
Total
(continuing
£’000
)
70,344
28,157
32,665
113,845
12,439
4,882 131,166
(24,586)
(13,558)
(38,144)
(12,444)
(23,513)
(2,799)
(3,412)
(6,211)
(2,094)
(1,770)
(2,792)
(368)
(30,177)
(17,338)
(3,160)
(435)
(1,089)
(47,515)
(14,973)
(26,372)
(74,101)
(10,075)
(4,684)
(88,860)
39,744
–
2,364
–
198
(10,014)
42,306
(10,014)
39,744
2,364
(9,816)
32,292
(13,421)
129
19,000
Total
(continuing
£’000
)
Investment
Management
£’000
Unit Trusts
£’000
Trust and Tax
Services
£’000
1,231,678
10,611
36,938 1,279,227
31,220
1,310,447
Included within Investment Management net commission income is £1,028,000 (31 December 2008: £1,160,000) of commission
receivable from Unit Trusts. Intersegment sales are charged at prevailing market prices.
Centrally incurred indirect expenses are allocated to operating segments on the basis of the cost drivers that generate the
expenditure.
b Geographic analysis
The following is an analysis of operating income analysed by the geographical location of the Group entity providing the service:
United Kingdom
Jersey
2009
£’000
113,121
3,636
116,757
2008
£’000
restated (note1)
126,772
4,394
131,166
The following is an analysis of the carrying amount of non-current assets analysed by the geographical area in which the assets
are located:
United Kingdom
Jersey
c Major clients
The Group is not reliant on any one client or group of connected clients for generation of revenues.
2009
£’000
87,645
4
87,649
2008
£’000
73,059
1,989
75,048
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3
7
9
0
0
2
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4
Net interest income
Interest income
Held to maturity investment securities
Available for sale investment securities
Loans and advances to banks and customers
Interest expense
Banks and customers
Net interest income
5
Net fee and commission income
Fee and commission income
Investment Management
Unit Trusts
Trust and Tax
Fee and commission expense
Investment Management
Unit Trusts
Net fee and commission income
2009
£’000
16,250
1,583
3,669
21,502
(3,006)
18,496
2009
£’000
86,577
12,587
4,571
103,735
(3,023)
(4,328)
(7,351)
96,384
2008
£’000
restated (note1)
46,833
2,104
19,178
68,115
(37,140)
30,975
2008
£’000
83,168
18,589
4,899
106,656
(1,827)
(6,738)
(8,565)
98,091
6
Dividend, net trading and other income
Dividend income
Dividend income comprises income from available for sale equity securities of £80,000 (2008: £134,000).
Net trading income
Net trading income comprises the following:
Unit Trust net dealing profi ts
Increase in value of derivative fi nancial instruments
2009
£’000
358
–
358
2008
£’000
458
22
480
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 2009 (2008: £nil) and the total liability recognised in the accounts at
31 December 2009 was £nil (2008: £nil).
Other income
Other operating income of £1,439,000 (2008: £1,486,000) is comprised of rental income from sub-leases on certain properties
leased by Group companies and sundry income.
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4
7
9
0
0
2
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7
Operating expenses
Staff costs (note 8)
Depreciation of property, plant and equipment (note 18)
Amortisation of internally generated intangible assets included in operating
expenses (note 17)
Amortisation of intangible assets, excluding client lists (note 17)
Auditors’ remuneration (see below)
Impairment losses on loans and advances (note 15)
Operating lease rentals
Other
Other operating expenses
Additional levy for Financial Services Compensation Scheme(i)
Amortisation of client relationship intangible assets (note 17)
Transaction costs(ii)
Total operating expenses
2009
£’000
56,594
2,180
278
915
545
22
5,039
18,738
84,311
229
1,967
782
87,289
2008
£’000
restated (note1)
57,859
2,122
276
906
525
52
4,173
20,233
86,146
1,404
1,310
–
88,860
(i) The arrangements put in place by the Financial Services Compensation Scheme (‘FSCS’) to protect depositors of failed
deposit-taking institutions resulted in signifi cant FSCS levies on the industry. In 2008 a charge to the profi t and loss account of
£1,404,000 was made in relation to estimated liabilities in respect of 2008/09 and 2009/10. As lower interest rates reduced
the government’s cost of borrowing in 2009, the net charge for the year is £229,000 which includes a provision for the
2010/11 year. Further charges are likely to be to be incurred in future years and the ultimate cost remains uncertain (note 30).
(ii) During the year, the Group entered into an agreement to acquire certain discretionary investment management assets and
operations (note 17). Legal and professional fees totalling £782,000 were recognised during the year in relation to this.
A more detailed analysis of auditors’ remuneration is provided below:
Fees payable to the Company’s auditors for the audit of the Company’s
annual accounts
Fees payable to the Company’s auditors 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
Fees payable to the Company’s auditors in respect of the prior year audit
Total auditors remuneration for continuing operations
Discontinued operations
Total
Pricewaterhouse
Coopers
£’000
KPMG
£’000
2009
£’000
2008
£’000
restated (note1)
–
85
85
127
–
–
7
6
78
91
–
91
203
104
–
62
–
454
–
454
203
104
7
68
78
545
–
545
248
95
23
32
–
525
77
602
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i
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o
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n
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s
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t
o
N
5
7
9
0
0
2
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8
Staff costs
Wages and salaries
Social security costs
Share-based payments
Pension costs (note 25)
– defi ned benefi t schemes
– defi ned contribution schemes
The average number of employees during the year was as follows:
Investment Management
Unit Trusts
Trust and Tax
Shared services
9
Income tax expense
Current tax
Adjustments in respect of previous years
Deferred tax (note 19)
2009
£’000
47,063
5,407
1,219
1,852
1,053
2,905
56,594
2009
438
24
40
179
681
2009
£’000
5,899
154
3,218
9,271
2008
£’000
48,165
5,472
1,299
1,942
981
2,923
57,859
2008
429
31
43
172
675
2008
£’000
restated (note1)
11,366
(178)
2,233
13,421
The tax charge on profi t from continuing operations for the year is higher (2008: higher) than the standard rate of corporation tax in
the UK of 28.0% (2008: 28.5%). The differences are explained below:
Tax on profi t from ordinary activities at the standard rate of 28.0% (2008 – 28.5%)
Effects of:
Disallowable expenses1
Share-based payments
Tax on overseas earnings
Under provision for tax in previous years
2009
£’000
8,251
566
30
(22)
446
9,271
2008
£’000
restated (note1)
12,057
388
273
80
623
13,421
1 The tax effect of disallowable expenses included £219,000 in respect of the Lloyds Banking Group transaction (note 17)
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 £2,338,000 has been credited
directly to equity (2008: £605,000).
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6
7
9
0
0
2
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10 Disposal groups and discontinued operations
During 2008, the Group announced its intention to exit its international trust businesses and 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 S.A., on 31 March 2009 the Group disposed of
its subsidiaries Rathbone Trust Company (BVI) Limited and Rathbone Trust (Singapore) Pte. Limited and on 17 November 2009 the
Group disposed of its subsidiary Rathbone Trust International B.V..
On 12 November 2009, the Group ceased to be represented on the Board of Rathbone International Finance B.V., the Group’s
trading agreements with that company were terminated and the Group ceased to have effective control over it. The Group ceased
to consolidate the results of Rathbone International Finance B.V. with effect from that date.
At 31 December 2009, plans to liquidate Rathbone Trust Company B.V. and Rathbone Bank (BVI) Limited were well advanced,
representing the fi nal stage in the Group’s exit from overseas trust activities.
The results of the discontinued operations, which have been included in the Consolidated income statement, were as follows:
Operating income
Operating expenses
(Loss)/profi t before tax from discontinued operations
Attributable tax credit
(Loss)/profi t after tax from discontinued operations
Loss recognised on re-measurement of assets of the disposal group
Attributable tax expense
Loss from discontinued operations
2009
£’000
959
(1,350)
(391)
33
(358)
(211)
–
(569)
2008
£’000
restated (note1)
19,228
(16,562)
2,666
129
2,795
(12,680)
–
(9,885)
The operations of these businesses are included within Trust and Tax Services in the segmental analysis in note 3.
The major classes of assets and liabilities comprising the operations classifi ed as held for sale were 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
Total assets of the disposal group
Accruals, deferred income and other liabilities
Total liabilities of the disposal group
Net assets of the disposal group
2009
£’000
–
–
–
–
–
–
–
–
–
–
Comparative balances have not been restated to show assets and liabilities held for sale, in accordance with IFRS 5.
Cash fl ows arising from discontinued operations, which have been included in the Consolidated cash fl ow statement, were
as follows:
Net cash (outfl ow)/infl ow from operating activities
Net cash used in investing activities
Net (decrease)/increase in cash and cash equivalents
2009
£’000
(1,522)
(4)
(1,526)
2008
£’000
21
790
4,153
46
148
655
5,813
4,008
4,008
1,805
2008
£’000
2,247
(266)
1,981
As a result of the disposal in the year of subsidiaries described above, £359,000 was transferred from the translation reserve to
retained earnings.
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7
7
9
0
0
2
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11 Dividends
Amounts recognised as distributions to equity holders in the year:
– fi nal dividend for the year ended 31 December 2008 of 26.0p
(2007: 25.0p) per share
– fi rst interim dividend for the year ended 31 December 2009 of 16.0p
(2008: 16.0p) per share
Proposed second interim dividend for the year ended 31 December
2009 of 26.0p (2008: fi nal dividend of 26.0p) per share
2009
£’000
2008
£’000
11,164
6,902
18,066
10,662
6,841
17,503
11,257
11,143
A fi rst interim dividend of 16.0p per share was paid on 7 October 2009 to shareholders on the register at the close of business on
18 September 2009.
A second interim dividend of 26.0p per share is payable on 31 March 2010 to shareholders on the register at the close of business
on 5 March 2010. No fi nal dividend is proposed.
Further details regarding historical dividend payments are included in the Directors’ report on page 28.
12 Earnings per share
Earnings used to calculate earnings per share on the bases reported in these fi nancial statements were:
Underlying profi t attributable to shareholders
Additional levy for Financial Services
Compensation Scheme
Amortisation of client relationships
Transaction costs
Profi t from continuing operations
Loss from discontinued operations
2009
Pre tax
£’000
2009
Taxation
£’000
2009
Post tax
£’000
2008
Pre tax
£’000
2008
Taxation
£’000
2008
Post tax
£’000
32,446
(9,886)
22,560
45,020
(14,194)
30,826
(229)
(1,967)
(782)
64
551
–
(165)
(1,416)
(782)
(1,404)
(1,310)
–
400
373
–
(1,004)
(937)
–
29,468
(602)
(9,271)
33
20,197
(569 )
42,306
(10,014 )
(13,421)
129
28,885
(9,885)
Profi t attributable to shareholders
28,866
(9,238)
19,628
32,292
(13,292)
19,000
Basic earnings per share has been calculated by dividing earnings by the weighted average number of shares in issue throughout
the period of 43,087,369 (2008: 42,745,197).
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 period – 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
Diluted ordinary shares
2009
2008
43,087,369
15,948
42,745,197
172,845
7,977
–
7,998
172,823
43,111,294
43,098,863
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N
8
7
9
0
0
2
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12 Earnings per share continued
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)
13 Cash and balances at central banks
Cash in hand (note 32)
Mandatory reserve deposits
2009
2008
restated (note 1)
(1.32)p
(1.32)p
52.36p
52.33p
2009
£’000
5
310
315
(23.12)p
(22.93)p
72.12p
71.52p
2008
£’000
3
348
351
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.
14
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
– fi xed interest rates
– non-interest bearing
2009
£’000
52,036
40,003
622
92,661
51,873
40,625
163
92,661
2008
£’000
25,900
150,073
–
175,973
27,188
148,614
171
175,973
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 fl ows expected to be received using current market rates.
Loans and advances to banks included in cash and cash equivalents at 31 December 2009 were £55,039,000 (note 32)
(2008: £175,227,000).
The Group’s exposure to credit risk arising from loans and advances to banks is described in note 28.
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o
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N
9
7
9
0
0
2
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15
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
– fi xed interest rates
– non-interest bearing
2009
£’000
4,043
6,670
12,015
831
3,268
(82)
26,745
21,387
–
5,358
26,745
2008
£’000
11,243
5,883
14,823
7,155
483
(175)
39,412
25,695
5,887
7,830
39,412
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 fl ows expected to be received using current market rates. Debtors arising from the
Trust and Pensions businesses are non-interest bearing.
No banking loans and advances to customers were impaired as at 31 December 2009 (2008: 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 2009 amount to £850,000 (2008: £1,021,000).
Included within loans and advances to customers repayable after more than fi ve years are vendor loan notes (‘notes’) with a fair
value of £3,267,000 at 31 December 2009 (2008: £3,268,000). The notes have a nominal value of £5,000,000 and were issued
by the acquirer of the Group’s Jersey trust operations in 2008. The notes are subordinated and unsecured, and are repayable on
the occurrence of certain events, principally the refi nancing of the operations disposed of.
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 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 calculated based on a discounted cash fl ow model and interest income
is recognised over the expected life of the notes under the effective interest rate method. The expected repayment date of the
notes was reassessed during the year and extended by two years to 2015.
Included within loans and advances to customers repayable within fi ve years but after more than one year is a Swiss Franc
denominated loan to the acquirer of the Group’s Geneva trust operations with a nominal value equivalent to £831,000 at
31 December 2009 (2008: £nil). The loan does not bear interest and is repayable in three approximately equal annual instalments
ending in 2012.
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
2009
£’000
175
(3)
(112)
22
–
–
–
82
2008
£’000
restated (note1)
639
130
(350)
52
738
(427)
(607)
175
The Group’s exposure to credit risk arising from loans and advances to customers is described in note 28.
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0
8
9
0
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2
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16
Investment securities
Available for sale securities
Equity securities – at fair value
– listed
– unlisted
Money market funds – at fair value
– 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
2009
£’000
2,153
779
84,000
86,932
2009
£’000
–
694,000
694,000
2009
£’000
654,000
40,000
694,000
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
Debt securities comprise bank and building society certifi cates of deposit, which have fi xed coupons. In 2008, debt securities also
included Gilts and treasury bills.
The fair value of debt securities at 31 December 2009 was £699,881,000 (2008: £894,968,000). 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 32).
The Group has not reclassifi ed any fi nancial asset from being measured at amortised cost to being measured at fair value through
profi t and loss during the year (2008: none reclassifi ed). The Group has not designated at initial recognition any fi nancial asset as
‘at fair value through profi t or loss’.
The Group continues to hold 300,000 shares in London Stock Exchange Group Plc.
The movement in investment securities may be summarised as follows:
At 1 January 2008
Additions
Disposal (sales and redemption)
Loss from changes in fair value
At 1 January 2009
Additions
Disposals (sales and redemption)
Loss from changes in fair value
At 31 December 2009
Available for sale
£’000
Held to maturity
£’000
6,948
369,000
(290,000)
(3,957)
81,991
606,000
(601,000)
(59)
765,274
2,545,080
(2,435,375)
–
874,979
1,796,282
(1,977,261)
–
Total
£’000
772,222
2,914,080
(2,725,375)
(3,957)
956,970
2,402,282
(2,578,261)
(59)
86,932
694,000
780,932
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1
8
9
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2
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17
Intangible assets
Goodwill
Other intangible assets
Goodwill
Cost
At 1 January
Exchange adjustment
Transferred to assets held for sale
Additions
Disposals
At 31 December
Accumulated impairment losses
At 1 January
Impairment charge recognised in the year
Transferred to assets held for sale
At 31 December
2009
£’000
47,241
34,732
81,973
2009
£’000
47,023
–
–
218
–
47,241
–
–
–
–
2008
£’000
47,023
21,209
68,232
2008
£’000
70,536
247
(887)
677
(23,550)
47,023
–
887
(887)
–
Net carrying amount of goodwill at 31 December
47,241
47,023
Additions to goodwill represent an adjustment to the goodwill acquired with Citywall Financial Management Limited in 2008 following
determination of the fi nal consideration payment.
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are expected to
benefi t from that business combination. The carrying amount of goodwill had been allocated as follows:
Investment Management
Trust and Tax
2009
£’000
45,287
1,954
47,241
2008
£’000
45,069
1,954
47,023
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 refl ect current market assessments of the time value of money and the risks specifi c to the
CGUs. The growth rates are based on industry growth forecasts. The Group prepares cash fl ow forecasts derived from the most
recent fi nancial budgets approved by management, covering the forthcoming year, extrapolated for up to 10 years based on a
medium- to long-term growth rate of 3% for the Investment Management CGU and 2% for the Trust and Tax CGU (2008: 2% in
both cases) based on management’s expectation of future industry growth rates. The pre-tax rate used to discount the forecast
cash fl ows is 10% for Investment Management and 12% for Trust and Tax (2008: 11.5% in both cases) based on a risk adjusted
weighted average cost of capital and refl ecting the relatively small size of the Trust and Tax CGU.
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2
8
9
0
0
2
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17
Intangible assets continued
Other intangible assets
Cost
At 1 January 2008
Exchange adjustment
Internally developed in the year
Purchased in the year
Acquired through business combinations
Transferred to non-current assets held for sale (note 10)
Disposals
At 1 January 2009
Internally developed in the year
Purchased in the year
At 31 December 2009
Amortisation
At 1 January 2008
Charge for the year
– continuing
– discontinued
Disposals
Transferred to non-current assets held for sale (note 10)
At 1 January 2009
Charge for the year
At 31 December 2009
Acquired client
relationships
£’000
Software
development
costs
£’000
Purchased
software
£’000
14,381
(8)
–
6,317
565
–
(87)
21,168
–
15,130
1,425
–
433
–
–
–
–
1,858
378
–
9,360
–
–
1,268
–
(46)
–
10,582
–
1,175
Total
£’000
25,166
(8)
433
7,585
565
(46)
(87)
33,608
378
16,305
36,298
2,236
11,757
50,291
1,496
871
7,601
9,968
1,310
26
–
(41)
2,791
1,967
276
–
–
–
906
–
(46)
–
2,492
26
(46)
(41)
1,147
278
8,461
915
12,399
3,160
4,758
1,425
9,376
15,559
Carrying amount at 31 December 2009
31,540
811
2,381
34,732
Carrying amount at 31 December 2008
Carrying amount at 1 January 2008
18,377
711
2,121
21,209
12,885
554
1,759
15,198
On 20 October 2009, the Group agreed terms with Lloyds Banking Group for the transfer of elements of Lloyds TSB’s legacy
discretionary investment management assets and HBOS’s discretionary investment management activities.
As at 31 December 2009, acquired client relationships of £11,683,000 had been recognised in relation to new relationships with
those former Bank of Scotland Portfolio Management Service clients from whom consent had been received and portfolio transfer
values determined. Consideration payments for Portfolio Management Service clients will be made in instalments shortly after
30 June 2010 and 31 December 2010 in proportion to the total value of funds under management for clients who have agreed
to transfer to the Group at those dates.
Plans to migrate discretionary private client portfolios from Lloyds TSB during 2010 are at an advanced stage. As at 31 December
2009 no assets had been recognised in relation to new relationships with such clients as no clients had transferred to the Group
at that time. The agreement includes a fl oor on the minimum total consideration payable, which is 50% of the maximum purchase
consideration, in recognition of assistance from Lloyds Banking Group with the transfer of clients and a cap on the maximum
consideration payable. Funds under management for those clients who elect to remain with Lloyds Banking Group are excluded
from the calculation of the maximum purchase consideration. At 31 December 2009, the theoretical maximum consideration
payable under the fl oor, if more than 50% of clients elect not to remain with Lloyds Banking Group nor transfer to Rathbones,
was £8,382,000. An advance payment of up to £8,382,000 will be made on 26 February 2010, which is recoverable if the total
consideration ultimately payable is below this value.
Transaction costs of £782,000 have been recognised in the Consolidated income statement in connection with the Lloyds Banking
Group transaction. No goodwill arose in relation to the transaction.
On 25 September 2009 the Group acquired the trade of Trust Financial Limited for £125,000 in cash consideration. A further
£60,000 of consideration is payable on 25 September 2010. Intangible assets for client relationships with a fair value totalling
£185,000 have been recognised as a result of the transaction. No other assets were acquired.
Purchased software with a cost of £7,732,000 (2008: £6,756,000) has been fully amortised but is still in use.
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3
8
9
0
0
2
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18 Property, plant and equipment
Cost
At 1 January 2008
Exchange adjustments
Additions
Acquired through business combinations
Transferred to non-current assets held for sale (note 10)
Disposals
At 1 January 2009
Additions
Disposals
At 31 December 2009
Depreciation
At 1 January 2008
Exchange adjustments
Charge for the year
– continuing
– discontinued
Acquired through business combinations
Transferred to non-current assets held for sale (note 10)
Disposals
At 1 January 2009
Charge for the year
Disposals
At 31 December 2009
Carrying amount at 31 December 2009
Carrying amount at 31 December 2008
Carrying amount at 1 January 2008
Short term
leasehold
improvements
£’000
7,375
74
1,415
–
(245)
(1,982)
6,637
403
–
7,040
2,701
56
697
72
–
(198)
(407)
2,921
761
–
3,682
3,358
3,716
4,674
Plant and
equipment
£’000
14,683
454
2,365
116
(1,541)
(2,442)
13,635
682
(453)
13,864
11,226
419
1,425
431
106
(1,440)
(1,632)
10,535
1,419
(408)
11,546
2,318
3,100
3,457
Total
£’000
22,058
528
3,780
116
(1,786)
(4,424)
20,272
1,085
(453)
20,904
13,927
475
2,122
503
106
(1,638)
(2,039)
13,456
2,180
(408)
15,228
5,676
6,816
8,131
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4
8
9
0
0
2
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19 Deferred tax asset
Deferred income taxes are calculated on all temporary differences under the liability method using an effective tax rate of 28%
(2008: 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
– credited/(charged) directly to equity
Other movements in deferred tax:
– amounts charged to the income statement
– actuarial gains and losses
– share-based payments
– fair value measurement of available for sale securities
Disposals
Deferred tax asset
Excess of depreciation
Share-based payments
Staff related costs
Pensions
Deferred income
Deferred tax liabilities
Available for sale securities
Intangible assets
Staff related costs
Unremitted overseas earnings
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
Discontinued operations
2009
£’000
2,483
(234)
41
(2,984)
2,415
(135)
17
–
1,603
2009
£’000
638
298
–
3,434
188
4,558
2009
£’000
807
1,728
151
269
2,955
2009
£’000
71
266
1,778
583
(70)
382
208
3,218
–
3,218
2008
£’000
3,528
(87)
(419)
(1,656)
12
(96)
1,108
93
2,483
2008
£’000
709
658
1,627
1,602
396
4,992
2008
£’000
824
1,346
–
339
2,509
2008
£’000
(489)
661
754
217
339
678
73
2,233
(490)
1,743
Deferred income tax liabilities of £648,000 (2008: £684,000) 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 £3,601,000 at
31 December 2009 (2008: £3,804,000).
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5
8
9
0
0
2
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20 Prepayments, accrued income and other assets
Trust work in progress
Prepayments
Accrued income
21 Deposits by banks
2009
£’000
620
6,023
23,235
29,878
2008
£’000
664
5,475
32,507
38,646
The Group has drawn down £6,155,000 (2008: £9,201,000) of an unsecured term loan which is repayable in four, six-monthly
instalments ending on 4 April 2011. Interest is payable on the loan at 0.7% above the London Inter-Bank Offer Rate. On
31 December 2009, deposits by banks included overnight overdraft balances of £1,224,000 (2008: nil).
The fair value of deposits by banks was not materially different to the carrying value. Fair value has been calculated as the
discounted amount of estimated future cash fl ows expected to be paid using current market rates.
22 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
– fi xed interest rates
– non-interest bearing
2009
£’000
705,071
59,736
1,554
–
766,361
702,705
59,060
4,596
766,361
2008
£’000
677,056
349,751
13,656
3,888
1,044,351
639,197
394,678
10,476
1,044,351
The fair value of amounts due to customers was not materially different to 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
fi xed-interest bearing deposits is based on discounted cash fl ows using interest rates for new debts with similar remaining maturity.
23 Accruals, deferred income, provisions and other liabilities
Creditors
Accruals and deferred income
Other provisions (note 24)
2009
£’000
5,601
23,525
17,749
46,875
2008
£’000
8,295
25,191
8,964
42,450
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
2009, £55,000 was included in Creditors representing the estimated present value of the future liability (2008: £65,000). The fair
value of the B Shares will be updated at each reporting date with changes in value being taken to profi t or loss.
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N
6
8
9
0
0
2
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24 Other provisions
At 1 January 2009
Charged to the income statement
Unused amount credited to profi t or loss
Net charge to the income statement
Other movements
Utilised/paid during the period
Current
Non-current
Other payables
£’000
Client
compensation
£’000
Litigation
related
and other
£’000
Total
£’000
7,927
1,007
30
8,964
–
–
–
14,667
(5,777)
16,817
16,588
229
16,817
545
(107)
438
–
(644)
801
801
–
801
140
–
140
–
(39)
685
(107)
578
14,667
(6,460)
131
17,749
131
–
17,520
229
131
17,749
Other movements in provisions relate to deferred payments to investment managers and third parties for the introduction of client
relationships, which have been capitalised and include £11,486,000 in relation to the agreement to acquire certain discretionary
investment management activities from Lloyds Banking Group (note 17).
At 31 December 2009, anticipated insurance recoverables relating to client compensation and litigation related provisions of £nil
(2008: £450,000) were included within other assets.
In the ordinary course of business, the Group can receive 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.
The timing of settlement of provisions for client compensation or litigation is dependent, in part, on the duration of negotiations with
third parties. Non-current provisions are expected to be settled within 24 months of the balance sheet date.
25
Long-term employee benefi ts
The Group operates a defi ned 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 £1,033,000
(2008: £952,000). The Group also operates defi ned contribution schemes for overseas employees, for which the total contributions
were £52,000 (2008: £518,000) of which £32,000 relates to discontinued operations (2008: £489,000).
The Group operates two funded pension schemes providing benefi ts based on fi nal 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 statements 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 benefi ciaries. 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 benefi ts 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. With effect from 1 July 2009 all future accrual is based on Career
Average Revalued Earnings.
The Group provides death in service benefi ts to all employees through the Rathbone 1987 Scheme. Third party insurance is
purchased for the benefi ts where possible and £547,000 of related insurance premia were expensed to the income statement in
the year (2008: £864,000).The estimated present value of the uninsured death in service benefi ts is included in long-term
employee benefi ts liabilities.
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d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
7
8
9
0
0
2
s
t
n
u
o
c
c
a
d
n
a
t
r
o
p
e
R
c
l
P
s
r
e
h
t
o
r
B
e
n
o
b
h
t
a
R
25
Long-term employee benefi ts continued
The schemes are valued by independent actuaries every three years using the projected unit credit method which looks at the
value of benefi ts 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 refl ects 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 at the following dates:
Rathbone 1987 Scheme
Laurence Keen Scheme
31 December 2007
31 December 2008
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
refl ect the different membership profi les of the schemes, were:
Rate of increase in salaries
Rate of increase of pensions in payment
Rate of increase of deferred pensions
Discount rate
Expected return on scheme assets
Infl ation
2009
Laurence
Keen
Scheme
%
4.85
3.70
3.60
5.70
6.00
3.60
2008
Laurence
Keen
Scheme
%
4.05
3.40
2.80
6.15
5.30
2.80
2009
Rathbone
1987
Scheme
%
4.85
3.50
3.60
5.70
7.00
3.60
2008
Rathbone
1987
Scheme
%
4.05
2.80
2.80
6.15
6.40
2.80
The assumed duration of the liabilities for the Laurence Keen Scheme is 18 years (2008: 25 years) and the assumed duration for
the Rathbone 1987 Scheme is 24 years (2008: 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 for members of the Rathbone 1987 Scheme the
normal age of retirement increased from 60 to 65 during the year. The assumed life expectancy for the membership of both
schemes is based on the PNA00 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:
Retiring today
Retiring in 20 years
– aged 60
– aged 65
– aged 60
– aged 65
2009
Males
26.8
22.0
28.5
23.6
2009
Females
29.1
24.2
30.3
25.4
2008
Males
26.7
21.9
28.4
23.5
The amount included in the balance sheet arising from the Group’s obligations in respect of the schemes is as follows:
2009
Laurence
Keen
Scheme
£’000
2009
Rathbone
1987
Scheme
£’000
2008
Laurence
Keen
Scheme
£’000
2008
Rathbone
1987
Scheme
£’000
2009
Total
£’000
2008
Females
29.0
24.1
30.3
25.3
2008
Total
£’000
Present value of defi ned benefi t obligations
Fair value of scheme assets
Defi cit in schemes
Death in service benefi t reserve - unfunded
Total defi cit
(11,086)
10,299
(74,491)
66,955
(85,577)
77,254
(9,750)
8,760
(54,243)
50,551
(63,993)
59,311
(787)
–
(7,536)
(1,090)
(8,323)
(1,090)
(990)
–
(3,692)
(1,041)
(4,682)
(1,041)
(787)
(8,626)
(9,413)
(990)
(4,733)
(5,723)
The amounts recognised in the income statement, within operating expenses, are as follows:
Current service cost
Interest cost
Expected return on scheme assets
2009
Laurence
Keen
Scheme
£’000
–
590
(463)
2009
Rathbone
1987
Scheme
£’000
1,740
3,462
(3,477)
2009
Total
£’000
1,740
4,052
(3,940)
2008
Laurence
Keen
Scheme
£’000
–
579
(615)
2008
Rathbone
1987
Scheme
£’000
2,556
3,435
(4,013)
2008
Total
£’000
2,556
4,014
(4,628)
127
1,725
1,852
(36)
1,978
1,942
s
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n
u
o
c
c
a
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
8
8
9
0
0
2
s
t
n
u
o
c
c
a
d
n
a
t
r
o
p
e
R
c
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P
s
r
e
h
t
o
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B
e
n
o
b
h
t
a
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25
Long-term employee benefi ts continued
Actuarial gains and losses have been reported in the statement of comprehensive income. The actual return on scheme assets
was a rise in value of £1,403,000 (2008: £1,100,000 fall) for the Laurence Keen Scheme and a rise in value of £9,791,000
(2008: £7,750,000 fall) for the Rathbone 1987 Scheme.
The cumulative actuarial gains and losses reported in the statement of comprehensive income since the adoption of IFRS is
as follows:
At 1 January
Actuarial (losses)/gains recognised in year
At 31 December
2009
Laurence
Keen
Scheme
£’000
2009
Rathbone
1987
Scheme
£’000
2009
Total
£’000
(295)
(110)
967
(8,516)
672
(8,626)
(405)
(7,549)
(7,954)
2008
Laurence
Keen
Scheme
£’000
593
(888)
(295)
2008
Rathbone
1987
Scheme
£’000
123
844
967
2008
Total
£’000
716
(44)
672
Movements in the present value of defi ned benefi t obligations were as follows:
At 1 January
Service cost (employer’s part)
Interest cost
Contributions from members
Actuarial loss/(gain)
Benefi ts paid
At 31 December
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
Benefi ts paid
2009
Laurence
Keen
Scheme
£’000
9,750
–
590
–
1,050
(304)
2009
Rathbone
1987
Scheme
£’000
55,284
1,740
3,462
1,245
14,830
(980)
2009
Total
£’000
65,034
1,740
4,052
1,245
15,880
(1,284)
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)
11,086
75,581
86,667
9,750
55,284
65,034
2009
Laurence
Keen
Scheme
£’000
8,760
463
940
440
–
(304)
2009
Rathbone
1987
Scheme
£’000
50,551
3,477
6,314
6,348
1,245
(980)
2009
Total
£’000
59,311
3,940
7,254
6,788
1,245
(1,284)
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)
At 31 December
10,299
66,955
77,254
8,760
50,551
59,311
s
t
n
u
o
c
c
a
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
9
8
9
0
0
2
s
t
n
u
o
c
c
a
d
n
a
t
r
o
p
e
R
c
l
P
s
r
e
h
t
o
r
B
e
n
o
b
h
t
a
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25
Long-term employee benefi ts continued
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
At 31 December
Rathbone 1987 Scheme
Equity instruments
Debt instruments
Interest rate swap funds
Cash
At 31 December
1.1.09
Expected
return
%
7.75
4.90
0.50
1.1.08
Expected
return
%
7.35
4.10
2.00
2009
Fair
value
£’000
5,252
4,204
843
2008
Fair
value
£’000
2009
Current
allocation
%
2008
Current
allocation
%
3,494
4,694
572
51
41
8
40
54
6
10,299
8,760
1.1.09
Expected
return
%
7.75
4.90
4.50
0.50
1.1.08
Expected
return
%
7.35
6.15
4.10
2.00
2009
Fair
value
£’000
52,219
8,843
4,537
1,356
2008
Fair
value
£’000
2009
Current
allocation
%
2008
Current
allocation
%
33,232
5,431
9,135
2,753
78
13
7
2
67
11
16
6
66,955
50,551
At 31 December 2009 the Rathbone 1987 Scheme held 335 shares (2008: 496) with a nominal value of £3,812,000
(2008: £5,000,000) in an interest rate swap fund. 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 (2008: 3.25% 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% – 20%
45% – 65%*
45% – 65%*
43% – 57%
21% – 35%
14% – 28%
0% – 8%
* The total allocation of assets in the Laurence Keen Scheme to fi xed 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 80% 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.
In the Laurence Keen Scheme, not more than 55% of the assets may be held in equities. A maximum of 15% of UK equities may be
invested in companies outside the FTSE 350 and not more than 15% of the assets may be held in alternative assets.
The sensitivities regarding the principal assumptions used to measure the total of the two schemes’ liabilities are set out below:
0.5% increase to:
– discount rate
– rate of infl ation
– rate of salary growth
1 year increase to longevity at 60
Combined impact on schemes’ liabilities
(Decrease)/increase
£’000
(Decrease)/increase
%
(9,119)
4,086
3,283
2,440
(10.5)
4.7
3.8
2.8
s
t
n
u
o
c
c
a
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
0
9
9
0
0
2
s
t
n
u
o
c
c
a
d
n
a
t
r
o
p
e
R
c
l
P
s
r
e
h
t
o
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B
e
n
o
b
h
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a
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25
Long-term employee benefi ts continued
The history of experience adjustments is as follows:
Laurence Keen Scheme
Present value of defi ned benefi t obligations (£’000)
Fair value of scheme assets (£’000)
2009
2008
2007
2006
2005
(11,086)
10,299
(9,750)
8,760
(10,301)
9,708
(10,423)
8,996
(11,697)
8,118
Defi cit in the scheme (£’000)
(787)
(990)
(593)
(1,427)
(3,579)
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
395
4%
940
9%
248
3%
104
1%
1,592
15%
1,864
16%
1,715
20%
70
1%
85
1%
539
7%
Present value of defi ned benefi t obligations (£’000)
Fair value of scheme assets (£’000)
2009
2008
2007
2006
2005
(75,581)
66,955
(55,284)
50,551
(60,274)
54,415
(53,982)
44,646
(50,501)
35,370
Defi cit in the scheme (£’000)
(8,626)
(4,733)
(5,859)
(9,336)
(15,131)
Experience adjustments on scheme liabilities:
– amount (£’000)
– percentage of scheme liabilities (%)
Experience adjustments on scheme assets:
– amount (£’000)
– percentage of scheme assets (%)
305
0%
2,937
5%
1,264
2%
3,038
6%
7,138
14%
6,314
9%
10,677
21%
90
0%
753
2%
4,297
12%
The total regular contributions made by the Group to the Rathbone 1987 Scheme during the year were £3,598,000
(2008: £2,260,000) based on 22.6% of pensionable salaries (2008: 13.9%). Additional lump sum contributions of £2,750,000
were paid in 2009 (2008: £nil) and the Group has committed to make additional annual contributions to the scheme of £2,750,000
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 £420,000 (2008: £455,000).
Additional lump sum contributions of £20,000 were paid in 2009 (2008: £nil). Annual contributions of £420,000 will continue
to be made to the Laurence Keen Scheme. Following the 2008 triennial valuation further annual contributions of £336,000 will
also be made from 2010 until 2017. 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.
26 Share capital
The total authorised number of ordinary shares at 31 December 2009 was 100,000,000 (2008: 100,000,000) with a par value of
£0.05 per share. All issued shares are fully paid.
The following movements in issued share capital occurred during the period:
At 1 January 2008
Shares issued on exercise
of options
At 1 January 2009
Shares issued:
– to share incentive plan
– on exercise of options
At 31 December 2009
Number of
shares
42,689,942
Exercise
price
Pence
Share
capital
£’000
Share
premium
£’000
Total
£’000
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
165,800
272,334
795.0 – 796.0
415.0 – 852.0
8
14
1,311
1,488
1,319
1,502
43,296,330
2,165
31,756
33,921
s
t
n
u
o
c
c
a
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
1
9
9
0
0
2
s
t
n
u
o
c
c
a
d
n
a
t
r
o
p
e
R
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n
o
b
h
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a
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27 Share-based payments
Share 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.
As at 31 December 2009, the trustees of the SIP held 1,356,417 (2008: 1,290,392) ordinary shares of 5p each in Rathbone
Brothers Plc with a total market value of £10,851,336 (2008: £10,755,417). No dividends on these shares have been waived.
Of the total number of shares held by the trustees 341,138 (2008: 412,701) have been conditionally gifted to employees.
Long-term incentive plan
Details of the general terms of the long-term incentive plan (LTIP) are set out in the Remuneration report on pages 36 to 43.
In March 2009, the trustees of the plan elected to settle substantially all of the 2006/08 award in cash as an alternative to shares
following changes to capital gains tax rules. As a consequence of this, the Group changed the basis of accounting for the awards
under the LTIP to treat them as cash settled rather than equity settled with effect from 31 March 2009. At the year end, a liability of
£119,000 has been recognised for the estimated fair value of future awards.
At 31 December 2009, the trustees of the LTIP held 42,693 (2008: 47,193) ordinary shares of 5p each in in Rathbone Brothers Plc
with a total market value of £341,544 (2008: £393,354). Dividends on these shares have been waived by the trustees.
Savings related share option plan
During the year, the Group established an HM Revenue & Customs approved savings related share option plan (save as you earn).
Under the scheme, employees can contribute up to £250 per month to acquire shares at the end of the three year savings period.
At the end of the savings period, employees can elect to acquire shares or receive their savings, including interest, in cash. Further
information on the scheme is given in the Remuneration report on page 40.
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 they become exercisable. The Group has no legal or constructive obligation to repurchase or settle the
options in cash.
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
2009
Number of
share
options
906,963
193,585
(51,000)
(272,334)
777,214
2009
Weighted
average
exercise
price
£
7.74
6.96
9.71
5.52
8.19
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
The weighted average share price at the dates of exercise for share options exercised during the year was £7.93 (2008: £9.24).
The options outstanding at 31 December 2009 had a weighted average contractual life of 3.3 years (2008: 4.0 years). Options
exercisable at 31 December 2009 had a weighted average exercise price of £7.53 (2008: £7.11).
Options with an aggregate estimated fair value of £323,000, determined using a binomial valuation model including expected
dividends, were granted on 23 December 2009 to directors and staff under the SAYE scheme. 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:
s
t
n
u
o
c
c
a
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
2
9
9
0
0
2
s
t
n
u
o
c
c
a
d
n
a
t
r
o
p
e
R
c
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27 Share-based payments continued
Share price (pence)
Exercise price (pence)
Expected volatility
Risk free rate
Expected dividend yield
2009
803
696
32.0%
2.1%
5.3%
2008
814
814
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
1999
1999
2000
2001
2001
2001
2002
2003
2004
2005
2006
2006
2008
2009
Exercisable
Exercise
price
Pence
732.50
814.17
932.50
985.00
827.50
915.80
810.00
415.00
743.50
852.00
1,172.00
1,116.00
813.50
696.00
Exercise
period
2002–2009
2002–2009
2003–2010
2004–2011
2004–2011
2004–2011
2005–2012
2006–2013
2007–2014
2008–2015
2009–2016
2009–2016
2011–2018
2013
2009
No.
–
–
101,810
22,500
66,184
38,110
66,351
9,622
61,956
161,148
15,948
10,000
30,000
193,585
777,214
2008
No.
24,550
58,350
101,810
22,500
66,184
38,110
71,351
181,528
76,956
189,676
35,948
10,000
30,000
–
906,963
The Group recognised total expenses of £1,219,000 in relation to equity-settled share-based payment transactions in 2009
(2008: £1,299,000).
28 Financial risk management
The Group has identifi ed 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 fi nancial risks into three areas:
(i) credit risk;
(ii)
liquidity risk; and
s
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o
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a
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a
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i
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s
e
t
o
N
3
9
(iii) market risk (which includes fair value interest rate risk, cash fl ow interest rate risk, currency risk and price risk).
The sections below outline the Group’s risk appetite and explain how it defi nes and manages each category of fi nancial 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 refl ect changes in the business, counterparties, markets
and the range of fi nancial instruments that it utilises.
The Group’s overall strategy and policies for monitoring and management of fi nancial 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 identifi cation,
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
(the RIM Board).
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 fi nancial risks in
accordance with the Group’s risk appetite.
9
0
0
2
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28 Financial risk management continued
(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 fi nancial
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 £4,980,000 were past due by fewer than 90 days but not impaired at 31 December 2009 (2008:
£6,322,000). No settlement balances were impaired at the balance sheet date (2008: nil).
Loans and advances to banks and debt and other securities
The Group has exposures to a wide range of fi nancial institutions through its treasury portfolio which includes bank deposits,
certifi cates 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 specifi c 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 previously 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 a client’s behalf. Overdrafts are actively monitored and reported to the Banking Committee on a
monthly basis.
s
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a
d
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t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
4
9
9
0
0
2
s
t
n
u
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c
c
a
d
n
a
t
r
o
p
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28 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 Banking Committee reviews all loans on a monthly basis and approves all loan extensions. Where necessary, repayment plans
are established with clients before loans become overdue or uncovered.
At 31 December, the total lending exposure limit for the Investment Management loan book was £30,000,000
(2008: £25,000,000) of which £18,712,000 had been advanced (2008: £12,459,000) and a further £5,260,000 had been
committed (2008: £4,555,000).
(c) Rathbone International Finance loan book
The Rathbone International Finance loan book was disposed of on 12 November 2009 (note 10).
(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 are constituted by loans made to the acquirers of the Group’s Jersey trust operations in
2008 and its Geneva trust operations in 2009 (note 15).
Derivatives
From time to time, the Group makes use of derivative fi nancial instruments to manage interest rate risk (note 6). 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 fi nancial 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 15. No other impairment
losses arose in the year (2008: none).
s
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o
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c
a
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
5
9
9
0
0
2
s
t
n
u
o
c
c
a
d
n
a
t
r
o
p
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28 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 fi nancial assets
Credit risk relating to off-balance sheet exposures:
Loan commitments
Financial guarantees
2009
£’000
17,305
92,661
3,167
18,712
–
850
6,018
778,000
–
22,663
5,260
5
2008
£’000
15,751
175,973
4,492
12,483
18,323
1,021
5,000
952,978
1,001
31,731
4,555
859
The above table represents the gross credit risk exposure to the Group at 31 December 2009 and 2008, 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.
12.9% of the total maximum exposure is derived from loans and advances to banks and customers (2008: 17.8%) and 82.4%
represents investments in debt securities (2008: 77.9%).
944,641
1,224,167
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 15)
Net carrying value
2009
Loans
and advances
to banks
£’000
92,661
–
–
92,661
–
92,661
2009
Loans
and advances
to customers
£’000
26,235
510
82
26,827
(82)
26,745
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
No loans and advances have been renegotiated (2008: nil).
(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 2009, 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 95, 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 2009
Standard lending criteria
Outside standard lending criteria
Investment
Management
loan book
£’000
International
Finance
loan book
£’000
Trust and
pension
debtors
£’000
Overdrafts
£’000
3,167
–
18,712
–
3,167
18,712
–
–
–
258
–
Total
loans and
advances
to customers
£’000
22,137
4,098
Other
debtors
£’000
–
4,098
258
4,098
26,235
s
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o
c
c
a
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
6
9
9
0
0
2
s
t
n
u
o
c
c
a
d
n
a
t
r
o
p
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28 Financial risk management continued
(i) Credit risk continued
At 31 December 2008
Standard lending criteria
Outside standard lending criteria
Investment
Management
loan book
£’000
International
Finance
loan book
£’000
Trust and
pension
debtors
£’000
Overdrafts
£’000
Total
loans and
advances
to customers
£’000
Other
debtors
£’000
4,492
–
12,483
–
14,878
3,224
282
–
–
3,268
32,135
6,492
4,492
12,483
18,102
282
3,268
38,627
The credit quality of loans and advances to banks that were neither past due nor impaired at 31 December 2009 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
2009
£’000
92,661
–
–
92,661
2008
£’000
71,074
104,481
418
175,973
(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 2009 were:
At 31 December 2009
<90 days overdue
90–180 days overdue
180–270 days overdue
270–365 days overdue
>365 days overdue
At 31 December 2008
<90 days overdue
90–180 days overdue
180–270 days overdue
270–365 days overdue
>365 days overdue
s
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a
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a
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i
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o
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c
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o
t
s
e
t
o
N
7
9
Investment
Management
loan book
£’000
International
Finance
loan book
£’000
Trust and
pension
debtors
£’000
Overdrafts
£’000
Total
loans and
advances
to customers
£’000
Other
debtors
£’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
201
120
91
40
58
510
Investment
Management
loan book
£’000
International
Finance
loan book
£’000
Trust and
pension
debtors
£’000
Overdrafts
£’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
221
221
221
81
56
25
112
495
–
–
–
–
–
–
201
120
91
40
58
510
Total
loans and
advances
to customers
£’000
Other
debtors
£’000
–
–
–
–
–
–
221
81
56
25
333
716
(c) Impaired
Allowance has been made for individually impaired trust and pension debtors. The balance of individually impaired trust and pension
debtors is £82,000 (2008: £244,000). There were no other impaired credit exposures at 31 December 2009 (2008: £nil).
9
0
0
2
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a
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28 Financial risk management continued
(i) Credit risk continued
Debt securities
The table below presents an analysis of debt securities by rating agency designation, as at 31 December 2009, based on Fitch’s or
Moody’s long-term rating designation.
2009
Goverment
securities
£’000
2009
Money
market
funds
£’000
2009
Certifi cates
of deposit
£’000
2009
Total
£’000
84,000
84,000
–
– 431,000 431,000
– 263,000 263,000
2008
Goverment
securities
£’000
25,759
–
–
2008
Money
market
funds
£’000
2008
Certifi cates
of deposit
£’000
2008
Total
£’000
79,000
95,351 200,110
– 529,853 529,853
– 224,016 224,016
84,000 694,000 778,000
25,759
79,000 849,220 953,979
AAA
AA- to AA+
A to A+
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 specifi c banks or banks within a particular country or sector.
(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 2009
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 fi nancial assets
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 fi nancial assets
United
Kingdom
£’000
15,621
40,892
2,303
17,975
–
768
–
Jersey
£’000
–
289
497
–
–
–
3,268
Rest of
the World
£’000
1,684
51,480
367
737
–
–
830
Total
£’000
17,305
92,661
3,167
18,712
–
768
4,098
314,000
–
19,168
–
–
162
464,000 778,000
–
22,663
–
3,333
410,727
4,216
522,431
937,374
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
s
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n
u
o
c
c
a
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
8
9
9
0
0
2
s
t
n
u
o
c
c
a
d
n
a
t
r
o
p
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28 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 2009
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 fi nancial assets
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 fi nancial assets
Public
sector
£’000
Financial
institutions
£’000
Private
clients
and other
£’000
Total
£’000
–
–
–
–
–
–
–
–
–
–
–
17,305
92,661
–
–
17,305
92,661
–
–
–
–
–
3,167
18,712
–
768
4,098
3,167
18,712
–
768
4,098
778,000
–
5,973
– 778,000
–
–
22,663
16,690
893,939
43,435
937,374
Public
sector
£’000
Financial
institutions
£’000
Private
clients
and other
£’000
Total
£’000
–
15,751
– 175,973
–
–
–
–
–
3,268
–
–
–
–
–
–
15,751
– 175,973
4,492
12,483
18,323
846
–
4,492
12,483
18,323
846
3,268
24,758 928,220
1,001
–
18,027
211
– 952,978
1,001
–
31,731
13,493
25,970 1,141,239
49,637 1,216,846
(ii) Liquidity risk
Liquidity risk is the risk that the Group will encounter diffi culty in meeting obligations associated with fi nancial liabilities that are
settled by delivering cash or another fi nancial asset.
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 FSA’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, defi ned 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.
s
t
n
u
o
c
c
a
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
9
9
9
0
0
2
s
t
n
u
o
c
c
a
d
n
a
t
r
o
p
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28 Financial risk management continued
(ii) Liquidity risk continued
Non-derivative cash fl ows
The table below presents the undiscounted cash fl ows receivable and payable by the Group under non-derivative fi nancial assets
and liabilities by remaining contractual maturities at the balance sheet date.
At 31 December 2009
Cash fl ows arising from fi nancial 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 fi nancial 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
After
5 years
£’000
Total
£’000
5
–
52,036
3,198
310
17,305
40,109
8,050
–
–
628
12,151
101,166 368,257 272,960
6
17,829
22
–
–
–
6,250
40,301
15
315
–
17,305
–
92,773
–
–
29,649
– 782,684
17,872
–
Cash fl ows arising from fi nancial assets
156,427
451,860
285,745
46,566
– 940,598
Cash fl ows arising from fi nancial liabilities
Deposits by banks
Settlement balances
Due to customers
Other fi nancial liabilities
1,224
–
710,972
2
1,533
22,157
55,185
22,447
1,574
–
1,562
1,898
3,104
–
–
6,772
Cash fl ows arising from fi nancial liabilities
712,198
101,322
5,034
9,876
Net liquidity gap
(555,771)
350,538
280,711
36,690
–
–
–
–
–
–
7,435
22,157
767,719
31,119
828,430
112,168
At 31 December 2008
Cash fl ows arising from fi nancial 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 fi nancial 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
After
5 years
£’000
Total
£’000
3
–
–
350
–
15,751
–
25,908 151,614
10,497
12,838
6,936
79,022 631,817 240,792
6
13,792
103
–
–
–
11,522
28,078
23
–
353
15,751
–
– 177,522
43,558
– 979,709
13,924
–
1,765
Cash fl ows arising from fi nancial assets
115,533 820,260 253,636
39,623
1,765 1,230,817
Cash fl ows arising from fi nancial liabilities
Deposits by banks
Settlement balances
Due to customers
Other fi nancial liabilities
–
–
1,533
14,048
677,488 352,961
25,615
9
1,901
–
12,685
343
6,516
–
5,857
11,869
9,950
–
–
14,048
– 1,048,991
37,836
–
Cash fl ows arising from fi nancial 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
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 fl ows (derivatives settled on a net basis)
As described in note 6 the Group employs Forward Rate Agreements in managing interest rate risk from time to time. 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 2009 (2008: nil).
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0
0
1
9
0
0
2
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28 Financial risk management continued
(ii) Liquidity risk continued
Off balance sheet items
Cash fl ows arising from the Group’s off balance sheet fi nancial liabilities (note 30) are summarised in the table below.
The contractual value of the Group’s commitments to extend credit to clients and maximum potential value of fi nancial 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.
At 31 December 2009
Loan commitments
Financial guarantees
Operating lease commitments
Capital commitments
After
3 months
but not
more than
1 year
£’000
–
–
3,634
–
After
1 year
but not
more than
5 years
£’000
–
–
13,065
–
Not more
than
3 months
£’000
5,260
5
1,245
14,002
After
5 years
£’000
–
–
10,346
–
Total
£’000
5,260
5
28,290
14,002
Total off balance sheet items
20,512
3,634
13,065
10,346
47,557
At 31 December 2008
Loan commitments
Financial guarantees
Operating lease commitments
Capital commitments
Total off balance sheet items
Total liquidity requirement
At 31 December 2009
Cash fl ows arising from fi nancial liabilities
Total off balance sheet items
At 31 December 2008
Cash fl ows arising from fi nancial liabilities
Total off balance sheet items
(iii) Market risk
After
3 months
but not
more than
1 year
£’000
–
–
3,774
–
After
1 year
but not
more than
5 years
£’000
–
9
14,813
–
Not more
than
3 months
£’000
4,555
850
1,263
150
After
5 years
£’000
–
–
11,984
–
Total
£’000
4,555
859
31,834
150
6,818
3,774
14,822
11,984
37,398
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
After
5 years
£’000
Total
£’000
712,198 101,322
20,512
–
5,034
3,634
9,876
13,065
– 828,430
47,557
10,346
712,198 121,834
8,668
22,941
10,346 875,987
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
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
Interest rate risk
Cash fl ow interest rate risk is the risk that the future cash fl ows of a fi nancial instrument will fl uctuate because of changes in market
interest rates. Fair value interest rate risk is the risk that the value of a fi nancial instrument will fl uctuate because of changes in
market interest rates.
The Group’s principal exposure to cash fl ow interest rate risk arises from the mismatch between the repricing of its fi nancial 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 profi le 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.
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1
0
1
9
0
0
2
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28 Financial risk management continued
(iii) Market risk continued
The table below shows the consolidated repricing profi le of the Group’s fi nancial assets and liabilities, stated at their carrying
amounts, categorised by the earlier contractual repricing or maturity dates.
At 31 December 2009
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 fi nancial assets
Total fi nancial assets
Liabilities
Deposits by banks
Settlement balances
Due to customers
Other fi nancial liabilities
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 fi nancial assets
Total fi nancial assets
Liabilities
Deposits by banks
Settlement balances
Due to customers
Other fi nancial liabilities
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
After
5 years
£’000
Non-interest
5 years
£’000
Total
£’000
310
–
91,876
21,417
–
–
–
–
–
–
622
–
–
–
–
467,000 139,000 132,000
–
–
–
–
–
–
–
–
40,000
–
580,603 139,000 132,622
40,000
2,757
–
760,211
–
–
–
932
–
1,533
–
622
–
3,089
–
–
–
On
demand
£’000
348
–
175,803
23,525
Not more
than
3 months
£’000
–
–
–
6,911
–
–
672,217 246,762
–
–
After
3 months
but not
more than
1 year
£’000
After
1 year
but not
more than
5 years
£’000
–
–
–
–
–
–
–
663
–
10,000
–
–
25,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5
17,305
163
5,328
315
17,305
92,661
26,745
2,932
2,932
– 778,000
22,663
22,663
48,396 940,621
–
22,157
7,379
22,157
4,596 766,361
31,181
31,181
57,934 827,078
(9,538)
113,543
After
5 years
£’000
Non-interest
5 years
£’000
Total
£’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 fi nancial liabilities
762,968
932
2,155
3,089
Interest rate repricing gap
(182,365) 138,068 130,467
36,911
Total fi nancial liabilities
1,018,973
15,341
1,533
6,798
483
62,470 1,105,598
Interest rate repricing gap
(147,080) 238,332
8,467
18,865
–
(3,994) 114,590
The Banking Committee has set an overall pre-tax interest rate exposure limit of £5,000,000 (2008: £5,000,000) for the total
profi t 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 profi t 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 2009, the Bank had £738.5 million (2008: £993.4 million) of sterling interest bearing liabilities averaging two days
(2008: four days) to repricing which were matched by sterling assets averaging 74 days (2008: 52 days) to repricing, creating an
exposure of 72 days (2008: 48 days). The total potential impact on profi t after tax and equity was £2,088,000 (2008: £1,894,000)
at the balance sheet date for a 2% decrease or increase in interest rates. The Group held no forward rate agreements at
31 December 2009 (2008: none).
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2
0
1
9
0
0
2
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28 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 signifi cant exposures
are managed through the use of spot contracts, from time to time, so as to reduce any currency exposure to a minimal amount. The
Group’s structural currency exposure was substantially eliminated on the disposal of its Switzerland, Singapore, British Virgin Islands
and Dutch operations during the year (note 10).
The Group does not have any material exposure to transactional foreign currency risk. The table below summarises the Group’s
exposure to foreign currency translation risk at 31 December 2009. Included in the table are the Group’s fi nancial assets and
liabilities, at carrying amounts, categorised by currency.
At 31 December 2009
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 fi nancial assets
Total fi nancial assets
Liabilities
Deposits by banks
Settlement balances
Due to customers
Other fi nancial liabilities
Sterling
£’000
US Dollar
£’000
Euro
£’000
Other
£’000
Total
£’000
5
15,564
66,853
26,060
2,158
778,000
22,647
310
833
9,353
165
–
686
13,198
520
–
222
3,257
–
315
17,305
92,661
26,745
–
–
10
774
–
6
–
2,932
– 778,000
22,663
–
911,287
10,671
15,184
3,479 940,621
7,379
19,376
742,557
29,512
–
1,671
7,684
834
–
1,070
13,060
649
–
40
7,379
22,157
3,060 766,361
31,181
186
Total fi nancial liabilities
798,824
10,189
14,779
3,286 827,078
Net on balance sheet position
112,463
482
405
193 113,543
Loan commitments
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 fi nancial assets
Total fi nancial assets
Liabilities
Deposits by banks
Settlement balances
Due to customers
Other fi nancial liabilities
Total fi nancial liabilities
Net on balance sheet position
Loan commitments
5,260
Sterling
£’000
–
US Dollar
£’000
–
Euro
£’000
–
5,260
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
1,061,402
11,031
30,071
3,094 1,105,598
108,525
3,009
2,709
347 114,590
4,555
–
–
–
4,555
A 10% weakening of the US dollar or Euro against the pound sterling, occurring on 31 December 2009, would have reduced equity
and profi t after tax by £35,000 or £29,000 respectively (2008: £215,000 and £194,000 respectively). A 10% strengthening of
the US dollar or Euro would have had an equal and opposite effect. This analysis assumes that all other variables, in particular other
exchange rates, remain constant.
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3
0
1
9
0
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2
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28 Financial risk management continued
(iii) Market risk continued
Price risk
Price risk is the risk that the fair value or future cash fl ows of a fi nancial instrument will fl uctuate 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 16). At 31 December 2009, the fair value of equity
securities recognised on the balance sheet was £2,931,000 (2008: £2,991,000). A 10% fall in global equity markets would, in
isolation, result in a pre-tax impact on net assets of £293,000 (2008: £299,000); there would be no impact on profi t after tax.
Fair values
The fair values of the Group’s fi nancial assets and liabilities are not materially different from their carrying values, with the exception
of held to maturity investment securities (note 18).
The table below analyses fi nancial instruments measured at fair value into a fair value hierarchy based on the valuation technique
used to determine the fair value.
(cid:129) Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
(cid:129) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly
(cid:129) Level 3: inputs for the asset or liability that are not based on observable market data
At 31 December 2009
Assets
Available for sale securities
– equity securities
– money market funds
Total fi nancial assets
Level 1
£’000
2,153
–
2,153
Level 2
£’000
Level 3
£’000
Total
£’000
779
84,000
84,779
–
–
–
2,932
84,000
86,932
There have been no transfers between levels during the year. Money market funds are demand securities and changes to estimates
of interest rates will not affect their fair value.
29
Capital management
Accounting capital is defi ned as the total of share capital, share premium, retained earnings and other reserves. Total capital at
31 December 2009 was £182,489,000 (2008: £184,631,000).
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. Regulatory capital differs from accounting capital
due to the non-consolidation of Rathbone Insurance Limited in regulatory capital values.
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
(cid:129)
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
(cid:129)
benefi ts for other stakeholders; and
(cid:129)
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:
(cid:129) 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
(cid:129) 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 2009 ICAAP was approved by the Rathbone Brothers Plc Board in February 2010. There have been no capital requirement
breaches during the course of the year.
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4
0
1
9
0
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2
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30 Contingent liabilities and commitments
(a) Indemnities are provided to a number of directors and employees in our Trust and Tax Services 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 2009 but not provided in the accounts amounted to
£592,000 (2008: £150,000).
(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
The fair value of the guarantees is £nil (2008: £nil).
2009
£’000
5
5,260
5,265
2008
£’000
859
4,555
5,414
(d) The Group leases various offi ces 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
2009
£’000
4,879
13,064
10,347
28,290
2008
£’000
5,037
14,813
11,984
31,834
(e) In addition to the Financial Services Compensation Scheme levies accrued in the year (note 7) further levy charges are likely to
be incurred in future years although the ultimate cost remains uncertain.
(f) The Group made certain commitments in relation to the transaction with Lloyds Banking Group, as disclosed in note 17.
31 Related party transactions
The remuneration of the key management personnel of the Group, who are defi ned as the Company’s directors, is set out in the
audited part of the Remuneration report on pages 36 to 43. At 31 December 2009 key management and their close family members
had gross outstanding deposits of £1,178,000 (2008: £635,000) and gross outstanding loans of £193,000 (2008: £396,000)
which 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.
The Group’s transactions with the pension funds are described in note 25. At 31 December 2009 £3,000 was due from the pension
schemes (2008: £nil).
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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5
0
1
9
0
0
2
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32 Consolidated cash fl ow statement
For the purposes of the cash fl ow statement, cash and cash equivalents comprise the following balances with less than three months
until maturity from the date of acquisition:
2008
£’000
restated (note1)
3
175,227
79,000
791
255,021
2008
£’000
9
1,199
–
1,208
2008
£’000
21
1,171
22,477
148
1,473
(18,440)
(4,941)
1,909
Cash and balances at central banks (note 13)
Loans and advances to banks (note 14)
Available for sale investment securities (note 16)
Included within assets held for sale (note 10)
2009
£’000
5
55,039
84,000
–
139,044
Available for sale investment securities are amounts invested in money market funds which are realisable on demand.
Cash fl ows arising from issue of ordinary shares comprise:
Share capital issued (note 26)
Share premium on shares issued (note 26)
Shares issued in relation to share-based schemes for which
no cash consideration was received
2009
£’000
22
2,799
(628)
2,193
The aggregate net assets of entities disposed of during the year (note 10) at the dates of disposal were as follows:
Cash and balances at central banks
Loans and advances to banks
Loans and advances to customers
Property, plant and equipment
Prepayments, accrued income and other assets
Due to customers
Accruals, deferred income, provisions and other liabilities
Loss on disposal
Total consideration receivable
Satisfi ed by:
Cash and cash equivalents
Net cash fl ow arising on disposal:
Consideration received in cash and cash equivalents
Cash and cash equivalents disposed of
2009
£’000
35
1,638
17,374
123
1,721
(15,744)
(4,623)
524
(211)
313
313
313
(1,654)
(1,341)
33 Events after the balance sheet date
There have been no material events occurring between the balance sheet date and the date of signing this report.
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6
0
1
9
0
0
2
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Company accounts
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C
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Company balance sheet
as at 31 December 2009
Fixed assets
Investments in subsidiaries
Available for sale equity securities
Total fi xed assets
Current assets
Debtors
Amounts owed by subsidiary undertakings
Other debtors
– due within one year
– due after more than one year
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
Profi t and loss account
Equity shareholders’ funds
Approved by the Board of Directors on 23 February 2010
A D Pomfret
Chief executive
R P Stockton
Finance director
The accompanying notes form an integral part of the Company accounts.
Note
37
37
38
39
40
41
42
42
42
2009
£’000
22,749
2,932
25,681
27,310
621
4,098
686
32,715
68
32,783
(6,155)
(78)
(895)
(304)
(7,432)
25,351
51,032
(5,979)
45,053
2,165
31,756
2,884
8,248
45,053
2008
£’000
22,562
2,991
25,553
30,103
698
3,268
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
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Notes to the individual accounts
34
Signifi cant accounting policies
Basis of accounting
The separate fi nancial statements of the Company are presented as required by the Companies Act 2006. They have been
prepared under the historical cost convention, as modifi ed by the revaluation of certain fi nancial 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 fi nancial 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 fi xed assets are subject to review for impairment in accordance with FRS 11: Impairment of fi xed assets and goodwill.
The carrying values of tangible fi xed assets are written down by the amount of any permanent impairment and the loss is charged
as an operating cost to the profi t and loss account in the period in which this occurs. The carrying value of tangible fi xed 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 fi nancial 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 profi t and loss
account. An impairment loss in respect of an investment in equity instruments classifi ed as available for sale is not reversed through
profi t or loss. If the fair value of a debt instrument classifi ed as available for sale increases and the increase can be objectively
related to an event occurring after the impairment loss was recognised in the profi t and loss account, the impairment is reversed
through the profi t and loss account.
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 indefi nite 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 fl ow analysis, option pricing models and other
valuation techniques commonly used by market participants.
Financial assets are derecognised when the rights to receive cash fl ows from the fi nancial 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 fl uctuations in foreign exchange rates, which are recognised as income or
expenditure in the profi t and loss account for monetary assets and directly in equity for non-monetary assets), until the fi nancial asset
is derecognised or impaired at which time the cumulative gain or loss previously recognised in equity should be recognised in profi t
or loss.
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34
Signifi cant 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 refl ect the actual
number of share options that vest except where forfeiture is only due to share prices not achieving the threshold for vesting.
For cash settled share-based payments, a liability is recognised for the services received, measured initially at the fair value of the
liability. At the date on which the liability is settled, and at each balance sheet date between grant date and settlement, the fair value
of the liability is remeasured with any changes in fair value recognised in profi t or loss for the year.
The cost of share-based payments relating to subsidiaries’ directors and staff are recharged to the subsidiaries.
Pension liability
The Company operates pension schemes providing benefi ts based on fi nal 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 defi cit is recognised in full, net
of any related deferred tax asset or liability. The movement in the scheme surplus/defi cit is split between operating charges, fi nance
items and actuarial gains and losses.
Payments to defi ned contribution retirement benefi t 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 profi ts from which the future reversal of the underlying
timing differences can be deducted.
Guarantees
Where the Company enters into fi nancial 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.
Interest bearing borrowings
Immediately after issue debt is stated at the fair value of consideration received, after deduction of issue costs. The fi nance cost of
the debt is allocated to periods over the term of the debt at a constant rate on the carrying amount.
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35
Profi t for the year
As permitted by Section 408 of the Companies Act 2006 the Company has elected not to present its own profi t and loss account
for the year. Rathbone Brothers Plc reported a profi t after tax for the fi nancial year ended 31 December 2009 of £23,243,000
(2008: £24,968,000).
Auditors’ remuneration for audit and other services to the Company are set out in note 7.
The average number of employees during the year was as follows:
Investment Management
Unit Trusts
Trust and Tax
Shared services
36 Dividends
2009
428
24
40
179
671
2008
430
31
43
172
676
Details of the Company’s dividends paid and proposed for approval at the Annual General Meeting are set out in note 11.
37
Investments
At 1 January 2009
Additions
Disposals
Net loss from change in fair value
At 31 December 2009
Investments in
subsidiaries
£’000
Available for
sale equity
securities
£’000
22,562
200
(13)
–
22,749
2,991
–
–
(59)
2,932
Total
£’000
25,553
200
(13)
(59)
25,681
On 25 September 2009 the Company acquired a further 200,000 shares (with nominal value of £1 each) in its wholly owned
subsidiary Rathbone Pension & Advisory Services Limited for cash consideration.
On 17 November 2009 the Company disposed of its subsidiary Rathbone Trust International B.V. for cash consideration.
At 31 December 2009 plans to liquidate Rathbone Trust Company B.V. and Rathbone Bank (BVI) Limited were well advanced.
At 31 December 2009 the principal subsidiary undertakings, were as follows:
Subsidiary undertaking
Country of incorporation
Activity and operation
Rathbone Investment Management Limited
Great Britain
Rathbone Bank (BVI) Limited*
Rathbone Investment Management International Limited*
Rathbone Trust Company Limited
Rathbone Stockbrokers Limited*
Rathbone Unit Trust Management Limited*
Rathbone Trust Company B.V.
Rathbone Pension & Advisory Services Limited
* held by subsidiary undertaking
British Virgin Islands
Jersey
Great Britain
Great Britain
Great Britain
The Netherlands
Great Britain
Investment management
and banking services
Banking
Investment management
Trust services
Stockbroking
Unit trust management
Trust services
Pension advisory services
The Company owns, directly or indirectly, 100% of the ordinary share capital of all subsidiaries.
A full list of the Company’s subsidiaries will be included in the Company’s annual return to Companies House.
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38 Other debtors
Deferred tax asset
Corporation tax debtor
Loans and receivables (due after more than one year)
2009
£’000
298
323
4,098
4,719
2008
£’000
658
40
3,268
3,966
Deferred income taxes are calculated on all temporary differences under the liability method using an effective tax rate of 28%
(2008: 28%).
The movement on the deferred tax account is only attributable to share-based payments and is as follows:
At 1 January
Charged to profi t and loss account
2009
£’000
658
(360)
298
2008
£’000
2,539
(1,881)
658
Included within loans and receivables are vendor loan notes (‘notes’) with a nominal value of £5,000,000 that were issued to the
acquirer of the Group’s Jersey trust operations in 2008. The notes are repayable on the occurrence of certain events, principally the
refi nancing of the operations disposed of.
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 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 £3,267,000 at 31 December 2009 (2008: £3,268,000)
and interest income is recognised over the expected life of the notes under the effective interest rate method. The expected
repayment date of the notes was reassessed during the year and extended by two years to 2015.
Included within loans and receivables is a Swiss Franc denominated loan to the acquirer of the Group’s Geneva trust operations
with a nominal value equivalent to £831,000 at 31 December 2009. The loan does not bear interest and is repayable in three
approximately equal annual instalments ending in 2012.
39 Bank loans
The Company has drawn down £6,155,000 (2008: £9,201,000) of an unsecured term loan which is repayable in four, six-monthly
instalments ending on 4 April 2011. Interest is payable on the loan at 0.7% above the London Inter-Bank Offer Rate.
40
Pension liability
Details of the defi ned benefi t pension schemes operated by the Company and changes thereto are provided in note 25 to the
Consolidated accounts.
The pension liability reported for the Company is stated net of related deferred tax.
Group pension liability (note 25)
Related deferred tax (note 19)
41
Share capital
2009
£’000
9,413
(3,434 )
5,979
2008
£’000
5,723
(1,602)
4,121
Details of the share capital of the Company together with changes thereto, options thereon and share-based payments are provided
in note 26 to the Consolidated accounts.
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42
Reserves
At 1 January 2009
Profi t for the year
Dividends paid
Shares issued
Actuarial gains and losses
Revaluation of investment securities
Share-based payments
– value of employee services
– transfer to liabilities for cash
settled awards
– cost of shares issued/purchased
At 31 December 2009
43
Reconciliation of movements in shareholders’ funds
Shareholders’ funds at 1 January
Profi t for the year
Dividends paid
Other recognised gains and losses relating to the year
Share-based payments
Share capital issued
Net (reduction in)/addition to shareholders funds for the year
Shareholders’ funds at 31 December
Share premium
£’000
28,957
2,799
Available for
sale reserve
£’000
2,943
(59)
31,756
2,884
2009
£’000
45,736
23,243
(18,066)
(8,685)
4
2,821
(683)
45,053
Profi t and
loss account
£’000
11,693
23,243
(18,066)
(8,626)
1,219
(119)
(1,096)
8,248
2008
£’000
41,996
24,968
(17,503)
(4,504)
(429)
1,208
3,740
45,736
44
Contingent liabilities and commitments
The Company’s obligations under operating leases are borne by a subsidiary undertaking.
45
Related party transactions
The Company has taken advantage of the exemption given by FRS 8 not to disclose transactions and balances with its subsidiaries.
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.
The Company’s transactions with the pension funds are described in note 25 to the Consolidated accounts. At 31 December 2009
£3,000 was due from the pension schemes (2008: £nil).
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-ninth Annual General Meeting of the Company will be held at 159 New Bond Street,
London W1S 2UD on Wednesday 5 May 2010 at 12.00 noon to consider and, if thought fi t, pass the following resolutions.
Resolutions 1 to 13 are ordinary resolutions requiring a majority of more than 50%. Resolution 13 is an ordinary resolution but is
classifi ed by Article 60 of the Articles of Association of the Company as non-routine, special business.
Resolutions 14 to 18 are special resolutions requiring a majority of 75% or more.
2009 Report and Accounts
1 To adopt the Report of the directors and the Audited Accounts for the year ended 31 December 2009.
2 To approve the Remuneration report for the year ended 31 December 2009.
The Remuneration report can be found on pages 36 to 43. 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.
Election and re-election of directors
3 To elect Kate Avery as a director of the Company.
4 To elect Kathryn Matthews as a director of the Company.
5 To re-elect Caroline Burton as a director of the Company.
6 To re-elect Richard Lanyon as a director of the Company.
7 To re-elect Andrew Morris as a director of the Company.
8 To re-elect Andy Pomfret as a director of the Company.
9 To re-elect Richard Smeeton as a director of the Company.
Biographical details of the directors seeking election or re-election can be found on pages 25 to 26 and in the Directors’ report on
page 29 in the case of Kate Avery and Kathryn Matthews who were appointed to the board on 6 January 2010.
Article 94 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 offi ce and seek election or
re-election. Following formal performance evaluation by the Board and individual appraisal by the chairman, the Board confi rms
that all directors seeking election or re-election continue to be effective and demonstrate commitment to the role.
Auditors
10 To appoint KPMG Audit Plc as auditors until the conclusion of the next Annual General Meeting before which accounts
are laid.
11 To authorise the directors to agree the remuneration of the auditors.
The auditors of a public company must be appointed for each fi nancial year at the meeting at which the accounts for the previous
fi nancial year are laid.
Political donations
12 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 donations to political parties or independent election candidates;
(b) to make donations to political organisations other than political parties; and
(c) to incur political expenditure,
Provided that:
(i)
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 conclusion of the Company’s next Annual General Meeting
(or adjournment thereof) after the passing of this resolution;
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Political donations continued
(ii) the aggregate amount of such donations and expenditure shall not exceed £50,000 and the amount authorised under
each of paragraphs (a), (b) and (c) above shall also be limited to such amount; and
(iii) in this resolution the expressions ‘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 defi nitions 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 specifi ed limit in the forthcoming year.
Authority to allot relevant securities
13 (a) That the directors be and they are hereby generally and unconditionally authorised in accordance with section 551 of the
Companies Act 2006 (the ‘Act’) to exercise all the powers of the Company to allot shares in the Company and to grant
rights to subscribe for or to convert any security into such shares:
(i) up to an aggregate nominal amount of £710,000; and
(ii) comprising equity securities (as defi ned in section 560 of the Act), up to a further aggregate nominal amount of
£710,000 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 conclusion of the
Company’s 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 Companies Act 1985 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 certifi cated form or in uncertifi cated 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 23 February 2010, in circumstances defi ned
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 23 February 2010. This authority may be
used for fully pre-emptive rights issues.
As at 23 February 2010, the Company does not hold any shares in the capital of the Company in treasury.
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Power to waive pre-emption rights
14 (a) That the directors be and they are hereby empowered pursuant to sections 570 and 573 of the Companies Act 2006
(the ‘Act’) to allot equity securities (as defi ned in section 560 of the Act), payment for which is to be wholly in cash:
(i) pursuant to the authority given by paragraph (a)(i) of resolution 13 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 fi xed 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 certifi cated form or in uncertifi cated 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 £105,000; and
(ii) pursuant to the authority given by paragraph (a)(ii) of resolution 13 in the notice of this meeting in connection with
a rights issue
as if section 561 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 724(5) 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 conclusion of the Company’s 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 Companies Act 1985
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 13 in the notice of
this meeting.
This fi rst special resolution seeks authority, limited to approximately 5% of the issued share capital of the Company at
23 February 2010, 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 2009, shares with a nominal value of £50,974 were allotted for cash, representing 2.4% 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 specifi c transaction notwithstanding this
general authority.
Authority to purchase ordinary shares
15 That the directors be and they are hereby granted pursuant to section 701 of the Companies Act 2006 (the ‘Act’) general
and unconditional authority to make market purchases (as defi ned by section 693 of the Act) 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 2,100,000 shares
(being approximately 5% of the issued share capital of the Company at 23 February 2010);
(b) the minimum price which may be paid for an ordinary share is 5p;
(c) 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
Offi cial List for the fi ve 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
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Authority to purchase ordinary shares continued
(d) the authority hereby conferred shall (unless previously renewed) expire 15 months after the passing of this resolution or,
if earlier, on the conclusion of the Company’s 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 2009 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 defi ned in section 724(5) of the Act.
At 23 February 2010 there were options outstanding to subscribe for 777,214 new ordinary shares in the Company. This represents
1.8% of the issued ordinary share capital of the Company at that date and would represent approximately 1.9% 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
16 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.
The Companies (Shareholders’ Rights) Regulations 2009 which came into force on 3 August 2009 increased the notice period
for general meetings of the Company to 21 days. This notice period can be reduced to 14 days for general meetings (other than
an Annual General Meeting) by the passing of a special resolution each year provided that voting by electronic means is available
to all shareholders.
Adoption of new Articles of Association
17 That with effect from the conclusion of the meeting the Articles of Association produced to the meeting and initialled
by the chairman of the meeting for the purpose of identifi cation be adopted as the Articles of Association of the Company in
substitution for, and to the exclusion of, the existing Articles of Association of the Company.
This special resolution seeks authority to adopt new articles of association (the ‘New Articles’) in order to update the
Company’s current articles of association (the ‘Current Articles’) to take account of the coming into force of the Companies
(Shareholders’ Rights) Regulations 2009 (the ‘Shareholders’ Rights Regulations’) and the implementation of the last parts of
the Companies Act 2006.
Some of the changes introduced in the New Articles are summarised below. Changes, which are of a minor, technical or clarifying
nature or which merely conform the language of the New Articles with that used in the model articles for public companies set out
in The Companies (Model Articles) Regulations 2008 have not been noted. The New Articles showing all the changes to the
Current Articles are available for inspection, as described in the notes to the Notice of AGM below.
(i) Articles which duplicate statutory provisions
Provisions in the Current Articles which replicate provisions contained in the Companies Act 2006 are in the main to be removed
in the New Articles. This is in line with the approach advocated by the Government that statutory provisions should not be duplicated
in a company’s constitution.
(ii) Redeemable shares
Under the Companies Act 1985, if a company wished to issue redeemable shares, it had to include in its articles the terms and
manner of redemption. The Companies Act 2006 enables directors to determine such matters instead provided they are so
authorised by the articles. The New Articles contain such an authorisation. The Company has no plans to issue redeemable shares
but if it did so the directors would need shareholders’ authority to issue new shares in the usual way.
(iii) Authority to purchase own shares, consolidate and sub-divide shares, and reduce share capital
Under the Companies Act 1985, a company required specifi c enabling provisions in its articles to purchase its own shares, to
consolidate or sub-divide its shares and to reduce its share capital or other undistributable reserves as well as shareholder authority
to undertake the relevant action. The Current Articles include these enabling provisions. Under the Companies Act 2006 a company
will only require shareholder authority to do any of these things and it will no longer be necessary for articles to contain enabling
provisions. Accordingly the relevant enabling provisions have been removed in the New Articles.
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Adoption of new Articles of Association continued
(iv) Provision for employees on cessation of business
The Companies Act 2006 provides that the powers of the directors of a company to make provision for a person employed or
formerly employed by the company or any of its subsidiaries in connection with the cessation or transfer to any person of the whole
or part of the undertaking of the company or that subsidiary, may only be exercised by the directors if they are so authorised by the
company’s articles or by the company in general meeting. The New Articles provide that the directors may exercise
this power.
(v) Voting record date
Under the Companies Act 2006 as amended by the Shareholders’ Rights Regulations the company must determine the right
of members to vote at a general meeting by reference to the register not more than 48 hours before the time of the meeting, not
taking into account days which are not working days. The New Articles have been amended to refl ect this requirement.
(vi) Suspension of registration of share transfers
The Current Articles permit the directors to suspend the registration of transfers. Under the Companies Act 2006 share transfers
must be registered as soon as practicable. The power in the Current Articles to suspend the registration of transfers is inconsistent
with this requirement. Accordingly, this power has been removed in the New Articles.
(vii) Chairman’s casting vote
The New Articles remove the provision giving the chairman a casting vote in the event of an equality of votes as this is no longer
permitted under the Companies Act 2006.
(viii) Change of name
Under the Companies Act 1985, a company could only change its name by special resolution. Under Companies Act 2006 a
company is able to change its name by other means provided for by its articles. To take advantage of this provision, the New Articles
enable the directors to pass a resolution to change the Company’s name.
Dividend rectifi cation
18 That:
(a) in respect of the payment of any and all fi nal and interim dividends by the Company in each of the 12 fi nancial periods
ending on 31 December 2009 (other than the fi nancial periods ending 31 December 2002, 31 December 2006 and
31 December 2007) (the ‘Relevant Dividends’), paid to current and former shareholders of the Company the appropriation
of distributable profi ts of the Company (as shown in the audited accounts of the Company for the fi nancial period in which
each such Relevant Dividend was paid) to such payment, be and they are hereby ratifi ed and confi rmed;
(b) any and all claims which the Company may have in respect of the payment of any Relevant Dividend against its current
and former shareholders who appeared on the register of shareholders on the relevant record date for each such Relevant
Dividend be released and a deed of release in favour of such shareholders be entered into by the Company in the form
of the deed produced to this meeting and signed by the Chairman for the purposes of identifi cation and thereafter
be delivered to the Secretary of the Company for retention on behalf of the said current and former shareholders
(the ‘Release’);
(c) any distribution involved in the giving of the Release in relation to any particular Relevant Dividend be made out of the
profi ts appropriated to such Relevant Dividend pursuant to paragraph (a) above by reference to a record date identical to
the record date for that Relevant Dividend; and
(d) any and all claims which the Company may have against its Directors (both current and former) either (i) in respect of the
payment of any Relevant Dividend or (ii) in respect of any breach of duty owed by such Directors to the Company arising
out of the payment of any Relevant Dividend be and they are hereby released and that a deed of release in favour of the
Company’s Directors be entered into by the Company in the form of the deed produced to this meeting and signed by the
Chairman for the purposes of identifi cation and thereafter be delivered to the Secretary of the Company for retention on
behalf of the said Directors.
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Dividend rectifi cation continued
As explained in the Directors’ report on page 31, following the identifi cation of a technical irregularity regarding the timing of
intra-group movements of reserves and the historic payment of dividends by the Company such dividends were paid at a time when
the relevant accounts of the Company for the purposes of the Companies Acts did not show suffi cient distributable reserves. This
resolution (which is proposed in four linked parts) asks shareholders to: (a) approve the appropriation of the historic profi ts of the
Company to the dividend payment concerned; and (b) release the current and former shareholders and directors from any claim by
the Company for repayment of the relevant dividends. The purpose of the resolution is to put the shareholders and directors into
the position in which they were always intended to be. All of the directors who are shareholders (holding in aggregate 2.0% of the
ordinary shares of the Company) will not be voting on this resolution in view of their interest in the subject matter of the proposal.
By Order of the Board
Richard Loader
Company secretary
31 March 2010
Registered Offi ce: 159 New Bond Street, London W1S 2UD
Notes
1 Pursuant to Regulation 41 of the Uncertifi cated Securities Regulations 2001 and subject to the provisions for proxies, the
Company specifi es that only those shareholders registered in the register of members of the Company as at 6.00pm on
3 May 2010 (or, if the meeting is adjourned, 6.00pm on the day two days prior to the day fi xed 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 3 May 2010. Alternatively, a member may appoint a proxy online by following the instructions for the electronic
appointment of a proxy at www.sharevote.co.uk. To be a valid proxy appointment, the member’s electronic message confi rming
the details of the appointment completed in accordance with those instructions must be transmitted so as to be received by
the same time. Members who hold their shares in uncertifi cated form may also use CREST to appoint a proxy electronically,
as explained below. Appointing a 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 Wednesday 5 May 2010 and any adjournment thereof by using the procedures
described in the CREST Manual which can be viewed at www.euroclear.com/CREST. 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.
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 specifi cations 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 3 May 2010. 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.
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Notes continued
Note 3 continued
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
Uncertifi cated 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 28 February 2010 (being the last practicable date prior to the printing of this Notice) the Company’s issued share
capital consists of 43,296,330 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company as at
28 February 2010 are 43,296,330.
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 Offi ce 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 17 will be available for inspection at the Registered Offi ce during business hours on any weekday
(public holidays excluded) from 31 March 2010 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 Each member attending the meeting has the right to ask questions relating to the business being dealt with at the meeting
which, in accordance with section 319A of the Companies Act 2006 and subject to some exceptions, the Company must
cause to be answered.
9
Information relating to the meeting which the Company is required by the Companies Act 2006 to publish on a website
in advance of the meeting may be viewed at www.rathbones.com. A member may not use any electronic address
provided by the Company in this document or with any proxy appointment form or in any website for communicating with
the Company for any purpose in relation to the meeting other than as expressly stated in it.
10 It is possible that, pursuant to members’ requests made in accordance with section 527 of the Companies Act 2006,
the Company will be required to publish on a website a statement in accordance with section 528 of that Act setting
out any matter that the members concerned propose to raise at the meeting relating to the audit of the Company’s latest
audited accounts. The Company cannot require the members concerned to pay its expenses in complying with those
sections. The Company must forward any such statement to its auditors by the time it makes the statement available
on the website. The business which may be dealt with at the meeting includes any such statement.
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Five year record
Operating income
Operating profi t
Exceptional items
Profi t before tax
Tax
Profi t after tax
Equity dividends paid and proposed
Basic earnings per share
Diluted earnings per share
Net dividends per ordinary share
2009
£’000
116,757
32,446
(2,978)
29,468
(9,271)
20,197
18,159
46.87p
46.85p
42.0p
2008
£’000
131,166
45,020
(2,714)
42,306
(13,421)
28,885
17,984
67.57p
67.02p
42.0p
2007
£’000
134,480
47,302
–
47,302
(14,212)
33,090
17,479
77.79p
76.54p
41.0p
2006
£’000
133,686
44,720
–
44,720
(12,582)
32,138
14,786
76.62p
74.71p
35.0p
2005
£’000
113,185
36,679
(1,381)
35,298
(10,617)
24,681
12,351
60.13p
58.84p
30.0p
Equity shareholders’ funds
182,489
184,631
184,750
159,149
130,417
Total funds under management
£13.10bn
£10.46bn
£13.12bn
£12.24bn
£9.48bn
The amounts disclosed for 2004 to 2006 include the results of operations that were discounted in 2008 and 2009. The amounts
disclosed for 2007 include the results of operations that were discontinued in 2009.
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Corporate information
Company secretary and registered offi ce
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 offi ce
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
www.equiniti.com
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Our offi ces
Head offi ce
159 New Bond Street
London W1S 2UD
Tel +44 (0)20 7399 0000
Fax +44 (0)20 7399 0011
Investment Management offi ces
Rathbone Investment Management Limited
159 New Bond Street
London W1S 2UD
Tel +44 (0)20 7399 0000
Fax +44 (0)20 7399 0011
1 Albert Street
Aberdeen
AB25 1XX
Tel +44 (0)1224 218 180
Fax +44 (0)1224 218 181
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
1 Northgate
Chichester
West Sussex PO19 1AT
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
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 Trust offi ce
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 and Tax offi ces
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
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1
It is important to us that all materials used
in the production of this document are
environmentally sustainable. The paper is FSC
certifi ed and contains 50% recycled fi bre and
50% virgin fi bre from sustainable sources.
Once you have fi nished with this report please
recycle it.
Designed and produced by Linnett Webb Jenkins.
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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