Rathbones Group
Annual Report 2010

Rathbone Brothers Plc 
Report and accounts 2010

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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 2010, Rathbones managed £15.63 billion  
of client funds of which £14.59 billion are managed by  
Rathbone Investment Management.

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Report and accounts online 

We	aim	to	provide	easy	and	transparent	access	
to	shareholder	information.	As	well	as	the	
printed	annual	report	and	accounts,	we	have	
developed	an	online	version	which	presents		
a	flexible	way	of	accessing	the	information	you	
need.	We	hope	you	find	it	a	valuable	addition		
to	our	suite	of	reporting	materials	and	would	
value	any	feedback	you	may	have	via	the	link	
provided	on	the	site.

www.rathbonesra2010.com

	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
 
 
 
 
	
	
	
	
 
 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
 
 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
 
 
 
 
 
 
 
	
Highlights of the year

Operational highlights

Rathbones’ total funds under  
management exceed £15 billion for  
the first time in November 2010.

£1.24 billion of net new funds under 
management gained by Rathbone 
Investment Management in the year.

Funds under management in our  
offices in Scotland grow by 39.4%  
from £1.42 billion to £1.98 billion.

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Financial highlights

Funds under management

+19.3%

£15.63bn 
£13.10bn

2010 
2009	

Operating income 
Continuing	operations1

+8.9%

£127.2m 
£116.8m

2010 
2009	

Underlying profit before tax2
Continuing	operations1

17 qualified investment professionals  
join Rathbones during the year.

2010 
2009	

+18.8%

£38.5m 
£32.4m

The first Rathbones Charity  
Symposium hosted by the charity  
team is held at the Royal Society. 

Mark Nicholls joins the Board as 
Chairman-designate.

The five Rathbone Unit Trust 
Management authorised unit trust  
funds marketed to IFAs all achieve  
first quartile performance in 2010.

Profit before tax 
Continuing	operations1

+2.0%

£30.1m 
£29.5m

2010 
2009	

Underlying earnings per share2
Continuing	operations1

+21.8%

63.76p 
52.36p

2010 
2009	

Basic earnings per share

+9.2%

49.76p 
45.55p

+4.8%

44.0p 
42.0p

2010 
2009	

Dividends per share

2010 
2009	

1	 Continuing	operations	exclude	businesses	disposed	
of	and	classified	as	held	for	sale	in	2009	(see		
note	10	to	the	consolidated	financial	statements).

2	 Underlying	profit	before	tax	excludes	Financial	

Services	Compensation	Scheme	levies,	amortisation	
of	client	relationships	and	Lloyds	Banking	Group	
transaction	costs.

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Chairman’s statement

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Mark Powell
Chairman	

2010 saw world markets going
through a period of uncertainty 
and considerable volatility  
but by the year end the FTSE  
100 Index had risen by 9.0% year  
on year and rallied by 22.8%  
to 5900 from its mid-year low  
of 4806. The FTSE APCIMS 
Balanced Index which is the 
market index which we consider 
most accurately reflects the  
mix of assets held by our clients 
rose by 9.3% during the course  
of calendar year 2010.

During the year, total funds 
under management within 
Rathbones rose by £2.53 billion 
(19.3%) reflecting £1.24 billion 
of new net organic and acquired 
funds. By the year end, total 
funds under management 
exceeded £15 billion for the  
first time ever.

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Results and dividends

Profit	before	tax	from	continuing	operations	
for	the	year	to	31	December	2010	was		
£30.1	million	compared	with	£29.5	million		
in	2009.	This	figure	is	struck	after	a	charge		
of	£4.8	million	(2009:	£2.0	million)	in	
connection	with	the	amortisation	of	intangible	
assets	and	a	further	£3.6	million	charge		
(2009:	£0.2	million)	in	respect	of	charges	
made	by	the	Financial	Services	Compensation	
Scheme.	The	bulk	of	this	sum	is	in	respect		
of	the	failure	of	Keydata	and	other	financial	
services	companies	regulated	by	the	FSA		
but	in	a	different	sector	of	the	market	from	
Rathbones.	I	greatly	regret	reporting	to		
our	shareholders	a	significant	deduction	from		
our	profits	caused	by	what	appears	to	be		
mismanagement	in	a	different	part	of		
the	financial	sector	over	which	Rathbones		
has	no	control	or	influence.

2010	basic	earnings	per	share	were		
49.76p	compared	with	45.55p	in	2009.		
Basic	earnings	per	share	from	continuing	
operations	were	49.76p	(2009:	46.87p).		
Your	Board	recommends	that	a	final	dividend	
of	28.0p	per	share	compared	with	26.0p	last	
year,	be	paid	making	the	total	dividends	per	
share	in	respect	of	the	2010	year	44.0p	
reflecting	the	good	progress	which	Rathbones	
has	made	and	the	strength	of	our	balance	
sheet.	The	final	dividend	will	be	paid	on		
18	May	2011.

Financial markets

As	was	the	case	in	2009,	most	world	stock	
markets	ended	the	year	near	to	their	highest	
levels	but	in	the	first	half	many	markets		
were	extremely	volatile.	Earlier	in	the	year		
the	FTSE	100	Index	fell	to	its	low	point	in	
June,	but	despite	the	uncertainties	connected		
with	the	measures	taken	by	the	Coalition	
Government	to	reduce	the	public	sector	
deficit,	the	market	rallied	by	the	year	end.	
During	the	year	interest	rates	have	remained	
very	low	as	governments	in	many	developed	
economies	have	sought	to	assist	the	relatively	
weak	recovery	that	has	been	underway.		
The	interest	rate	environment	continues	to	
have	an	adverse	effect	on	Rathbones’	net	
interest	income	as	it	is	very	difficult	for	us		
to	place	funds	in	money	markets	in	an	
appropriately	cautious	and	prudent	way	that	
also	earns	an	attractive	return.

Funds	under	management	in	Rathbone	
Investment	Management	(including	our	
subsidiary	based	in	Jersey)	rose	by	20.0%	to	
£14.59	billion	(2009:	£12.16	billion).	The	
FTSE	APCIMS	Balanced	Index	rose	9.3%	
over	the	same	period.	The	average	level		
of	the	FTSE	100	Index	on	our	key	quarterly	

charging	dates	was	5528	compared	with	
4706	in	2009,	a	rise	of	17.5%.

During	the	year	funds	under	management		
in	Rathbone	Unit	Trust	Management	rose	by	
10.6%	to	£1.04	billion	at	31	December	2010.

Investment	performance	in	our	range	of	
publicly	marketed	unit	trusts	was	very	strong	
during	2010	and	we	look	forward	to	returning	
to	a	satisfactory	growth	in	funds	under	
management	in	2011.

Composition of the Board

During	November	we	announced	that		
John	May,	a	director	of	Caledonia	Investments	
Plc,	who	has	been	a	valuable	Non-executive	
Director	of	our	Board	for	the	last	three	years,	
would	retire	from	the	Board	at	the	conclusion	
of	his	three	year	term	of	office.	He	has	been		
a	supportive	and	positive	member	of	our	
Board	and	we	thank	him	and	wish	him	well.

At	the	same	time	it	was	announced	that	I		
will	retire	from	the	Board	of	Rathbones	at	the	
conclusion	of	our	Annual	General	Meeting	in	
May	2011.	Following	a	carefully	conducted	
search	process,	Mark	Nicholls	has	been	
appointed	as	a	Non-executive	Director	and		
he	will	succeed	me	as	Chairman	after	the	
Annual	General	Meeting.	A	solicitor	by	
training,	he	was	head	of	investment	banking	
at	S	G	Warburg	before	joining	the	Royal	Bank	
of	Scotland.	He	now	has	a	range	of	board	
appointments	in	financial	and	other	companies	
and	brings	great	experience	and	expertise		
to	us.	I	have	absolutely	no	doubt	that	he	will		
be	a	thoughtful	and	effective	Chairman.

Outlook

The	continuing	turbulence	in	the	financial	
markets	indicates	that	2011	will	bring	more	
uncertainty,	but	as	the	steps	taken	by	the	
Coalition	Government	to	reduce	the	fiscal	
deficit	combine	with	the	relative	attraction		
of	equities	compared	with	low	yielding	
government	and	corporate	bonds,	this	makes	
us	cautiously	optimistic	about	the	future.

Rathbones	continues	to	exhibit	the	ability		
to	grow	both	organically	and	by	attracting	
investment	managers	with	experience		
and	quality	to	join	us.	I	have	no	hesitation		
in	believing	that	the	combination	of		
Mark	Nicholls’	ability	and	strategic	direction	
and	the	energy,	initiative	and	foresight		
of	the	executive	team,	led	by	Andy	Pomfret,	
promises	Rathbones	a	positive	and		
exciting	future.

Mark Powell 
Chairman

16	February	2011

	
	
	
	
	
	
	
	
	
	
	
 
 
 
 
 
	
	
	
 
 
 
 
 
	
 
	
 
 
 
	
Chief Executive’s statement

Key highlights

Financial performance

In	spite	of	the	continuing	uncertain	economic	
climate,	2010	has	been	a	better	year	than	
2009.	We	have	gained	a	significant	amount		
of	new	business	and	at	the	end	of	the	year	
our	total	funds	under	management	exceeded	
£15	billion,	a	notable	milestone.	With	the	
FTSE	100	Index	ending	the	year	at	5900	and	
strong	commission	figures,	especially	in	the	
second	half	of	the	year,	we	produced	a	profit	
before	tax	of	£30.1	million	from	continuing	
operations	(2009:	£29.5	million).

As	a	result	of	the	2009	transaction	with	
Lloyds	Banking	Group	more	than	3,000	
clients	joined	us	during	2010	contributing		
to	a	total	net	growth	rate	for	our	core	
investment	management	business	of	10.2%	
(2009:	12.5%).	The	acquisition	of	teams	and	
corporate	businesses	are	important	for	our	
growth	but	I	have	often	said	that	the	‘best’	
growth	is	net	organic	growth,	where	our	
existing	Investment	Managers	gain	new	
clients	(or	attract	new	business	from	existing	
clients).	This	net	organic	growth	figure	was	a	
very	respectable	5.3%	in	2010	(2009:	6.7%).		
This	figure	takes	account	of	the	withdrawal		
of	cash	from	client	portfolios;	in	the	first	half	
there	were	signs	that	clients	required	cash		
to	compensate	for	lower	income	earned	on	
their	investments;	this	reduced	over	the	
second	half.	We	continue	to	consider	how		
we	can	improve	and	increase	our	net	organic	
growth	rate.	

Mike	Webb	took	over	as	Chief	Executive	of	
our	unit	trust	business	(Rathbone	Unit	Trust	
Management)	on	1	April	2010.	This	business	
has	developed	well	since	and	now	has		
£1.04	billion	of	funds	under	management		
and	a	much	improved	short	term	track	record	
on	key	funds.	Indeed	at	31	December	2010,	
all	IMA	ranked	funds	were	in	the	top	quartile	
for	performance	over	the	one	year	period.		
The	three	year	track	record	is	the	most	
important	in	obtaining	net	sales	and	it	will		
take	time	to	rebuild	this;	however,	it	has	been	
encouraging	to	see	a	significant	decline	in		
the	level	of	net	redemptions.	We	are	now	
turning	our	attention	to	gaining	net	sales	in	
2011	and	investing	in	this	area.	

We	have	continued	to	invest	to	improve	our	
infrastructure,	the	service	to	clients	and	our	
overall	efficiency.	We	have	also	had	to	
increase	the	amount	we	invest	in	coping	with	
regulatory	change.	Even	simple	changes	can	
have	a	significant	effect	on	our	systems,	for	
example	when	CGT	rates	are	changed	part	
way	through	the	year	as	happened	in	2010.	

In	spite	of	the	overall	turmoil	in	financial	
markets,	it	would	appear	that	2008	saw	the	
market	and	economic	low	point	and	2010	
showed	some	signs	of	resilience	and	recovery	
both	in	stock	market	terms	and	in	the		
health	of	underlying	companies.	Our	overall	
operating	income	grew	by	8.9%	to		
£127.2	million	(2009:	£116.8	million)	as	fees	
and	commissions	benefited	from	stronger	
markets	and	the	growth	in	funds	under	
management.	As	anticipated	our	net	interest	
income	remains	low	and,	although	there	is	an	
expectation	that	interest	rates	will	increase,	
the	timing	remains	uncertain.	The	overall	level	
of	the	market	is	one	of	the	most	important	
drivers	of	our	income	line	and	on	our	four	
charging	dates	in	2010	the	FTSE	100	Index	
was	on	average	17.5%	higher	than	on	the	
same	dates	in	2009.

We	continue	to	manage	our	cost	base	
carefully	whilst	at	the	same	time	seeking		
to	invest	in	medium	and	long	term	growth	
opportunities	for	the	business.	Operating	
expenses	(excluding	contribution	to	the	
Financial	Services	Compensation	Scheme	
(FSCS),	intangible	asset	amortisation	and	
transaction	costs)	were	£88.7	million,	up	
5.2%	(2009:	£84.3	million).	Much	of	this	cost	
increase	related	to	newly	acquired	investment	
teams,	office	costs	including	those	arising	
from	office	moves	in	Edinburgh	and	
Cambridge,	and	the	costs	of	additional	
projects.	After	two	years	of	very	tight	salary	
cost	controls,	from	January	2011	we	have	
awarded	salary	increases	of	4%	overall,	
rewarding	our	staff	who	have	worked	so		
hard	in	a	very	difficult	economic	environment.		
Many	of	them	had	rises	either	well	below	
inflation	or	zero	over	the	last	two	years.	

We	are	aware	that	in	recent	years	our	overall	
income	as	a	percentage	of	funds	under	
management	has	reduced	below	that	of	many	
of	our	competitors.	We	have	consequently	
reviewed	our	investment	management	
charging	structure	and	are	making	changes	
which	will	come	into	effect	from	6	April	2011.	
This	is	always	a	difficult	and	sensitive	area	but	
we	believe	it	is	fair	that	clients	should	face	
small	increases	for	the	premium	service	that	
they	receive.	We	expect	these	increases	to	
add	approximately	3	–	4	basis	points	to	our	
average	net	operating	basis	point	return	
(85bps	for	2010,	95bps	for	2009)	on	an	
annualised	basis.	

The	financial	impact	of	FSCS	levies	which	
arise	from	other	industry	failures	is	wholly	
outside	our	control.	The	interim	levy	of		

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Andy Pomfret
Chief	Executive	

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Financial performance continued

£3.2	million	arising	from	the	failure	of		
Keydata	Investment	Services	Limited	and	
other	intermediaries	announced	in	January	
2011	is	unwelcome	and	adds	to	the		
£0.4	million	we	had	already	anticipated	
resulting	in	a	£3.6	million	charge	for	the	year	
(2009:	£0.2	million).	We	will	be	keeping	a		
very	close	eye	on	future	developments		
and	how	costs	have	been	shared	across		
the	investment	management	industry.

2010	has	also	seen	the	full	year	impact	of		
the	amortisation	of	the	intangible	assets	that	
arose	as	part	of	our	Lloyds	Banking	Group	
transaction	at	the	end	of	2009.	As	expected,	
this	largely	resulted	in	the	charge	associated	
with	client	relationship	intangibles	growing	to	
£4.8	million	in	2010	(2009:	£2.0	million).

Marketing and business development

During	2010	we	have	reviewed	our		
marketing	and	business	development	activity.	
We	are	aiming	to	focus	our	resources	on	
those	target	segments	of	the	market	where	
we	have	significant	presence	and	feel	we	
offer	compelling	solutions	for	clients.	The	role	
of	Independent	Financial	Advisers	(IFAs)	is	
increasingly	important	in	referring	business		
to	us.	We	are	now	focusing	our	efforts	on		
a	number	of	IFA	firms	where	we	wish	to	
develop	sustainable	strategic	relationships	
and	are	also	targeting	a	number	of	chartered	
financial	planners	who	we	believe	will		
have	a	significant	requirement	to	introduce	
discretionary	investment	managers	to		
their	clients.

The	impact	of	the	Retail	Distribution	Review	
(RDR),	which	comes	into	force	on	1	January	
2013,	has	been	much	debated.	Despite	
considerable	industry	consultation	the	rules		
as	currently	drafted	do	not	reflect	fully	the	
business	that	we	are	in,	namely	providing	a	
service	to	a	client	rather	than	selling	a	product	
to	a	customer.	Although	some	changes	will		
be	inevitable	the	RDR	will	not	significantly	
impact	our	business	strategy.	The	effects	on	
the	IFA	community	are	expected	to	be	more	
profound	and	many	IFAs	will	be	unable	to,		
or	will	not	wish	to,	provide	the	bespoke	
discretionary	investment	management	service	
that	is	our	core	business.	We	consider	that		
our	offering	may	well	provide	a	helpful	
solution.	In	order	to	take	advantage	of	this	
opportunity	we	will	be	investing	more	in	our	
relationships	with	IFAs	over	the	next	year	and	
developing	our	web	portals	for	intermediaries.

We	support	the	main	principles	of	the		
RDR	which	will	increase	the	professionalism		
of	advisers	and	reduce	the	use	of	trail	

commission,	which	we	have	long	viewed		
as	an	opaque	means	of	charging	the	client	
and	which,	in	our	view,	does	not	treat	clients	
fairly.	We	continue	to	believe	that	our	bespoke	
service	offering,	where	a	client	deals	directly	
with	an	investment	professional,	is	one	that	
sets	us	apart	and	enhances	our	role	of	trusted	
adviser	to	our	clients.

Last	year	I	highlighted	our	development	of		
the	Rathbone	Multi	Asset	Portfolio	Service.	
These	funds	particularly	appeal	to	IFAs	and	
their	clients	and	have	continued	to	grow	well	
–	now	standing	at	£73.6	million	of	funds	
under	management	(2009:	£40.7	million).		
We	also	continue	to	develop	our	panel	
relationships.

Our	charities	business	has	benefited	from	
some	more	focused	marketing	spend.	We	held	
our	first	Charity	Symposium	in	the	autumn	of	
2010	at	the	Royal	Society	with	over	220	
attendees.	We	look	forward	to	growing	this	
part	of	our	business	further	in	2011.	It	now	
has	some	£1.63	billion	(2009:	£1.39	billion)	
of	funds	under	management.	

We	continue	to	improve	our	overall		
investment	process	and	the	ways	we		
present	this	to	both	the	end	clients	and	to		
the	increasingly	important	intermediary	clients.	
The	proliferation	of	complex	investment	
products	means	we	are	spending	more	on	
research	to	ensure	our	Investment	Managers	
have	the	widest	possible	investment	choice	
for	private	clients	and	charities.	We	will	be	
investing	further	in	2011.	Our	asset	allocation	
process	prompts	Investment	Managers		
to	look	at	portfolio	diversification	which		
has	helped	them	manage	client	funds	in	
volatile	markets.	The	way	the	central	
investment	process	is	communicated	to	
Investment	Managers	across	the	country	
has	also	been	improved.

Treasury and financing

During	the	year	we	undertook	a	major	review	
of	our	banking	licence	to	establish	whether		
it	was	sensible	to	retain	it	in	the	light	of	
changing	regulation	and	public	perception		
of	banks.	This	was	an	extensive	exercise	
which	took	account	of	the	views	of	our	
Investment	Managers,	clients,	investors,	
regulators	and	the	external	views	of	
competitors	and	consultants.	Our	conclusion	
was	that	the	banking	regime	in	its	current	
form	remains	attractive	compared	to	the		
client	money	alternative	and	that,	in	a	normal	
interest	rate	environment,	the	interest	margin	
we	would	achieve	more	than	outweighs	the	
costs	of	regulation.	Indeed	we	found	there		
to	be	few	savings	in	moving	to	a	client	money	

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Treasury and financing continued

regime.	However,	we	are	also	well	prepared	
should	we	need	to	surrender	it	in	future		
due	to	materially	adverse	changes	in	
regulation	or	capital	requirements.

Overall	client	cash	levels	remain	static	and	
were	£0.76	billion	at	the	end	of	2010		
(2009:	£0.77	billion).	Our	treasury	policy	
remains	cautious	and	we	are	consistently	
seeking	ways	to	avoid	exposure	to	the	more	
troubled	countries	in	the	Eurozone	and	the	
more	troubled	banks.	The	level	of	loans	made	
to	clients	increased	to	£40.0	million	at	the	
end	of	2010	(2009:	£26.7	million).	These	
loans	are	generally	secured	against	the	value	
of	the	portfolio	that	we	manage	and	are		
often	seen	by	clients	as	a	very	attractive		
way	of	obtaining	reasonably	priced	bridging	
finance	for	a	house	move.	

Our	pension	scheme	deficits	have	been		
very	volatile	over	the	last	year	and	at	the		
end	of	2010	were	£6.6	million	compared		
to	£9.4	million	at	31	December	2009	(but		
were	£15.7	million	at	30	June	2010).	Our	
committed	contributions	to	the	schemes	are	
£21.2	million	over	the	next	seven	years	and	
there	is	a	triennial	valuation	due	in	2011.

Our	external	borrowings	were	only		
£3.1	million	at	31	December	2010		
(2009:	£6.2	million)	so	the	business	is	
effectively	ungeared.	Our	Group	Tier	1		
capital	ratio	is	28.3%	at	31	December	2010		
(2009:	36.3%)	on	a	Basel	III	basis,		
indicating	the	strength	of	our	capital	base.		
In	2010	we	established	an	insurance		
cell	with	Harlequin	Insurance	PCC	to	provide		
additional	cover	against	professional		
indemnity	risks.	This	held	net	assets	of		
£1.5	million	at	31	December	2010.

We	have	moved	to	a	new	office	in		
St	Andrew	Square	in	Edinburgh	replacing	
what	had	become	a	cramped	and	dated	office.	
Edinburgh	is	our	second	largest	office	
measured	by	funds	under	management	and		
is	now	in	an	appropriate	home	in	an	historic	
location.	We	have	also	taken	more	space		
in	Liverpool	to	cope	with	the	growing		
business	and	in	November	2010	we	moved	
our	Cambridge	office	due	to	the	expiry		
of	the	lease	on	our	old	premises.	In	2011		
we	anticipate	finalising	arrangements	for		
our	London	office;	in	the	event	of	a	move,		
this	may	result	in	additional	costs	in	2011	
associated	with	any	period	of	double	
occupation	and	the	moving	costs	themselves.	

Regulation

These	days	no	report	is	complete	without	
some	comments	on	the	level	of	regulation	
with	which	we	must	comply.	Aside	from		
the	significant	FSCS	levies	we	have	been	
charged,	over	the	year	we	have	also	looked	
hard	at	the	bank	payroll	tax	(which	did	not	
impact	us),	the	possible	impact	of	a	bank		
levy	(again	no	impact	due	to	our	size),	new	
rules	on	capital,	liquidity	management	and	
reporting	and	the	RDR.	There	are	also	
changes	in	corporate	governance	and	the		
way	we	monitor	and	report	risk.	We	are	
currently	dealing	with	consultation	papers	on	
the	way	we	should	structure	remuneration	for	
the	more	highly	paid	client	facing	staff	and	
what	we	must	disclose	about	it.	None	of	these	
present	fundamental	problems	or	challenges	
to	our	business	model	but	they	do	cost	us	
either	directly	or	indirectly,	in	management	
time,	or	through	higher	systems	and	
processes	expenditure,	which	may	ultimately	
be	passed	on	to	clients.

Investing in our business

Outlook

We	have	been	looking	hard	at	investment		
to	drive	our	development.	Some	of	the	areas	
we	have	been	working	on	and	which	we	will	
progress	in	2011	relate	to	improving	our	
business	efficiency,	such	as	making	contract	
notes	optional	for	clients,	upgrading	our	tax	
packs	and	significant	work	rewriting	all	of		
our	primary	client	documentation.	We	have	
improved	the	way	we	deal	and	consolidated	
our	dealing	activities	into	our	Liverpool	office	
which	has	enhanced	our	settlement	efficiency.	
We	have	also	formalised	the	way	our	staff		
can	work	remotely,	bearing	in	mind	the	ever	
present	need	for	security	of	client	data	and		
for	control	over	the	way	we	deal.	

We	have	ended	2010	in	a	better	position		
than	2009	with	a	larger	business	and	positive	
markets.	We	will	be	investing	in	our	business	
at	an	increased	rate	in	2011	in	order	to		
take	advantage	of	some	clear	opportunities	
and	to	grow	the	business	further.	I	would		
like	to	thank	all	staff	who	have	worked	so	
hard	over	the	last	year	to	make	the	business		
the	success	it	is.	Their	experience	and	
professionalism	make	us	well	placed	to		
take	advantage	of	the	challenges	ahead.

Andy Pomfret 
Chief	Executive

16	February	2011

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Investment Management

Investment	Management	teams	provide	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	
(SIPPs)	from	offices	in	the	UK	and	Jersey.	The	service	we	
offer	is	bespoke	with	a	well	researched	performance	driven	
process	servicing	individual	client	needs.

Our	fees	and	charges	are	transparent,	with	our	banking	status	
allowing	access	to	a	range	of	services	including	currency,	fixed	
rate	term	deposits	and	loans	secured	against	portfolios.

Our	charities	team	advises	over	500	charities,	with	funds	
under	management	worth	£1.63	billion.	In	2010	we	held	our	
first	Charity	Symposium	with	130	charities	in	attendance.

Rathbone	Greenbank	Investments	continues	to	grow,	building	
up	extensive	expertise	in	understanding	how	financial	and	
ethical	issues	can	be	integrated	within	portfolios	to	meet	the	
overall	objectives	of	clients.

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

2010 

2009

Direct employees (average full time equivalents) 
•	 453	

474.5	
1,028.1	
0.76	
185.4	
28.3	
30.1	

346.4	
1,037.1
0.77
182.5
36.3
29.5	

Offices
•	 Aberdeen		
•	 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

Number of Investment Management clients	

39

37	

35	

33	

31	

29

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2006	

	2007	

	2008		

2009		

2010

2010:  37.4 
2009:	 33.8	
2008:	 31.2	
2007:	 30.3	
2006:	 29.2	

2010:  15.63 
2009:	 13.10	
2008:	 10.46	
2007:	 13.12	
2006:	 12.24

2010:  43.8
2009:	 0.8	
2008:	 (17.3)	
2007:	 (9.8)	
2006:	 24.2

Rathbones at a glance

Total Rathbones

Funds under management

Investment Management 

  Unit Trusts 

2010 
£bn 

14.59 
1.04 

15.63 

2009
£bn

12.16 
0.94

13.10

Operating income (continuing operations)

2010 
£m 

114.7	
7.4	
5.1	

127.2 

2009
£m

104.3	
7.7
4.7

1
116.7

Investment	Management	

	 Unit	Trusts	
	 Trust	and	Tax	Services	

1	 Includes	rounding

Key measures 

Market	capitalisation		
	 at	31	December	2010	(£m)	
Total	assets	(£m)	
Cash	held	in	client	portfolios	(£bn)	
Total	equity	(£m)	
Basel	III	Tier	1	ratio	(%)	
Profit	before	tax	(£m)	

Funds under management  

n
b
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16

15

14

13

12

10

0

2006	

	2007	

	2008		

2009		

2010 

Total shareholder return

  50

	 40

	 30

	 20
%
	 10

0

	 -10

	 -20

2006	

	2007	

	2008		

2009		

2010

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Client base breakdown

Discretionary vs non-discretionary by  
client numbers

As at December 2010 

	 Discretionary	
	 Non-discretionary	

Account type by funds  
under management

As at December 2010 

	 Private	client	
	 Trust	and	settlements	

ISAs	
	 Charities	
	 Pensions	including	SIPPs	
	 Other	

Account size by value 

As at December 2010 

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

Top ten UK private client wealth managers
(ranked by discretionary assets under management 
as at 31 December 2009)

Company 

Discretionary AUM3 
(£bn) 

Total AUM
(£bn)

36.93	
Coutts	&	Co	
13.92	
GLG	Partners	
12.18	
Brewin	Dolphin	Ltd	
Rathbones1 
11.43 
HSBC2	
10.08	
9.31	
Schroders	
8.86	
Rensburg	Sheppards	
Newton	Investment	Management	Limited	 7.61	
7.36	
Smith	&	Williamson	
7.11	
Goldman	Sachs	International	

Source:	Private	Asset	Managers	directory,	2010
1	 Rathbones	internal	data
2	 Combined	data	for	HSBC	Global	Asset	Managers	and		

HSBC	Private	Bank

43.45	
13.92	
21.00	
12.16
20.95
12.58	
12.13	
7.61	
9.20
23.78*

3	 Barclays	Wealth,	St.	James’s	Place	and	Lloyds	TSB	Private	Banking	

(total	assets	under	management:	£50.76bn,	£21.40bn	and	£11.14bn	
respectively)	do	not	provide	a	breakdown	of	their	discretionary	assets	
under	management.

*	 Private	Asset	Managers	directory	estimate

Unit Trusts

We	offer	a	range	of	Unit	Trusts	which	are	distributed	mainly	
through	independent	financial	advisers	in	the	UK.	

We	invest	directly	or	via	collectives,	employing	a	multi-asset	
approach.	The	Rathbone	Managed	Asset	Portfolio	was	
launched	this	year.

%

92.8
7.2

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

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46.4	
15.1
13.2
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52.8	
17.3
15.8
11.0
2.4
0.7

Principal trading name
•	 Rathbone	Unit	Trust	Management

Direct employees (average full time equivalents)
•	 24

Offices
•	 London

Head of Unit Trusts
•	 Mike	Webb

Website 
•	 www.rutm.com

Trust and Tax Services

The	Trust	and	Tax	Services	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 average (full time equivalents) 
•	 43

Offices 
•	 Liverpool	
•	 London

Head of Trust and Tax Services 
•	

Ian	Buckley

Website 
•	 www.rathbones.com

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Strategy and business performance

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

What is important to us

The	UK	wealth	management	industry	is	an	exciting	place	to		
be	with	many	opportunities	available	to	firms	that	can	deliver		
a	tailored	and	personal	service	to	clients	at	reasonable	cost.		
This	is	exactly	what	we	do.	Our	reputation	depends	on	providing

a	quality	service	to	all	of	our	clients	and	this	is	core	to	our	
strategy.	Rathbones	has	developed	services	targeted	not	only		
to	individual	private	clients	but	also	to	professional	investors,	
intermediaries	and	charities.

How we achieve our aims

Measuring our success

•	 Focus	our	efforts	in	the	UK	on	providing	discretionary	

investment	services,	which	allows	us	to	streamline	our	spending	
decisions	and	concentrate	on	what	we	do	best.

•	 Consistently	benchmark	the	price	of	our	services	against		
others	in	the	market	to	ensure	we	deliver	what	we	do	at	a	
competitive	cost.

•	 Provide	a	whole	of	market	investment	approach	which		

allows	our	investment	managers	to	select	from	a	full	range		
of	investments.

•	 Build	a	research	capability	to	provide	structured	investment	

support	to	investment	managers	in	making	their	asset	allocation	
and	stock	selection	decisions.

•	 Continually	invest	in	people	and	systems	to	support	quality	

service	levels	and	breadth	of	investment	choice.

Key	measures	of	our	success	are	our	growth	in	total	funds	under	
management	and	the	underlying	rate	of	net	organic	funds	growth		
in	Rathbone	Investment	Management.	This	net	organic	growth		
rate	takes	account	of	cash	or	assets	withdrawn	by	clients	and	
excludes	any	new	funds	we	acquire.	These	measures	reflect	the	
prevailing	economic	conditions	and	are	important	indicators	of		
how	successful	we	are	in	attracting	new	clients	and	retaining	
existing	client	relationships.

•	 Total	funds	under	management	as	at	31	December	2010	were	
£15.63	billion,	up	19.3%	compared	with	31	December	2009.

•	 Funds	managed	by	Rathbone	Investment	Management		

were	£14.59	billion	as	at	31	December	2010,	up	20.0%	from		
31	December	2009	(FTSE	100	Index	up	9.0%	and	FTSE	
APCIMS	Balanced	Index	up	9.3%).

•	 An	underlying	net	organic	growth	rate	of	5.3%	in	Rathbone	

•	 Manage	our	own	administration	and	treasury	functions		

Investment	Management	(2009	6.7%).

in-house	to	ensure	that	risks	are	managed	and	service	levels	are	
maintained	to	our	high	standards.

•	 Encourage	regular	feedback	from	our	clients	and	act		

upon	it.

•	 The	number	of	Rathbone	Investment	Management	clients		

grew	10.7%	in	the	year	to	37,400	and	account	closure	rates	
remain	small.

•	 Funds	under	management	in	Rathbone	Unit	Trust	Management	

•	 Offer	unit	trust	funds	tailored	to	private	client	investment.

rose	10.6%	to	£1.04	billion	at	31	December	2010.

•	 Help	to	meet	the	needs	of	our	private	clients	by	providing	quality	

tax,	trust	and	financial	planning	services.

Key performance indicators

Net organic growth rates in Investment Management funds 
under management %

Unit Trust funds under management £m

2010:  5.3

2009:	 6.7

2008:	 7.4

2007:	 7.8

2006:	 7.2

2010:  1,043

2009:	 935

2008:	 1,029

2007:	 1,887

2006:	 1,856

Total funds under management £bn

Number of clients ’000

2010:  15.63

2009:	 13.10

2008:	 10.46

2007:	 13.12

2006:	 12.24

2010:  37.4

2009:	 33.8

2008:	 31.2

2007:	 30.3

2006:	 29.2

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Shareholders 
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.

What is important to us

We	believe	that	sustainable	growth	comes	from	providing	a	
consistantly	high	level	of	service	to	clients	and	maintaining	our	
strong	reputation.	We	aim	to	invest	in	the	business	to	grow	it		
and	continually	enhance	what	we	offer	to	an	increasingly	diverse	
population	of	clients	who	have	a	range	of	different	needs.

We	aim	to	be	very	mindful	of	regulatory	developments	where	
possible	believing	that	this	helps	to	secure	future	long	term	value.	
We	believe	in	open	and	transparent	communication	to	the	market	
and	take	regular	soundings	from	investors	on	the	quality	and	
content	of	what	we	disclose.

How we achieve our aims

Measuring our success

•	 Pursue	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	over	the	economic	cycle.

•	 Manage	operating	cost	levels	in	line	with	growth	in	the	size	of	

the	business	and	market	movements	over	time.

•	

Invest	in	systems	and	IT	to	drive	ongoing	cost	efficiency,	and	
ensure	that	settlement	and	administration	processes	are	
automated	wherever	possible.

•	 Regularly	re-evaluate	supplier	relationships	to	ensure	we		
are	receiving	value	for	money	and	the	right	service	levels.

•	 Conservatively	manage	treasury	assets	(proprietary	funds	and	
client	cash	balances	held	by	us	as	a	banking	institution)	within	
clear	risk-based	guidelines.

•	 Provide	clear	management	accountability	for	operational	and	

business	risks.

•	 Maintain	optimal	capital	and	liquidity	levels	as	a	licenced	UK	
deposit	taker,	having	regard	to	market	conditions,	regulatory	
requirements	and	growth	opportunities.

We	measure	our	success	principally	by	the	total	growth	in	funds	
under	management,	earnings	per	share	and	dividends	per	share.	
These	are	standard	measures,	but	particularly	suit	our	business,	
which	is	highly	cash	generative.

•	 A	total	net	funds	growth	(both	net	organic	and	acquired)		

rate	of	10.2%	in	Rathbone	Investment	Management	in	2010	
continues	a	longer	term	trend	of	good	organic	growth	and	
targeted	acquisitions.

•	 An	operating	margin	of	23.7%	in	2010	vs	25.2%	in	2009	

principally	reflects	increases	in	amortisation	charges	and	levies	
from	the	Financial	Services	Compensation	Scheme.

•	 Underlying	operating	expenses	of	£88.7	million	in	2010	are	
5.2%	up	from	the	£84.3	million	in	2009	reflecting	a	balance		
of	investment	and	cost	control	in	2010.

•	 We	have	invested	£4.1	million	of	capital	expenditure	in		

2010	to	support	business	efficiency	and	client	service.	This	is	
up	78.3%	from	the	£2.3	million	spent	in	2009	reflecting	both	
business	development	spend	and	improvements	to	our	IT,	
property	and	communications	infrastructure.	

•	 Earnings	per	share	from	continuing	operations	is	up	6.2%		
to	49.76p	in	2010	from	46.87p	in	2009	notwithstanding		
£3.6	million	of	FSCS	levies.	

•	 We	have	increased	our	dividend	per	share	to	44.0p	keeping		
up	a	long	term	trend	of	maintaining	or	increasing	dividends.

•	 Our	Basel	III	Tier	1	ratio	of	28.3%	at	31	December	2010		
(2009:	36.3%)	remains	healthy	and	well	above	standards	
required	by	the	recent	Basel	III	accord.

Key performance indicators

Profit before tax (continuing) £’000

Earnings per share (continuing) p

2010:  30,083

2009:	 29,468

2008:	 42,306

2007:	 47,302

2006:	 44,720

2010:  49.76

2009:	 46.87

2008:	 67.57

2007:	 77.79

2006:	 76.62

Operating margin %

Dividend per share p

2010:  23.7

2009:	 25.2

2008:	 32.3

2007:	 35.2

2006:	 33.5

2010:  44.0

2009:	 42.0

2008:	 42.0

2007:	 41.0

2006:	 35.0

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Employees 
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.

What is important to us

We	promote	a	strong	sense	of	integrity	and	trust	among	our	
staff	that	we	also	believe	reflects	how	we	build	relationships	
with	our	clients.	We	promote	a	robust	investment	culture	that	is	
developing	rapidly	in	line	with	investment	markets	as	a	whole.

We	have	dedicated	and	loyal	employees	who	are	driven	by	providing	
quality	service	to	our	clients.	Remuneration	structures	encourage	
behaviour	that	will	produce	value	over	the	medium	to	longer	term.

How we achieve our aims

Measuring our success

•	 Ensure	that	all	remuneration	schemes	are		

consistent,	meet	regulatory	requirements	and	foster		
appropriate	behaviours.

•	 Regularly	benchmark	rewards	where	possible	to	ensure	that	
awards	remain	reasonable,	competitive	and	in	line	with	
shareholder	interests.

•	 Provide	mechanisms	for	all	senior	Directors	to	build	up	
a	meaningful	shareholding	over	a	five	year	period.

•	 Offer	share-based	incentives	to	staff	across	the	business	
where	feasible	to	encourage	wider	share	ownership		
amongst	employees.

•	 Ensure	that	recruitment	processes	are	set	to	ensure	that	new	
employees	fit	the	existing	culture	and	have	ample	opportunity	
to	further	their	career.

•	 Provide	extensive	training	for	all	levels	of	staff	seeking	the	

highest	professional	and	personal	standards.

•	 Ensure	all	staff	are	appropriately	qualified	to	standards	required	

by	the	Retail	Distribution	Review.

•	 Share	ideas	and	best	practice	throughout	the	organisation	

through	timely	consultation	and	communication.

•	 Act	as	a	fair	employer	to	staff.

As	a	service	based	business,	we	recognise	that	continuity	of	
client	service	more	often	than	not	means	continuity	of	employees	
who	are	happy	to	promote	and	represent	the	firm.	We	therefore	
measure	our	success	principally	by	looking	at	how	many	people	
join	and	leave	the	organisation	and	learning	from	this	experience.	
We	encourage	share	ownership	across	the	business	and	assess	
this	regularly	to	explore	opportunities	to	improve	on	staff	
ownership	levels	year	to	year.

•	 Total	staff	turnover	continues	to	be	low	at	6.4%	in	2010	

compared	to	3.4%	in	2009.

•	 Turnover	in	investment	professionals	has	also	remained	low	at	

2.4%	compared	to	0%	in	2009.

•	 11,334	hours	of	training	were	delivered	in	2010	compared	to	

2009	(11,301	hours).

•	 The	overall	number	of	shares	held	by	current	and	former	

employees	and	their	families	represent	approximately	20%	of	
total	issued	share	capital	at	31	December	2010	(2009:	20%).

•	 The	number	of	shares	held	by	Share	Incentive	Plan		

(SIP)	participants	was	1.3	million	at	31	December	2010		
(2009:	1.3	million).

Key performance indicators

Staff costs (note 8) as a percentage of 
operating expenses (continuing) %

2010:  60.8

2009:	 64.8

2008:	 65.1

2007:	 68.2

2006:	 67.1

Average full time equivalent employees (continuing)

2010:  699

2009:	 681

2008:	 675

2007:	 644

2006:	 606

Number of shares held by SIP participants

Staff turnover (all staff) %

2010:  1,316,557

2009:	 1,346,948

2008:	 1,290,392

2007:	 1,270,641

2006:	 1,136,132

2010:   6

2009:	 3

2008:	 6

2007:	 8

2006:	 11

 
 
 
 
	
	
	
 
 
 
 
 
	
	
	
	
 
	
	
	
	
 
	
	
	
	
 
	
	
	
	
 
 
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Business review

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

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

Investment Management

Table 1. Key performance indicators

Underlying	rate	of	net	organic		
growth	in	Investment	Management		
funds	under	management1	

Underlying	rate	of	total	net		
growth	in	Investment	Management		
funds	under	management1	

2010 

2009

5.3%	

6.7%

10.2%	

12.5%

  £14.59bn	 £12.16bn

85bps	

95bps

Funds	under	management	at	
31	December1	

Average	net	operating	basis	
point	return2	

1	 See	table	2
2	 See	table	5

Business environment

After	a	volatile	first	half	of	2010,	the	second	
half	of	the	year	witnessed	a	welcome	rally	
with	the	FTSE	100	Index	rising	from	4917	at	
30	June	2010	to	5900	at	the	end	of	the	year.	

Rathbone	Investment	Management	has	
continued	to	attract	funds	at	a	healthy	rate	
throughout	2010	largely	reflecting	successful	
acquisitions	and	a	tried	and	tested	business	
model	which	provides	high	quality	services		
to	private	clients.	

This	growth	combined	with	higher	market	
levels	to	drive	Investment	Management	funds	
under	management	some	20.0%	higher	over	
the	year	to	£14.59	billion.	Increases	in	the	
FTSE	100	and	the	FTSE	APCIMS	Balanced	
indices	were	9.0%	and	9.3%	respectively	
during	2010.	

Table	2	demonstrates	how	organic	and	
acquired	growth	and	market	movements		
have	impacted	funds	under	management	by	
reconciling	opening	and	closing	balances.

Organic	inflows	represent	the	amount	of		
new	funds	brought	in	by	existing	Investment	
Managers,	either	from	existing	clients	or		
from	new	clients.	Acquired	growth	represents		
new	funds	either	from	acquisitions	or	from	
Investment	Managers	who	have	joined		
us	recently.

Table 2. Investment Management – funds 
under management

As	at	1	January	
Inflows1	

–	organic	
–	acquired	

Outflows1	
Market	adjustment2	

2010  
£bn 

12.16	
2.06	

1.46	
0.60	

2009
£bn

9.43
1.86

1.31
0.55

(0.82)	
1.19	

(0.68)
1.55

As at 31 December	

14.59	

12.16

Net	organic	new	business3	

0.64	

0.63

Underlying	rate	of	net	organic	growth4	 5.3%	

6.7%

Underlying	rate	of	total	net	growth5	

10.2%	

12.5%

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

5	 Net	organic	and	acquired	business	as	a	%	of	opening		

funds	under	management

Gross	organic	inflows	of	£1.46	billion	
represent	12.0%	of	funds	under	management	
at	1	January	2010	(2009:	13.9%)	and	
have	remained	at	consistently	high	levels	
throughout	2010.	Net	organic	growth	(stated	
after	fund	outflows	which	naturally	occur	
because	clients	withdraw	capital	and/or	
income	from	portfolios	to	meet	other	financial	
requirements,	or	close	their	account)	
remained	healthy	at	5.3%	in	2010	(2009:	
6.7%).	In	the	first	quarter	of	2010	we	saw	
evidence	of	clients	withdrawing	cash	from	
their	portfolios	to	supplement	their	income,	
which	reduced	the	net	organic	funds	growth	
rate	to	3.2%	annualised	based	on	that	
quarter’s	experience.	This	effect	dwindled	in	
the	second	half	as	markets	recovered.	The	
annualised	net	organic	growth	rate	in	the	
fourth	quarter	of	2010	was	some	7.4%	of	
opening	year	funds	annualised.

We	are	continuing	to	see	growth	across	all	
parts	of	our	business,	including:
•	 Charity	funds	under	management	of		
£1.63	billion	at	31	December	2010	
up	17.3%	on	the	£1.39	billion	at		
31	December	2009;

•	 The	value	of	funds	managed	as	a	result		
of	provider	panel	relationships	which	
increased	by	28.7%	to	£1.30	billion	at		
31	December	2010	from	£1.01	billion		
at	the	start	of	the	year;

•	 The	value	of	Rathbone	SIPP	funds,	which	
increased	by	19.7%	to	£334	million	at		
31	December	2010	from	£279	million		
at	the	start	of	the	year;	and

•	 Rathbone	Pension	&	Advisory	Services	

which	saw	the	number	of	new	SIPPs	upon	
which	it	has	advised	increase	by	7.3%		
to	1,010	(2009:	941).

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Investment Management continued

We	acquired	some	£600	million	of		
funds	under	management	in	2010		
(2009:	£546	million)	including	more		
business	resulting	from	our	transaction		
with	Lloyds	Banking	Group	in	2009.		
This	transaction	has	now	brought	us		
some	£800	million	of	funds	in	total.

Total	net	organic	and	acquired	growth		
has	added	£1.24	billion	of	funds	under	
management	in	2010	representing	a		
growth	rate	of	10.2%	(2009:	12.5%).	

Financial performance

Table 3. Investment Management 
– financial performance

Net	fee	income1	
Commission	
Interest	and	other	income2	

2010  
£m 

68.5	
36.2	
10.0	

2009
£m

55.8
28.7
19.8

Net operating income	
Underlying	operating	expenses3	 	

114.7	
(77.1)	

104.3
(72.1)

Underlying profit before tax	
Financial	Services	Compensation	
Scheme	levies	
Amortisation	of	client	relationships 
Transaction	costs	

Profit before tax	

37.6	

32.2

(3.3)	
(4.8)	
–	

(0.2)
(2.0)
(0.8)

29.5	

29.2

Underlying	operating	%	margin4	 	

32.8%	

30.9%

1	 Net	fee	income	is	stated	after	deducting	fees	and	commission	

2	

expenses	paid	to	introducers
Interest	and	other	income	is	presented	net	of	interest	expense		
paid	on	client	accounts
See	table	6	for	more	detail

3	
4	 Underlying	profit	before	tax	divided	by	net	operating	income

Net	fee	income	increased	by	22.8%	from	
£55.8	million	in	the	year	ended	31	December	
2009	to	£68.5	million	in	2010	benefiting	
both	from	the	healthy	growth	levels	
mentioned	above	and	higher	market	levels.	
The	average	FTSE	100	Index	(measured		
on	our	quarterly	billing	dates)	was	5528		
in	2010	compared	with	an	average	of	4706		
in	2009;	an	increase	of	some	17.5%.	The	
FTSE	APCIMS	Balanced	Index	increased	
13.7%	on	the	same	basis.	

Average	funds	under	management	of		
£13.40	billion	can	be	seen	from	table	4		
below	to	be	27.0%	higher	than	£10.55	billion	
in	2009.

Table 4. Investment Management – average funds 
under management

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

Average	

2010  
£bn 

2009
£bn

13.02	
12.41	
13.59	
14.59	

9.11
9.69
11.23
12.16

13.40	

10.55

Average	FTSE	100	level	

5528	

4706

Market	conditions	in	2010	presented	
Investment	Managers	with	many	opportunities	
to	make	positive	investment	decisions.	
Commission	income	of	£36.2	million	in		
2010	was,	as	a	result,	some	26.1%	higher	
than	the	£28.7	million	in	2009.	Client	
portfolios	became	more	fully	invested	as	
cash	represented	4.9%	of	portfolios	at	
31	December	2010	compared	to	6.3%	at		
31	December	2009.

In	contrast,	interest	and	other	income	of	
£10.0	million	fell	by	49.5%	compared	to	
£19.8	million	in	2009.	This	is	unsurprising	
given	that	interest	rates	remained	at	very		
low	levels	throughout	2010	and	that	the	first	
half	of	2009	benefited	from	the	three	
emergency	base	rate	cuts	made	by	the		
Bank	of	England.	Whilst	amounts	fluctuated		
in	response	to	2010	market	conditions,		
cash	held	in	client	portfolios	ended	the	year		
at	£0.76	billion	(2009:	£0.77	billion).

Table 5. Revenue margins

Basis	point	return	from1
–	fee	income		
–	commission	
–	interest2	

Total	margin	

2010  
bps  

2009
bps

53	
27	
5	

85	

53
28
14

95

1	 Net	operating	income	(see	table	3)	excluding	interest	on	own	

reserves	divided	by	the	average	funds	under	management	on	the	
quarterly	billing	dates.	Funds	under	management	exclude	funds	
acquired	as	a	result	of	the	transaction	with	Lloyds	Banking	Group		
in	2009
Excluding	interest	on	own	reserves

2	

Total	2010	revenue	margins	of	85	basis	
points	fell	from	95	basis	points	in	2009	
largely	reflecting	the	significant	year	on	
year	fall	in	net	interest	income.

Table 6. Investment Management 
– operating expenses

Staff	costs1	
–	fixed	
–	variable	

Total	staff	costs1	
Other	operating	expenses	

Underlying	operating	expenses	
Financial	Services	Compensation	
Scheme	levies	
Amortisation	of	client	relationships	
Transaction	costs	

2010  
£m 

2009
£m

26.2	
13.8	

40.0	
37.1	

77.1	

3.3	
4.8	
–	

25.2
13.9

39.1
33.0

72.1

0.2
2.0
0.8

Operating expenses	

85.2	

75.1

Underlying	cost/income	ratio2	

67.2%	

69.1%

1	 Represents	the	costs	of	Investment	Managers	and	teams	directly	

involved	in	client	facing	activities

2	 Operating	expenses	before	the	Financial	Services	Compensation	
Scheme	levies,	amortisation	of	client	relationships	and	transaction	
costs	divided	by	net	operating	income

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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.

 
 
 
 
	
	
	
 
 
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Investment Management continued

Total	operating	expenses	in	Rathbone	
Investment	Management	for	2010	were	
£85.2	million,	compared	to	£75.1	million	in	
2009,	an	increase	of	13.4%.	Fixed	staff	costs	
of	£26.2	million	increased	by	4.0%	year	on	
year	principally	reflecting	the	successful	
addition	of	new	revenue	generating	staff		
and	salary	inflation.	Variable	staff	costs	were	
marginally	down	year	on	year	as	higher	
profit-based	awards	in	2010	were	more		
than	offset	by	reductions	in	the	amount	of	
funds-based	growth	awards.	These	latter	
awards	are	designed	to	reward	strong	levels	
of	organic	growth	and	outperformance	
against	the	FTSE	APCIMS	Index.	
Performance	awards	were	high	in	2009		
as	a	result	of	resurgent	bond	markets	which	
improved	Rathbones’	performance	over		
and	above	the	FTSE	APCIMS	Index.

Average	full	time	equivalent	headcount	of	
Investment	Managers	and	teams	involved	in	
client	facing	activities	was	184	in	2010	
compared	to	145	in	2009.

Other	operating	expenses	of	£37.1	million	
include	property,	depreciation,	settlement,		
IT,	finance	and	other	central	support		
services	costs.	The	year	to	year	increase	of		
£4.1	million	(12.4%)	largely	reflects	higher	
variable	award	payments	to	support	staff	in	
line	with	increased	profitability,	operational	
costs	associated	with	the	Lloyds	Banking	
Group	transaction,	one	off	office	moving		
costs	of	£0.6	million,	mostly	in	Edinburgh,		
and	additional	project	expenditure.

Recent	market	conditions	have	resulted		
in	a	number	of	financial	services	businesses	
failing	which	in	turn	places	demands	on	the	
Financial	Services	Compensation	Scheme	
(FSCS)	to	compensate	investors.	As	an	asset	
management	group	with	a	banking	licence	
Rathbones	is	potentially	exposed	to	levies	
from	a	number	of	industry	sectors.	As	costs	
largely	arise	from	exceptional	market	
conditions	affecting	businesses	not	
associated	with	Rathbones,	levy	costs	have	
been	highlighted	separately	in	the	above		
table	and	excluded	from	underlying	profit	
before	tax.

FSCS	costs	of	£3.6	million	in	2010	are		
£3.4	million	higher	than	the	prior	year.		
This	largely	reflects	additional	levies	as	a	
result	of	the	failure	of	Keydata	Investment	
Services	Limited	and	other	intermediaries,	
somewhat	offset	by	the	favourable	impact		
of	continued	low	interest	rates	on	the		
size	of	banking	levies.

Client	relationship	intangible	assets	are	
created	in	the	course	of	acquiring	funds		
under	management.	As	the	amortisation	
charges	associated	with	these	assets	
represents	a	significant	non-cash	item,		
this	has	been	excluded	from	underlying		
profit	to	separately	highlight	what	are		
largely	cash-based	earnings.

Amortisation	charges	in	respect	of	client	
relationship	intangibles	have	increased	from	
£2.0	million	to	£4.8	million	largely	as	a	result	
of	acquired	growth	and	the	transaction	with	
the	Lloyds	Banking	Group	at	the	end	of	2009.	
The	Lloyds	Banking	Group	transaction	
resulted	in	the	creation	of	a	portfolio	of	
intangible	assets	of	£21.5	million	which		
are	being	amortised	over	10	years,	and	
incurred	transaction	costs	of	£0.8	million	
which	were	expensed	in	2009.

Unit Trusts

Table 7. Key performance indicators

2010 

2009

	 £1.04bn	 £0.94bn

(3.2%)	

(22.3%)

Funds	under	management	at	
31	December	

Underlying	rate	of	net	growth	
in	funds	under	management1	

1	

See	table	8

Business environment

The	retail	asset	management	sector	has	
recovered	somewhat	from	difficult	times	in	
recent	years.	Gross	intermediary	sales,	
including	through	platforms,	were	some	
£87	billion	in	2010	compared	to	£68	billion	in	
2009	(source:	IMA).	Much	of	the	year	was	
dominated	by	sales	in	bond	sectors,	although	
latterly	investors	began	to	move	into	equities.	
Throughout	the	year	sales	into	funds	of	funds	
were	very	strong,	signalling	a	greater	move	by	
IFAs	to	outsourcing	their	investment	services	
in	reaction	to	the	RDR.	Performance	remains	
fundamental	to	attracting	funds	growth	in	a	
market	that	is	becoming	increasingly	
dominated	by	institutional	buying	practices.	

Following	the	arrival	of	Mike	Webb	as		
Chief	Executive	in	2010	the	business	is	
rebuilding	its	performance	record	after	a	
difficult	2008,	and	is	refocusing	distribution		
to	adapt	to	market	changes.	In	June	2010,	
Rathbone	Unit	Trust	Management	publicly	
launched	two	multi	asset	funds,	which	play		
to	the	outsourcing	theme	above.

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Stability

We have looked after clients for 
generations. We have a trusted 
reputation for high-quality service  
and integrity.

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.

In an ever-changing world our heritage 
and permanence provide reassurance  
to our clients.

 
 
 
 
	
	
	
 
 
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Unit Trusts continued

Financial performance

Table 8. Unit Trusts – funds under management

Table 11. Unit Trusts – financial performance

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As	at	1	January	
Net	outflows	

–	inflows1	
–	outflows1	

Market	adjustments2	

As at 31 December	

2010 
£bn 

0.94	
(0.03)	

0.15	
(0.18)	

0.13	

1.04	

2009
£bn

1.03
(0.23)

0.11
(0.34)

0.14

0.94

Underlying	rate	of	net	growth3	

(3.2%)	

(22.3%)

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

Funds	under	management	increased		
10.6%	to	£1.04	billion	at	31	December	
2010	from	£0.94	billion	at	the	start	of	the	
year.	Whilst	net	redemptions	continued	for	
most	of	2010,	they	slowed	considerably	
over	the	course	of	the	year	as	sales	and	
fund	performance	improved	and	the	fourth	
quarter	saw	net	fund	inflows	of	£18.3	
million.	Fund	details	are	outlined	in	tables		
9	and	10	below.

Table 9. Unit Trusts – fund assets

31 December  31	December
2009
£m

2010 
£m  

Income	Fund	
Global	Opportunities	Fund	
Blue	Chip	Income	and	Growth	Fund	
Ethical	Bond	Fund	
Recovery	Fund	
Multi	Asset	Portfolio	Service	funds	
Other	

483	
105	
59	
54	
69	
74	
199	

1,043	

503
76
52
42
69
41
152

935

Overall,	funds	have	been	well	positioned	
throughout	2010	with	performance	showing	
early	signs	of	improvement	across	the	range.	
Efforts	will	continue	in	earnest	recognising	
the	importance	of	three	year	performance	
records	to	platforms	and	institutions.

Table 10. 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	Fund1	

1	
1	
1	
1	
1	

2	
2	
3	
3	
n/a	

2	
2	
1	
3	
n/a

1	 Performance	data	for	the	Rathbone	Recovery	Fund	is		

not	yet	available	beyond	1	year	as	the	fund	was	launched		
on	13	July	2009

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	
Underlying	operating	expenses	

Underlying profit before tax	
Financial	Services	Compensation	
Scheme	levies	

Profit before tax	

2010  
£m 

0.5	
12.5	
0.2	
0.1	

13.3	
–	
(5.9)	

7.4	
(6.6)	

0.8	

(0.3)	

0.5	

2009
£m

1.0
11.6
0.4
0.1

13.1
(0.1)
(5.3)

7.7
(7.6)

0.1

–

0.1

Operating	%	margin1	

10.8%	

1.3%

1	 Unit	Trusts	underlying	profit	before	tax	divided	by	net		

operating	income

Annual	management	charges	increased	
7.8%	from	£11.6	million	in	the	year	ended	
31	December	2009	to	£12.5	million		
in	2010	with	average	funds	under	
management	increasing	from	£0.88	billion	
in	2009	to	£0.94	billion	in	2010.	Annual	
management	charges	as	a	percentage		
of	average	funds	under	management		
are	consistent	at	1.3%	(2009:	1.3%)		
year	on	year.

Rebates	and	trail	commission	payable		
as	a	percentage	of	annual	management	
charge	income	was	broadly	consistent	at	
47.2%	compared	to	45.7%	in	2009.	
Managers’	box	dealing	profits	constituted	
2.7%	of	net	operating	income	in	the	year	
(2009:	5.2%)	as	a	consequence	of	fund	
redemptions.	Net	operating	income	as	a	
percentage	of	average	funds	under	
management	was	0.8%	in	2010	compared		
to	0.9%	in	2009.

Table 12. Unit Trusts – operating expenses

Staff	costs1	
–	fixed	
–	variable	

Total	staff	costs	
Other	operating	expenses	

Underlying	operating	expenses	
Financial	Services	Compensation	
Scheme	levies	

Operating expenses	

2010  
£m 

2009
£m

2.2	
1.2	

3.4	
3.2	

6.6	

0.3	

6.9	

2.1
1.8

3.9
3.7

7.6

–

7.6

Underlying	cost/income	ratio2 

89.2%	

98.7%

1	 Represents	the	costs	of	Investment	Managers	and	teams	directly	

involved	in	investment	or	distribution	activities

2	 Operating	expenses	excluding	Financial	Services	Compensation	
Scheme	levies	as	a	%	of	net	operating	income	(see	table	11)

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Independence

Rathbone Brothers Plc is a FTSE 250 
listed company and independence lies  
at the heart of our thinking.

We pride ourselves on being free  
to make investment decisions on our 
clients’ behalf, unconstrained by 
conflicting interests.

We select investment products and  
assets based on merit and suitability 
from the full universe of opportunities, 
including collectives and alternative 
investments.

 
 
 
 
	
	
	
 
 
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Unit Trusts continued

Fixed	staff	costs	of	£2.2	million	for		
year	ended	31	December	2010	(2009:		
£2.1	million)	grew	marginally	due	to		
salary	inflation	and	the	full	year	effect		
of	headcount	changes.	Average	full	time	
equivalent	headcount	was	unchanged		
at	24	in	2010	and	2009,	although	2010	
year	end	headcount	was	28,	reflecting	
more	investment	in	the	sales	team.

Variable	staff	costs	of	£1.2	million	were	
down	33.3%	as	the	impact	of	high	prior	
year	profit	share	schemes	which	are	
spread	over	the	service	periods	of	relevant	
employees	was	considerably	reduced.		
New	profit-based	award	schemes		
which	are	also	linked	with	growth	and	
performance	have	been	put	in	place		
in	2010.	Table	13	demonstrates	the		
impact	of	deferred	profit	share	awards		
on	2010	variable	costs.

Table 13. Unit Trusts – variable staff costs

Total	variable	staff	costs	
Deferred	profit	share	adjustment	 

Variable	staff	costs	excluding	
deferred	profit	share	

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

2010  
£m 

1.2	
(0.3)	

2009
£m

1.8
(1.4)

0.9	

0.4

45.0%	

21.1%

Other	operating	expenses	have	reduced	by	
13.5%	to	£3.2	million,	as	costs	of	£3.7	million	
in	2009	included	£0.5	million	of	one	off	fund	
merger	costs,	redundancies	and	recruitment	fees.	

Trust and Tax Services

Table 14. Key performance indicators for Trust 
and Tax Services

2010 

2009

2.0%	

4.3%

Operating	%	margin1	

1	

See	table	15

Business environment

The	UK	trust	business	is	closely	aligned		
with	our	core	discretionary	investment	
management	business.	It	comprises:
•	

the	family	office	service	based	in	London	
which	provides	advisory	services	to	
substantial	family	groups	including	trustee	
administration	and	taxation	planning;	and
the	taxation	services	business	based	in	
Liverpool,	which	prepares	tax	returns	for	
individuals	and	trusts,	and	provides	income	
and	capital	tax	planning	services.

•	

A	rapidly	changing	legal	and	taxation	
environment	in	the	UK	continues	to	provide	
opportunities	to	provide	quality	advice	to	
private	clients	and	family	offices.

Table 15. Trust and Tax Services – 
financial performance

Net operating income	
Operating	expenses	

Profit before tax 

2010  
£m 

5.1	
(5.0)	

0.1	

2009
£m

4.7
(4.5)

0.2

Operating % margin1 

2.0%	

4.3%

1	 Profit	before	tax	divided	by	net	operating	income

Operating	income	grew	by	8.5%	to	
£5.1	million	in	2010	from	£4.7	million	in	
2009	reflecting	higher	advisory	fees	earned	
following	the	recruitment	of	two	senior	
practitioners	and	their	team	in	2010.

Table 16. Trust and Tax Services – 
operating expenses

Staff	costs1	
–	fixed	
–	variable	

Total	staff	costs1	
Other	operating	expenses 

Operating expenses	

2010  
£m 

2009
£m

2.7	
0.2	

2.9	
2.1	

5.0	

2.5
0.3

2.8
1.7

4.5

Cost/income	ratio2	

98.0%	

95.7%

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

client	facing	activities

2	 Operating	expenses	divided	by	net	operating	income

Fixed	staff	costs	of	£2.7	million	for	2010	
compare	to	costs	of	£2.5	million	in	2009	
reflecting	a	higher	average	full	time	equivalent	
headcount	of	43	compared	to	40	in	2009.	
Other	operating	expenses	represent	property,	
depreciation,	finance,	IT	and	other	support	
costs	which	are	largely	fixed,	and	were	
42.0%	of	total	operating	expenses	in	2010	
(2009:	37.8%).

Operations and resources

Rathbones’	information	technology	department	
has	continued	to	provide	a	robust	operations	
infrastructure.	There	have	been	a	large	number	
of	developments	in	our	investment	systems	
and	our	support	systems	to	drive	the	business	
forward	and	improve	efficiency.	Some	of	the	
more	significant	examples	in	2010	have	been:
•	 decommissioning	of	our	Pershing	dealing	

platform	and	centralising	all	dealing	activity	
in	Liverpool;
improving	our	voice	over	IP		
telephone	technology;

•	

•	 significantly	upgrading	our	Microsoft	

Exchange	server	capacity;
implementing	a	new	client	documentation	
management	system;	and
improving	our	online	reporting	functionality.

•	

•	

We	continued	to	achieve	excellent	CREST,	
unit	trust	and	overseas	settlement	rates,	and	
will	continue	to	invest	in	our	core	processes		
to	secure	future	efficiencies.

 
 
 
 
	
	
	
 
 
	
	
 
 
	
 
 
 
	
 
 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
 
 
 
 
 
 
	
	
	
 
 
 
	
 
 
 
 
 
 
	
	
 
 
 
 
 
 
 
 
	
	
	
	
 
	
 
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Skill

Our Investment Process provides 
structure and well-researched guidance 
for Investment Managers. This is  
non-prescriptive and allows  
Investment Managers the latitude to  
take investment decisions based on 
specific client requirements.

The Rathbone Investment Process 
supports managers in their choice of a 
growing range of investment options, 
including alternatives 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.

 
 
 
 
	
	
	
 
 
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Operations and resources continued

In	2011	we	plan	to	outsource	to	a	data		
centre	to	ensure	we	benefit	from	best	
practices	and	efficiencies,	and	upgrade		
our	treasury	management	systems.

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	Edinburgh	and	
Cambridge	offices	in	November	and	set		
up	a	new	office	in	Aberdeen,	our	focus		
in	2011	will	be	on	finalising	our	position		
on	our	London	location	in	advance	of		
lease	break	opportunities	in	2012.

Taxation

The	effective	tax	rate	for	the	year	is		
28.4%	(2009:	31.5%),	calculated	as	the		
total	tax	charge	on	continuing	operations		
of	£8.5	million	(2009:	£9.3	million)		
divided	by	the	profit	before	income	tax		
on	continuing	operations	of	£30.1	million		
(2009:	£29.5	million).

The	effective	rate	of	tax	in	2010	is		
higher	than	the	composite	UK	standard		
rate	of	28.0%	due	principally	to	the	impact		
of	disallowable	expenses	and	a	small		
over-provision	for	tax	in	prior	years.

A	full	reconciliation	of	income	tax	expense		
is	included	in	note	9	to	the	consolidated	
financial	statements.

Dividend

An	interim	dividend	of	16.0p	per	share	was	
paid	to	shareholders	on	6	October	2010	and	
the	Board	is	recommending	that	a	final	
dividend	of	28.0p	be	paid	on	18	May	2011.	
This	results	in	a	total	payment	of	44.0p	
(2009:	42.0p)	for	the	year.	This	dividend	is	
covered	1.1	times	by	reported	basic	earnings	
per	share	and	1.4	times	by	basic	underlying	
earnings	per	share	(see	note	12).

Capital management

Rathbones	is	classified	under	the		
Capital	Requirements	Directive	as	a	banking	
group	and	performs	an	Internal	Capital	
Adequacy	Assessment	Process	(ICAAP)		
on	an	annual	basis.	The	Group	has	adopted	
the	standardised	approach	to	calculating		
its	Pillar	I	credit	risk	component	and	the		
basic	indicator	approach	to	calculating	its	
operational	risk	component.

In	addition	to	a	variety	of	stress	tests	
performed	as	part	of	ICAAP	work,	and	daily	
reporting	for	regulatory	purposes,	capital	
levels	are	monitored	and	forecast	on	a	
monthly	basis	to	ensure	that	dividends	and	

investment	requirements	are	appropriately	
managed	and	appropriate	buffers	are	kept	
against	adverse	business	conditions.	Subject	
to	regulatory	minimums,	capital	is	freely	
transferable	across	the	Group	and	regular	
exercises	are	run	to	ensure	that	Group	
structures	remain	optimal.	Investment	of	
proprietary	funds	is	controlled	by	the		
treasury	team.

Rathbones	remains	well	capitalised	and		
does	not	rely	on	the	wholesale	market	to		
fund	its	operations.	On	a	Basel	III	basis,	the	
Group’s	Tier	1	ratio,	calculated	as	Tier	1	
capital	as	a	proportion	of	total	risk	weighted	
assets,	was	28.3%	at	31	December	2010	
(2009:	36.3%).

Rathbones’	Pillar	III	disclosure	is	presented		
on	our	website	at	www.rathbones.com.		
Further	details	on	capital	management	
processes	can	be	found	in	note	29	to	the	
consolidated	financial	statements.	

Treasury and financing

As	a	licenced	deposit	taker,	Rathbone	
Investment	Management	holds	the	Group’s	
surplus	liquidity	on	its	statement	of	financial	
position	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	a	Board-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.

As	a	net	provider	of	liquidity	to	the	banking	
markets	Rathbones	does	not	rely	on	
wholesale	funding	to	finance	its	operations	
and	it	is	anticipated	that	this	will	not	change.	
External	borrowings	are	limited	to	a	term	loan	
facility	of	£3.1	million	at	31	December	2010	
from	Barclays	Bank	PLC	(2009:	£6.2	million),	
which	will	be	repaid	in	full	by	4	April	2011.

Liquidity and cash flow

As	fee	income	is	largely	collected	directly	
from	client	portfolios	and	expenses	by	and	
large	are	predictable,	Rathbones	operates	
with	a	modest	amount	of	working	capital.	
Larger	cash	flows	are	principally	generated	
from	banking/treasury	operations	when	

 
 
 
 
	
	
	
 
 
	
	
	
	
	
	
	
	
 
 
 
	
	
	
 
	
 
 
	
 
 
 
	
	
	
	
	
	
	
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Operational excellence

We believe that to sustain successful, 
long term relationships our services 
must be underpinned by high-quality 
administration.

Our aim is to provide first-class 
administration which exceeds client 
expectations at reasonable cost.

We continue to invest in this area as  
we see the needs of our private clients, 
charity trustees and professional 
intermediaries evolve.

 
 
 
 
	
	
	
 
 
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Liquidity and cash flow continued	

Investment	Managers	make	investment	and	
asset	allocation	decisions	about	the	amount	
of	cash	to	be	held	in	client	portfolios.		
Liquidity	risks	are	managed	on	a	daily	basis	
and	depend	on	transaction	activity.

As	a	bank,	Rathbones	is	subject	to	the		
FSA’s	Internal	Liquidity	Adequacy		
Assessment	regime.

The	most	significant	non-operating	cash		
flows	during	the	year	were	as	follows:
•	 outflows	relating	to	the	payment	of	

dividends	of	£18.2	million		
(2009:	£18.1	million);

•	 outflows	relating	to	intangible	asset	
additions	of	£27.7	million	(2009:		
£2.2	million)	mainly	in	respect	of	the	
Lloyds	Banking	Group	transaction;	and

•	 £2.7	million	capital	expenditure	on	
property,	plant	and	equipment		
(2009:	£1.1	million).

Pensions

Rathbones	operates	two	defined	benefit	
pension	schemes	(both	of	which	are	closed		
to	new	members)	and	a	defined	contribution	
pension	scheme.	At	31	December	2010,		
the	combined	accounting	deficit	for	the		
two	defined	benefit	schemes	totalled		
£6.6	million	(2009:	£9.4	million).	Details	of	
the	assumptions	supporting	the	accounting	
valuation	and	associated	sensitivities	are	
included	in	note	25	to	the	consolidated	
financial	statements.

Actuarial	funding	valuations	of	the	schemes	
were	undertaken	as	at	31	December	2007	
and	2008,	and	will	be	performed	again	for	
both	schemes	in	2011.	Funding	valuations		
are	typically	more	prudent	than	valuations	
used	for	financial	reporting	which	must	be	
based	on	management’s	best	estimate		
of	future	liabilities.	Based	on	the	previous	
funding	valuations,	the	Company	has	agreed		
a	schedule	of	contributions	for	both	schemes	
totalling	£21.2	million	over	the	next	seven	
years,	in	addition	to	regular	annual	
contributions	of	£3.6	million,	subject	to	the	
schemes	remaining	in	deficit.	The	timing	of	
contributions	is	set	out	in	note	25	to	the	
consolidated	financial	statements.

Risks

The	Corporate	governance	report	on	page	32	
outlines	Rathbones’	risk	framework,	risk	
governance	processes	and	key	risks	that	
impact	the	business.	Note	28	to	the	
consolidated	financial	statements	provides	
additional	detail	on	financial	risks.

Rathbones’	income	is	dependent	on	the	
behaviour	of	investment	markets	and	interest	
rates,	which	inherently	impacts	the	risk	of	the	
business.	Aside	from	market	changes,	this	
year	presented	a	number	of	factors	which	
particularly	impacted	our	risk	profile	and		
these	are	outlined	below.

Business risks

Negative impact of regulation 
2010	was	a	very	busy	year	from	a	regulatory	
perspective	with	a	number	of	wide	ranging	
FSA	and	EC	pronouncements	on	banking	
capital,	liquidity,	payment	services,	the		
RDR,	remuneration	and	client	money.	
Responding	in	time	to	this	regulation	and	
refining	system	requirements	and	processes	
to	ensure	compliance	has	taken	some	
considerable	effort.	Whilst	regulation	itself		
has	done	little	to	impact	the	risk	profile	of		
the	business,	the	risk	of	not	complying	with	
new	rules	has	certainly	increased,	although	
we	have	planned	resources	carefully	to	
mitigate	this.

The	risk	of	unexpected	additional	levies		
being	charged	by	the	FSCS	has	increased	
significantly	in	2010	as	investor	losses	from	
institutions	which	failed	in	2008/9	are	
assessed	and	quantified.	

Competition risk 
The	RDR	was	the	most	significant		
competition	risk	event	in	2010.	This	regulation	
will	undoubtedly	change	the	competitive	
landscape	for	providing	financial	advice,	
although	its	full	effects	remain	uncertain.		
It	is	expected	to	present	additional	business	
opportunities	for	Rathbones.

Reputational risk 
Rathbones	remains	a	highly	regarded	member	
of	the	investment	management	industry.	
Operational	losses	arising	from	potential	
reputation	issues	were	insignificant	in	2010.

Operational risks

Inappropriate IT strategy 
2010	has	been	a	busy	year	for	projects		
as	noted	in	the	operations	and	resources	
commentary	on	page	18.	We	have	continued	
to	deploy	skilled	project	management	
resources	where	necessary	to	manage	
complex	change	and	invest	in	training	to	
ensure	skills	are	up	to	date.

The	pace	of	change	shows	no	signs	of	
abating	as	we	continue	to	respond	to	
significant	external	change	and	a	continued	
desire	to	improve	efficiency.

Accounting or regulatory reporting error 
There	continues	to	be	a	significant	amount		
of	new	regulatory	and	accounting	reporting	

 
 
 
 
	
	
	
 
 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
 
 
 
 
 
	
	
	
	
	
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Risks continued

requirements,	which	increase	the	risk	of		
non-compliance.

Adverse impact of a poor acquisition 
Whilst	we	continue	to	acquire	investment	
management	teams,	the	principal	acquisition	
related	risks	in	2010	were	associated	with	
the	Lloyds	Banking	Group	transaction	which	
increased	risk	indicators	in	the	operations	
area	in	the	first	half	of	2010	as	new	clients	
were	transferred.	Additional	controls	were	
appropriately	applied	to	manage	the	change	
and	the	acquired	business	was	operating		
fully	on	Rathbone	Investment	Management	
systems	from	30	June	2010.	The	amount		
of	funds	transferred	was	as	expected.

Poor performance in Unit Trusts 
The	volume	of	unit	trust	sales	is	closely	
correlated	to	the	longer	term	performance	of	
unit	trust	funds	relative	to	that	of	competitors.	
During	2010,	investment	processes	have	
been	improved	and	a	deferred	remuneration	
scheme	revised	to	better	align	Investment	
Manager	rewards	to	fund	performance.

Loss of an investment management team 
Investment	Manager	turnover	has	been	very	
low	historically	and	this	has	continued	in	2010.

Client litigation 
Complaints	from	clients	have	remained	at	
very	low	levels	with	22	formal	complaints	
recorded	in	2010	(2009:	39).	None	have	
resulted	in	litigation	in	the	year.

Financial risks

The	risk	that	an	asset	value	falls	or	that	an	
additional	liability	is	incurred	is	sometimes	
dependent	upon	the	exercise	of	judgement.	
Critical	accounting	judgements	and	the	key	
sources	of	estimation	and	uncertainty	are	
reported	in	note	2	to	the	consolidated	
financial	statements.	

Credit risk 
Credit	markets	have	seen	a	number	of	high	
profile	adverse	events	involving	banking	
institutions	and	sovereign	jurisdictions	in	
Greece,	Ireland	and	other	Eurozone	countries.	
A	volatile	first	half	of	2010	saw	cash	in	client	
portfolios	rise	to	over	£0.95	billion	at		
30	June	2010	returning	to	£0.76	billion	at		
31	December	2010.	Credit	risk	capital	
increases	or	decreases	directly	with	higher		
or	lower	cash	levels	respectively.

Rathbones	retained	its	conservative	treasury	
policy	throughout	the	year	experiencing	no	
default	issues.	Credit	risks	associated	with	
other	investment	securities	did	not	
significantly	change	in	the	year.

Liquidity risk 
Rathbones	remains	highly	cash	generative		
with	a	strong	liquidity	profile.	Liquidity	was	
managed	well	within	tolerances	throughout	
the	year.	Rathbones	has	met	all	deadlines		
in	respect	of	the	FSA’s	Internal	Liquidity	
Adequacy	Assessment	regime.

Market risk 
Rathbones	has	maintained	its	conservative	
policy	in	respect	of	managing	interest		
rate	risk	adhering	to	agreed	tolerance	limits	
throughout	the	year.	Currency	risks	have	
remained	minimal.	The	value	of	our	equity	
investment	securities	increased	by	6.9%		
to	£3.1	million	in	2010.

Going concern basis

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,	capital,	
liquidity	position,	risks	and	borrowing	facilities	
are	also	described	in	the	business	review	on	
page	11.	In	addition,	notes	28	and	29	to	the	
consolidated	financial	statements	provide	
further	details.

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	III	disclosures	
annually.	Note	21	to	the	consolidated	financial	
statements	shows	that	the	Company	has	an	
unsecured	term	loan	of	£3.1	million	at		
31	December	2010	which	represents	1.7%	
of	total	equity	(2009:	£6.2	million).	The	
Company	is	not	reliant	on	the	renewal	of		
debt	facilities	to	continue	to	finance	its	
operations.

In	2010,	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	from	the	date	
the	financial	statements	are	approved.

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Chairman

Mark Powell

Chief Executive

Andy Pomfret

Andy	Pomfret,	aged	50,	
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	
plc	and	a	Director	of	the	Association	of		
Private	Client	Investment	Managers	&	
Stockbrokers	(APCIMS).	

Mark	Powell,	aged	65,	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	is	retiring		
from	the	Board	after	the	Annual	General	Meeting	
on	11	May	2011.

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	
and	a	Non-executive	Director	of	HgCapital	Trust		
plc.	He	is	a	former	Chairman	of	the	Association		
of	Private	Client	Investment	Managers	&	
Stockbrokers	(APCIMS)	and	a	former	member		
of	the	Takeover	Panel.	He	is	chairman	of	the	
Nomination	Committee.

Board Committees

Audit Committee

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

Executive Committee

The	Executive	Committee	is	chaired	by	the		
Chief	Executive	Andy	Pomfret,	and	comprises		
Ian	Buckley,	Paul	Chavasse,	Richard	Lanyon	and	
Paul	Stockton.	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.

Current	members	of	the	Audit	Committee		
are	Oliver	Corbett	(chairman),	Kate	Avery,	
Caroline	Burton,	David	Harrel	and	Kathryn	
Matthews.	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,	Oliver	Corbett,	David	Harrel,		
Kathryn	Matthews	and	Mark	Nicholls.		
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,		
Caroline	Burton,	Oliver	Corbett,	David	Harrel,	
Kathryn	Matthews,	Mark	Nicholls	and		
Andy	Pomfret.	Full	details	of	its	role	are	set		
out	in	the	Nomination	committee	report.

Directors

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Executive Directors

Ian Buckley

Andrew Morris

Ian	Buckley,	aged	60,	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.

Paul Chavasse

Paul	Chavasse,	aged	46,	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.

Richard Lanyon

Richard	Lanyon,	aged	59,	is
the	Director	with	overall	
responsibility	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.

Andrew	Morris,	aged	46,	
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.

Richard Smeeton

Richard	Smeeton,	aged	46,	
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.

Paul Stockton

Paul	Stockton,	aged	45,	
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.

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Non-executive Directors

David Harrel

Oliver Corbett

David	Harrel,	aged	62,	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	The	Kyte	Group	Limited,	a	
member	of	the	Board	of	the	English	National	
Opera	and	a	trustee	of	the	Clore	Duffield	
Foundation.	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.

Kate Avery

Kate	Avery,	aged	51,	began	
her	career	with	Barclays	Plc,	
where	she	worked	for	some	
eighteen	years,	becoming	
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	and	a	Non-executive	Director		
of	the	Newcastle	Building	Society.	She	was	
appointed	to	the	Board	on	6	January	2010		
and	is	considered	to	be	independent.

Caroline Burton

Caroline	Burton,	aged	61,	
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.	

Oliver	Corbett,	aged	46,	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	of	investment	banking,		
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.

Kathryn Matthews

Kathryn	Matthews,	aged	51,	
has	spent	her	entire	career		
in	investment	management,	
most	recently	as	Chief	
Investment	Officer,	Asia	
Pacific	(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	a	number	of	
companies	including	Hermes	Fund	Managers	
Limited,	Fidelity	Asian	Values	Plc,	Montanaro		
UK	Smaller	Companies	Investment	Trust	Plc		
and	J	P	Morgan	Chinese	Investment	Trust	Plc.	
She	was	appointed	to	the	Board	on	6	January	
2010	and	is	considered	to	be	independent.

Mark Nicholls

Mark	Nicholls,	aged	61,	is	a	
lawyer	and	corporate	financier.	
After	studying	law	at	
Cambridge	he	took	articles		
at	Linklaters	before	joining		
S	G	Warburg	in	1976.	

He	became	a	Director	in	1984	and	Head	of	
Investment	Banking	in	1994.	In	1996	he	joined	
Royal	Bank	of	Scotland	and	became	head	of	
their	private	equity	group,	leaving	in	2003	to	
pursue	a	plural	career.	He	is	currently	Chairman	
of	the	West	Bromwich	Building	Society	and		
a	Non-executive	Director	of	Northern	Investors	
Company	PLC.	He	was	appointed	to	the		
Board	on	1	December	2010	and	is	considered		
to	be	independent.

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Governance

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Directors’ report

The	information	contained	in	the	Chairman’s	statement,	Chief	Executive’s	statement,	Rathbones	at	a	glance,	strategy	and	
business	performance,	business	review,	Directors’	profiles,	Corporate	governance	report,	Audit	Committee	report,	Nomination	
Committee	report,	Corporate	responsibility	report	and	Directors’	responsibility	statement	form	part	of	the	Directors’	report.

Group activities

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

The	Group’s	principal	activity	is	discretionary	investment	management	for	private	clients,	charities	and	trusts	carried	out	by	
Rathbone	Investment	Management	Limited	from	eleven	offices	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	five	venture	capital	trusts.	Rathbones	manages	eight	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.	
Rathbone	Pension	&	Advisory	Services	Limited	offers	a	pension	advice	service,	SIPP	administration	and	other	financial	
planning	services.

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Business review

A	full	review	of	the	Group’s	business	activities	are	set	out	in	the	business	review	on	page	11.	Information	about	
environmental,	employee	and	social	and	community	issues	are	set	out	in	the	Corporate	responsibility	report	on	page	50.

Post statement of financial position events

Details	of	events	after	the	statement	of	financial	position	date	are	set	out	in	note	33	to	the	consolidated	financial	statements.

Group results and Company dividends

The	Group	profit	after	taxation	for	the	year	ended	31	December	2010	was	£21,552,000	(2009:	£19,628,000).

The	Directors	recommend	the	payment	of	a	final	dividend	of	28.0p	(2009:	nil)	on	18	May	2011	to	shareholders	on	the	
register	on	3	May	2011.	An	interim	dividend	of	16.0p	(2009:	42.0p)	was	paid	on	6	October	2010	to	shareholders	on	the	
register	on	17	September	2010.	This	results	in	total	dividends	of	44.0p	(2009:	42.0p)	per	ordinary	share	for	the	year.		
These	dividends	amount	to	£19,067,000	(2009:	£18,159,000)	–	see	note	11	to	the	consolidated	financial	statements.

Capital structure

The	Company’s	share	capital	is	comprised	of	one	class	of	ordinary	shares	of	5p	each.	At	31	December	2010,	43,376,790	
shares	were	in	issue	(2009:	43,296,330).	The	shares	carry	no	rights	to	fixed	income	and	each	share	carries	the	right	to	one	
vote	at	general	meetings.	All	shares	are	fully	paid.

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

The	Board	currently	has	the	authority	to	allot	14.2	million	shares	(approximately	one	third	of	the	issued	share	capital	at	23	
February	2010)	with	the	authority	to	allot	a	further	14.2	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	2.1	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	interests	of	Directors	and	connected	persons	in	the	share	capital	of	the	Company	are	shown	in	table	1.	There	were	no	
changes	between	31	December	2010	and	16	February	2011.	Details	of	Directors’	share	options	are	shown	in	tables	7	and		
8	on	page	43.

Table 1. Directors’ shareholdings

Chairman 
G	M	Powell	

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

Non-executive 
C	R	R	Avery	
C	M	Burton	
O	R	P	Corbett	
D	T	D	Harrel	
K	A	Matthews	
M	P	Nicholls	

Number	of	5p	ordinary	shares	
at	1	January	20101	

Number	of	5p	ordinary	shares	
at	31	December	2010

Beneficial	

	 Non-beneficial	

Beneficial	

	 Non-beneficial

	 251,397	

	 12,500	

	 113,334	

8,500

	 33,056	
	 51,411	
	 212,052	
50,070	
	 91,490	
	 116,475	
379	

2,457	
3,183	
1,437	
8	
–	
–	

–	
–	
–	
–	
–	
–	
–	

–	
–	
–	
–	
–	
–	

	 36,813	
	 54,218	
	 203,961	
55,475	
	 101,034	
	 116,856	
5,114	

2,457	
3,623	
1,849	
8	
160	
–	

–	
–	
–	
–	
–	
–	
–

–	
–	
–	
–	
–	
–

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1	 or	date	of	appointment	if	later

There	were	no	changes	between	the	date	of	this	report	and	1	March	2011.

Executive Directors

The	Directors	with	executive	responsibilities	are	Andy	Pomfret,	Ian	Buckley,	Paul	Chavasse,	Richard	Lanyon,	Andrew	Morris,	
Richard	Smeeton	and	Paul	Stockton.	Their	biographies	are	on	pages	24	and	25.	Peter	Pearson	Lund	retired	from	the	Board	
on	31	March	2010.

Non-executive Directors

The	Directors	with	non-executive	responsibilities	are	Mark	Powell,	Kate	Avery,	Caroline	Burton,	Oliver	Corbett,	David	Harrel,	
Kathryn	Matthews	and	Mark	Nicholls.	Their	biographies	are	on	pages	24	and	26.

Kate	Avery	and	Kathryn	Matthews	were	appointed	to	the	Board	on	6	January	2010.	Mark	Nicholls	was	appointed	to	the	
Board	on	1	December	2010.	James	Barclay	and	Mark	Robertshaw	stepped	down	from	the	Board	at	the	Annual	General	
Meeting	on	5	May	2010.	John	May	stepped	down	from	the	Board	on	1	December	2010.	Mark	Powell	is	to	retire	as	a	
Director	and	Chairman	at	the	conclusion	of	the	Annual	General	Meeting	on	11	May	2011,	when	it	is	intended	that		
Mark	Nicholls	will	take	on	this	role.

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,	all	Non-executive	Directors	are	independent.

Retirement and re-appointment of Directors

Ian	Buckley,	Paul	Chavasse	and	David	Harrel	retire	by	rotation	at	the	next	Annual	General	Meeting	and,	being	eligible,	offer	
themselves	for	re-election.

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Substantial shareholdings

At	16	February	2011,	the	Company	had	received	notifications	in	accordance	with	the	Financial	Services	Authority’s	Disclosure	
and	Transparency	Rule	5.1.2	of	the	following	interests	of	3%	or	more	in	the	voting	rights	of	the	Company.

Table 2. Substantial shareholdings at 16 February 2011

Notifier 

BlackRock	Inc.	

Lindsell	Train	Ltd.	

Legal	&	General	Group	Plc	

Lloyds	Banking	Group	plc	

Date of notification 

Ordinary shares 

% of voting rights

	 15	October	2010	

6,938,467	

16.03%

	 17	November	2009	

2,173,950	

	 23	January	2009	

1,700,574	

15	March	2007	

1,477,812	

5.04%

3.96%

3.50%

3.12%

Mawer	Investment	Management	Ltd.		

	 13	October	2009	

1,344,818	

There	were	no	changes	between	the	date	of	this	report	and	1	March	2011.

Political and charitable donations

No	contributions	were	made	for	political	purposes	during	the	year	(2009:	nil).	Details	of	the	Company’s	charitable	donations		
can	be	found	in	the	Corporate	responsibility	report	on	page	59.

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	page	57.

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	launched	in	2009.

Policy on the payment of creditors

Rathbones	does	not	follow	a	published	code	or	standard	on	payment	practice.	Its	policy	is	to	fix	terms	of	payment	with	each	
supplier	in	accordance	with	its	requirements	and	financial	procedures.	Rathbones	ensures	that	suppliers	are	aware	of	those	
terms	and	abides	by	them	subject	to	the	resolution	of	any	disagreement	regarding	the	supply.	In	the	majority	of	cases,	the		
terms	agreed	with	suppliers	are	for	payment	within	30	days	of	their	invoice	date.	Trade	creditors	of	the	UK	subsidiaries	at		
31	December	2010	represented	14	days	of	annual	purchases	(2009:	13	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	consolidated	financial	statements.

Indemnification of Directors

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

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

Share price

The	mid	market	price	of	the	Company’s	shares	at	31	December	2010	was	£10.94	(2009:	£8.00)	and	the	range	during	the	
year	was	£7.625	to	£10.94	(2009:	£6.68	to	£9.60).

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Auditor

The	Audit	Committee	reviews	the	appointment	of	the	external	auditor	and	their	relationship	with	the	Group,	including	
monitoring	the	Group’s	use	of	the	auditor	for	non-audit	services.	Note	7	to	the	consolidated	financial	statements	sets	out	
details	of	the	auditor’s	remuneration.	Having	reviewed	the	independence	and	effectiveness	of	the	external	auditor,	the	Audit	
Committee	has	recommended	to	the	Board	that	the	existing	auditor,	KPMG	Audit	Plc,	be	reappointed.	KPMG	Audit	Plc	have	
indicated	their	willingness	to	continue	in	office	and	ordinary	resolutions	reappointing	them	as	auditor	and	authorising	the	
Directors	to	set	their	remuneration	will	be	proposed	at	the	2011	AGM.

The	Directors	in	office	at	the	date	of	signing	of	this	report	confirm	that	there	is	no	relevant	audit	information	of	which	the		
auditor	is	unaware	and	that	each	Director	has	taken	all	reasonable	steps	to	make	him	or	herself	aware	of	any	relevant	audit	
information	and	to	establish	that	the	auditor	is	aware	of	that	information.

Annual General Meeting

The	2011	Annual	General	Meeting	will	be	held	on	Wednesday	11	May	2011	at	12.00	noon	at	159	New	Bond	Street,	London	
W1S	2UD.	Full	details	of	all	resolutions	with	a	letter	of	explanation	from	the	Chairman	and	explanatory	notes	are	set	out	in	the	
separate	notice	of	the	meeting.

Special business

The	resolutions	proposed	include	an	ordinary	resolution	to	give	the	Directors	the	authority	to	allot	up	to	14.3	million	shares	
(with	an	aggregate	nominal	amount	of	up	to	£715,000).	They	also	include	an	ordinary	resolution	seeking	approval	of	a	new	
Long	Term	Incentive	Plan.	Full	details	are	in	the	Remuneration	report	and	Notice	of	AGM.

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	also	proposed.

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

16	February	2011

Registered	office:	159	New	Bond	Street,	London	W1S	2UD

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Corporate governance report

In	relation	to	compliance	with	the	Combined	Code	this	report	together	with	the	Directors’	report	states	the	position	at		
16	February	2011.

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	current	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	14	Directors,	of	which	six	(43%)	are	independent	Non-executive	Directors.	The	Code	requires	that	at		
least	half	the	Board,	excluding	the	Chairman,	should	be	independent	Non-executive	Directors.	The	number	of	senior	
practitioners	from	within	the	operating	subsidiaries	on	the	Board	does	result	in	a	sizeable	number	of	Executive	Directors,	
making	the	achievement	of	the	Code	target	difficult.	Following	the	retirement	of	Mark	Powell	from	the	Board	after	the	2011	
AGM,	there	will	be	13	Directors	on	the	Board	of	which	six	(46%)	will	be	independent	Non-executive	Directors.

The	Financial	Reporting	Council	issued	the	UK	Corporate	Governance	Code	in	June	2010	which	replaces	the	Combined	
Code	and	applies	to	accounting	periods	beginning	on	or	after	29	June	2010.

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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	generally	held.	The	Non-executive	Directors	also	have	informal	meetings	without	the	Chairman	or	
Chief	Executive	present.

Board membership

The	Board	currently	consists	of	a	Non-executive	Chairman,	seven	Executive	Directors	and	six	other	Non-executive	Directors.	
The	roles	of	Chairman,	Mark	Powell,	and	Chief	Executive,	Andy	Pomfret,	are	separated	and	are	clearly	defined	in	writing		
and	agreed	by	the	Board.	The	Chairman	is	primarily	responsible	for	the	working	of	the	Board	and	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	all	of	the	Non-executive	Directors	are	independent	with	the	exception	of	Mark	Powell		
(as	explained	above).

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	
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	financial	statements,	company	acquisitions	and	disposals,	major	capital	expenditure	and	the	review	of	decisions	taken		
by	the	boards	of	subsidiary	companies.

Board performance

The	Board,	Audit	and	Remuneration	Committees	carry	out	appraisals	of	their	operation	and	performance	on	an	annual	basis.	
In	2010,	an	internal	questionnaire	was	used	which	was	developed	and	executed	with	assistance	from	Lintstock	Limited,	a	
London	based	corporate	advisory	firm.	The	2009	review	focused	on	the	major	corporate	transaction	in	2009	and	on	Board	
oversight	during	the	‘credit	crunch’.	The	2010	questionnaire	was	of	a	more	general	nature	and	was	particularly	designed	to		
gain	a	fresh	perspective	on	the	operation	of	the	Board	from	the	new	Non-executive	Directors.	

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.

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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	include	activities	to	keep	up	to	date	with	
Rathbones’	specific	issues	and	industry,	market	and	regulatory	changes.

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

Board Committees

The	four	principal	Board	Committees	are	the	Executive,	Audit,	Remuneration	and	Nomination	Committees.	The	Board	has	
delegated	full	authority	to	the	Executive	Committee,	subject	to	a	list	of	matters	which	are	reserved	for	decision	by	the	full	
Board.	The	other	Board	Committees	have	formal	terms	of	reference,	which	are	reviewed	and	approved	by	the	Board	on	an	
annual	basis.	These	are	available	on	request	from	the	Company’s	registered	office	and	on	the	Group	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,	Caroline	Burton,	David	Harrel	and		
Kathryn	Matthews.	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,	Oliver	Corbett,	David	Harrel,	
Kathryn	Matthews	and	Mark	Nicholls.	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,	Caroline	Burton,	Oliver	Corbett,		
David	Harrel,	Kathryn	Matthews,	Mark	Nicholls	and	Andy	Pomfret.	Full	details	of	its	role	are	set	out	in	the	Nomination	
Committee	report.

Conflicts 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	conflicts	or	possibly	may	conflict	with	the	Company’s	interests.	The	Act	allows	the	Board	to	authorise		
a	Director’s	conflict	or	potential	conflict	of	interest	where	the	Articles	of	Association	contain	a	provision	to	this	effect	and	also	
allows	the	Articles	of	Association	to	contain	other	provisions	for	dealing	with	Directors’	conflicts	of	interest	to	avoid	a	breach	
of	duty.	Shareholders	approved	the	necessary	changes	to	the	Company’s	Articles	of	Association	at	the	AGM	on	7	May	2008.

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

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

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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 2010

Plc Board1 

Executive Committee2 

Audit Committee  Remuneration Committee 

Nomination Committee

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C	R	R	Avery	
J	C	Barclay	
I	M	Buckley	
C	M	Burton	
P	D	G	Chavasse	
O	R	P	Corbett	
D	T	D	Harrel	
R	P	Lanyon	
K	A	Matthews	
J	M	May	
A	T	Morris	
M	P	Nicholls	
P	G	Pearson	Lund	 	
A	D	Pomfret	
G	M	Powell	
M	Robertshaw	
R	I	Smeeton	
R	P	Stockton	

1	 Scheduled	bi-monthly	meeting
2	 Scheduled	monthly	meeting

Shareholder relations

5/7	
2/2	
7/7	
6/7	
6/7	
6/7	
6/7	
6/7	
7/7	
6/6	
7/7	
1/1	
2/2	
7/7	
7/7	
2/2	
7/7	
7/7	

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

4/5	
1/2	
–	
5/5	
–	
5/5	
3/5	
–	
5/5	
–	
–	
–	
–	
–	
–	
2/2	
–	
–	

4/5	
1/2	
–	
5/5	
–	
4/5	
4/5	
–	
5/5	
–	
–	
1/1	
–	
–	
–	
2/2	
–	
–	

2/2	
0/0	
-	
2/2	
–	
2/2	
2/2	
–	
2/2	
1/2	
–	
0/0	
–	
2/2	
1/2	
0/0	
–	
–

The	Company	is	committed	to	ensuring	that	there	is	effective	communication	with	all	shareholders.	All	regulatory	news	
announcements,	press	releases	and	financial	reports	are	available	on	the	Group	website.	An	HTML	version	of	the	2010	
report	and	accounts	will	be	available	online.	Following	the	publication	of	the	interim	and	full	year	results,	presentations	are	
given	to	major	shareholders,	investment	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	figures	are	disclosed	after	the	
vote	and	on	the	website.

Risk management and internal control

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

Risk appetite

The	Board	have	articulated	their	detailed	risk	appetite	to	the	FSA	as	part	of	the	Individual	Capital	Adequacy	Assessment	
Process	(ICAAP)	with	some	of	the	risks	covered	set	out	below.	The	overall	risk	appetite	is	assessed	to	be	low	to	medium.

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Risk management and internal control continued

Risk governance

Risk Management Committee 
Ian	Buckley	is	the	Director	with	specific	responsibility	for	risk	management.	He	chairs	the	Risk	Management	Committee	
which	reports	to	the	Board.	It	comprises	all	members	of	the	Executive	Committee	together	with	the	Group	heads	of	
personnel,	compliance	and	internal	audit.	Non-executive	Directors	are	also	often	in	attendance.

This	Committee	is	an	important	element	in	the	Group’s	overall	control	system	and	undertakes	a	review	of	risk	within	the	Group	
at	its	quarterly	meetings.	It	reports	on	a	regular	basis	to	the	Board	both	on	the	identification	of	risks	and	the	steps	being	taken	
to	control	or	mitigate	such	risks.	Risk	review	procedures	have	been	in	place	throughout	the	year	and	up	to	16	February	2011.

The risk management process 
A	risk	register	is	maintained	which	is	the	principal	tool	for	monitoring	risks.	Each	risk	is	rated	by	assessing	each	risk’s	
probability	of	occurring	and	its	impact	if	it	does	occur	using	a	1	–	5	scoring	system.	The	inherent	risk	score	is	then	reduced		
if	the	risk	is	reduced	by	internal	controls	or	by	insurance	to	give	a	residual	risk	score.	Risks	are	then	ranked	and	the	top	ten	
risks	identified	together	with	a	list	of	other	emerging	risks	and	issues.	The	financial	impacts	of	risks	are	also	assessed	where	
possible	for	regulatory	capital	assessment	purposes.	

The	other	key	elements	of	the	Group’s	overall	control	systems	include:
•	 a	formal	structure	of	committees	and	subsidiary	company	boards	where	senior	staff	oversee	the	operation	of	the		

business	on	a	regular	basis;

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

trends	to	be	evaluated	and	variances	to	be	acted	upon;

•	 daily	monitoring	of	regulatory	capital	and	liquidity	levels,	interest	rate	and	counterparty	exposures;
•	
•	 an	ICAAP	required	by	FSA	prudential	rules	which	requires	regular	assessments	of	the	amounts,	types	and	distribution		

the	monitoring	of	key	risk	and	key	performance	indicators;	

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

•	 a	defined	set	of	policies	and	procedures	for	treasury	operations	with	limits	set	regularly	by	the	Banking	Committee;
•	 a	confidential	reporting	policy,	which	encourages	employees	to	raise	serious	concerns	about	a	colleague’s	or	Group	

company’s	practice;	
independent	reviews	of	operational	systems	and	controls;

•	
•	 an	appropriately	skilled	and	staffed	internal	audit	department;	and
•	

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

Table 2. Risk scoring

Very	high	

High	

Medium	

Low	

Probability 

Will	occur	

Greater	than	50%	chance	in		
a	2	year	period	

Less	than	50%	chance	in	a		
2	–	5	year	period	

Unlikely	to	occur	in	a	
10	year	period	

Very	low	

A	potential	1	in	50	year	scenario	

Chart 1. Risk impact/probability map

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Very	high	

High	

Medium	

Low	

Very	low	

5

4

3

2

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0

Score 

Impact 

Score

5	

4	

3	

2	

1	

Very	severe	
Over	£10.0	million	

Severe	
£2.5	million	–	£10.0	million

Moderate	
£1.0	million	–	£2.5	million	

Low	
Less	than	£1.0	million	

Insignificant	

5	

4	

3	

2	

1

High	level	risks

Medium	level	risks

Low	level	risks

	0	

1	
Very	low		

2	
Low		

3	
Medium		

4	
High	

5	
Very	high

Impact	of	risk

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Risk management and internal control continued	

The top 10 risks

Risks	can	be	broadly	categorised	under	one	of	three	headings,	business	risk,	operational	risk	and	financial	risk.	Top	10	risks	
are	drawn	from	each	of	these	risk	categories	and	are	updated	monthly.	Top	10	risks	identified	at	31	December	2010	together	
with	their	risk	categories	are	shown	in	table	3.

Table 3. The top 10 risks

Negative	impact	of	regulation	
Inappropriate	IT	strategy	
Accounting	or	regulatory	reporting	error	
Adverse	impact	of	a	poor	acquisition	
Treasury	counterparty	default	
Competition	risk	
Poor	performance	of	Rathbone	Unit	Trust	funds	
Damage	to	Rathbones’	reputation		
Loss	of	an	investment	management	team	

1	
2	
3	
4	
5	
6	
7	
8	
9	
10	 Client	litigation	

Business risks

Negative impact of regulation

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Category

Business	
Operational	
Operational	
Operational	
Financial	
Business	
Operational	
Business	
Operational	
Operational

Rathbones	operate	in	a	heavily	regulated	industry	in	which	failure	to	comply	with	regulatory	requirements	can	lead	to		
significant	fines	and	penalties.	The	Group’s	profitability	could	be	reduced	(or	increased)	by	future	regulatory	changes.		
Rathbones	is	involved	with	a	number	of	representative	industry	bodies	and	maintains	close	contact	with	the	FSA	and		
other	regulators.

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.

Damage to Rathbones’ reputation

Reputational	risk	could	arise	for	many	reasons	including	poor	performance	or	service,	or	regulatory	censure	leading	to	
negative	publicity.	This	risk	is	reduced	by	greater	management	monitoring	of	higher	risk	activities	and	the	swift,	open		
and	transparent	resolution	of	any	issues	that	arise.	Business	marketing	and	the	use	of	public	and	media	relations	
professionals	also	reduce	the	risk	of	reputational	damage.

Operational risks

Inappropriate IT strategy

In	an	increasingly	IT	led	business,	our	core	investment	management	system	is	considered	by	many	to	be	a	market	leader		
but	continual	change	and	development	is	needed	which	can	be	challenging.	System	changes	are	evolutionary	and	are	made	
with	the	close	involvement	of	users	to	reduce	the	risk	of	costly	developments	not	meeting	the	needs	of	the	business.

Accounting or regulatory reporting error

Increasingly	complex	accounting	and	reporting	demands,	particularly	in	the	areas	of	financial	and	regulatory	reporting,	
increase	the	risk	of	error.	Documented	processes	and	controls	and	close	management	oversight	reduce	the	risk	of		
such	errors.

Adverse impact of a poor acquisition

Acquisitions	create	a	financial	risk	associated	with	the	lower	than	anticipated	taking	on	of	clients.	They	can	also	create	
operational	disruption	and	disruption	to	the	culture	of	the	business	which	can	be	costly.	Potential	acquisitions	are	subject		
to	rigorous	review	and	assessment	before	any	recommendation	to	the	Board	is	made.	

Poor performance of Rathbone Unit Trust Management funds

In	common	with	all	unit	trust	managers,	the	success	of	Rathbone	Unit	Trust	Management	is	highly	dependent	on	the	
performance	of	the	funds	it	manages.	These	risks	are	reduced	by	a	robust	investment	process	which	includes	regular	and	
open	analysis	and	discussion	of	performance.

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Risk management and internal control continued	

Loss of an investment management team

The	impact	of	the	loss	of	an	investment	management	team	would	clearly	depend	on	its	size	and	location.	This	risk	is	mitigated	
by	employment	contract	provisions	and	competitive	remuneration	packages	including	profit	share	and	a	new	business	
incentive	scheme	with	deferred	awards.

Client litigation 

Litigation	can	be	costly.	Investment	Managers	will	gather	a	good	deal	of	background	information	about	their	clients	and	will	
aim	to	provide	an	investment	portfolio	that	is	suitable	for	their	needs,	recognising	that	the	value	of	all	investments	can	fall	as	
well	as	rise.	Our	investment	process	provides	guidance	on	asset	allocation	and	research	on	investments	and	investment	
products.	Sound	business	practice	reduces	the	risk	of	client	dissatisfaction	and	complaint.	

Financial risks

Treasury counterparty default 
This	risk	mainly	arises	from	the	placement	of	surplus	investment	client	cash	which	is	held	under	a	banking	relationship.		
It	is	reduced	by	the	use	of	a	wide	range	of	financial	institutions	with	long	term	ratings	above	a	minimum	level,	with	exposure	
limits	for	each	institution.	Exposures	are	monitored	daily	and	reviewed	by	the	Banking	Committee	each	month.	This	and		
other	financial	risks	are	also	considered	in	detail	in	note	28	to	the	consolidated	financial	statements.

The	business	review	on	page	11	highlights	factors	in	the	year	which	have	had	an	impact	on	Rathbones’	risk	profile.

On	behalf	of	the	Board,	the	Audit	Committee	confirms	that	it	has	reviewed	the	effectiveness	of	the	systems	of	internal		
control	in	existence	in	the	Group	for	the	year	ended	31	December	2010	and	has	taken	account	of	material	developments	
since	the	year	end.	Necessary	actions	have	been	or	are	being	taken	to	remedy	any	significant	failings	or	weaknesses	
identified	from	that	review.	This	process	meets	the	requirements	of	the	‘Guidance	on	Internal	Control	(The	Turnbull	Guidance)’	
published	in	September	1999	and	revised	in	October	2005.

Going concern

The	Company’s	business	activities,	risks	and	uncertainties,	financial	performance	in	2010	and	the	financial	position	at		
31	December	2010	are	summarised	in	the	business	review	on	page	11.	Note	28	to	the	consolidated	financial	statements	
summarises	how	the	Group	manages	its	financial	risk.

Regulation

Rathbone	Investment	Management	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.

The	Board	together	with	the	Executive	Committee	and	the	Audit	Committee	have	implemented	systems	and	procedures		
to	ensure	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	2010.

Remuneration Committee

The	Board	has	delegated	the	determination	of	Executive	Director	remuneration	to	the	Remuneration	Committee		
(the	Committee).	The	current	members	of	the	Committee	are	the	independent	Non-executive	Directors	Caroline	Burton	
(chairman),	Kate	Avery,	Oliver	Corbett,	David	Harrel,	Kathryn	Matthews	and	Mark	Nicholls.	Kate	Avery,	Kathryn	Matthews		
and	Mark	Nicholls	joined	the	Committee	on	their	appointment	to	the	Board.

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	five	occasions	in	2010	(2009:	five).	Details	of	attendance		
at	meetings	are	shown	on	page	34.

Remuneration policy for Executive Directors

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

There	has	been	considerable	government	and	regulatory	focus	on	remuneration	in	2009	and	2010,	particularly	in	the	
financial	services	industry.	This	has	provided	an	opportunity	to	review	and	update	remuneration	arrangements.

Following	consultation	with	major	shareholders	in	early	2010,	the	profit	sharing	scheme	was	revised	to	introduce	an		
element	of	deferral	with	deferred	awards	invested	in	Rathbone	shares.	The	current	Long	Term	Incentive	Plan	(LTIP)	has		
now	reached	the	end	of	its	10	year	life	and	shareholder	approval	of	a	replacement	LTIP	will	be	sought	at	the	AGM	on		
11	May	2011.	Full	details	are	below.

Remuneration packages

The	current	remuneration	package	for	an	Executive	Director	has	four	main	elements:
•	 Basic	salary	and	benefits.
•	 Profit	share.
•	 Equity	incentives.
•	 Pension.

Remuneration	packages	are	designed	to	have	the	following	three	key	characteristics:
•	 To	align	the	interests	of	the	Directors	with	shareholders	in	generating	long	term	shareholder	value.
	 –	 Participation	in	a	LTIP	and	use	of	the	total	shareholder	return	performance	condition
	 –	 Deferred	profit	share	invested	in	Rathbone	Brothers	Plc	shares

•	 To	align	remuneration	practices	with	effective	risk	management.
	 –	 Profit	share	rather	than	income	based	bonus
	 –	 Profits	for	these	purposes	are	realised	and	in	cash
	 –	 Deferred	awards	(LTIP	and	partial	deferral	of	profit	share)

•	 To	motivate	and	retain	key	executives.
	 –	 Directors	are	incentivised	to	increase	the	deferred	share	element	of	the	profit	share
	 –	 Deferred	awards	(profit	sharing	scheme	and	LTIP)
	 –	 Retention	provisions	and	up	to	date,	best	practice	contracts

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

The	elements	of	remuneration	packages	are	summarised	below.

Basic salary and benefits

An	Executive	Director’s	basic	salary	is	determined	by	the	Committee	and	any	change	implemented	on	1	January	of	each		
year	or	when	an	individual	changes	position	or	responsibility.	In	deciding	appropriate	levels,	the	Committee	considers	salaries	
throughout	the	Group	as	a	whole	and	the	information	obtained	on	comparable	companies	in	the	financial	sector.

In	view	of	the	trading	conditions	experienced	in	late	2008	and	in	2009,	Directors’	basic	salaries	were	not	increased	on		
1	January	2009	or	on	1	January	2010.	With	one	exception,	all	Directors	received	a	salary	increase	of	approximately	4%	with	
effect	from	1	January	2011	which	was	in	line	with	the	average	increase	for	all	employees.	Ian	Buckley	received	an	increase		
of	7.8%	to	reflect	significant	additional	responsibilities	taken	on	during	the	year.

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Basic salary and benefits continued

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	benefits	including	life,	private	medical	and	permanent	health	insurance.	The	
provision	of	company	cars	is	being	phased	out	as	lease	contracts	end.

Profit share

As	explained	in	our	2009	financial	statements,	changes	were	made	to	the	operation	of	this	arrangement.	From	2010,		
awards	to	all	Executive	Directors	are	made	from	a	pool	of	profits	of	3	–	5%	of	Group	profit	before	tax	with	an	expectation	that	
in	a	normal	year	the	percentage	would	be	around	4%.	The	percentage	for	2010	was	5%	reflecting	the	strong	performance		
in	2010.	

The	Committee	has	the	discretion	to	adjust	the	calculation	of	Group	profit	before	tax	for	the	purposes	of	the	profit	share	to	
ensure	that	it	appropriately	reflects	underlying	business	performance.	For	2010,	the	Committee	agreed	that	the	exceptional	
FSCS	levies	of	£3.6	million	should	be	excluded	from	the	calculation.

Awards	to	individual	Directors	are	determined	by	the	Committee	following	recommendations	by	the	Chief	Executive	and	
Chairman.	They	are	calculated	taking	into	account	the	performance	of	the	Director,	the	results	of	the	business	for	which	the	
Director	has	responsibility	(where	relevant)	and	market	data	where	this	is	available.

Awards	are	made	in	both	cash	(one	third)	and	deferred	shares	(two	thirds)	with	interim,	on	account	awards	payable	during	the	
financial	year,	and	final	awards	made	shortly	after	the	announcement	of	the	Group’s	results	for	the	year.	The	proportion	paid	in	
cash	may	be	increased	at	the	request	of	the	participant	but	this	will	cause	the	overall	award	to	be	reduced	such	that	the	total	
will	be	reduced	by	a	maximum	of	one-third	if	100%	of	the	award	is	taken	in	cash.	In	2010,	all	participants	took	the	maximum	
award.	Individual	awards	are	capped	at	200%	of	basic	salary.	

No	performance	criteria	are	attached	to	the	deferred	share	awards.	The	Committee’s	view	is	that	share	price	movements	
reflect	the	performance	of	the	business	and	therefore	further	performance	conditions	were	not	necessary.	Half	of	deferred	
share	awards	will	lapse	if	a	Director	is	a	‘bad	leaver’.	Deferred	shares	will	attract	the	monetary	equivalent	of	declared	dividends	
over	the	deferral	period	from	the	end	of	the	financial	year	of	the	award.	Awards	vest	on	the	third	anniversary	of	the	financial	
year	end	at	which	point	a	nil	paid	option	will	be	granted	over	the	deferred	share	award	(including	a	further	number	of	
additional	shares	representing	the	value	of	dividends	received	and	reinvested	in	relation	to	vested	shares).	This	option	may	be	
exercised	within	seven	years	of	grant.

For	2010,	a	first	interim	deferred	share	award	was	made	on	31	March	2010	and	a	second	interim	award	on	6	September	
2010.	The	final	award	will	be	made	following	the	announcement	of	the	2010	results.

Table 1. Profit share (audited information)

Total	cash	award	
Total	deferred	share	award	

	 £55,000	 £62,333	 £115,000	 £48,000	 £107,333	 £113,334	 £60,000	
	 £110,000	 £124,667	 £230,000	 £96,000	 £214,667	 £226,666	 £120,000	

I M  
Buckley 

P D G 
Chavasse 

R P 
 Lanyon 

A T 
Morris 

A D 
Pomfret 

R I 
Smeeton 

R P
 Stockton 

Total

	 £561,000	
	£1,122,000

Total award	

	 £165,000	 £187,000	 £345,000	 £144,000	 £322,000	 £340,000	 £180,000	

	£1,683,000

Deferred share awards 
– 3 year deferral

First interim
Cash	equivalent	
Market	price	at	award		
Deferred	share	award	(shares)	

Second interim
Cash	equivalent	
Market	price	at	award		
Deferred	share	award	(shares)	

Final
Cash	equivalent	

Total	deferred	share	award		
(cash	equivalent)	

	 £13,000	 £18,000	 £47,000	 £20,000	 £37,000	 £49,000	 £18,000	
£8.597	
2,093	

£8.597	
5,699	

£8.597	
4,303	

£8.597	
2,326	

£8.597	
5,467	

£8.597	
1,512	

£8.597	
2,093	

	 £15,000	 £19,000	 £50,000	 £22,000	 £40,000	 £52,000	 £19,000	
£8.326	
2,282	

£8.326	
1,801		

£8.326	
6,245	

£8.326	
4,804	

£8.326	
2,282	

£8.326	
2,642	

£8.326	
6,005	

	 £202,000	

23,493

	 £217,000	

26,061	

	 £82,000	

£87,667	 £133,000	 £54,000	 £137,667	 £125,666	 £83,000	

	 £703,000

	 £110,000	 £124,667	 £230,000	 £96,000	 £214,667	 £226,666	 £120,000	

	£1,122,000

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Profit share continued

Table 2. Directors’ remuneration (audited information)

Profit 
sharing 
– cash 
£’000 

Profit
sharing 
– deferred 
shares2 
£’000 

Salary 
or fee1 
£’000 

Benefits3 
£’000 

2010	
total	
£’000	

2009	

2010	
pension	

2009
pension
total  contributions4	 contributions
£’000
£’000	

£’000 

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	
C	R	R	Avery	
J	C	Barclay	
C	M	Burton	
O	R	P	Corbett	
D	T	D	Harrel	
K	A	Matthews	
J	M	May	
M	P	Nicholls	
M	Robertshaw	

Total 

165 

– 

– 

3 

168	

168	

–	

311 
184 
231 
230 
188 
37 
210 
219 

35 
12 
40 
43 
40 
35 
32 
5 
12 

107 
55 
62 
115 
48 
– 
114 
60 

– 
– 
– 
– 
– 
– 
– 
– 
– 

215 
110 
125 
230 
96 
– 
226 
120 

– 
– 
– 
– 
– 
– 
– 
– 
– 

3 
3 
3 
3 
17 
– 
3 
3 

– 
– 
2 
2 
– 
1 
– 
– 
– 

636	
352	
421	
578	
349	
37	
553	
402	

35	
12	
42	
45	
40	
36	
32	
5	
12	

469	
272	
311	
429	
287	
156	
418	
298	

–	
37	
42	
45	
40	
–	
35	
–	
37	

37	
21	
–	
–	
–	
–	
–	
21	

–	
–	
–	
–	
–	
–	
–	
–	
–	

–

37
24
–
–
–
–
–
21

–
–
–
–
–
–
–
–
–

2,029 

561 

1,122 

43 

3,755 

3,044 

79 

82

1	 Reviewed	annually	on	1	January
2	 This	is	the	cash	equivalent	of	deferred	share	awards	at	the	date	of	the	award.	Deferred	share	awards	vest	after	three	years
3	 Benefits	include	the	provision	of	a	company	car	and	medical	insurance.	They	also	include	the	value	of	SIP	matching	shares	awarded	on	a	one	for	one	basis	to	

	match	partnership	shares	acquired	up	to	a	maximum	of	£1,500	per	annum	

4	 During	the	year,	retirement	benefits	accrued	under	money	purchase	schemes	in	relation	to	three	directors	(2009:	three)

Equity incentives

Long Term Incentive Plan (LTIP)

The	current	LTIP	was	approved	by	shareholders	in	2000	and	no	awards	may	be	made	after	November	2010.	It	is		
therefore	proposed	to	introduce	a	replacement	LTIP	with	effect	from	1	January	2011,	subject	to	shareholder	approval	at		
the	AGM.

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	relative	total	shareholder	return	(TSR)	measured	against	the	FTSE	All	Share	Index.	TSR	is	a	measure		
of	the	overall	return	to	shareholders.	It	reflects	both	the	change	in	the	share	price	and	dividends,	assuming	that	they		
are	reinvested.

Whilst	the	rules	of	the	proposed	new	LTIP	have	been	updated	and	revised	to	reflect	current	practice,	the	main	features		
of	the	proposed	plan,	which	are	set	out	in	detail	in	the	Notice	of	the	AGM,	are	broadly	unchanged.	Awards	are	limited	to	75%		
of	salary	other	than	in	exceptional	circumstances	when	the	Committee	consider	that	a	100%	limit	would	be	appropriate.		
Whilst	the	EPS	performance	target	is	unchanged,	the	TSR	performance	target	has	been	revised.	The	TSR	of	the	Company		
is	compared	with	the	FTSE	All	Share	Total	Return	Index	(TRI)	with	threshold	vesting	of	25%	of	the	award	if	the	Index	is	
matched.	There	is	full	vesting	if	the	Rathbones	TSR	exceeds	that	of	the	Index	by	10%	(in	absolute	rather	than	relative	terms)	
with	straight	line	vesting	between	these	two	points.	The	Committee	consider	that	the	combination	of	EPS	and	TSR	is		
most	appropriate	as	it	ensures	not	only	focus	on	a	key	financial	driver	(via	EPS),	but	also	alignment	of	shareholder	interests	
(via	TSR).

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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	award	shall	normally	continue	in	effect	and	vest	on	the	original	date	set	for	vesting	but	with		
the	award	based	on	the	performance	during	the	plan	cycle	as	a	whole	but	reduced	pro	rata	to	reflect	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.

Shares	for	both	the	profit	sharing	scheme	and	LTIP	are	held	by	The	Rathbone	Brothers	Plc	Settlement	in	Jersey.	On		
31	December	2010,	the	trustee,	Investec	Trust	(Jersey)	Limited,	held	112,693	Rathbone	Brothers	Plc	ordinary	shares		
(2009:	42,693	ordinary	shares).	Dividend	entitlements	in	respect	of	this	holding	have	been	waived	and	voting	rights		
will	not	be	exercised.

Table 3. LTIP performance targets (2005/07 to 2010/12)

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

a	 TSR

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

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

b	 EPS	

EPS growth over the plan cycle 

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

Table 4. Proposed LTIP performance targets (2011/13 onwards)

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

a	 TSR

Rathbone Brothers Plc TRI relative to the FTSE All Share TRI 

Below	the	percentage	change	in	the	FTSE	All	Share	TRI	
Equal	to	the	percentage	change	in	the	FTSE	All	Share	TRI	
Greater	than	the	percentage	change	in	the	FTSE	All	Share	TRI	by	0.1%	to	9.9%	
Equal	to	or	greater	than	the	percentage	change	in	the	FTSE	All	Share	TRI	plus	10%	

b	 EPS	

EPS growth over the plan cycle 

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

2008/10 plan cycle

% of award

50%	
50%

Vesting of award (TSR element)

0%	
Straight	line	increase	
100%

Vesting of award (EPS element)

0%	
25%	
Straight	line	increase	
100%

% of award

50%	
50%

Vesting of award (TSR element)

0%	
25%	
Straight	line	increase	
100%

Vesting of award (EPS element)

0%	
25%	
Straight	line	increase	
100%

The	TSR	for	the	three	year	period	was	19.8%,	which	ranked	the	Company	at	the	62.2	percentile	relative	to	the	constituents		
of	the	FTSE	All	Share	Index	resulting	in	an	award	of	48.8%	of	the	TSR	element.	Basic	EPS	decreased	from	76.54p	in	2007	
to	49.76p	in	2010	and	so	no	award	was	payable	for	this	element	of	the	plan.

2009/11 and 2010/12 plan cycles

Details	of	the	provisional	awards	for	the	2009/11	and	2010/12	plan	cycles	are	set	out	in	table	5.	

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2011/13 plan cycle

The	2011/13	awards	are	subject	to	shareholder	approval	of	the	plan	at	the	AGM	on	11	May	2011.	If	approved,	the	awards	
will	be	treated	as	having	been	made	on	1	March	2011	using	the	average	share	price	in	the	20	dealing	days	prior	to	that	date.	
Participation	in	the	LTIP	is	conditional	on	the	Director	signing	a	new	service	agreement.

Were	the	maximum	possible	provisional	awards	to	be	made	in	shares	to	current	and	former	Directors	as	shown	in	table	5,	
285,149	ordinary	shares	(2009:	393,346)	would	be	awarded,	representing	0.7%	(2009:	0.9%)	of	the	issued	share	capital		
at	31	December	2010.	In	practice,	awards	under	the	LTIP	are	intended	to	be	satisfied	using	market	purchased	shares	held		
in	trust.	Expected	actual	awards	are	difficult	to	predict	with	any	accuracy.

Table 5. LTIP actual and provisional awards of ordinary shares (audited information)

Plan	cycle	
Status	

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

Total 

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Market	value	of	shares	at	date	of	provisional	award		

2008/10	

2010/12	
Actual	award	 Maximum	provisional	award	 Maximum	provisional	award

2009/11	

3,617	
3,957	
3,957	
3,098	
5,404	
3,617	
2,747	

26,397 

£10.75	

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

142,079 

£8.43	

16,904	
21,187	
21,187	
16,585	
28,933	
19,365	
18,909

143,070

£8.23

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.	Actual	awards	for	the	2008/10	plan	will	be	made	in	
March	2011.	The	performance	conditions	for	the	2007/09	plan	were	not	satisfied	and	no	award	was	therefore	made	in	2010	in	respect	of	this	plan.

Long term incentive arrangements for Peter Pearson Lund

Peter	Pearson	Lund,	who	retired	from	the	Board	on	31	March	2010,	participated	in	the	Rathbone	Unit	Trust		
Management	Limited	deferred	profit	sharing	plan	rather	than	the	LTIP.	As	a	‘good	leaver’	his	outstanding	awards	vested	on	
his	retirement.

Table 6. Awards held by Peter Pearson Lund under the Rathbone Unit Trust Management Deferred Bonus Plan 
(audited information)

Year	of	award	

2006	
2007	
2008	
2009	

Total	

Awards	outstanding	at	
1	January	2010	
(£	value	on	award)	

	 158,659	
	 462,557	
	 191,950	
	 48,050	

	 861,216  

	Award	made	in	2010	
(£	value	on	award)	

	Awards	vesting	in	2010	
(£	value	on	award)	

Awards	vesting	in	2010	
(£	value	of	funds	released)	

Awards	outstanding	at	
31	December	2010	
(£	value	on	award)

–	
–	
–	
–	

– 

158,659	
462,557	
191,950	
48,050	

861,216 

177,296	
489,485	
193,493	
48,052	

908,326 

–
–
–
–

–

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	inflation.	SIP	shares		
are	included	in	the	table	of	Directors’	share	interests	on	page	29.

Executive	Directors	may	also	participate	in	the	Rathbones	Savings	Related	Share	Option	Plan	(commonly	known	as	a	Save		
As	You	Earn	or	SAYE	Plan)	on	the	same	terms	as	all	other	employees.	Details	of	grants	to	Directors	are	shown	in	table	7.		
It	is	anticipated	that	a	further	grant	will	be	made	in	March	2011	following	the	announcement	of	the	2010	results.

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Table 7. The Rathbone Brothers Savings Related Share Option Plan 2009 (audited information)

At	
1	January	
20101	

Granted	in	
2010	

Exercised		
in	
2010	

At	
Lapsed	in	 31	December	
2010	

2010	

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	

696p	
696p	
696p	
696p	
696p	
696p	
696p

7,817

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

1	 or	date	of	appointment	if	later

Share options

The	Company’s	share	option	scheme	was	approved	by	shareholders	in	November	2000	with	a	ten	year	life	and	so	no	further	
grants	may	now	be	made.

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

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

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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	8.	The	terms	and	conditions	of	all	options	have	remained	unchanged	during	the	year.

Table 8. Outstanding share options and movements in the year (audited information)

A	T	Morris	
R	I	Smeeton	
R	P	Stockton	

Former Director	
P	G	Pearson	Lund	
P	G	Pearson	Lund	

	 At	1	January	

20101		

Exercised	
in	2010		

At	
Lapsed	 31	December	
2010	
in	2010		

Date	of	
grant	

Earliest	
exercise	
date		

Latest	
exercise	
date	

Exercise	
price	

Exercise	
date	

10,000	
12,000	
30,000	

–	
–	
–	

10,000	
12,000	
–	

–	 10/04/00	 10/04/03	 10/04/10	
–	 10/04/00	 10/04/03	 10/04/10	
30,000	 22/08/08	 22/08/11	 22/08/18	

932.50p	
932.50p	
813.50p	

–	
–	
–	

Market	
value	at	the	
date	of
	exercise

–	
–	
–

9,966	
10,000	

–	
10,000	

–	
–	

9,966	 24/04/01	 24/04/04	 24/04/11	
–	 15/03/05	 15/03/08	 15/03/15	

827.50p	
–	
852.00p	 10/11/10	

–	
£10.18

71,966 

10,000 

22,000 

39,966

1	 or	date	of	appointment	if	later
2	 The	mid-market	closing	price	of	the	Company’s	shares	on	31	December	2010	was	£10.94	(2009:	£8.00)	and	the	range	during	the	year	was	£7.625	to	

£10.94	(2009:	£6.68	to	£9.60)

3	 P	G	Pearson	Lund	retired	from	the	Board	on	31	March	2010.	His	options	may	be	exercised	before	31	March	2011,	subject	to	the	performance	condition		

being	satisfied

Dilution

Currently,	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.	It	is	proposed	that	at	the	AGM	on	11	May	2011	the	15%	limit	will	be	reduced	to	10%,		
in	line	with	ABI	guidelines.	

Table 9. Potential dilution over a rolling 10 year period

10	years	to	
31	December	2010	
(ordinary	shares)	

%	of	issued	share	
capital	at	
	31	December	2010		

10	years	to	
31	December	2009	
	(ordinary	shares)	

%	of	issued	share		
capital	at	
31	December	2009

Share	option	grants	
SAYE	grants	
Shares	allotted	in	respect	of	the	SIP	

2,012,537	
193,585	
1,139,465	

3,345,587 

4.6%	
0.4%	
2.6%	

7.6% 

2,314,537	
193,585	
1,071,167	

3,579,289 

5.3%	
0.4%	
2.5%

8.3%

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

	 40

	 30

	 20

	 10
%

0

	 -10

	 -20

31	Dec	2005	

31	Dec	2006		

31	Dec	2007		

31	Dec	2008	

	31	Dec	2009	

31	Dec	2010

	 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.

Pension arrangements

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

Prior	to	1	April	2006,	the	accrual	rate	was	1/60th	for	each	year	of	membership.	With	effect	from	1	April	2006,	employees	
were	given	the	choice	of	either	remaining	on	a	1/60th	accrual	rate	(but	increasing	their	contribution	rate	from	5%	to	6.5%		
at	1	April	2006	and	to	8%	from	1	January	2008)	or	switching	to	a	1/70th	accrual	rate	for	future	pensionable	service		
(but	continuing	to	contribute	at	5%).	With	effect	from	1	July	2009,	future	service	benefits	are	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	consolidated	financial	statements.

Since	1	April	2002,	new	employees	have	been	offered	membership	of	a	Group	defined	contribution	plan,	established	with	
Scottish	Widows.	In	the	case	of	certain	Directors	and	senior	staff,	the	Group	contributes	to	their	personal	pension	arrangements.

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

The	changes	in	pension	entitlements	arising	in	the	financial	year,	required	to	be	disclosed	by	the	UK	Listing	Authority,	are	
shown	in	table	10.	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	inflation,	post-retirement	discount	rates	and	future	mortality.

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

Table 10. Directors’ accrued benefits under defined benefit schemes (audited information)

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

Age	at	
31/12/10	

Years	of		
service	at	
31/12/10	

Accrued		
benefit	at	
31/12/101	

46	
59	
46	
46	

10	
19	
22	
22	

36,813	
73,302	
65,722	
77,917	

Increase	in	
accrued		
benefits		
excluding	
inflation2	

2,993	
4,142	
1,903	
4,627	

Increase	in	

Increase	in	
accrued			Transfer	value			Transfer	value	 Transfer	value	
of	2	less		
transfer	value	
of	accrued	
benefits		
benefits	at	 less	Directors’
including	
Directors’	
contributions4
inflation3	 contributions	
31/12/09	

of	accrued	
benefits	at	
31/12/10	

4,542	
7,310	
4,826	
7,984	

23,222	
429,967	
514,401	
92,427	 1,950,109	 1,640,578	
18,034	 1,125,649	
954,767	
949,965	
51,438	 1,152,468	

65,834	
291,765	
156,322	
185,503

During	2010,	four	Directors	(2009:	five)	accrued	benefits	under	defined	benefit	schemes

1	 The	pension	entitlement	shown	above	for	the	four	participating	Directors	is	that	which	would	be	paid	annually	on	retirement	at	age	60	or	65	based	on	service		

to	31	December	2010	(or	normal	retirement	date,	if	earlier)
2	 The	additional	pension	earned	in	the	year	excluding	UK	inflation
3	 The	additional	pension	earned	in	the	year	including	UK	inflation
4	 The	increase	in	transfer	value	represents	the	additional	capital	amount	less	a	Director’s	contributions	necessary	to	fund	the	increase	in	the	accrued	pension		

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

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Pension arrangements continued 

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

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	Executive	Directors	
serving	during	the	year	are	as	shown	below:

Table 11. Executive Directors’ service contracts

Executive	Director	

I	M	Buckley	
P	D	G	Chavasse	
R	P	Lanyon	
A	T	Morris	
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	
1	October	2004	
9	March	1995	
18	August	2008	

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

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

Shareholdings

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

External appointments

Executive	Directors	are	encouraged	to	take	on	external	appointments	as	non-executive	directors,	but	are	discouraged	from	
holding	more	than	one	position	in	a	major	company.	Prior	approval	of	any	new	appointment	is	required	by	the	Board	with	fees	
generally	being	payable	to	the	Company.

An	exception	is	Ian	Buckley,	who	was	appointed	to	the	board	of	NXT	Plc	(now	HiWave	Technologies	PLC)	prior	to	joining	
Rathbones.	In	2010,	Ian	Buckley	received	fees	of	£45,833	from	NXT	Plc	(2009:	£41,250).	He	resigned	from	the	NXT	Plc	
board	on	1	January	2011.	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	(2009:	£27,350),	his	Rathbones	salary	has	been	
reduced	accordingly.

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.	The	appointment	is	
reviewed	annually.	The	Committee	is	also	assisted	by	the	personnel	department	and	by	the	Company	Secretary.

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Non-executive Directors

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

Non-executive Directors’ fees

Fees	were	unchanged	in	2010	but	were	increased	with	effect	from	1	January	2011	as	shown	below.

Table 12. Non-executive Directors’ fees

Basic	fee1	
Additional	fees	
•	 Chairman	of	the	Audit	Committee	
•	 Chairman	of	the	Remuneration	Committee	
•	 Senior	Independent	Director2	

2009	and	2010	

£35,000	

£7,500	
£5,000	
£5,000	

2011

£38,000

£8,000	
£7,000	
£8,000

1	 Mark	Nicholls	is	to	receive	a	fee	of	£60,000	per	annum,	increasing	to	£120,000	per	annum	on	his	appointment	as	Chairman
2	 The	additional	fee	for	the	Senior	Independent	Director	is	only	paid	if	he	or	she	is	not	a	Committee	chairman

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	2008	and	effective	for	accounting	periods	beginning	on	or	after	29	June	2008.	The	Board	will	move	at	the	
AGM	an	ordinary	resolution	seeking	approval	of	the	Directors’	Remuneration	report	for	2010.	The	Notice	of	AGM	has	been	
circulated	separately.

Approved	by	the	Board	on	16	February	2011	and	signed	on	its	behalf	by

Caroline Burton 
Chairman	of	the	Remuneration	Committee

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Audit Committee report

Committee members

The	current	members	of	the	Audit	Committee	are	the	independent	Non-executive	Directors	Oliver	Corbett	(chairman),		
Kate	Avery,	Caroline	Burton,	David	Harrel	and	Kathryn	Matthews.

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

The	Committee	met	on	five	occasions	in	2010	(2009:	seven).	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:
•	
•	
•	 narrative	statements	and	disclosures,	to	ensure	that	they	are	reasonable	and	consistent	with	the	reported	results.

the	significant	financial	reporting	issues	and	judgements	made	in	connection	with	the	Company’s	financial	reporting;
the	Group’s	accounting	policies	and	any	proposed	changes;

Internal controls and risk management systems

The	review	of	the	effectiveness	of	the	Group’s	internal	financial	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	financial	
statements,	the	scope	and	findings	of	the	annual	external	audit	and	periodic	reviews	with	senior	management.

During	2010,	the	Committee	received	a	number	of	reports	on	financial	reporting	issues	including	the	finance	department’s	
Group	financial	statements	consolidation	process,	segmental	reporting	and	capital	planning.	It	was	involved	in	and	consulted	
on	the	conversion	of	the	basis	of	accounting	for	Group	subsidiary	companies	from	UK	Generally	Accepted	Accounting	
Principles	(UK	GAAP)	to	International	Financial	Reporting	Standards	(IFRS).	It	also	considered	a	Financial	Reporting	Council	
(FRC)	update	for	audit	committees	on	issues	arising	from	current	economic	conditions.	Committee	members	visited	offices		
in	Bristol,	Exeter,	Liverpool	and	Winchester	as	well	as	London.	

A	separate	Risk	Management	Committee	considers	risk	management	issues	(see	page	34).

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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.	This	ensures	that	whilst	the	focus	is		
on	higher	risk	areas,	all	parts	of	the	business	are	covered	over	a	three	year	cycle.	Regular	updates	are	given	to	the	Committee	
on	the	findings	of	internal	audit	reviews,	the	status	of	scheduled	work	and	on	the	follow	up	of	reviews	to	ensure	that	agreed	
recommendations	are	acted	upon	promptly.	The	internal	audit	department	will	also	undertake	occasional	ad	hoc	reviews	at	the	
request	of	management	or	the	Committee.	The	Committee	also	regularly	reviews	the	resources	and	authority	of	the	Group	
internal	audit	department.

External audit

The	Audit	Committee	is	responsible	for	reviewing	external	audit	arrangements	and	for	any	recommendation	to	the	Board	
regarding	change	of	audit	firm.	This	review	includes	consideration	of	the	external	auditor’s	period	in	office,	their	compensation	
and	the	scope,	quality	and	cost-effectiveness	of	their	work.	At	their	December	2010	meeting,	the	Committee	discussed	the	
September	2010	public	report	by	the	FRC	Audit	Inspection	Unit	on	their	2009/10	inspection	of	KPMG	LLP	and	KPMG	Audit	
Plc	with	the	KPMG	audit	partner.

The	Audit	Committee	reviews	the	independence	and	the	nature	of	non-audit	services	supplied	by	the	auditor	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	auditor	should	not,	in	aggregate,	exceed	50%	
of	the	audit	fee	in	any	year	without	the	prior	written	approval	of	the	Audit	Committee.	

Non-audit	fees	payable	to	the	auditor	in	2010	were	£301,000.	This	represents	67.3%	of	the	audit	fees	of	£447,000	which	
includes	the	audit	of	regulatory	returns	and	of	the	interim	statement	(2009:	£185,000,	51.4%	of	£360,000).	The	Committee	
recognises	that,	given	their	knowledge	of	the	business,	there	are	often	advantages	in	using	the	auditor	to	provide	certain		
non-audit	services.	

In	2010	the	Committee	and	Board	approved	the	use	of	KPMG	for	the	provision	of	an	independent	opinion	on	an	American	
Institute	of	Certified	Public	Accountants	(AICPA)	Statement	on	Auditing	Standard	No.	70	(SAS70)	Report	on	the	Processing	
of	Transactions	by	Service	Organisations.	The	cost	of	this	work	together	with	pension	advice	was	primarily	responsible	for	the	
high	non-audit	KPMG	costs	in	2010.

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Role and responsibilities of the Committee continued

The	Committee	is	satisfied	that	the	independence	of	the	auditor	has	not	been	impaired	by	providing	these	services.		
Details	of	the	auditor’s	fees	are	shown	in	note	7	to	the	consolidated	financial	statements.	The	Committee	also	reviews	the	
audit	engagement	letters	each	year	and	has	discussions	with	the	auditor	with	no	management	present.

Regarding	the	2010	audit,	presentations	were	received	from	the	auditor	on	audit	progress,	findings	and	recommendations	
and	unadjusted	errors.

Confidential reporting policy

The	Audit	Committee	annually	reviews	the	Group’s	Public	Interest	Disclosure	Act	1998	confidential	reporting	policy	and	
approves	any	changes	to	the	document.	It	also	receives	details	of	any	reports	made.

Other

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

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Nomination Committee report

Committee members

The	current	members	of	the	Nomination	Committee	are	Mark	Powell	(chairman),	Kate	Avery,	Caroline	Burton,	Oliver	Corbett,	
David	Harrel,	Kathryn	Matthews,	Mark	Nicholls	and	Andy	Pomfret.	Kate	Avery,	Kathryn	Matthews	and	Mark	Nicholls	joined		
the	Committee	on	their	appointment	to	the	Board.

The	Committee	met	formally	on	two	occasions	in	2010	(2009:	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

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.	The	Committee		
is	mindful	of	the	benefits	of	a	diverse	Board	with	a	broad	range	of	skills	and	experience	and	this	has	been	reflected	in		
recent	Board	appointments.

Regarding	succession	planning,	the	Board	is	exposed	to	senior	management	below	Board	level	during	visits	to	other	offices,	
attendance	at	internal	meetings	and	presentations	by	senior	managers	to	the	Board.

In	June	2010,	a	firm	of	headhunters	was	approached	regarding	the	recruitment	of	a	new	Non-executive	Director	with	a		
view	to	him	or	her	becoming	Chairman	on	the	retirement	of	Mark	Powell	in	2011.	A	long	list	of	candidates	was	reviewed	and	
four	candidates	selected	for	interview.	Following	those	interviews,	the	Committee’s	recommendation	to	the	Board	was	that	
Mark	Nicholls	be	appointed.

All	Directors	are	required	to	seek	election	by	the	members	at	the	AGM	following	their	appointment,	and	re-election	every		
three	years.	A	Non-executive	Director	is	not	appointed	for	a	fixed	term	but	would	not	normally	serve	as	a	Director	for	more		
than	nine	years.

The	Committee	are	mindful	of	the	UK	Corporate	Governance	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.

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Corporate responsibility report

Introduction

I	am	pleased	to	introduce	our	third	annual	corporate	responsibility	report.	Rathbones	is	committed	to	act	as	a	good	corporate	
citizen	and	takes	its	responsibilities	as	investment	manager,	employer	and	consumer	seriously	and	I	believe	that	this	is	
reflected	in	this	report	of	the	Social	and	Environmental	Committee	(SEC)	which	I	chair.

This	Committee	is	responsible	for	ensuring	that	Rathbones	effectively	manages	its	sustainability	issues.	It	is	formed	by	
members	of	staff	from	key	functions	such	as	facilities	management,	personnel,	marketing,	IT	and	investment	management.		
It	meets	on	a	quarterly	basis	and	reports	directly	to	the	Group	Executive	Committee	of	the	Board.

With	regard	to	environmental,	social	and	governance	(ESG)	matters	as	they	affect	our	business,	the	Board	believes	that	the	
SEC	has	identified	and	assessed	the	significant	risks	to	the	Company’s	short	and	long	term	value.

The	past	year	has	been	one	of	progress.	Our	total	estimated	carbon	footprint	has	fallen	by	3.3%	from	2,521	tonnes	CO2e1	in	
2008/09	to	2,439	tonnes	CO2e	in	2009/10.	In	particular,	I	am	pleased	to	report	a	fall	in	business	travel	emissions	following	
the	disposal	of	our	offshore	trust	businesses.	Plans	are	well	advanced	for	the	move	of	our	London	data	centre	to	a	specialist	
third	party	provider	which	should	lead	to	a	reduction	in	energy	usage	associated	with	the	cooling	of	the	equipment	which	has	
always	proved	difficult	and	inefficient	in	our	New	Bond	Street	offices.	The	creation	of	a	‘green	team’	in	Liverpool,	of	which	
more	below,	has	increased	awareness	of	environmental	issues	in	our	key	Liverpool	office.

Looking	forward,	the	SEC	has	recognised	that	it	is	unlikely	that	further	significant	reductions	in	our	carbon	footprint	will	be	possible.	
It	will	therefore	be	looking	at	possible	carbon	offset	arrangements	with	a	view	to	making	Rathbones	a	carbon	neutral	company.

Finally,	I	am	delighted	that	our	corporate	responsibility	reporting	has	been	recognised	with	both	the	2008	and	2009	reports	
nominated	for	the	ICSA	Hermes	Transparency	in	Governance	Award	for	best	sustainability	and	stakeholder	disclosure	by		
a	FTSE	250	company.	The	Company	remains	a	constituent	company	in	the	FTSE4Good	Index	Series.

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Andy Pomfret 
Chief	Executive	
Chairman	of	the	SEC
1	 We	have	expressed	our	carbon	footprint	in	terms	of	CO2	equivalent	(CO2e)	to	accommodate	non-CO2	greenhouse	gas	emissions

Our strategy

Rathbones’	corporate	responsibility	strategy	can	be	summarised	as	follows:
•  Environment  

Manage	our	environmental	impact	and	reduce	our	carbon	footprint	by	the	efficient	use	of	resources.

•  Clients	

• 

Maintain	and	develop	the	relationships	we	have	with	our	clients,	treat	them	fairly	and	continue	to	meet	their	needs.
Investments	
Consider	corporate	responsibility	issues	in	the	companies	in	which	we	invest	on	behalf	of	our	clients.

•  Employees  

Motivate	and	reward	appropriately,	encouraging	their	development.

•  Communities  

Engage	in	the	communities	in	which	we	operate.

Environment

As	a	responsible	business,	Rathbones	believes	that	environmental	concerns	should	be	central	to	the	day	to	day	running	of	its	
business,	and	all	due	care	and	consideration	should	be	given	to	reducing	our	impact	on	the	environment.	

Our	direct	environmental	impacts	are	those	typical	of	an	office-based	business,	for	example,	energy	consumption	of	buildings,	
travel	related	emissions,	resource	consumption	and	waste	generation.

As	such,	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	significant	impact	on	our	business.

The	need	to	comply	with	any	future	tightening	of	energy	efficiency	standards	would	be	of	greater	impact.	However,	
Rathbones	considers	that	the	steps	we	have	already	taken	in	the	course	of	refurbishing	our	Liverpool	and	London	offices	
have	largely	addressed	any	reasonable	measures	we	could	be	expected	to	take.

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Our environmental performance

Scope

Our	reporting	period	covers	the	year	to	30	September	2010,	with	comparative	figures	for	2008/09	and	2007/08.	The		
carbon	footprint	calculations	now	cover	all	UK	employees2.

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.	We	have	used	the	financial	control	approach	in	setting	the	
organisational	boundary,	and	measured	our	total	direct	Scope	1,	2	and	significant	Scope	3	emissions.	Scope	1	includes		
all	direct	operational	emissions	(primarily	from	the	use	of	gas	for	office	heating),	Scope	2	covers	electricity	consumption		
and	Scope	3	includes	all	indirect	operational	emissions	including	business	travel.

Base year

Our	base	year	is	2007/08,	which	is	the	first	year	for	which	verifiable	emissions	data	is	available.	Base	year	emissions	for	
2007/08	and	2008/09	have	been	recalculated	in	order	to	provide	a	means	of	consistent	comparison	across	the	years.	

Our	base	year	recalculation	policy	is	to	recalculate	prior	year	emissions	for	relevant	significant	changes	which	meet	our	
significance	threshold	of	5%	of	total	base	year	emissions.	This	year,	recalculation	was	undertaken	to	include	three	offices	
which	had	previously	been	excluded	from	the	analysis;	Birmingham,	Jersey	and	Kendal.	We	have	also	included	the	newly	
acquired	office	in	Aberdeen.	

It	should	be	noted	that	we	have	used	the	emissions	factors	for	2009	to	recalculate	the	emissions	figures	stated	for		
2007/08	and	2010	emissions	factors	to	recalculate	2008/09	figures.	This	is	in	accordance	with	the	Government’s	guidance	
on	incorporating	updated	emissions	factors	into	previous	carbon	accounting,	to	ensure	data	accuracy	and	comparability.	

Our carbon footprint

Our	total	carbon	footprint	for	this	year	is	2,439	tonnes	of	CO2e	(2008/09:	2,521	tonnes	of	CO2e).	Our	reported	emissions	
have	fallen	3.3%	from	last	year	as	a	result	of	a	number	of	efficiency	measures	taken	across	our	operations.	In	particular,		
a	significant	reduction	in	long	haul	flights	has	contributed	to	this	improvement.	

Chart 1. Tonnes of CO2e by emissions source

	 Electricity	
	 Gas	
	 Flights	
	 Non-company	cars	
	 National	rail	
	 Company	cars	
	 Taxis	

Total 

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

Office	floor	space	(m2)	
Number	of	employees	as	at	31	December4		

Scope	1	(Gas,	company	cars)	
Scope	2	(Electricity)	
Scope	3	(Business	travel)	

Total	CO2e	(tonnes)	

Intensity	measurement	CO2e	(tonnes)	per	employee		

2009/10 

2008/09 

	 11,461	
689	

	 11,461	
683	

261	
1,745	
433	

2,439	

3.54	

267	
1,763	
491	

2,521	

3.69	

Tonnes CO2e

1,745		
247	
214	
120	
95	
14	
4

2,439

2007/08
(Base year)3

	 10,496
673

308	
1,688	
505

2,501

3.72

2	 Previously,	the	scope	covered	92%	of	Group	employees
3	 Data	re-baselined	for	2008/09	and	2007/08	in	order	to	include	four	offices	previously	excluded	from	calculations	and	to	utilise	the	latest	available		
emissions	factors	for	the	relevant	years,	using	2009	emissions	factors	for	2007/08,	and	2010	emissions	factors	for	2008/09,	in	accordance	with	
Government	Guidelines

4	 Employee	numbers	have	been	restated	following	the	collection	of	improved	data

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Our environmental performance continued	

Targets

Based	on	our	carbon	emissions	during	baseline	year	2007/08,	our	overall	goal	is	to	reduce	our	carbon	footprint	where	
possible,	to	achieve	savings	year	on	year.	In	order	to	achieve	this	goal,	we	have	agreed	a	series	of	actions	focused	on	
addressing	carbon	intensive	activities.	These	include:
•	 Monitor	and	reduce	the	energy	consumption	of	our	offices	through	improved	energy	efficiency,	management	and	

staff	engagement;

•	 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.

Intensity measurement

In	line	with	the	Accounting	for	Sustainability	model,	we	are	reporting	our	carbon	intensity	against	our	operating	income	and	
funds	under	management.	

Table 2. Carbon intensity

Operating	income	
Funds	under	management	(FUM)	

5	 Tonnes	CO2e	per	£m	of	operating	income	or	FUM

Liverpool case study

2010 
£m 

127.2	
15,630	

2009 
£m 

116.8	
13,100	

Carbon intensity5

2010 

19.2	
0.16	

2009

21.6
0.19

Rathbones	occupies	two	floors	in	the	iconic	Grade	II	listed	Port	of	Liverpool	building.	It	is	the	largest	office	in	the	Group	with	
46%	of	employees	based	there.	It	was	identified	that	significant	improvements	in	the	Group’s	environmental	performance	
could	be	made	by	addressing	the	energy,	travel,	waste	and	resource	impacts	associated	with	the	Liverpool	office.	A	structured	
programme	was	introduced	a	number	of	years	ago	to	strategically	address	the	environmental	performance	of	the	Liverpool	
operation.	Highlighted	below	are	some	of	our	milestones:
•	 an	office	refurbishment	in	2006	allowed	us	to	invest	in	energy	efficient	and	sensor-controlled	lighting	technologies;
•	 waste	and	recycling	facilities	in	the	office	were	upgraded.	We	recycle	our	paper,	card,	plastic,	metal,	glass	and	toner	waste;	
•	 an	environmental	assessment	in	2009	helped	us	measure	our	carbon	footprint	and	identified	carbon	and	cost	saving	

opportunities;

•	 we	have	run	a	number	of	staff	engagement	projects	to	raise	awareness	and	share	learning;	
•	 a	green	team	has	been	created	to	encourage	recycling,	reduce	energy	usage	and	make	people	more	aware	of	the	

environmental	impact	of	their	actions.	

As	a	result	of	these	actions	we	have	managed	to	reduce	the	energy	carbon	footprint	of	the	Liverpool	office	by	8%	since	
2007/08	and	have	achieved	a	zero-to-landfill	policy.

Performance analysis

Energy

Electricity 
Total	electricity	use	and	associated	CO2e	emissions	have	decreased	by	1%	compared	to	the	previous	year.	The	main	
decrease	was	from	the	London	office.	Our	IT	infrastructure	is	a	major	user	of	electricity	but	consumption	levels	are	falling		
as	the	energy	efficiency	of	IT	equipment	improves.	For	example,	155	diskless	PCs	were	deployed	during	the	year,	which		
use	10%	of	the	power	of	a	normal	PC.

Natural gas 
Natural	gas	consumption	has	decreased	by	3%	over	the	past	year.	Improved	data	quality	has	allowed	us	to	measure	a	
reduction	in	consumption	in	the	Liverpool	office	of	126,900kWh,	which	has	contributed	significantly	to	the	overall	reduction.	
Gas	use	from	a	number	of	offices	has	been	calculated	using	benchmark	data,	and	accurate	estimates	of	reduction	cannot	be	
calculated	for	those	sites.

Objectives for 2011 
We	will	continue	to	improve	our	data	collection	processes	so	that	accurate	data	on	energy	consumption	can	be	provided	for	
all	of	our	offices.	We	will	seek	to	identify	opportunities	to	improve	our	energy	efficiency	and	will	implement	these	where	
practical	and	cost-effective.

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Performance analysis continued	

Business travel

Overall,	we	are	pleased	to	report	a	total	decrease	of	14.4%	in	CO2e	emissions	associated	with	business	travel	from	
the	baseline	year,	and	a	12%	decrease	on	last	year.	These	represent	a	significant	proportion	of	the	overall	savings	within		
the	carbon	footprint.	Our	business	travel	bookings	are	now	fully	centralised,	and	this	has	resulted	in	a	higher	level	of		
data	quality	and	reporting	accuracy	in	the	current	reporting	year.	

Company cars 
The	emissions	from	our	small	fleet	of	company	cars	have	remained	stable	this	year.

Flights 
A	reduction	in	the	total	number	of	long	haul	flights	contributed	to	a	28%	reduction	on	the	previous	year’s	emissions,		
which	was	the	largest	reduction	in	CO2e	made	throughout	the	total	carbon	footprint.	

Rail
National	rail	travel	decreased	by	3%	in	2009/10	from	1,732,000km	to	1,675,000km,	with	a	concurrent	reduction		
of	3%	in	associated	CO2e.

Taxis and non-company cars 
Our	use	of	taxis	has	decreased	by	46%	to	15,113km	with	staff	encouraged	to	use	public	transport	where	possible.		
This	has	contributed	to	a	reduction	in	3	tonnes	CO2e.	Non-company	car	use	has	increased	by	34%	on	the	previous	year,	
with	a	corresponding	increase	of	31	tonnes	CO2e	in	carbon	emissions.	This	is	due	in	part	to	the	growth	of	the	investment	
management	business	and	in	particular	the	acquisition	of	clients	from	the	Lloyds	Banking	Group.

Objectives for 2011 
We	will	continue	to	encourage	the	use	of	public	transport	where	practical.	Video	conferencing	facilities	are	being	installed		
in	those	smaller	Group	offices	which	currently	do	not	have	the	facility.

Waste and recycling

All	offices	have	active	recycling	programmes	with	high	levels	of	participation	that	cover	at	a	minimum	paper	and	cardboard.		
In	most	offices	shredded	paper,	glass,	plastic	bottles	and	cans	are	also	recycled.	Of	the	344kg	of	waste	produced	per	
employee	per	annum,	it	is	estimated	that	271kg	is	recycled.	

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

We	have	carried	out	wide	sampling	of	our	waste	streams	in	our	main	offices	and	have	improved	the	quality	of	data	received	
from	our	suppliers.	We	continue	to	improve	our	recycling	level,	achieving	an	estimated	average	93%	recycling	level	of	
recyclable	materials	across	the	business.	

In	London	and	Liverpool	we	have	also	seen	waste	to	energy	initiatives	fully	implemented	and	send	69%	of	our	non-recycled	
waste	to	energy	production.	As	a	result,	in	London	and	Liverpool	we	have	achieved	our	objective	of	sending	no	waste		
to	landfill.

Objectives for 2011 
We	remain	focused	on	reducing	the	mass	of	waste	generation	and	improving	recycling	levels	in	our	offices.	Overall,	we	seek		
to	achieve	a	total	reduction	in	the	amount	of	residual	waste	sent	to	landfill.	

Table 3. Waste and recycling data

Paper	and	cardboard	
Secure	shredding	
Other	materials	

Total	recycling	
Waste	to	energy	
Residual	landfill	waste	

Total waste 

Per	employee	(kg)	

 Mass collected 
2009/10 
(tonnes) 

72		
106		
9	

187		
34		
16		

237  

344	

% of total 

30%	
45%	
4%	

79%	
14%	
7%	

100% 

	 Mass	collected
2008/09 
(tonnes) 

70	
104	
9	

183	
18	
33	

234 

343

%	of	total

30%	
44%	
4%

78%	
8%	
14%

100%

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Performance analysis continued 

Paper usage

Total	paper	consumption	amounts	to	128	tonnes,	which	is	approximately	equivalent	to	17.1	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	

Total paper 

Recycled	percentage	

Total	paper	usage	per	employee	(kg)	

Total 
2009/10 

88	
40	

128 

69%	

186	

Total 
2008/096  

104	
18	

122 

85%	

179	

Total 
2007/086

84	
24

108

78%

160

6	 As	a	result	of	data	quality	improvements,	increases	of	24	tonnes	in	the	paper	consumption	for	2008/09,	and	10	tonnes	for	2007/08	reporting	years	were	

identified.	These	have	been	added	into	the	calculation	to	reflect	best	available	data.

69%	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	4	million	sheets	since	2007/08.	Paper	used	for	
printing	has,	however,	increased	by	38%	as	a	result	of	the	growth	of	the	investment	management	business	and	increased	
levels	of	client	communication.	This	has	resulted	in	a	net	increase	in	our	overall	paper	consumption.	

We	have	estimated	that	our	paper	consumption	this	year	has	caused	emissions	of	178	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 2011 
We	remain	focused	on	improved	paper	management	in	our	offices	and	will	increase	efforts	to	reduce	our	printed	paper	use.		
To	address	the	issue	of	our	increasing	print	consumption,	we	will	consider	means	of	delivering	our	client	communications	in	
a	more	resource	efficient	manner,	and	will	consider	electronic	media	as	part	of	this	review.	We	will	also	seek	to	reduce	our	
use	of	virgin	stock	to	achieve	or	exceed	our	2007/08	level	of	78%	recycled	stock.	

Table 5. Performance versus our objectives

Our objective for 2010 

Performance 

Comment 

Our objective for 2011

Energy

Energy	audit	in	Bristol	

Travel

We	will	review	our	travel	
policy	and	seek	ways	of	
increasing	the	use	of	video	
conferencing

Enhance	the	central	
travel	booking	system	
with	online	access	

Waste

On	track	 An	energy	audit	for	the	Bristol	
office	has	been	commissioned	

Investigate	environmental	benefits	
of	outsourcing	the	London	IT	
and	communications	facilities

Achieved	 We	have	reported	a	reduction	in	the	

number	of	flights.	Our	Scope	3	
emissions	have	decreased	by	17%	

Introduce	video	conferencing	
facilities	to	all	offices	

Achieved	 The	use	of	a	single	travel	

provider	has	increased	our	
data	quality	significantly	

Increase	internal	data	
quality	rating	to	4	by	2011	
(see	data	quality	rating	below)

Seek	ways	of	reducing		
waste	in	offices	other	than		
London	and	Liverpool	

On	track	 Our	zero-to-landfill	programme	has	

been	successfully	initiated	in	our	
London	and	Liverpool	offices		

Seek	ways	of	reducing	waste	in	
other	offices	

Paper usage

Seek	ways	to	reduce	
printed	stationery	use,	
particularly	for	
client	communication	

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addressed.	However,	increased	
client	communication	has	resulted	
in	increased	print	consumption	

Consider	resource	efficient	
options	for	delivering	our	client	
communications,	including	
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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	
2009	to	30	September	2010.	It	does	not	represent	an	independent	third	party	assurance		
of	Rathbones’	management	approach	to	sustainability.

Carbon	Smart	has	been	commissioned	by	Rathbone	Brothers	Plc	for	the	third	consecutive	year	to	measure	Rathbones’	
carbon	footprint	for	all	offices	for	its	2010	Corporate	responsibility	report.	Through	this	engagement	Carbon	Smart		
has	assured	Rathbones	that	the	reported	carbon	footprint	is	representative	of	the	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	verified	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	years.

We	have	concluded	the	following:

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

Completeness 
Reported	environmental	data	covers	all	employees	and	all	entities	that	meet	the	criteria	of	being	subject	to	control		
or	significant	influence	of	the	reporting	organisation.	We	recommend	that	Rathbones	continues	to	improve	its	data		
collection	processes.

Consistency
In	order	to	ensure	comparability,	we	have	used	the	same	calculation	methodologies	and	assumptions	as	previous	years.		
We	have	re-baselined	data	to	account	for	four	additional	offices	which	were	included	under	scope	this	year,	as	well	as	
changes	in	the	Government’s	emissions	factors.

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	3.6	which	reflects	a	consistent	improvement	
from	the	base	year	of	2.6.	

Table 6. Data quality rating7

Scope	

Overall	
Scope	1	
Scope	2	
Scope	3	
Paper	
Waste	and	recycling	

%	Carbon	footprint	
2008/09	

Data	quality	rating	
2009/10	

Data	quality	rating	
2008/09	

Data	quality	rating
2007/08

100%	
11%	
71%	
18%	
–	
–	

3.6	
3	
4	
4	
4	
3	

3.2	
2	
4	
3	
4	
3	

2.6	
2	
3	
2	
4	
2

7	 Most	of	our	gas	use	data	comes	from	meter	readings	or	invoices.	Data	for	gas	consumption	in	the	Birmingham,	Cambridge	and	Chichester	offices	was	not	
available	and	so	a	government	benchmark	was	used.	In	the	case	of	Liverpool,	gas	data	was	only	available	for	the	whole	building	and	had	to	be	adjusted		
pro	rata	to	give	estimated	figures	for	the	space	occupied	by	Rathbones.	Most	electricity	data	comes	from	primary	sources	and	is	complete.	Travel	data	quality	
has	improved	significantly	from	last	year;	approximately	5%	of	train	journeys	were	estimated	based	on	cost	(2008/09:	40%).	The	waste	data	from	Aberdeen,	
Birmingham,	Chichester,	Jersey	and	Kendal	was	estimated	based	on	office	samples.	London	paper	data	from	last	year	has	been	recalculated	based	on	a	
miscalculation	discovered	in	the	dataset.	Paper	consumption	was	based	on	paper	purchased	and	printing	records

Ben Murray 
Director		
Carbon	Smart	Limited	

16	February	2011

Louise Quarrell 
Director	
Carbon	Smart	Limited

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Clients

The	fair	treatment	of	our	clients	is	central	to	our	culture.	We	provide	a	personal	service	with	a	clear	charging	structure	and	
aim	to	report	to	clients	in	a	clear	and	understandable	way.	Each	FSA	regulated	subsidiary	has	a	director	who	is	responsible	
for	ensuring	our	adherence	to	the	FSA’s	Treating	Customers	Fairly	(TCF)	principles	or	outcomes.	Management	information	is	
produced	and	monitored	at	Board	level.	This	covers	staff	training,	client	complaints,	account	closures	and	any	TCF	issues	
raised	during	internal	peer	reviews	of	client	files.

During	2009,	we	undertook	a	telephone	survey	of	a	sample	of	clients.	Feedback	was	generally	positive.	Lessons	learned	
were	that	most	clients	really	valued	the	personal	contact	from	an	Investment	Manager.	Many	wanted	less	paper	and	more	
electronic	communication.	Our	procedures	for	new	clients	have	been	simplified	and	revised	with	the	introduction	of	a	client	
guide	to	the	process	whilst	our	terms	of	business	have	been	re-written.	Our	client	web	portal	is	increasingly	used	by	clients		
to	access	their	investment	portfolio.	

Investments

Asset	allocation	and	stock	selection	form	part	of	the	Rathbone	Investment	Process	from	which	all	our	Investment	Managers	
draw	guidance	and	investment	ideas	whilst	retaining	the	necessary	flexibility	to	ensure	that	their	clients’	individual	needs		
are	met.

Clients	are	not	invested	in	pre-determined	model	portfolios	but	benefit	from	a	structured	portfolio	construction	process		
that	encompasses	the	full	range	of	assets	that	you	would	expect	from	a	professional	investment	management	firm,	including	
equities,	funds,	gilts	and	corporate	bonds,	fund	of	hedge	funds,	structured	products	and	so	on.

To	support	this	approach,	Rathbones	produces	in-house	strategic	and	tactical	asset	allocation	models	for	its	Investment	
Managers	to	assist	them	in	constructing	portfolios	suitable	for	individual	clients.	Recommended	lists	are	also	produced	in	
order	to	help	our	Investment	Managers	select	individual	holdings.

Internal	performance	monitoring	and	risk	control	processes	ensure	that	the	appropriate	quality	of	service	and	fulfilment		
of	client	objectives	are	achieved.

Responsible investment

Although	general	investment	activities	are	not	covered	by	a	formal	responsible	investment	policy,	social,	environmental	and	
ethical	(SEE)	considerations	are	taken	into	account	for	specific	mandates	throughout	the	Group,	but	particularly	by	our	
specialist	ethical	investment	service,	Rathbone	Greenbank	Investments.	As	at	31	December	2010,	Rathbone	Greenbank	
Investments	had	£434.5	million	of	funds	under	management,	representing	some	3%	of	the	total	funds	managed	by		
Rathbone	Investment	Management.

Media	coverage	and	consumer	awareness	of	SEE	issues	(especially	climate	change)	continue	to	raise	the	profile	of	ethical		
or	socially	responsible	investing.	However,	while	coverage	of	socially	responsible	investment	products	(such	as	unit	or	
investment	trusts),	ethical	banking	and	ethical	mortgages	tends	to	be	quite	widespread,	less	attention	is	given	to	the	
opportunities	for	private	investors	to	invest	directly	in	companies	addressing	social	and	environmental	challenges	through	
bespoke	portfolio	management.

Through	Rathbone	Greenbank	Investments	and	Rathbone	Unit	Trust	Management’s	Ethical	Bond	Fund,	the	Company	is		
able	to	provide	investment	services	tailored	to	clients’	interests	in	these	areas.	Where	appropriate,	the	Company	is	also		
able	to	participate	in	new	share	issues	offered	by	companies	that	provide	environmentally	or	socially	beneficial	products		
or	services.	

Affiliations

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.	In	addition,	Rathbone	Greenbank	Investments	is	a	
long-standing	member	of	influential	groups	such	as	the	UK	Sustainable	and	Investment	Finance	association	(UKSIF)		
and	the	Ecumenical	Council	for	Corporate	Responsibility	(ECCR),	as	well	as	being	a	founding	endorser	of	the		
Forest	Footprint	Disclosure	Project.

Voting

During	2010,	the	Group	continued	to	implement	its	policy	on	proxy	voting,	which	covers	all	companies	in	the	FTSE	350	and	
those	where	it	holds	3%	or	more	of	the	issued	share	capital	(with	the	exception	of	Rathbone	Brothers	Plc).	Voting	is	also	
undertaken	on	any	company	if	requested	by	an	underlying	shareholder.

As	part	of	ongoing	efforts	to	enhance	the	Group’s	governance	and	voting	policy	and	ensure	that	we	meet	the	key	principles		
of	the	UK	Stewardship	Code	(as	published	by	the	Financial	Reporting	Council	in	July	2010),	we	are	appointing	a	proxy	voting	
consultant	to	assist	in	this	process.

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Investments continued 

Engagement

Engagement	with	companies	on	environmental,	social	or	governance	(ESG)	matters	is	largely	undertaken	by	Rathbone	
Greenbank	Investments’	ethical	research	team.	This	ranges	from	low	level	contact	with	companies	on	issues	relating	to	ESG	
disclosure	to	participation	in	co-filing	and	voting	on	shareholder	resolutions	at	company	AGMs.	These	activities	may	occur	as	
a	result	of	fundamental	analysis	of	companies’	ESG	data,	or	it	may	come	about	because	of	collaborative	efforts	initiated	by	
interest	groups	such	as	UKSIF	or	the	UN	PRI’s	Clearinghouse	project.

Employees

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

Health and welfare

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

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	confidential	employee	assistance	programme	offering	advice	on	employment,	personal		
and	legal	concerns.

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Equality and diversity

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

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

Work-life balance

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	five	years’	service.	Employees	are	able	to	buy		
up	to	five	additional	days	of	leave	with	the	agreement	of	their	manager.	We	also	provide	time	off	for	dependants,	parental	
leave	and	paternity	leave	and	have	a	childcare	voucher	scheme	in	place.	

Maternity	benefits	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	five	years’	service,	employees	have	the	
opportunity	to	take	up	to	three	months’	unpaid	leave	once	in	every	ten	years	without	any	loss	of	service-related	benefits	such	
as	pension	or	death	in	service	cover.

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

Code of conduct

FSA	registered	staff	are	required	to	adhere	to	FSA	rules	and	to	the	Rathbones	compliance	manual.	The	manual	includes		
the	Rathbone	code	of	business	conduct	and	a	number	of	policy	documents	including	policies	on	dealing,	gifts	and	business	
benefits	and	bribery	and	conflicts	of	interest.

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Employees continued 

Training and development

We	are	very	much	a	people	business	and	therefore	training	and	development	continues	to	be	a	high	priority.	In	September		
we	were	successful	in	gaining	accreditation	from	the	Chartered	Institute	of	Securities	and	Investment	(CISI)	for	our	
continuous	professional	development	scheme.	This	required	us	to	demonstrate	how	our	training	measured	up	to	the	rigorous	
standards	expected	by	the	institute.	The	CISI	were	particularly	impressed	by	the	support	for	training	and	development	from	
senior	managers	and	the	use	of	business	sponsors	to	ensure	that	content	of	training	is	absolutely	tailored	and	relevant	to	the	
needs	of	the	business.

A	number	of	successful	initiatives	continue	to	gain	momentum	with	excellent	feedback	from	participants,	some	of	which	are	
covered	below.

Qualifications 
Rathbones	continues	to	support	its	staff	to	gain	qualifications	relevant	to	their	roles.	During	2010,	136	staff	studied	towards	
appropriate	qualifications.	The	table	below	shows	the	variety	of	qualifications	taken.

Qualification  

Number of staff studying

CISI	Investment	Administration	Qualification	
Management	Qualifications	
CISI	Private	Client	Investment	Advice	and	Management	Certificate	
IT	Qualifications	
Chartered	Financial	Analyst	
CISI	Diploma	and	Masters	in	Wealth	Management	 	
Chartered	Institute	of	Management	Accountants	
CISI	Investment	Advice	Diploma	
Project	Management		
Other		

Total 

38	
23	
17	
11	
6	
6	
4	
4	
4	
23

136

Financial training 
Following	on	from	a	2009	course	which	focused	on	the	use	of	financial	ratios	in	stock	selection,	a	number	of	portfolio	
construction	technique	courses	were	held	in	2010	which	164	investment	management	staff	attended.	

Senior Investment Management Programme 
Using	a	similar	format	to	the	Rathbone	Development	Programmes	of	previous	years	this	course	was	targeted	at	19	
Investment	Directors	from	around	the	Group.	The	aim	was	to	engage	them	in	the	business	to	improve	their	understanding		
of	the	strategic	issues	faced	by	the	business	and	to	gain	their	input	to	challenges	coming	up	in	the	future.	The	feedback		
was	very	positive	and	we	plan	to	hold	a	similar	programme	next	year	which	will	include	staff	from	the	support	departments	
with	a	view	to	increasing	their	business	awareness.

CISI Chartered Membership 
Following	the	granting	of	the	Royal	Charter	to	the	CISI,	147	Investment	Managers	have	upgraded	their	membership	
to	become	individually	chartered	members	and	in	doing	so	are	demonstrating	a	commitment	to	maintaining	the	highest		
standards	of	professional	development	and	ethical	behaviour.

Secretarial training 
The	secretarial	training	and	networking	programme	has	continued	to	grow	with	the	aim	of	engaging	secretaries	in		
the	business.	It	is	designed	to	ensure	that	secretarial	staff	are	aware	of	business	changes	that	will	affect	them,	for		
example,	the	introduction	of	a	new	client	relationship	management	system	and	an	online	travel	booking	system.		
This	initiative	contributed	to	our	success	as	being	a	runner	up	in	the	employer	of	the	year	category	at	the	2010		
Executive	PA	magazine	awards.

Management and leadership development 
The	development	of	good	leadership	and	management	skills	within	the	Company	is	vital	and	we	continue	to	run	long		
term	programmes	that	are	linked	to	nationally	recognised	qualifications	provided	by	the	Chartered	Management	Institute.		
The	training	is	very	practical	and	concentrates	on	developing	skills	that	can	be	immediately	used	back	at	the	workplace.		
The	delegates	have	the	opportunity	to	share	their	experiences	and	constantly	learn	from	each	other.

IT skills 
Our	IT	systems	are	fundamental	to	our	business	and	the	IT	training	team	offer	training	that	is	completely	bespoke.	The	great	
advantage	of	having	in-house	trainers,	in	addition	to	their	knowledge	of	the	business,	is	that	they	can	personalise	courses	for	
small	groups	or	use	one	to	one	sessions	to	ensure	that	staff	can	learn	in	a	way	suitable	to	them	and	which	enables	them	to	
maximise	the	potential	of	our	IT	systems.

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Employees continued 

Coaching
We	strive	to	provide	a	range	of	development	opportunities	to	all	staff	across	the	Group	and	have	recently	increased	the	
amount	of	coaching	that	is	available	for	one	to	one	performance	enhancement.	We	have	been	able	to	do	this	because	we	
now	have	qualified	coaches	within	the	training	team.

Investment
Rathbones	continues	to	invest	in	training,	in	2010	we	spent	£393,000	on	development	(2009:	£327,000).	This	equates		
to	an	average	of	£562	per	person	(2009:	£480)	and	2.2	days	(2009:	2.3	days).

Chart 2. Expenditure by type of training

	 Qualifications	
	 Continuous	professional	development	
	 Soft	skills	
	 Coaching		

IT	
	 Other	

%

29	
28	
17	
14	
6	
6	

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Challenges for the future

The	FSA’s	Retail	Distribution	Review	(RDR)	has	increased	the	focus	on	professional	standards.	We	are	reviewing	the	gaps	
between	the	new	standards	and	the	qualifications	gained	by	staff	and	are	supporting	them	with	the	training	needed	to	refresh	
areas	of	knowledge.	This	is	an	opportunity	for	the	business	to	provide	some	highly	relevant	and	inspiring	courses.

We	have	recently	reviewed	our	examination	requirements	for	Investment	Managers	in	light	of	the	new	upgraded	qualifications	
now	available.	The	decision	has	been	made	that	we	will	continue	to	encourage	staff	to	complete	qualifications	over	and	above	
the	minimum	regulatory	requirements.

Communities

Donations and fundraising

During	the	year,	the	Group	made	total	charitable	donations	of	£162,000,	representing	0.54%	of	continuing	Group	pre-tax	
profits	(2009:	£174,098,	representing	0.59%	of	continuing	Group	pre-tax	profits).

Employees	are	encouraged	to	donate	to	charity	in	a	tax	efficient	manner	through	the	Give	As	You	Earn	(GAYE)	payroll	giving	
scheme.	In	2010,	Rathbone	employees	made	payments	totalling	£107,000	(2009:	£384,000)	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	2010	donated	£85,000	(2009:	£81,000)	to	causes	chosen	by	employees	through	this	method.

In	2010,	Children	with	Leukaemia	and	The	Anthony	Nolan	Trust	were	selected	by	an	employee	ballot	as	the	charities	we	
would	support	for	2010	and	2011.	During	2010,	£8,000	has	been	raised	by	employees	for	these	two	charities.

During	the	year,	Rathbone	employees	have	undertaken	a	wide	variety	of	community	and	fundraising	events.

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Statement of Directors’ responsibilities in respect of the report and accounts

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The	Directors	are	responsible	for	preparing	the	annual	report	and	the	Group	and	parent	company	financial	statements	in	
accordance	with	applicable	law	and	regulations.

Company	law	requires	the	Directors	to	prepare	Group	and	parent	company	financial	statements	for	each	financial	year.	Under	
that	law	they	are	required	to	prepare	the	Group	financial	statements	in	accordance	with	IFRS	as	adopted	by	the	EU	and	
applicable	law	and	have	elected	to	prepare	the	parent	company	financial	statements	on	the	same	basis.

Under	company	law	the	Directors	must	not	approve	the	financial	statements	unless	they	are	satisfied	that	they	give	a	true	
and	fair	view	of	the	state	of	affairs	of	the	Group	and	parent	company	and	of	their	profit	or	loss	for	that	period.	In	preparing	
each	of	the	Group	and	parent	company	financial	statements,	the	Directors	are	required	to:	
•	 select	suitable	accounting	policies	and	then	apply	them	consistently;	
•	 make	judgements	and	estimates	that	are	reasonable	and	prudent;	
•	 state	whether	they	have	been	prepared	in	accordance	with	IFRS	as	adopted	by	the	EU;	and	
•	 prepare	the	financial	statements	on	the	going	concern	basis	unless	it	is	inappropriate	to	presume	that	the	Group	and	the		
	 parent	company	will	continue	in	business.

The	Directors	are	responsible	for	keeping	adequate	accounting	records	that	are	sufficient	to	show	and	explain	the	parent	
company’s	transactions	and	disclose	with	reasonable	accuracy	at	any	time	the	financial	position	of	the	parent	company	and	
enable	them	to	ensure	that	its	financial	statements	comply	with	the	Companies	Act	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	report	that	complies	with	that	law	and	those	regulations.

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

Disclosure of information to auditor

The	Directors	who	held	office	at	the	date	of	approval	of	this	Directors’	report	confirm	that,	so	far	as	they	are	each	aware,	there		
is	no	relevant	audit	information	of	which	the	Company’s	auditors	are	unaware;	and	each	Director	has	taken	all	the	steps	that		
he	or	she	ought	to	have	taken	as	a	Director	to	make	him	or	herself	aware	of	any	relevant	audit	information	and	to	establish	that	
the	Company’s	auditor	is	aware	of	that	information.

Statement as a result of the Disclosure and Transparency Rules of the Financial Services Authority

We	confirm	that	to	the	best	of	our	knowledge:
•	

the	financial	statements,	prepared	in	accordance	with	the	applicable	set	of	accounting	standards,	give	a	true	and	fair		
view	of	the	assets,	liabilities,	financial	position	and	profit	or	loss	of	the	Company	and	the	undertakings	included	in	the	
consolidation	taken	as	a	whole;	and
the	Directors’	report,	together	with	the	information	provided	in	the	business	review,	includes	a	fair	review	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	a	description	of	the	principal	risks	and	uncertainties	that	they	face.	

•	

By	Order	of	the	Board

A D Pomfret 
Chief	Executive

16	February	2011

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Consolidated financial statements

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Independent auditor’s report to the members of Rathbone Brothers Plc

We have audited the financial statements of Rathbone Brothers Plc for the year ended 31 December 2010 which  
comprise the consolidated income statement, consolidated and Company statement of comprehensive income, consolidated 
and Company statement of changes in equity, consolidated and Company statement of financial position, consolidated and 
Company statement of cash flows and the related notes. The financial reporting framework that has been applied in their 
preparation is applicable law and International Financial Reporting Standards (IFRS) as adopted by the EU and, as regards 
the parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

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 auditor’s 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 auditor

As explained more fully in the Directors’ responsibilities statement in respect of the report and accounts set out on page 60, 
the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true  
and fair view. Our responsibility is to audit, and express an opinion on, the financial 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 financial statements

A description of the scope of an audit of financial statements is provided on the APB’s website at:

www.frc.org.uk/apb/scope/UKP.cfm 

Opinion on financial statements

In our opinion:
• 

• 
• 

the financial statements give a true and fair view of the state of the Group’s and of the parent company’s affairs as  
at 31 December 2010 and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRS as adopted by the EU; 
the parent company financial statements have been properly prepared in accordance with IFRS as adopted by the EU 
and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and,

• 
  as regards the Group financial statements, Article 4 of the IAS Regulation. 

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:
• 

• 

• 

the part of the Directors’ Remuneration report to be audited has been properly prepared in accordance with the 
Companies Act 2006; 
the information given in the Directors’ report for the financial year for which the financial statements are prepared is 
consistent with the financial statements; and
information given in the Corporate governance report set out on page 32 with internal control and risk  
management systems in relation to financial reporting processes and about share capital structures is consistent with  
the financial 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:
•  adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been 

• 

received from branches not visited by us; or
the parent company financial statements and the part of the Directors’ Remuneration report to be audited are not in 
agreement with the accounting records and returns; or

•  certain disclosures of Directors’ remuneration specified by law are not made; or
•  we have not received all the information and explanations we require for our audit; or
•  a Corporate Governance Statement has not been prepared by the Company.

Under the Listing Rules we are required to review:
• 
• 

the Directors’ statement, set out on page 60, in relation to going concern; 
the part of the Corporate governance report on page 32, relating to the Company’s compliance with the nine provisions 
of the June 2008 Combined Code specified for our review; and

•  certain elements of the report to shareholders by the Board on Directors’ remuneration.

I Cummings (Senior Statutory Auditor)  
for and on behalf of KPMG Audit Plc, Statutory Auditor 
Chartered Accountants

15 Canada Square, London E14 5GL

16 February 2011

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Consolidated income statement
for the year ended 31 December 2010

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 

Levies for the Financial Services Compensation Scheme 
Amortisation of client relationships 
Transaction costs 
Other operating expenses 

Operating expenses 

Profit before tax from continuing operations   
Taxation 

Profit after tax from continuing operations 

Discontinued operations
Loss before tax from discontinued operations 
Income tax credit on loss before tax from discontinued operations 
Loss recognised on re-measurement of assets of the disposal group 

Net loss from discontinued operations 

Profit for the period attributable to  equity holders of the Company 

Dividends paid and proposed for the year per ordinary share 
Dividends paid and proposed for the year 
Earnings per share for the period attributable to equity  
holders of the Company: 
–  basic 
–  diluted 
Earnings per share from profit from continuing operations for the 
period attributable to equity holders of the Company: 
–  basic 
–  diluted 

Note 

4 

5 

6 
6 
6 

7 
20 
7 

7 

9 

10 

11 

12 

12 

The accompanying notes form an integral part of the consolidated financial statements.

2010 
 £’000 

10,274 
(1,445) 

2009
£’000

  21,502
(3,006)

8,829 

  18,496

  124,432 
(7,762) 

  103,735
(7,351)

  116,670 

  96,384

90 
226 
1,369 

80
358
1,439

  127,184 

  116,757

(3,575) 
(4,845) 
– 
(88,681) 

(97,101) 

30,083 
(8,531) 

21,552 

– 
– 
– 

– 

21,552 

44.00p 
19,067 

(229)
(1,967)
(782)
(84,311)

(87,289)

  29,468 
(9,271)

  20,197

(391)
33 
(211)

(569)

  19,628 

  42.00p
  18,159 

49.76p 
49.35p 

  45.55p
  45.53p

49.76p 
49.35p 

46.87p
  46.85p

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Consolidated statement of comprehensive income
for the year ended 31 December 2010

Profit for the year attributable to equity holders of the Company   

Other comprehensive income: 
Exchange translation differences 
Net actuarial loss on retirement benefit obligation 
Revaluation of available for sale investment securities: 
–  net gain/(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 

Consolidated statement of changes in equity
for the year ended 31 December 2010

2010 
 £’000 

21,552 

9 
(3,005) 

155 

(13) 
782 

(2,072) 

2009
£’000

  19,628

(182)
(8,626)

(59)

17
2,415

(6,435)

19,480 

  13,193

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

At 1 January 2009  
Profit for the year 
Exchange translation differences 
Net actuarial loss on retirement 
benefit obligation 
Revaluation of available for sale 
investment securities 
Deferred tax relating to components 
of other comprehensive income 
Dividends paid 
Issue of share capital 
Reclassification of translation reserve 
on disposal of subsidiaries 
Share-based payments: 
–  value of employee services  
–  transfer to liabilities for cash 

settled awards 

25 

16 

11 
26 

10 

–  costs of shares issued/purchased  19 
–  tax on share-based payments 

At 1 January 2010  
Profit for the year 
Exchange translation differences 
Net actuarial loss on retirement 
benefit obligation 
Revaluation of available for sale 
investment securities 
Deferred tax relating to components 
of other comprehensive income 
Dividends paid 
Issue of share capital 
Reclassification of translation reserve 
on liquidation of subsidiaries   
Share-based payments: 
–  value of employee services  
–  costs of shares issued/purchased 
–  tax on share-based payments 

25 

16 

11 
26 

10 

19 

2,143  28,957  31,835 

2,119 

786 

(182) 

(59) 

17 

22 

2,799 

34,740  118,791  184,631 
  19,628  19,628 
(182) 

(182) 

(59) 

17 

(8,626) 

(8,626)

(59)

2,415 

2,432  
(18,066)  (18,066)
2,821 

(359) 

(359) 

359 

–

1,219 

1,219 

(119) 
(1,096) 
(94) 

(119) 
(1,096)
(94)

34,157  114,411  182,489 
21,552
21,552 
9

9 

155 

(13) 

(3,005) 

(3,005)

155

782 

769
(18,167)  (18,167)
736 

2,165 

31,756 

31,835 

2,077 

245 

9 

155 

(13) 

4 

732 

(254) 

(254) 

254 

– 

1,054 
(569) 
351 

1,054
(569)
351

At 31 December 2010 

2,169 

32,488 

31,835 

2,219 

– 

34,054  116,663  185,374

The accompanying notes form an integral part of the consolidated financial statements.

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Consolidated statement of financial position
as at 31 December 2010

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   
Prepayments, accrued income and other assets 
Property, plant and equipment  
Deferred tax asset   
Intangible assets 

Total assets 

Liabilities 
Deposits by banks   
Settlement balances 
Due to customers   
Accruals, deferred income, provisions and other liabilities 
Current tax liabilities 
Retirement benefit obligations  

Total liabilities 

Equity 
Share capital 
Share premium 
Other reserves 
Retained earnings   

Total equity 

Total liabilities and equity   

Note 

13 

14 
15 

16 
16 
17 
18 
19 
20 

21 

22 
23 

25 

26 
26 

2010 
 £’000 

4 
18,169 
39,565 
40,025 

42,587 
  751,085 
36,368 
6,143 
2,474 
91,702 

2009
£’000

315 
17,305 
  92,661 
26,745 

  86,932 
  694,000 
  29,878 
5,676 
1,603 
  81,973 

 1,028,122 

 1,037,088 

3,304 
23,712 
  762,026 
42,455 
4,608 
6,643 

7,379 
  22,157 
  766,361 
  46,875 
2,414 
9,413 

  842,748 

  854,599 

2,169 
32,488 
34,054 
  116,663 

2,165 
  31,756 
  34,157 
  114,411 

  185,374 

  182,489 

 1,028,122 

 1,037,088 

The financial statements were approved by the Board of Directors and authorised for issue on 16 February 2011 and were 
signed on its behalf by: 

A D Pomfret 
Chief Executive 

R P Stockton 
Finance Director 

Company registered number: 01000403. 

The accompanying notes form an integral part of the consolidated financial statements. 

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Consolidated statement of cash flows
for the year ended 31 December 2010

Note 

2010 
 £’000 

2009
£’000

Cash flows from operating activities  
Profit before income tax from continuing operations 
Net interest income 
Impairment losses on loans and advances 
Profit on disposal of plant and equipment 
Depreciation and amortisation  
Defined benefit pension scheme charges 
Share-based payment charges 
Interest paid 
Interest received 

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

Cash generated from/(used in) operations 
Defined benefit pension contributions paid 
Tax paid 
Discontinued operations 

Net cash inflow/(outflow) from operating activities 

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

Net cash (used in)/generated from investing activities 

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

Net cash used in financing activities  

Net decrease 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 

15 

25 
8 

25 

10 

32 

16 
16 
10 

32 
11 

30,083 
(8,829) 
95 
(37) 
8,405 
1,510 
1,729 
(1,413) 
11,754 

43,297 

24,572 
(864) 
(7,980) 
(8,410) 
1,555 

6,598 

58,768 
(7,285) 
(6,089) 
– 

  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)

45,394 

  (275,660)

– 
(30,417) 
128 
(1,679,090) 
1,622,005 
– 

(1,341)
(3,319)
65 
(1,796,282)
1,977,261
(4)

(87,374) 

  176,380 

(286) 
453 
(18,167) 

(18,000) 

(59,980) 
  139,044 
5 

(468)
2,193 
(18,066)

(16,341)

  (115,621)
  255,021 
(356)

Cash and cash equivalents at the end of the period 

32 

79,069 

  139,044

The accompanying notes form an integral part of the consolidated financial statements.

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Notes to the consolidated financial statements

1  Principal accounting policies

Rathbone Brothers Plc (the Company) is a public company incorporated and domiciled in England and Wales under  
the Companies Act 2006.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards  
as adopted by the EU (IFRS). The Company has elected to prepare its Company financial statements in accordance with 
IFRS for the first time and consequently IFRS 1 ‘First time adoption of International Financial Reporting Standards’ has  
been applied; the Company financial statements are presented on page 109.

Developments in reporting Standards and Interpretations 

Standards affecting the financial statements 
In the current year, there have been no new or revised Standards and Interpretations that have been adopted and have 
affected the amounts reported in these financial statements.

Standards not affecting the reported results or the financial position 
The following new and revised Standards and Interpretations have been adopted in the current year. Their adoption  
has not had any significant impact on the amounts reported in these financial statements but may impact the accounting  
for future transactions and arrangements:
• 
• 
• 
•  Amendments to IFRS 2, ‘Share-based Payments: Vesting Conditions and Cancellations & Group Cash-settled  

IFRS 3, ‘Business Combinations (revised 2008)’
IAS 27, ‘Consolidated and Separate Financial Statements (revised 2008)’
IFRIC 17, ‘Distributions of Non-cash Assets to Owners’ 

Share-based Payment Transactions’ 

The following amendments were made as part of ‘Improvements to IFRS (2009)’:
•  Amendments to IAS 38 ‘Intangible Assets’
•  Amendments to IFRS 8 ‘Operating Segments’
•  Amendments to IAS 7 ‘Statement of Cash Flows’
•  Amendments to IAS 36 ‘Impairment of Assets’

New Standards and Interpretations

A number of new standards, amendments to Standards and Interpretations, are effective for annual periods beginning  
after 1 January 2010, and therefore have not been applied in preparing these consolidated financial statements.  
None of these is expected to have a significant affect on the consolidated financial statements of the Group, except for  
IFRS 9 ‘Financial Instruments’, which is not yet adopted by the EU and is expected to become mandatory for the Group’s 
2013 consolidated financial statements and could change the classification and measurement of financial assets.  
The Group does not plan to adopt this standard early and the extent of the impact has not been determined.

Basis of consolidation

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

Subsidiaries are all entities in which the Company has a controlling interest, generally accompanying a shareholding  
of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable  
or convertible are considered when assessing whether an entity is a subsidiary of the Company. Subsidiaries are fully 
consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control 
ceases. The results of subsidiaries are included in the consolidated financial statements up to 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. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business 
combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority  
interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired  
is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired,  
the difference is recognised directly in the income statement.

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. 

For subsidiaries with non-coterminous year ends, financial statements are drawn up to 31 December for the purposes  
of consolidation. 

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1 

Principal accounting policies continued

Basis of preparation

The financial statements have been prepared on the historical cost basis, except for certain financial instruments that are 
measured at fair value. 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 financial statements.

The Directors have, at the time of approving the financial 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 financial statements. Further detail is contained in the 
business review on page 23.

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. Dividends receivable from 
money market funds are included within net interest income. 

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

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

Dividend income

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

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 classified 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 evenly over the period the service is provided.

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

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

Property, plant and equipment

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

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

Leasehold property: 
Plant, equipment and computer hardware: 

over the lease term 
over three to ten years

The assets’ residual lives are reviewed, and adjusted if appropriate, at each statement of financial position 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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1 

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 identifiable assets, liabilities and contingent liabilities of a subsidiary at the date of acquisition. 

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

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

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

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

Costs that are directly associated with the production of identifiable and unique software products controlled by the Group  
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 cost. Those in respect of business combinations are initially  
recognised at fair value. Client relationships have a finite useful life and are carried at cost less accumulated amortisation. 
Amortisation is calculated using the straight line method to allocate the cost of the client relationships over their estimated 
useful lives (ten to fifteen years). When client relationships are lost the full amount of unamortised cost is recognised 
immediately and the intangible asset is derecognised.

Financial assets

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

Financial assets at fair value through profit or loss 

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

Loans and receivables 

b 
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an  
active market. They arise when the Group provides money, goods or services to a debtor or purchases a loan with no intention 
of trading the receivable. 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 financial assets with fixed or determinable payments and fixed maturities  
that the Group’s management has the positive intention and ability to hold to maturity, other than those that meet the 
definition of loans and receivables or that the Group has classified as available for sale or fair value through profit or loss. 
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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1 

Principal accounting policies continued

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

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

Available for sale financial assets and financial liabilities at fair value through profit or loss are subsequently carried at fair  
value. Loans and receivables and held to maturity investments are carried at amortised cost using the effective interest 
method. Gains and losses arising from changes in the fair value of the financial assets ‘at fair value through profit or loss’ 
category are included in the income statement in the period in which they arise. Gains and losses arising from changes  
in the fair value of available for sale financial assets are recognised in the statement of other comprehensive income and 
presented in the available for sale reserve in equity, until the financial asset is sold, derecognised or impaired at which  
time the cumulative gain or loss previously recognised in equity should be recognised in the income statement. However, 
interest calculated using the effective interest method is recognised in the income statement. 

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

Impairment

Goodwill and other intangible assets with indefinite useful lives are tested for impairment annually, and when there is an 
indication of impairment.

Financial assets and other assets with finite useful lives 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. 

The recoverable amount of non-financial assets is the higher of fair value less any cost to sell and value in use. In assessing 
value in use, the estimated future cash flows are discounted to their present values using a pre tax discount rate that  
reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates  
of future cash flows have not been adjusted. The recoverable amount of held to maturity investment securities and loans  
and receivables is calculated as the present value of estimated future cash flows, discounted at the effective interest  
rate of the asset on recognition. Where an asset does not generate cash flows that are independent from other assets,  
the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.

Impairment of available for sale securities is calculated as the cumulative loss that has been previously recognised directly  
in equity at the time that objective evidence of impairment is identified.

If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount, the carrying 
amount of the asset or cash generating unit is reduced to its recoverable amount. Impairment losses are recognised as an 
expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of any asset, except for goodwill, equity instruments 
or cash generating units, is increased to the revised estimate of its recoverable amount, which is no greater than the carrying 
amount that would have been determined had no impairment loss been recognised for the asset or cash generating unit  
in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at  
a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

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

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

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1 

Principal accounting policies continued

Deposits and borrowings

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

Provisions

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

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 statement of financial position date, monetary assets and liabilities that are denominated in foreign currencies are 
retranslated at the rates prevailing on the statement of financial position date. Non-monetary financial assets carried at  
fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value  
was determined.

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

On consolidation, the assets and liabilities of the Group’s overseas operations are translated into the Group’s presentational 
currency at exchange rates prevailing on the statement of financial position 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.

Retirement benefit obligations

The cost of providing benefits under defined benefit plans are determined using the projected unit credit method, with 
actuarial valuations being carried out at each statement of financial position 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 benefits are already vested, and otherwise is amortised  
on a straight line basis over the average period until the amended benefits become vested.

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

Death in service benefits are provided to all employees through the pension schemes. The amount recognised in the 
statement of financial position for death in service benefits 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 defined contribution retirement benefit schemes are charged as an expense as they fall due.

Taxation

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

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

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1 

Principal accounting policies continued
Taxation continued

Deferred tax is accounted for using the statement of financial position liability method in respect of temporary  
differences arising from differences between the carrying amount of assets and liabilities in the financial statements  
and the corresponding tax basis used in the computation of taxable profit. In principle, deferred tax liabilities are  
recognised for all temporary differences and deferred tax assets are recognised to the extent that it is probable that  
taxable profits will be available against which deductible temporary differences may be utilised. Such assets and  
liabilities are not recognised if the temporary difference arises:
• 
• 

from the initial recognition of goodwill for which amortisation is not deductible for tax purposes; or
from the initial recognition of other assets and liabilities in a transaction, which affects neither the tax profit nor  
the accounting profit, 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 statement of financial position date and reduced  
to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset  
to be recovered.

Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the statement  
of financial position 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 in hand and demand deposits which may be accessed without penalty.

Cash equivalents comprise money market funds which are realisable on demand and loans and advances to banks with a 
maturity of less than three months from the date of acquisition.

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

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 reflects the number of vested 
shares or share options, with a corresponding adjustment to equity. Where vesting conditions are related to market conditions, 
the charges for the services received are recognised regardless of whether or not the market related vesting condition is  
met, provided that the non-market vesting conditions are met. Shares purchased and issued are charged directly to equity.

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 statement of financial position date between  
grant date and settlement, the fair value of the liability is remeasured with any changes in fair value recognised in profit  
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 

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1 

Principal accounting policies continued
Segmental reporting continued

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

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

Financial guarantees

The Group provides a limited number of financial guarantees which are fully backed by assets in clients’ portfolios.  
Financial guarantees are initially recognised in the statement of financial position at fair value. Guarantees are subsequently 
measured at the higher of the best estimate of any amount to be paid to settle the guarantee and the amount initially 
recognised less cumulative amortisation, which is recognised over the life of the contract.

2  Critical accounting judgements and key sources of estimation and uncertainty 

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

Client relationship intangibles

The Group makes estimates about the expected duration of client relationships to determine the period over which related 
intangible assets are amortised. The amortisation period is estimated with reference to historical data on account closure 
rates and management’s expectations for the future. During the year client relationship intangible assets were amortised over 
a 10 – 15 year period. Amortisation of £4,845,000 was charged during the year. A reduction in the average amortisation 
period of 1 year would increase the amortisation charge by approximately £410,000.

In determining whether a client relationship is lost management consider factors such as the level of funds withdrawn and  
the existence of other retained family relationships.

Financial Services Compensation Scheme levies

The arrangements put in place by the Financial Services Compensation Scheme (FSCS) to protect depositors and  
investors from loss in the event of failure of financial institutions have resulted in significant FSCS levies on the industry.  
The financial impact of FSCS levies are largely out of the Group’s control as they result from other industry failures.

The FSCS announced on 20 January 2011 that it would be raising an interim levy of £326 million, principally to cover the 
cost of compensating investors from the failure of Keydata Investment Services Limited (Keydata) and other intermediaries. 
On 24 January 2011 the Group received invoices totalling £3,203,000 for the Keydata and other intermediary failures.  
This cost has been charged to profit in the financial statements and recognised within accruals.

It is possible that the FSCS will make future recoveries from third parties and from the underlying assets for which 
compensation is being paid. However, the timing and total amount of these recoveries is uncertain, as is the Group’s share  
of any recoveries made.

The total amount relating to FSCS levies charged to the income statement during 2010 was £3,575,000.

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 refinancing of the operations disposed of.

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2 

Critical accounting judgements and key sources of estimation and uncertainty continued
Vector loan notes continued

The carrying value of the notes has been calculated as £3,267,000 using a discounted cash flow model based on the 
estimated repayment date, using a discount rate equal to the initial effective interest rate of the loan. Changing the estimated 
repayment date of the notes by one year would result in an increase or decrease in their carrying value of approximately 
£250,000. A 1% increase/decrease in the assumed rate at which interest accrues under the loan would increase/decrease 
the carrying value of the loan by approximately £96,000.

Retirement benefit obligations

The Group makes estimates about a range of long term trends and market conditions to determine the value of the deficit 
on its retirement benefit schemes, based on the Group’s expectations of the future and advice taken from qualified actuaries. 
The principal assumptions underlying the reported deficit of £6,643,000 are given in note 25.

Long term forecasts and estimates are necessarily highly judgemental and subject to risk that actual events may be 
significantly different to those forecast. If actual events deviate from the assumptions made by the Group then the reported 
surplus or deficit in respect of retirement benefit obligations may be materially different. The history of experience adjustments 
and information on the sensitivity of the retirement benefit obligation to changes in underlying estimates is set out in note 25.

3  Segmental information

Operating segments

For management purposes, the Group is currently organised into three operating divisions: Investment Management,  
Unit Trusts and Trust and Tax Services. The products and services from which each reportable segment derives its revenues 
are described in Rathbones at a glance on page 6. 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 financial 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 2010 

Net fee income 
Net commission 
Net interest and other income  

Operating income 

Staff costs – fixed   
Staff costs – variable 

Total staff costs 
Other direct expenses 
Allocation of indirect expenses 

Underlying operating expenses 

Underlying profit before tax 
Levies for the Financial Services Compensation Scheme 
Amortisation of client relationships 
Transaction costs 

Investment 
  Management 
£’000 

Unit Trusts 
£’000 

  Trust and Tax 
Services 
£’000 

Total 
£’000

68,485 
36,180 
10,030 

7,074 
– 
343 

4,931 
– 
141 

80,490
36,180
10,514

  114,695 

7,417 

5,072  127,184

(26,239) 
(13,756) 

(2,161) 
(1,233) 

(2,673)  (31,073)
(232)  (15,221)

(39,995) 
(11,907) 
(25,151) 

(3,394) 
(1,545) 
(1,686) 

(2,905)  (46,294) 
(617)  (14,069)
(1,481)  (28,318)

(77,053) 

(6,625) 

(5,003)  (88,681)

37,642 
(3,332) 
(4,845) 
– 

792 
(243) 
– 
– 

69 
– 
– 
– 

38,503 
(3,575)
(4,845)
–

Profit before tax attributable to equity holders  of the Company 

29,465 

549 

69 

30,083

Income tax expense 

Profit 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 

(8,531)

21,552

Total 
£’000

  995,501 

12,923 

9,416  1,017,840
10,282

 1,028,122

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3 

Segmental information continued
Operating segments continued

31 December 2009 

Net fee income 
Net commission 
Net interest and other income  

Operating income 

Staff costs – fixed   
Staff costs – variable 

Total staff costs 
Other direct expenses 
Allocation of indirect expenses 

Underlying operating expenses 

Investment 
  Management 
£’000 

Unit Trusts 
£’000 

  Trust and Tax
Services 
£’000 

Total 
£’000

55,784 
28,740 
  19,789 

7,590 
– 
130 

4,657  68,031 
28,740 
67  19,986

– 

  104,313 

7,720 

4,724  116,757

(25,170) 
(13,900) 

(2,086) 
(1,852) 

(2,483)  (29,739) 
(315)  (16,067)

(39,070) 
(9,725) 
(23,406) 

(3,938) 
(2,138) 
(1,479) 

(2,798)  (45,806)
(465)  (12,328) 
(1,292)  (26,177)

(72,201) 

(7,555) 

(4,555)  (84,311)

Underlying profit before tax 
Levies for the Financial Services Compensation Scheme 
Amortisation of client relationships 
Transaction costs 

Profit before tax from continuing operations 
Discontinued operations 

  32,112 
(212) 
(1,967) 
(782) 

  29,151 
– 

Profit/(loss) before tax attributable to equity holders  of the Company 

  29,151 

Income tax expense from continuing operations 
Income tax credit from discontinued operations 

Profit for the year attributable to equity holders of the Company   

165 
(17) 
– 
– 

148 
– 

148 

169  32,446

– 
– 
– 

(229) 
(1,967) 
(782)

169  29,468
(602)
(602) 

(433)  28,866

(9,271) 

33

  19,628

Segment total assets 
Unallocated assets  

Total assets 

Investment 
  Management 
£’000 

Unit Trusts 
£’000 

  Trust and Tax 
Services 
£’000 

Total 
£’000

 1,002,284  15,947 

9,472 1,027,703 
9,385

 1,037,088

Included within Investment Management net fee and commission income is £1,225,000 (31 December 2009: £1,028,000) 
of fee and commission receivable from Unit Trusts. Included within Trust and Tax Services net fee and commission income  
is £31,000 (31 December 2009: £86,000) of fees receivable from Investment Management. 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.

Geographic analysis 
The following table presents operating income analysed by the geographical location of the Group entity providing the service.

Operating income by geographical market (continuing operations)

United Kingdom 
Jersey 

2010 
£’000 

  123,119 
4,065 

2009
£’000

  113,121
3,636 

  127,184 

  116,757 

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3 

Segmental information continued
Geographic analysis continued

The following is an analysis of the carrying amount of non-current assets analysed by the geographical area in which the  
assets are located:

Non-current assets by geographical location (continuing operations)

United Kingdom 
Jersey 

2010 
£’000 

97,053 
792 

97,845 

2009
£’000

87,645 
4 

87,649 

Major clients 
The Group is not reliant on any one client or group of connected clients for generation of revenues.

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 Services 

Fee and commission expense 
Investment Management 
Unit Trusts 

Net fee and commission income 

6  Dividend, net trading and other operating income

Dividend income 

2010 
£’000 

8,083 
555 
1,636 

2009
£’000

  16,250 
1,583
3,669

10,274 

  21,502 

(1,445) 

8,829 

(3,006)

  18,496 

2010 
£’000 

2009
£’000

  106,602 
12,930 
4,900 

  86,577 
  12,587 
4,571 

  124,432 

  103,735 

(3,131) 
(4,631) 

(7,762) 

(3,023)
(4,328)

(7,351)

  116,670 

  96,384

Dividend income comprises income from available for sale equity securities of £90,000 (2009: £80,000). 

Net trading income

Net trading income of £226,000 (2009: £358,000) comprises unit trust net dealing profits.

Other operating income

Other operating income of £1,369,000 (2009: £1,439,000) comprises rental income from sub-leases on certain properties 
leased by Group companies and sundry income.

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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 20)  
Amortisation of purchased software (note 20) 
Auditor’s remuneration (see below) 
Impairment losses on loans and advances (note 15) 
Operating lease rentals 
Other 

Other operating expenses 
Levies for the Financial Services Compensation Scheme1 
Amortisation of client relationship intangible assets (note 20)   
Transaction costs2   

Total operating expenses 

2010 
£’000 

58,997 
2,207 

355 
998 
748 
95 
5,299 
19,982 

88,681 
3,575 
4,845 
– 

97,101 

2009
£’000

  56,594 
2,180 

278
915 
545
22
5,039
  18,738

  84,311 
229 
1,967
782 

87,289

1  The arrangements put in place by the Financial Services Compensation Scheme (FSCS) to protect depositors of  

failed institutions resulted in significant FSCS levies on the industry. The failure of Keydata Investment Services Limited 
(Keydata) and other intermediaries resulted in a considerable increase in the levy made by the FSCS to the Group.  
The Group has accrued £3,575,000 in 2010 in respect of its share of the cost of FSCS borrowings including a provision 
for the 2010/2011 levy year, of which £3,203,000 relates to Keydata and other intermediaries (note 23). Recoveries 
in future years by the FSCS may become available to offset this liability but the amount and timing of these is highly 
uncertain and no allowance has been made for these in calculating this liability. Further charges for historical failures  
by financial institutions are likely to be incurred in future years and the ultimate cost remains uncertain (note 30).

2  During 2009, the Group entered into an agreement to acquire certain discretionary investment management assets  

and operations (note 20). Legal and professional fees and staff incentive payments totalling £782,000 were recognised 
during 2009  in relation to this. There were no fees in relation to this during 2010.

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

Fees payable to the Company’s auditors for the audit of the Company’s   
annual financial statements 
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 

Total 

2010 
Total 
£’000 

PwC 
£’000 

KPMG 
£’000 

2009
Total
£’000

84 

– 

85 

85 

286 
86 
53 
192 
47 

748 

– 
– 
7 
6 
78 

91 

203 
104 
– 
62 
– 

454 

203 
104 
7 
68 
78 

545 

Fees for other services pursuant to legislation include £77,000 for the audit of the Group’s regulatory returns and review of 
the interim statement (2009: £72,000).

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8  Staff costs

Wages and salaries  
Social security costs 
Share-based payments 
Pension costs (note 25) 

–  defined benefit schemes 
–  defined contribution schemes 

The average number of employees during the year was as follows:

Investment Management 
Unit Trusts 
Trust and Tax Services 
Shared Services 

Continuing operations 

9 

Income tax expense

Current tax 
Adjustments in respect of previous years  
Deferred tax (note 19) 

2010 
£’000 

48,671 
5,771 
1,729 

1,510 
1,316 

2,826 

2009
£’000

47,063
5,407 
1,219 

1,852
1,053

2,905

58,997 

  56,594

2010 

453 
24 
43 
179 

699 

2010 
£’000 

8,200 
82 
249 

8,531 

2009

438 
24 
40 
179 

681 

2009
£’000

5,899
154
3,218

9,271 

The tax charge on profit from continuing operations for the year is higher (2009: higher) than the standard rate of corporation 
tax in the UK of 28.0% (2009: 28.0%). The differences are explained below: 

Tax on profit from ordinary activities at the standard rate of 28.0% (2009: 28.0%)   
Effects of: 
–  disallowable expenses1 
–  share-based payments 
–  tax on overseas earnings 
–  (over)/under provision for tax in previous years   
–  other 
Effect of change in corporation tax rate   

2010 
£’000 

8,423 

340 
(30) 
(77) 
(136) 
(35) 
46 

2009
£’000

8,251 

566 
30
(22)
446
–
 –

8,531 

9,271 

1  The tax effect of disallowable expenses in 2009 included £219,000 in respect of the Lloyds Banking Group  

transaction (note 20).

The UK Government has proposed that the UK corporation tax rate is reduced to 24.0% over the four years from 2011.  
At 31 December 2010 only the first step of this reduction, to 27.0%, had been substantively enacted. Consequently deferred 
tax assets and liabilities are calculated at 27.0%.

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 £1,120,000 has been 
credited directly to equity (2009: £2,338,000).

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10  Disposal groups and discontinued operations

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.

The voluntary liquidations of Rathbone Trust Company B.V. and Rathbone Bank (BVI) Limited, both of which commenced  
in 2009, were completed on 6 July 2010 and 5 November 2010 respectively. This completed the final stage of 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 before tax from discontinued operations 
Attributable tax credit 

Loss after tax from discontinued operations 
Loss recognised on re-measurement of assets of the disposal group 
Attributable tax expense 

Loss from discontinued operations 

2010 
£’000 

– 
– 

– 
– 

– 
– 
– 

– 

2009
£’000

959
(1,350)

(391)
33

(358)
(211)
–

(569)

The operations of these businesses are included within Trust and Tax Services in the segmental analysis in note 3.

Cash flows arising from discontinued operations, which have been included in the consolidated statement of cash flows,  
were as follows:

Net cash outflow from operating activities 
Net cash used in investing activities 

Net decrease in cash and cash equivalents 

2010 
£’000 

– 
– 

– 

2009
£’000

(1,522)
(4)

(1,526)

As a result of the liquidations and disposals of subsidiaries in the year as described above, £254,000 (2009: £359,000) was 
transferred from the translation reserve to retained earnings.

11  Dividends

Amounts recognised as distributions to equity holders in the year:
–   second interim dividend for the year ended 31 December 2009 of 26.0p 
 (final dividend for the year ended 31 December 2008: 26.0p) per share 

–   first interim dividend for the year ended 31 December 2010 of 16.0p  

(2009: 16.0p) per share 

Proposed final dividend for the year ended 31 December 2010 of 28.0p  
(2009: second interim dividend of 26.0p) per share  

2010 
£’000 

2009
£’000

11,246 

  11,164

6,921 

18,167 

6,902

  18,066

12,146 

  11,257

An interim dividend of 16.0p per share was paid on 6 October 2010 to shareholders on the register at the close of business 
on 17 September 2010 (2009: 16.0p). 

A final dividend declared of 28.0p per share is payable on 18 May 2011 to shareholders on the register at the close of 
business on 3 May 2011. The final dividend is subject to approval by shareholders at the Annual General Meeting on  
11 May 2011 and has not been included as a liability in these financial statements.

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12  Earnings per share

Earnings used to calculate earnings per share on the bases reported in these financial statements were:

Underlying profit attributable to shareholders 
Levies for the Financial Services 
Compensation Scheme 
Amortisation of client relationships 
Transaction costs 

Profit from continuing operations 
Loss from discontinued operations 

2010 
Pre tax 
£’000 

2010 
Taxation 
£’000 

2010 
Post tax 
£’000 

2009 
Pre tax 
£’000 

2009 
Taxation 
£’000 

2009
Post tax
£’000

38,503 

(10,889)  27,614  32,446 

(9,886)  22,560 

(3,575) 
(4,845) 
– 

1,001 
1,357 
– 

(2,574) 
(3,488) 
– 

(229) 
(1,967) 
(782) 

64 
551 
– 

(165)
(1,416)
(782)

30,083 
– 

(8,531)  21,552  29,468 
(602) 

– 

– 

(9,271)  20,197
(569)

33 

Profit attributable to shareholders 

30,083 

(8,531)  21,552  28,866 

(9,238)  19,628

Basic earnings per share has been calculated by dividing earnings by the weighted average number of shares in issue 
throughout the period of 43,307,423 (2009: 43,087,369).

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 

2010 

2009

43,307,423 
76,153 
116,364 
169,580 

43,087,369 
15,948 
7,977
–

43,669,520 

43,111,294

Earnings per share from discontinued operations and underlying earnings per share were as follows:

2010 

2009

Earnings per share from discontinued operations for the year attributable to 
equity holders of the Company: 
–  basic 
–  diluted 

Underlying earnings per share from continuing operations for the year attributable to 
equity holders of the Company: 
–  basic 
–  diluted 

13  Cash and balances at central bank

Cash in hand (note 32) 
Mandatory reserve deposits 

– 
– 

63.76p 
63.23p 

2010 
£’000 

4 
– 

4 

(1.32)p
(1.32)p

52.36p
52.33p

2009
£’000

5 
310 

315 

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.

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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 
–   fixed interest rates 
–   non-interest bearing 

2010 
£’000 

31,305 
8,260 
– 

39,565 

28,084 
11,430 
51 

39,565 

2009
£’000

  52,036
  40,003
622

  92,661

  51,873 
  40,625
163

  92,661 

The fair value of loans and advances is not materially different to their carrying amount. Fair value has been calculated as the 
discounted amount of estimated future cash flows expected to be received using current market rates.

Loans and advances to banks included in cash and cash equivalents at 31 December 2010 were £39,565,000 (note 32) 
(2009: £55,039,000).

The Group’s exposure to credit risk arising from loans and advances to banks is described in note 28.

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 
–  fixed interest rates 
–  non-interest bearing 

2010 
£’000 

2009
£’000

4,461 
10,129 
22,040 
271 
3,267 
(143) 

40,025 

35,182 
– 
4,843 

40,025 

4,043
6,670
  12,016 
831 
3,267 
(82)

26,745

  21,387
– 
5,358

26,745 

The fair value of loans and advances to customers is not materially different to their carrying amount. Fair value has been 
calculated as the discounted amount of estimated future cash flows expected to be received using current market rates. 
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 2010 (2009: 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 2010 amount to £1,062,000 
(2009: £850,000).

Included within loans and advances to customers repayable after more than five years are vendor loan notes (notes) carried 
at amortised cost of £3,267,000 at 31 December 2010 (2009: £3,267,000). 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 refinancing of the operations disposed of.

The notes bear no interest for three years from issue. Interest is then rolled-up into the loan at the Bank of England base  
rate on half of the notes’ nominal value for the following two years. Thereafter, interest is rolled-up 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  
flow model and interest income is recognised over the expected life of the notes under the effective interest rate method. 
During the year, management’s estimate of the interest rate applicable for these notes was reduced in line with current 
market expectations.

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15  Loans and advances to customers continued

Included within loans and advances to customers repayable within five years is a Swiss Franc denominated loan to the 
acquirer of the Group’s Switzerland trust operations with a nominal value equivalent to £565,000 at 31 December 2010 
(2009: £831,000). The loan does not bear interest and is repayable in three approximately equal annual instalments  
ending in February 2012.

Allowance for losses on loans and advances

At 1 January 
Exchange rate adjustment 
Amounts written off 
Charge to the income statement 

2010 
£’000 

82 
– 
(34) 
95 

143 

2009
£’000

175
(3)
(112)
22 

82

The Group’s exposure to credit risk arising from loans and advances to customers is described in note 28.

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: 
–  unlisted 

Maturity of debt securities

Due within 1 year 
Due after more than 1 year 

2010 
£’000 

2,513 
574 

39,500 

42,587 

2009
£’000

2,153 
779 

  84,000 

  86,932 

2010 
£’000 

2009
£’000

  751,085 

  694,000 

  751,085 

  694,000 

2010 
£’000 

  731,085 
20,000 

2009
£’000

  654,000 
  40,000 

  751,085 

  694,000

Debt securities comprise bank and building society certificates of deposit, which have fixed coupons and treasury bills.  
In 2009, debt securities only comprise bank and building society certificates of deposit.

The fair value of debt securities at 31 December 2010 was £754,893,000 (2009: £699,881,000). 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 reclassified any financial asset between being measured at amortised cost and being measured ‘at fair 
value through profit and loss’ during the year (2009: none reclassified). The Group has not designated at initial recognition 
any financial asset as ‘at fair value through profit and loss’.

The Group continues to hold 300,000 shares in London Stock Exchange Group Plc.

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16 

Investment securities continued

The movement in investment securities may be summarised as follows:

At 1 January 2009  
Additions 
Disposal (sales and redemption) 
Loss from changes in fair value 

At 1 January 2010  
Additions 
Disposals (sales and redemption) 
Gain from changes in fair value 

At 31 December 2010 

17  Prepayments, accrued income and other assets

Trust work in progress 
Prepayments 
Accrued income 

Available for sale 
£’000 

Held to maturity 
£’000 

81,991 
606,000 
(601,000) 
(59) 

86,932 
480,500 
(525,000) 
155 

874,979 
1,796,282 
(1,977,261) 
– 

694,000 
1,679,090 
(1,622,005) 
– 

Total 
£’000

956,970  
2,402,282  
(2,578,261) 
(59)

780,932  
2,159,590 
(2,147,005)
155 

42,587 

751,085 

793,672

2010 
£’000 

698 
10,606 
25,064 

36,368 

2009
£’000

620
6,023
  23,235

  29,878

Prepayments includes £3,100,000 (2009: £nil) of advance payments to Lloyds Banking Group in relation to the transfer of 
investment management activities (note 20) which was repaid by Lloyds Banking Group on 24 January 2011.

18  Property, plant and equipment

Cost 
At 1 January 2009  
Additions 
Disposals 

At 1 January 2010  
Additions 
Disposals 

At 31 December 2010 

Depreciation 
At 1 January 2009  
Charge for the year  
Disposals 

At 1 January 2010  
Charge for the year  
Disposals 

At 31 December 2010 

Carrying amount at 31 December 2010 

Carrying amount at 31 December 2009   

Carrying amount at 1 January 2009 

Short term 
leasehold 
improvements 
£’000 

6,637 
403 
– 

7,040 
867 
(100) 

7,807 

2,921 
761 
– 

3,682 
747 
(100) 

4,329 

3,478 

3,358 

3,716 

Plant and 
equipment 
£’000 

  13,635 
682 
(453) 

13,864 
1,898 
(3,990) 

11,772 

  10,535 
1,419 
(408) 

11,546 
1,460 
(3,899) 

9,107 

2,665 

2,318 

3,100 

Total 
£’000

  20,272  
1,085  
(453)

20,904  
2,765 
(4,090)

19,579 

  13,456  
2,180  
(408)

15,228  
2,207
(3,999)

13,436

6,143 

5,676 

6,816

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19  Net deferred tax asset

Deferred income taxes are calculated on all temporary differences under the liability method using an effective tax rate  
of 27.0% (2009: 28.0%).

The movement on the deferred tax account is as follows:

At 1 January 
Adjustments in respect of prior years: 
–  credited/(charged) to the income statement 
–  credited 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 
Effect of change in corporation tax rate on deferred tax: 
–  charged to the income statement 
–  charged directly to equity 

Deferred tax assets

Excess of depreciation 
Share-based payments 
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 

2010 
£’000 

1,603 

218 
56 

(421) 
841 
313 
(43) 

(46) 
(47) 

2,474 

2010 
£’000 

738 
919 
2,306 
72 

4,035 

2010 
£’000 

820 
214 
527 
– 

1,561 

2010 
£’000 

(100) 
(269) 
376 
1,909 
(269) 
(1,514) 
116 

249 

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

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20  Intangible assets

Goodwill 
Other intangible assets 

Goodwill

Cost

At 1 January 
Additions 

At 31 December 

Accumulated impairment losses

At 1 January and 31 December 

Net carrying amount of goodwill at 31 December 

2010 
£’000 

47,241 
44,461 

91,702 

2009
£’000

47,241
34,732 

  81,973

2010 
£’000 

2009
£’000

47,241 
– 

47,241 

– 

47,241 

47,023 
218 

47,241 

– 

47,241

Additions to goodwill in 2009 represent an adjustment to the goodwill acquired with Citywall Financial Management Limited 
in 2008 following determination of the final consideration payment.

Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are 
expected to benefit from that business combination. The carrying amount of goodwill has been allocated as follows:

Investment Management 
Trust and Tax Services 

2010 
£’000 

45,287 
1,954 

47,241 

2009
£’000

  45,287
1,954 

47,241 

The recoverable amounts of goodwill allocated to the CGUs are determined from value in use calculations. The key 
assumptions for the value in use calculations are those regarding the discount rates and growth rates during the period. 
Management estimates discount rates using pre tax rates that reflect current market assessments of the time value of money 
and the risks specific to the CGUs. The growth rates are based on industry growth forecasts. The Group prepares cash flow 
forecasts derived from the most recent financial budgets approved by management, covering the forthcoming year based  
on flat market assumptions and organic growth in line with historical rates. Budgets are extrapolated for up to ten years 
based on a medium to long term growth rate of 3% for the Investment Management CGU and 2% for the Trust and Tax 
Services CGU (2009: 3% and 2% respectively) based on management’s expectation of future industry growth rates. A ten 
year extrapolation period is chosen based on management’s expectation of the duration of client relationships. The pre tax 
rate used to discount the forecast cash flows is 10% for Investment Management and 12% for Trust and Tax Services  
(2009: 10% and 12% respectively) based on a risk adjusted weighted average cost of capital and reflecting the relatively 
small size of the Trust and Tax Services CGU.

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20 

Intangible assets continued

Other intangible assets

Cost 
At 1 January 2009  
Internally developed in the year 
Purchased in the year 

At 1 January 2010  
Internally developed in the year 
Purchased in the year 
Disposals 

At 31 December 2010 

Amortisation 
At 1 January 2009  
Charge for the year  

At 1 January 2010  
Charge for the year  
Disposals 

At 31 December 2010 

Client 
  relationships 
£’000 

  21,168 
– 
  15,130 

36,298 
– 
14,293 
(878) 

49,713 

2,791 
1,967 

4,758 
4,845 
(878) 

8,725 

Carrying amount at 31 December 2010 

40,988 

Carrying amount at 31 December 2009   

  31,540 

Carrying amount at 1 January 2009 

  18,377 

Software 
development 
costs 
£’000 

1,858 
378 
– 

2,236 
284 
– 
– 

2,520 

1,147 
278 

1,425 
355 
– 

1,780 

740 

811 

711 

Purchased 
software 
£’000 

  10,582 
– 
1,175 

11,757 
– 
1,350 
(639) 

12,468 

8,461 
915 

9,376 
998 
(639) 

9,735 

2,733 

2,381 

2,121 

Total 
£’000

  33,608  
378  
  16,305 

50,291  
284 
15,643
(1,517)

64,701 

  12,399  
3,160 

15,559  
6,198 
(1,517)

20,240 

44,461 

34,732

  21,209

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.

Included within client relationships is £4,089,000 of acquired client relationships which have been recognised in the 
year (2009: £11,683,000) in relation to new relationships with those former Bank of Scotland Portfolio Management 
Service clients from whom consent to transfer their accounts had been received and portfolio transfer values determined. 
Consideration payments for Portfolio Management Service clients were 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. A rebate of £468,000 was  received on 24 January 2011 and has been included within 
prepayments (note 17).

In addition £5,750,000 of acquired client relationships have been recognised in the year (2009: £nil) in relation to new 
relationships  with former Lloyds TSB legacy discretionary investment management clients. An initial payment of £8,382,000 
was made on 26 February 2010. A final rebate of £2,632,000 was received on 24 January 2011 based on the value of  
client assets transferred at 31 December 2010 and has been included within prepayments (note 17).

In total, £21,522,000 of client relationships have been recognised as a result of the transaction. £22,849,000 was paid  
in the year (2009: £197,000) in relation to the transaction, including advance payments to Lloyds Banking Group of 
£3,100,000 (2009: £nil) (note 17). £1,576,000 has been provided for final payments outstanding at 31 December 2010  
in relation to the transaction (2009: £11,486,000) (note 24).

No goodwill has been recognised at 31 December 2010 in relation to the transaction. Transaction costs of £nil  
(2009: £782,000)  have been recognised in the consolidated income statement in connection with the transaction with  
Lloyds Banking Group.

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 was paid 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 in 2009. No other assets were acquired.

Purchased software with a cost of £7,957,000 (2009: £7,732,000) has been fully amortised but is still in use.

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21  Deposits by banks

The Group has drawn down £3,089,000 (2009: £6,155,000) of an unsecured term loan which is repayable in two  
equal instalments. One of these instalments was paid in January 2011 and the final instalment is payable on 4 April 2011. 
Interest is payable on the loan at 0.7% above the London Inter-Bank Offer Rate. On 31 December 2010, deposits by  
banks included overnight overdraft balances of £215,000 (2009: £1,224,000).

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 flows 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 

Amounts include: 
–  variable interest rates 
–  fixed interest rates 
–  non-interest bearing 

2010 
£’000 

2009
£’000

  718,168 
43,335 
523 

  705,071
  59,736
1,554 

  762,026 

  766,361 

  712,260 
44,288 
5,478 

  702,705
  59,060 
4,596 

  762,026 

  766,361

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 fixed-interest bearing deposits is based on discounted cash flows 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) 

2010 
£’000 

11,182 
25,083 
6,190 

42,455 

2009
£’000

5,601 
  23,525 
17,749 

  46,875 

Accruals and deferred income includes £3,575,000 in 2010 in respect of the Group’s share of the cost of FSCS levies 
including a provision for the 2010/11 levy year, of which £3,203,000 relates to Keydata and other intermediaries (note 7).

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8
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24  Other provisions

At 1 January 2010  

Charged to profit or loss 
Unused amount credited to profit or loss  

Net charge to profit or loss 
Other movements   
Utilised/paid during the period 

Current 
Non-current 

0
1
0
2
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Other 
payables 
£’000 

  16,817 

– 
– 

– 
  14,294 
(26,019) 

5,092 

1,934 
3,158 

5,092 

Client 
compensation 
£’000 

Litigation related 
and other 
£’000 

801 

530 
(466) 

64 
– 
(243) 

622 

622 
– 

622 

131 

508 
– 

508 
– 
(163) 

476 

476 
– 

476 

Total 
£’000

17,749 

1,038  
(466)

572 
  14,294 
(26,425)

6,190 

3,032  
3,158 

6,190

 
 
 
 
 
 
	
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
24  Other provisions continued

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 £1,576,000 (2009: £11,486,000) in relation to the 
agreement to acquire certain discretionary investment management activities from Lloyds Banking Group (note 20).

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 27 months of the statement  
of financial position date.

25  Long term employee benefits

The Group operates a defined contribution group personal pension scheme and contributes to various other personal pension 
arrangements for certain Directors and employees. The total of contributions made to this scheme during the year was 
£1,295,000 (2009: £1,033,000). The Group also operates defined contribution schemes for overseas employees, for which 
the total contributions were £21,000 (2009: £52,000) of which £nil relates to discontinued operations (2009: £32,000).

The Group operates two funded pension schemes, 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 schemes are required to act in the best interest of the schemes’ beneficiaries. The appointment of 
trustees 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 schemes.

The Laurence Keen Scheme was closed to new entrants and future accrual with effect from 30 September 1999.  
Past service benefits continue to be calculated by reference to final pensionable salaries. From 1 October 1999, all the  
active members of the Laurence Keen Scheme were included under the Rathbone 1987 Scheme for accrual of retirement 
benefits for further service. The Rathbone 1987 Scheme was closed to new entrants with effect from 31 March 2002. 

The Group provides death in service benefits to all employees through the Rathbone 1987 Scheme. Third party insurance 
is purchased for the benefits where possible and £519,000 of related insurance premia were expensed to the income 
statement in the year (2009: £547,000). The estimated present value of the uninsured death in service benefits is included 
in long term employee benefits liabilities. During the year the Group changed its insurance arrangements and substantially 
eliminated the uninsured element of this benefit.

The schemes are valued by independent actuaries every three years using the projected unit credit method which looks at  
the value  of benefits accruing over the years following the valuation date based on projected salary to the date of termination 
of services, discounted to a present value using a rate that reflects the characteristics of the liability. The valuations are 
updated at each statement of financial position 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 reflect the different membership profiles of the schemes, were:

2010 
 Laurence Keen 
Scheme % 

2009 
Laurence Keen 
Scheme % 

2010 
Rathbone 1987 
Scheme % 

2009
Rathbone 1987
Scheme %

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 
Inflation1 

1 

Inflation assumptions are based on the Retail Prices Index

4.85 
3.70 
3.60 
5.40 
5.90 
3.60 

4.85 
3.70 
3.60 
5.70 
6.00 
3.60 

4.85 
3.50 
3.60 
5.40 
6.70 
3.60 

4.85
3.50
3.60
5.70
7.00
3.60

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25  Long term employee benefits continued

The assumed duration of the liabilities for the Laurence Keen Scheme is 18 years (2009: 18 years) and the assumed 
duration for the Rathbone 1987 Scheme is 24 years (2009: 24 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.

The normal retirement age for members of the Laurence Keen Scheme is 65 (60 for certain former Directors). The normal 
retirement age for members of the Rathbone 1987 Scheme is 60 for service prior to 1 July 2009 and 65 from that date 
following the introduction of pension benefits based on Career Average Revalued Earnings (CARE) from that date. The 
assumed life expectancy for the membership of both schemes is based on the PNA00 actuarial tables. The assumed life 
expectations on retirement were:

Retiring today: 
–  aged 60 
–  aged 65 
Retiring in 20 years: 
–  aged 60 
–  aged 65 

2010 
Males 

26.9 
22.1 

28.6 
23.7 

2010 
Females 

29.1 
24.3 

30.4 
25.4 

2009 
Males 

26.8 
22.0 

28.5 
23.6 

2009
Females

29.1
24.2

30.3
25.4

The amount included in the statement of financial position arising from the Group’s obligations in respect of the schemes is 
as follows:

2010 
 Laurence Keen 

2010 
Rathbone 
Scheme  1987 Scheme 
£’000 

£’000 

2010 
Total 
£’000 

2009 
 Laurence Keen 

2009
Rathbone 
Scheme  1987 Scheme 
£’000 

£’000 

2009
Total
£’000

Present value of defined benefit obligations 
Fair value of scheme assets 

(12,041)  (89,312) (101,353) 
94,710 
82,759 
11,951 

(11,086)  (74,491)  (85,577)
77,254 

  10,299  66,955 

Deficit in schemes   
Death in service benefit reserve – unfunded 

(90) 
– 

(6,553) 
– 

(6,643) 
– 

(787) 
– 

(7,536) 
(1,090) 

(8,323)
(1,090)

Total deficit 

(90) 

(6,553) 

(6,643) 

(787) 

(8,626) 

(9,413)

The amounts recognised in the income statement, within operating expenses, are as follows: 

2010 
 Laurence Keen 

2010 
Rathbone 
Scheme  1987 Scheme 
£’000 

£’000 

2010 
Total 
£’000 

2009 
 Laurence Keen 

2009 
Rathbone 
Scheme  1987 Scheme 
£’000 

£’000 

2009
Total
£’000

Current service cost 
Interest cost 
Expected return on scheme assets 

– 
623 
(631) 

2,129 
4,374 
(4,985) 

2,129 
4,997 
(5,616) 

– 
590 
(463) 

1,740 
3,462 
(3,477) 

1,740 
4,052 
(3,940)

(8) 

1,518 

1,510 

127 

1,725 

1,852

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 £1,206,000 (2009: £1,403,000 rise) for the Laurence Keen Scheme and a rise in value of 
£9,084,000 (2009: £9,791,000 rise) 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:

2010 
 Laurence Keen 

2010 
Rathbone 
Scheme  1987 Scheme 
£’000 

£’000 

2010 
Total 
£’000 

2009 
 Laurence Keen 

2009 
Rathbone 
Scheme  1987 Scheme 
£’000 

£’000 

2009
Total
£’000

At 1 January 
Net actuarial loss recognised in year 

(405) 
(67) 

(7,549) 
(2,938) 

(7,954) 
(3,005) 

(295) 
(110) 

967 
(8,516) 

672 
(8,626)

At 31 December 

(472)  (10,487)  (10,959) 

(405) 

(7,549) 

(7,954)

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25  Long term employee benefits continued

Movements in the present value of defined benefit obligations were as follows:

2010 
 Laurence Keen 

2010 
Rathbone 
Scheme  1987 Scheme 
£’000 

£’000 

At 1 January 
Service cost (employer’s part)  
Interest cost 
Contributions from members   
Actuarial loss 
Benefits paid 

11,086 
– 
623 
– 
642 
(310) 

75,581 
2,129 
4,374 
1,245 
7,037 
(1,054) 

2010 
Total 
£’000 

86,667 
2,129 
4,997 
1,245 
7,679 
(1,364) 

2009 
 Laurence Keen 

2009
Rathbone 
Scheme  1987 Scheme 
£’000 

£’000 

2009
Total
£’000

– 
590 
– 

9,750  55,284  65,034 
1,740 
1,740 
4,052 
3,462 
1,245 
1,245 
1,050  14,830  15,880 
(1,284)
(980) 
(304) 

At 31 December 

12,041 

89,312  101,353 

  11,086  75,581  86,667

Movements in the fair value of scheme assets were as follows:

2010 
 Laurence Keen 

2010 
Rathbone 
Scheme  1987 Scheme 
£’000 

£’000 

At 1 January 
Expected return on scheme assets 
Actuarial gain 
Contributions from the sponsoring companies 
Contributions from scheme members 
Benefits paid 

10,299 
631 
575 
756 
– 
(310) 

66,955 
4,985 
4,099 
6,529 
1,245 
(1,054) 

2010 
Total 
£’000 

77,254 
5,616 
4,674 
7,285 
1,245 
(1,364) 

2009 
 Laurence Keen 

2009 
Rathbone 
Scheme  1987 Scheme 
£’000 

£’000 

2009
Total
£’000

8,760  50,551  59,311 
3,940 
3,477 
7,254 
6,314 
6,788 
6,348 
1,245 
1,245 
(1,284)
(980) 

463 
940 
440 
– 
(304) 

At 31 December 

11,951 

82,759 

94,710 

  10,299  66,955 

77,254 

The analysis of the scheme assets, measured at bid prices, and expected rates of return on those assets at the statement 
of financial position 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 

1.1.10 
Expected 
return 
% 

1.1.09 
Expected 
return 
% 

7.45 
4.60 
0.50 

7.75 
4.90 
0.50 

2010 
Fair 
value 
£’000 

6,082 
5,538 
331 

2009 
Fair 
value 
£’000 

2010 
Current 
allocation 
% 

2009
Current
allocation
%

5,252 
4,204 
843 

51 
46 
3 

51 
41 
8

11,951  10,299

1.1.10 
Expected 
return 
% 

1.1.09 
Expected 
return 
% 

2010 
Fair 
value 
£’000 

2009 
Fair 
value 
£’000 

2010 
Current 
allocation 
% 

2009
Current
allocation
%

7.45 
4.60 
4.20 
0.50 

7.75 
4.90 
4.50 
0.50 

64,971  52,219 
8,843 
11,928 
4,537 
4,512 
1,356 
1,348 

79 
14 
5 
2 

78 
13 
7 
2

82,759  66,955 

At 31 December 2010 the Rathbone 1987 Scheme held 335 shares (2009: 335) with a nominal value of £4,808,000 
(2009: £3,812,000) 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 (2009: 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.

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25  Long term employee benefits continued

The statement of investment principles set by the trustees requires that the assets of the schemes 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%2 
45% – 65%2 

43% – 57% 
21% – 35%
14% – 28%
0% – 8%

2  The total allocation of assets in the Laurence Keen Scheme to fixed interest stocks and cash deposits is expressed as a combined percentage of the two 

asset classes in the statement of investment principles

In the Rathbone 1987 Scheme, not more than 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 the total portfolio can be invested in hedge 
funds. The trustees have initiated a process of de-risking the portfolio over the next 10 years as the scheme matures.

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% change in: 
–  discount rate 
–  rate of inflation   
–  rate of salary growth 
–  1 year increase to longevity at 60 

The history of experience adjustments is as follows:

Laurence Keen Scheme

Present value of defined benefit obligations 
Fair value of scheme assets 

Deficit in the scheme 

Experience adjustments on scheme liabilities: 
–  amount 
–  percentage of scheme liabilities 

Experience adjustments on scheme assets: 
–  amount 
–  percentage of scheme assets 

Rathbone 1987 Scheme

Present value of defined benefit obligations 
Fair value of scheme assets 

Deficit in the scheme 

Experience adjustments on scheme liabilities: 
–  amount 
–  percentage of scheme liabilities 

Experience adjustments on scheme assets: 
–  amount 
–  percentage of scheme assets 

Combined impact on schemes’ liabilities

(Decrease)/increase 
£’000 

(Decrease)/increase 
%

(11,359) 
6,844 
4,202 
2,824 

(11.2) 
6.8  
4.1  
2.8

2010 
£’000 

2009 
£’000 

2008 
£’000 

2007 
£’000 

2006
£’000

(12,041)  (11,086) 
11,951  10,299 

(9,750)  (10,301)  (10,423)
8,996 
9,708 
8,760 

(90) 

(787) 

(990) 

(593) 

(1,427)

– 
0% 

575 
5% 

395 
4% 

(248) 
(3%) 

(104) 
(1%) 

1,592 
15%

940 
9% 

(1,715) 
20% 

70 
1% 

85 
1%

2010 
£’000 

2009 
£’000 

2008 
£’000 

2007 
£’000 

2006
£’000

(89,312)  (75,581)  (55,284)  (60,274)  (53,982)
82,759  66,955  50,551  54,415  44,646 

(6,553) 

(8,626) 

(4,733) 

(5,859) 

(9,336)

(635) 
(1%) 

305 
0% 

2,937 
5% 

(1,264) 
(2%) 

3,038 
6%

4,099 
5% 

6,314 
9% 

(10,677) 
(21%) 

(90) 
0% 

753 
2%

The total regular contributions made by the Group to the Rathbone 1987 Scheme during the year were £3,571,000  
(2009: £3,598,000) based on 22.6% of pensionable salaries (2009: 22.6%). Additional lump sum contributions of 
£2,958,000 were paid in 2010 (2009: £2,750,000) and the Group has committed to make additional annual contributions 
to the scheme of £2,750,000 until 30 June 2017. 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.

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25  Long term employee benefits continued

The total contributions made by the Group to the Laurence Keen Scheme during the year were £756,000 (2009: £420,000). 
No additional lump sum contributions were paid in 2010 (2009: £20,000). Annual contributions of £756,000 will continue 
to be made to the Laurence Keen Scheme until April 2013. Thereafter, annual contributions of £336,000 will be made until 
December 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 following movements in share capital occurred during the period:

At 1 January 2009  
Shares issued: 
–  to Share Incentive Plan 
–  on exercise of options 

At 1 January 2010  
Shares issued: 
–  to Share Incentive Plan 
–  to Save As You Earn scheme 
–  on exercise of options 

Number of 
shares 

42,858,196 

Exercise 
price 
p 

Share 
capital 
£’000 

Share 
premium 
£’000 

Total 
£’000

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 

68,851 
359 
11,250 

926.5 
696.0 
852.0 

3 
– 
1 

635 
2 
95 

638 
2 
96 

At 31 December 2010 

43,376,790 

2,169 

32,488 

34,657 

The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote  
per share at meetings of the Company. The ordinary shareholders are entitled to any residual assets on the winding up of  
the Company.

Unvested shares in the Employee Benefit Trust (note 27) are treasury shares. At 31 December 2010 the trust held  
380,285 (2009: 383,831) unvested shares with an aggregate cost of £1,665,000 (2009: £2,232,000) which is included  
in retained earnings.

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 purchased or allotted 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 dividend shares whilst for Jersey employees 
dividends are paid in cash.

As at 31 December 2010, the trustees of the SIP held 1,316,557 (2009: 1,356,417) ordinary shares of 5p each in  
Rathbone Brothers Plc with a total market value of £14,403,000 (2009: £10,851,000). No dividends on these shares have 
been waived. Of the total number of shares held by the trustees 267,592 (2009: 341,138) have been conditionally gifted to 
employees.

Long Term Incentive Plan

Rathbone Brothers Plc shares are held by Investec Trust (Jersey) Limited as trustee of the Rathbone Brothers Plc Settlement 
for both the Long Term Incentive Plan (LTIP) and deferred profit share awards. Details of the general terms of these plans are 
set out in the Remuneration report on page 38. The total shareholder return based performance criteria have been treated as 
market-based vesting conditions.

In March 2009, the Group elected to settle substantially all of the 2006/08 LTIP award in cash as an alternative to shares.  
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 £795,000 (2009: £119,000) 
has been recognised for the estimated fair value of future awards.

At 31 December 2010, the trustees held 112,693 (2009: 42,693) ordinary shares of 5p each in Rathbone Brothers Plc  
with a total market value of £1,233,000 (2009: £342,000). Dividends on these shares have been waived by the trustees.

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3
9

0
1
0
2
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27  Share-based payments continued

Savings related share option or Save As You Earn (SAYE) plan

Under the plan, 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 38.

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 plan. The inputs into the binomial 
model for options granted during 2009, as at the date of issue, were as follows:

Share price (pence) 
Exercise price (pence) 
Expected volatility   
Risk free rate 
Expected dividend yield 

2010 

– 
– 
– 
– 
– 

2009

803 
696
32.0%
2.1%
5.3%

The number of share options outstanding for the SAYE plan at the end of the year, the period in which they were granted and 
the date on which they may be exercised are given below:

Year of grant 

2009 

Share option scheme

Exercise 
price 
p 

Exercise 
period 

2010 
Number 

2009
Number

  696.00 

2013  184,988  193,585

Under the share option scheme approved by shareholders in 2000, certain employees hold options to subscribe for  
shares in the Company at prices ranging from 415p to 1,172p. 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.

The number of share options outstanding for the share option scheme 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 

2000 
2001 
2001 
2001 
2002 
2003 
2004 
2005 
2006 
2006 
2008 

Exercisable 

Exercise
price 
p 

  932.50 
  985.00 
827.50 
  915.80 
  810.00 
  415.00 
743.50 
  852.00 
  1,172.00 
  1,116.00 
  813.50 

Exercise 
period 

2010 
Number 

2009
Number

–  101,810
2003–2010 
22,500  22,500
2004–2011 
66,184  66,184
2004–2011 
38,110  38,110
2004–2011 
64,851  66,351
2005–2012 
9,622
2006–2013 
2007–2014 
61,956  61,956
2008–2015  144,648  161,148
15,948  15,948
2009–2016 
10,000  10,000
2009–2016 
30,000  30,000
2011–2018 

9,622 

  463,819  583,629 

Movements in the number of share options outstanding for both the SAYE plan and the share option scheme were as follows: 

At 1 January 
Granted in the year  
Lapsed in the year   
Exercised in the year 

At 31 December 

2010 
Number 
of share 
options 

777,214 
– 
(116,798) 
(11,609) 

648,807 

2010 
Weighted average 
exercise price 
£ 

8.19 
– 
9.11 
 8.47 

8.02 

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

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4
9

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27  Share-based payments continued
Share option scheme continued

The weighted average share price at the dates of exercise for share options exercised during the year was £10.04  
(2009: £7.93). The options outstanding at 31 December 2010 had a weighted average contractual life of 3.5 years  
(2009: 3.3 years). Options exercisable at 31 December 2010 had a weighted average exercise price of £7.71  
(2009: £7.53). No options were granted during the year. 

The Group recognised total expenses of £1,729,000 in relation to equity-settled share-based payment transactions in 2010 
(2009: £1,219,000). 

28  Financial risk management

The Group has identified the risks arising from its activities and has established policies and procedures to manage these 
items in  accordance with its risk appetite, as described in the Corporate governance report’s Risk management and internal 
control section on page 34. The Group categorises its financial risks into three areas:

(i) 

 credit risk (which includes counterparty default risk);

(ii) 

liquidity risk; and

(iii)  market risk (which includes fair value interest rate risk, cash flow interest rate risk, foreign exchange risk and price risk).

The sections below outline the Group’s risk appetite and explain how it defines and manages each category of financial  
risk. The Group’s risk management policies are designed to identify and analyse the risks that the Group faces, to set 
appropriate risk limits and controls and to monitor the risks and adherence to limits by means of reliable and up-to-date 
information systems. The Group regularly reviews its risk management policies and systems to reflect changes in the 
business, counterparties, markets and the range of financial instruments that it utilises.

The Group’s overall strategy and policies for monitoring and management of financial risk are set by the Board of Directors 
(the Board). The Board has embedded risk management within the business through the boards of directors of the Group’s 
operating subsidiaries and certain of the Board’s standing committees. The principal committees that have responsibility 
for the identification, mitigation and management of risks are the Executive Committee, the Audit Committee, the Risk 
Management Committee and the Banking Committee, which is a standing committee of the Board of Directors of Rathbone 
Investment Management. 

The Treasury Department, reporting through the Banking Committee, has principal responsibility for monitoring exposure  
to credit risk, liquidity risk and market risk. Procedures and delegated authorities are documented in a Group treasury manual 
and policy documents are in place to cover the management and monitoring of each type of risk. The primary objective of  
the Group’s treasury policy is to manage short term liquidity requirements whilst maintaining an appropriate level of exposure 
to other financial risks in accordance with the Group’s risk appetite.

(i)  Credit risk

The Group takes on exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when 
due, through its banking, treasury, trust and pensions advisory activities. The principal source of credit risk arises from  
placing funds with other banks and holding interest bearing securities. The Group also has exposure to credit risk through  
its loan books, guarantees given on clients’ behalf and loans made to the acquirers of the Group’s Jersey and Switzerland 
operations in 2008 and 2009.

It is the Group’s policy to place funds generated internally and from deposits by clients with a range of high quality  
financial institutions. Investments are spread to avoid excessive exposure to any individual counterparty. Loans made to  
clients are secured against clients’ assets that are held and managed by Group companies.

Exposure to credit risk is managed through setting appropriate ratings requirements and lending limits. Limits are reviewed 
regularly, taking into account the ability of borrowers and potential borrowers to meet repayment obligations.

The Group categorises its exposures based on the long term ratings awarded to counterparties by Fitch Ratings Ltd (‘Fitch’) 
or Moody’s Corporation (‘Moody’s’). Each exposure is assessed individually, both at inception and in ongoing monitoring.  
In addition to formal external ratings, the Banking Committee also utilises market intelligence information to assist its  
ongoing monitoring.

Settlement balances 
Settlement risk arises in any situation where a payment in cash or transfer of a security is made in the expectation of  
a corresponding delivery of a security or receipt of cash. The majority of transactions are carried out on a delivery versus 
payment  basis, which results in securities and cash being exchanged within a very close timeframe. Settlement balances 
outside standard terms are monitored on a daily basis.

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5
9

0
1
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2
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28  Financial risk management continued

(i)  Credit risk continued

The Investment Management and Unit Trust businesses have exposure to market counterparties in the settlement of trades. 
Settlement balances arising in the Investment Management segment are primarily in relation to client trades and risk of non-
settlement is borne by clients.

Loans and advances to banks and debt and other securities 
The Group has exposures to a wide range of financial institutions through its treasury portfolio which includes bank  
deposits, certificates of deposit, money market funds and government bonds. These exposures principally arise from the 
placement of surplus investment management client cash, which is held under a banking relationship, and the Group’s  
own reserves.

The Group’s policy requires that all such exposures are only taken with counterparties that have been awarded a minimum 
long term rating of ‘A’ by Fitch or equivalent rating by Moody’s. Counterparty limits are also in place to limit exposure to 
an individual counterparty or connected group of counterparties. Counterparty exposures are monitored on a daily basis 
and reviewed by the Banking Committee on a monthly basis. The Banking Committee may suspend dealing in a particular 
counterparty, or liquidate specific holdings, in the light of adverse market information.

Loans and advances to customers 
The Group provides loans to clients through its Investment Management operations (the Investment Management loan book). 
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 clients’ behalf. Overdrafts are actively monitored and reported to the Banking 
Committee on a monthly basis.

(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 subject to credit criteria.

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 £45,000,000  
(2009: £30,000,000) of which £31,957,000 had been advanced (2009: £18,712,000) and a further £7,724,000 had  
been committed (2009: £5,260,000).

(c)	 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.

(d)	 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 Switzerland trust operations in 2009 (note 15).

Impairment and provisioning policies 
Impairment provisions are recognised for financial reporting purposes only for losses that have been incurred at the statement 
of financial position 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 the statement of financial 
position 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 during the year (2009: none).

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i
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s
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N

6
9

0
1
0
2
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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 
–  Trust and pension debtors   
–  Other debtors 
Debt securities 
–  Unlisted debt securities and money market funds 
Other financial assets 
Credit risk relating to off-balance sheet exposures: 
Loan commitments  
Financial guarantees 

2010 
£’000 

18,169 
39,565 

3,306 
31,957 
1,073 
5,822 

  790,585 
30,265 

7,724 
583 

2009
£’000

17,305 
  92,661 

3,167 
  18,712 
850 
6,018 

  778,000 
  22,663 

5,260 
5 

  929,049 

  944,641 

The above table represents the gross credit risk exposure to the Group at 31 December 2010 and 2009, 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 statement of financial position.

8.8% of the total maximum exposure is derived from loans and advances to banks and customers (2009: 12.9%) and 85.1% 
represents investments in debt securities (2009: 82.4%).

Settlement balances
Settlement balances are summarised as follows:

Neither past due nor impaired  
Past due but not impaired < 90 days 
Past due but not impaired > 90 days 
Impaired 

Gross carrying value 
Less allowance for impairment 

Net carrying value 

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 

2010 
£’000 

13,267 
4,877 
25 
– 

18,169 
– 

18,169 

2009 
Loans and 
advances 
to banks 
£’000 

  92,661 
– 
– 

  92,661 
– 

  92,661 

2009
£’000

  12,300 
4,980
25 
– 

17,305 
–

17,305 

2009
Loans and
advances
to customers
£’000

  26,235 
510 
82 

  26,827 
(82)

26,745 

2010 
Loans and 
advances 
to banks 
£’000 

39,565 
– 
– 

39,565 
– 

39,565 

2010 
Loans and 
advances 
  to customers 
£’000 

39,318 
708 
143 

40,169 
(143) 

40,026 

No loans and advances have been renegotiated (2009: nil).

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N

7
9

0
1
0
2
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28  Financial risk management continued

(i)  Credit risk continued

(a)	 Neither	past	due	nor	impaired
The credit quality of loans and advances to customers that were neither past due nor impaired at 31 December 2010, 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 96, 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 2010 

Standard lending criteria 
Outside standard lending criteria 

At 31 December 2009 

Standard lending criteria 
Outside standard lending criteria 

Investment 
  Management 
loan book 
£’000 

Overdrafts 
£’000 

Trust and 
pension 
debtors 
£’000 

Total 
loans and 
Other  advances to 
customers 
£’000

debtors 
£’000 

3,306 
– 

31,957 
– 

223 
– 

– 
3,832 

35,486 
3,832 

3,306 

31,957 

223 

3,832 

39,318 

Investment 
  Management 
loan book 
£’000 

Overdrafts 
£’000 

Trust and 
pension 
debtors 
£’000 

Total 
loans and 
advances to 
customers 
£’000

Other 
debtors 
£’000 

3,167  18,712 
– 

– 

258 
– 

–  22,137  
4,098 

4,098 

3,167  18,712 

258 

4,098  26,235 

The credit quality of loans and advances to banks that were neither past due nor impaired at 31 December 2010 is  
analysed below  by reference to the long term credit rating awarded by Fitch, or equivalent rating by Moody’s as at the 
statement of financial position date.

AA- to AA+ 

2010 
£’000 

2009
£’000

39,565 

  92,661 

(b)		 Past	due	but	not	impaired	
Loans and advances that are past due are assessed for impairment and provided against where considered appropriate. The 
gross amount of loans and advances by class to customers that were past due but not impaired at 31 December 2010 were:

At 31 December 2010 

< 90 days overdue  
90 –180 days overdue 
180 – 270 days overdue 
270 – 365 days overdue 
> 365 days overdue 

At 31 December 2009 

< 90 days overdue  
90 –180 days overdue 
180 – 270 days overdue 
270 – 365 days overdue 
> 365 days overdue 

Investment 
  Management 
loan book 
£’000 

Overdrafts 
£’000 

Trust and 
pension 
debtors 
£’000 

Total 
loans and 
Other  advances to 
customers 
£’000

debtors 
£’000 

– 
– 
– 
– 
– 

– 

– 
– 
– 
– 
– 

– 

255 
141 
184 
43 
85 

708 

– 
– 
– 
– 
– 

– 

255 
141 
184 
43 
85 

708 

Investment 
  Management 
loan book 
£’000 

Overdrafts 
£’000 

Trust and 
pension 
debtors 
£’000 

Total 
loans and 
advances to 
customers 
£’000

Other 
debtors 
£’000 

– 
– 
– 
– 
– 

– 

– 
– 
– 
– 
– 

– 

201 
120 
91 
40 
58 

510 

– 
– 
– 
– 
– 

– 

201  
120  
91  
40  
58 

510

(c)		 Impaired
Allowance has been made for individually impaired trust and pension debtors. The balance of individually impaired trust 
and pension debtors is £143,000 (2009: £82,000). There were no other impaired credit exposures at 31 December 2010 
(2009: £nil).

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8
9

0
1
0
2
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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 2010, based on 
Fitch or Moody’s long term rating designation.

AAA 
AA – to AA + 
A to A + 

2010 
  Government 
securities 
£’000 

2010 
Money 
2010 
market  Certificates 
of deposit 
 funds 
£’000 
£’000 

2009 
2010  Government 
securities 
Total 
£’000 
£’000 

2009 
Money 
market 
 funds 
£’000 

2009 
Certificates 
of deposit 
£’000 

2009
Total
£’000

– 
– 
– 

– 

39,500 

39,500 
– 
–  448,000  448,000 
–  303,085  303,085 

–  84,000 
– 
– 

–  84,000 
–  431,000  431,000 
–  263,000  263,000 

39,500  751,085  790,585 

–  84,000  694,000  778,000 

Concentration of credit risk 
The Group has counterparty concentration risk within its treasury assets in that exposure is to a number of similar credit 
institutions. The Banking Committee actively monitors counterparties and may reduce risk by either suspending dealing or 
liquidating investments in the light of adverse market information, for example in anticipation of or in response to any formal 
Fitch or Moody’s rating downgrade. This may happen in relation to specific banks or banks within a particular country  
or sector.

(a)		 Geographical	sectors	
The following table analyses the Group’s credit exposures, at their carrying amounts, by geographical region as at the 
statement of financial position date. In this analysis, exposures are categorised based on the country of domicile of  
the counterparty.

At 31 December 2010 

Settlement balances 
Loans and advances to banks  
Loans and advances to customers 
–  Overdrafts 
–  Investment Management loan book 
–  Trust and pension debtors   
–  Other debtors 
Debt securities 
–  Unlisted debt securities and money market funds 
Other financial assets 

At 31 December 2009 

Settlement balances 
Loans and advances to banks  
Loans and advances to customers 
–  Overdrafts 
–  Investment Management loan book 
–  Trust and pension debtors   
–  Other debtors 
Debt securities 
–  Unlisted debt securities and money market funds 
Other financial assets 

United 
Kingdom 
£’000 

16,953 
25,562 

2,775 
30,462 
930 
– 

Jersey 
£’000 

Rest of
the World 
£’000 

Total 
£’000

– 
– 

1,216 
14,003 

18,169 
39,565 

131 
251 
– 
3,267 

400 
1,244 
– 
565 

3,306 
31,957 
930 
3,832 

  305,000 
27,706 

–  485,585  790,585 
30,265 

2,511 

48 

  409,388 

3,697  505,524  918,609 

United 
Kingdom 
£’000 

Jersey 
£’000 

Rest of 
the World 
£’000 

Total 
£’000

  15,621 
  40,892 

– 

1,684 

17,305  
289  51,480  92,661  

2,303 
17,975 
768 
– 

497 
– 
– 
3,267 

367 
3,167  
737  18,712  
768  
4,098  

– 
831 

  314,000 
  19,168 

–  464,000  778,000  

162 

3,333  22,663

  410,727 

4,215  522,432  937,374 

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9
9

0
1
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2
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28  Financial risk management continued

(i)  Credit risk continued

(b)		 Industry	sectors	
The Group’s credit exposures at the statement of financial position date, analysed by the primary industry sectors in which our 
counterparties operate, were:

At 31 December 2010 

Settlement balances 
Loans and advances to banks  
Loans and advances to customers 
–  Overdrafts 
–  Investment Management loan book 
–  Trust and pension debtors   
–  Other debtors 
Debt securities 
–  Unlisted debt securities and money market funds 
Other financial assets 

At 31 December 2009 

Settlement balances 
Loans and advances to banks  
Loans and advances to customers 
–  Overdrafts 
–  Investment Management loan book 
–  Trust and pension debtors   
–  Other debtors 
Debt securities 
–  Unlisted debt securities and money market funds 
Other financial assets 

(ii)  Liquidity risk

Public 
sector 
£’000 

Financial 
institutions 
£’000 

Private 
clients 
and other 
£’000 

Total 
£’000

– 
– 

– 
– 
– 
– 

18,169 
39,565 

– 
– 

18,169 
 39,565 

– 
– 
– 
– 

3,306 
31,957 
930 
3,832 

3,306 
31,957 
930
3,832 

–  790,585 
6,764 
– 

–  790,585
30,265 

23,501 

–  855,083 

63,526  918,609 

Public 
sector 
£’000 

Financial 
institutions 
£’000 

– 
17,305 
–  92,661 

Private 
clients 
and other 
£’000 

Total 
£’000

– 
17,305 
–  92,661  

– 
– 
– 
– 

3,167 

3,167  
– 
–  18,712  18,712  
– 
768 
4,098  
– 

768 
4,098 

–  778,000 
– 

–  778,000 
5,973  16,690  22,663 

–  893,939  43,435  937,374 

Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities that 
are settled by delivering cash or another financial asset.

The primary objective of the Group’s treasury policy is to manage short to medium term liquidity requirements. Rathbone 
Investment Management (the bank) also has a regulatory requirement to maintain adequate liquidity to ensure that there is 
no significant risk that its liabilities cannot be met as they fall due. The controls and policies that ensure these requirements 
are met are now documented in an Internal Liquidity Adequacy Assessment (ILAA) in response to additional regulatory 
requirements applicable to the 2010 financial year. This assessment process was implemented in 2010 and is expected to  
be reviewed by the Financial Services Authority in 2011.

Liquidity risk is primarily managed by holding cash and marketable instruments that are realisable at short notice.  
The Group operates a strict set of criteria for counterparties to ensure that investments are liquid and placed with high  
quality counterparties.

The Group does not rely on external funding for its activities.

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28  Financial risk management continued

(ii)  Liquidity risk continued

Non-derivative cash flows 
The table below presents the undiscounted cash flows receivable and payable by the Group under non-derivative financial 
assets and liabilities by remaining contractual maturities at the statement of financial position date.

At 31 December 2010 

Cash flows arising from financial assets 
Cash and balances at central banks 
Settlement balances 
Loans and advances to banks  
Loans and advances to customers 
Debt securities and money market funds  
Other financial assets 

Not more 

After 
3 months 
but not 
than  more than 
1 year 
£’000 

3 months 
£’000 

On 
demand 
£’000 

4 
– 
31,306 
3,393 

– 
– 
18,169 
– 
8,264 
– 
22,793 
11,159 
39,522  371,307  366,369 
10 
25,369 

1,483 

After 
1 year but 
not more 
than 
5 years 
£’000 

– 
– 
– 
5,229 
20,454 
94 

After 
5 years 
£’000 

Total 
£’000

– 
4
18,169 
– 
39,570 
– 
42,574 
– 
–  797,652 
26,956
– 

Cash flows arising from financial assets 

75,708  434,268  389,172 

25,777 

–  924,925 

Cash flows arising from financial liabilities
Deposits by banks   
Settlement balances 
Due to customers   
Other financial liabilities 

215 
– 
  718,171 
131 

1,545 
23,712 
43,353 
23,642 

1,562 
– 
525 
1,888 

– 
– 
– 
7,871 

3,322 
– 
23,712 
– 
–  762,049 
33,532 
– 

Cash flows arising from financial liabilities 

  718,517 

92,252 

3,975 

7,871 

–  822,615 

Net liquidity gap   

  (642,809)  342,016  385,197 

17,906 

–  102,310 

At 31 December 2009 

Cash flows arising from financial assets 
Cash and balances at central banks 
Settlement balances 
Loans and advances to banks  
Loans and advances to customers 
Debt securities and money market funds  
Other financial assets 

On 
demand 
£’000 

Not more 
than 
3 months 
£’000 

After 
3 months 
but not 
more than 
1 year 
£’000 

After 
1 year but 
not more 
than 
5 years 
£’000 

After 
5 years 
£’000 

Total 
£’000

310 
5 
– 
17,305 
  52,036  40,109 

– 
– 
628 
8,050  12,151 

– 
– 
– 
6,250 
  101,166  368,257  272,960  40,301 
15 

17,829 

3,198 

22 

6 

315  
– 
17,305  
– 
– 
92,773  
–  29,649  
–  782,684  
17,872 
– 

Cash flows arising from financial assets 

  156,427  451,860  285,745  46,566 

–  940,598 

Cash flows arising from financial liabilities 
Deposits by banks   
Settlement balances 
Due to customers   
Other financial liabilities 

1,224 

1,533 
–  22,157 
  710,972  55,185 
2  22,447 

1,574 
– 
1,562 
1,898 

3,104 
– 
– 
6,772 

– 
7,435  
–  22,157  
–  767,719  
–  31,119 

Cash flows arising from financial liabilities 

  712,198  101,322 

5,034 

9,876 

–  828,430 

Net liquidity gap   

  (555,771)  350,538  280,711  36,690 

–  112,168 

Included within the amounts due to customers due on demand disclosed above are balances that are repayable on demand  
or that do  not have a contractual maturity date, which historical experience shows are unlikely to be called in the short term.

Derivative cash flows (derivatives settled on a net basis) 
The Group did not hold any derivative instruments at 31 December 2010 (2009: £nil). 

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28  Financial risk management continued

(ii)  Liquidity risk continued

Off-balance sheet items 
Cash flows arising from the Group’s off-balance sheet financial liabilities (note 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 financial 
guarantees are analysed by the duration of the commitment. Future minimum lease payments under non-cancellable 
operating leases are reported by their contractual payment dates. Capital commitments are summarised by the earliest 
expected date of payment.

At 31 December 2010 

Loan commitments  
Financial guarantees 
Operating lease commitments  
Capital commitments 

Not more 

After 
3 months 
but not 
than  more than 
1 year 
£’000 

3 months 
£’000 

7,724 
5 
1,305 
594 

– 
– 
3,910 
– 

After 
1 year but 
not more 
than 
5 years 
£’000 

– 
578 
11,206 
– 

After 
5 years 
£’000 

– 
– 
7,749 
– 

Total 
£’000

7,724 
583 
24,170 
594 

Total off-balance sheet items 

9,628 

3,910 

11,784 

7,749 

33,071 

At 31 December 2009 

Loan commitments  
Financial guarantees 
Operating lease commitments  
Capital commitments 

Total off-balance sheet items   

Total liquidity requirement

Not more 
than 
3 months 
£’000 

5,260 
5 
1,245 
  14,002 

After 
3 months 
but not 
more than 
1 year 
£’000 

After 
1 year but 
not more 
than 
5 years 
£’000 

– 
– 

– 
– 
3,634  13,065 
– 

– 

After 
5 years 
£’000 

Total 
£’000

– 
– 

5,260  
5  
8,655  26,599  
–  14,002 

  20,512 

3,634  13,065 

8,655  45,866 

At 31 December 2010 

On 
demand 
£’000 

Not more 

After 
3 months 
but not 
than  more than 
1 year 
£’000 

3 months 
£’000 

After 
1 year but 
not more 
than 
5 years 
£’000 

After 
5 years 
£’000 

Total 
£’000

Cash flows arising from financial liabilities 
Total off-balance sheet items   

  718,517 
– 

92,252 
9,628 

3,975 
3,910 

7,871 
11,784 

–  822,615 
33,071 

7,749 

At 31 December 2009 

  718,517  101,880 

7,885 

19,655 

7,749  855,686 

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

Cash flows arising from financial liabilities 
Total off-balance sheet items   

  712,198  101,322 
–  20,512 

5,034 
9,876 
3,634  13,065 

–  828,430  
8,655  45,866 

  712,198  121,834 

8,668  22,941 

8,655  874,296 

(iii) Market risk

Interest rate risk 
Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes  
in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate because  
of changes in market interest rates.

The Group’s principal exposure to cash flow interest rate risk arises from the mismatch between the repricing of its financial 
assets and liabilities. In particular, customer accounts and loan balances are repriced very shortly after changes in base  
rates, whereas the yield on the Group’s interest-bearing assets is correlated to the future expectation of base rates and  
varies depending on the maturity profile of the Group’s treasury portfolio. The average maturity mismatch is controlled  
by the Banking Committee, which generally lengthens the mismatch when the yield curve is expected to rise and shortens  
it when the yield curve is expected to fall.

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28  Financial risk management continued
 Market risk continued

(iii) 

The table below shows the consolidated repricing profile of the Group’s financial assets and liabilities, stated at their carrying 
amounts, categorised by the earlier of contractual repricing or maturity dates.

At 31 December 2010 

Assets 
Cash and balances at central banks 
Settlement balances 
Loans and advances to banks  
Loans and advances to customers 
Investment securities 
–  equity securities  
–  debt securities and money market funds 
Other financial assets 

Total financial assets 

Liabilities 
Deposits by banks   
Settlement balances 
Due to customers   
Other financial liabilities 

Total financial liabilities 

Not more 

After 
3 months 
but not 

After 
6 months 
but not 
than  more than  more than 
1 year 
£’000 

6 months 
£’000 

3 months 
£’000 

– 
– 
39,536 
35,190 

– 
– 
– 
– 

– 
– 
– 
3,267 

– 

– 
  408,585  217,000  145,000 
– 

– 

– 

– 

After 
1 year but 
not more 
than 
5 years 
£’000 

– 
– 
– 
– 

– 
20,000 
– 

  483,311  217,000  148,267 

20,000 

3,304 
– 
  756,025 
125 

  759,454 

– 
– 
150 
– 

150 

– 
– 
373 
– 

373 

– 
– 
– 
– 

– 

Interest rate repricing gap   

  (276,143)  216,850  147,894 

20,000 

After 
5 years 
£’000 

Non- 
interest 
bearing 
£’000 

Total 
£’000

– 
– 
– 
– 

– 
– 
– 

– 

– 
– 
– 
– 

– 

– 

4 
18,169 
29 
1,568 

4 
18,169 
39,565 
40,025 

3,087 

3,087 
–  790,585 
30,265 

30,265 

53,122  921,700

– 
23,712 

3,304 
23,712 
5,478  762,026 
32,255 

32,130 

61,320  821,297 

(8,198)  100,403 

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 financial assets 

Total financial assets 

Liabilities
Deposits by banks   
Settlement balances 
Due to customers   
Other financial liabilities 

Total financial liabilities 

Not more 
than 
3 months 
£’000 

After 
3 months 
but not 
more than 
6 months 
£’000 

After 
6 months 
but not 
more than 
1 year 
£’000 

After 
1 year but 
not more 
than 
5 years 
£’000 

After 
5 years 
£’000 

Non- 
interest 
bearing 
£’000 

Total 
£’000

310 
– 
  91,876 
  21,418 

– 
– 
– 
– 

– 
– 
622 
– 

– 
– 
– 
3,267 

– 
– 
– 
– 

5 
17,305 

315  
17,305  
163  92,661  
26,745  

2,060 

– 

– 
– 
  467,000  139,000  132,000  40,000 
– 
– 

– 

– 

– 

2,932 

2,932  
– 
–  778,000  
– 
–  22,663  22,663 

  580,604  139,000  132,622  43,267 

–  45,128  940,621 

7,379 
– 
  760,211 
– 

  767,590 

– 
– 
932 
– 

932 

– 
– 
622 
– 

622 

– 
– 
– 
– 

– 

– 
7,379  
– 
–  22,157  22,157  
– 
4,596  766,361  
–  31,181  31,181 

– 

57,934  827,078 

Interest rate repricing gap   

 (186,986) 138,068  132,000  43,267 

– 

(12,806)  113,543 

The Banking Committee has set an overall pre-tax interest rate exposure limit of £5,000,000 (2009: £5,000,000) for the 
total profit or loss resulting from an unexpected immediate and sustained 2% movement in Sterling interest rates for the 
bank, the principal operating subsidiary. The potential total profit or loss is calculated on the basis of the average number  
of days to repricing of the interest bearing liabilities compared with the period to repricing on a corresponding amount of 
interest bearing assets.

At 31 December 2010, the bank had £734.2 million (2009: £738.5 million) of Sterling interest bearing liabilities averaging 
two days (2009: two days) to repricing which were matched by Sterling assets averaging 89 days (2009: 74 days) to 
repricing, creating an exposure of 87 days (2009: 72 days). The total potential impact on profit after tax and equity was 
£2,542,000 (2009: £2,088,000) at the statement of financial position date for a 2% decrease or increase in interest  
rates. The Group held no forward rate agreements at 31 December 2010 (2009: none).

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28  Financial risk management continued
 Market risk continued

(iii) 

Foreign exchange risk 
The Group monitors its currency exposures that arise in the ordinary course of business on a daily basis and significant 
exposures are managed through the use of spot contracts, 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 2009 and 2010 (note 10).

The Group does not have any material exposure to transactional foreign exchange risk. The table below summarises the 
Group’s exposure to foreign currency translation risk at 31 December 2010. Included in the table are the Group’s financial 
assets and liabilities, at carrying amounts, categorised by currency.

At 31 December 2010 

Assets 
Cash and balances at central banks 
Settlement balances 
Loans and advances to banks  
Loans and advances to customers 
Investment securities 
–  equity securities  
–  debt securities and money market funds 
Other financial assets 

Total financial assets 

Liabilities 
Deposits by banks   
Settlement balances 
Due to customers   
Other financial liabilities 

Sterling 
£’000 

US Dollar 
£’000 

Euro 
£’000 

Other 
£’000 

Total 
£’000

4 
14,662 
16,758 
38,421 

– 
1,252 
16,450 
288 

– 
1,831 
3,633 
747 

– 
424 
2,724 
569 

4 
18,169 
39,565 
40,025 

2,518 
  790,585 
28,606 

– 
– 
13 

569 
– 
115 

– 
3,087 
–  790,585 
30,265 

1,531 

  891,554 

18,003 

6,895 

5,248  921,700 

3,089 
22,582 
  738,751 
28,941 

– 
789 
16,439 
193 

– 
146 
4,224 
1,348 

215 
195 

3,304 
23,712 
2,612  762,026 
32,255 
1,773 

Total financial liabilities 

  793,363 

17,421 

5,718 

4,795  821,297 

Net on-balance sheet position 

98,191 

582 

1,177 

453  100,403 

Loan commitments 

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 financial assets 

Total financial assets 

Liabilities
Deposits by banks   
Settlement balances 
Due to customers   
Other financial liabilities 

7,724 

Sterling 
£’000 

– 

US Dollar 
£’000 

– 

Euro 
£’000 

– 

7,724 

Other 
£’000 

Total 
£’000

5 
  15,564 
  66,853 
  26,060 

2,158 
  778,000 
  22,647 

310 
833 

– 
686 
9,353  13,198 
520 

165 

– 
222 

315  
17,305  
3,257  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 
1,070 
7,684  13,060 
649 

834 

– 

7,379  
40  22,157  
3,060  766,361  
186  31,181 

Total financial 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 

5,260 

– 

– 

– 

5,260 

A 10% weakening of the US Dollar or Euro against the Pound Sterling, occurring on 31 December 2010, would have 
reduced equity and profit after tax by £42,000 or £85,000 respectively (2009: £35,000 and £29,000 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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28  Financial risk management continued
 Market risk continued

(iii) 

Price risk 
Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in 
market prices (other than those arising from interest rate risk or foreign exchange 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 2010, the fair value of equity securities recognised on the statement of financial position was £3,087,000 
(2009: £2,932,000). A 10% fall in global equity markets would, in isolation, result in a pre-tax impact on net assets of 
£309,000 (2009: £293,000); there would be no impact on profit after tax. A 10% rise in global markets would have an  
equal and opposite effect.

Fair values 
The fair values of the Group’s financial assets and liabilities are not materially different from their carrying values, with the 
exception of held to maturity investment securities (note 16).

The table below analyses financial instruments measured at fair value into a fair value hierarchy based on the valuation 
technique used to determine the fair value:
•  Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
•  Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either  

directly or indirectly.

•  Level 3: inputs for the asset or liability that are not based on observable market data.

At 31 December 2010 

Assets
Available for sale securities 
–  equity securities  
–  money market funds 

Total financial assets 

At 31 December 2009 

Assets 
Available for sale securities 
–  equity securities  
–  money market funds 

Total financial assets 

Level 1 
£’000 

Level 2 
£’000 

Level 3 
£’000 

Total 
£’000

2,513 
– 

574 
39,500 

2,513 

40,074 

– 
– 

– 

3,087 
39,500 

42,587 

Level 1 
£’000 

Level 2 
£’000 

Level 3 
£’000 

Total 
£’000

2,153 

779 
–  84,000 

– 
2,932  
–  84,000 

2,153 

84,779 

–  86,932 

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The fair value of unlisted equity securities is calculated by reference to net asset values with a liquidity discount applied.  
The fair value of money market funds is their daily redemption value.

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.

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29  Capital management

Rathbone Brothers Plc’s capital is defined for accounting purposes as the total of share capital, share premium, retained 
earnings and other reserves. As at 31 December 2010 this totalled £185,374,000 (2009: £182,489,000). The Company has 
external borrowings of £3,089,000 at 31 December 2010 (2009: £6,155,000) (note 21) which are not considered to be 
part of accounting capital given their very short maturity.

The Group’s objectives when managing capital are to:
•  safeguard the Group’s ability to continue as a going concern so that it can continue to provide returns for shareholders 

and benefits for other stakeholders;

•  maintain a strong capital base to be able to support the development of the business when required;
•  optimise the distribution of capital across Group companies reflecting the requirements of each business;
•  strive to make capital freely transferable across the Group where possible; and
•  comply with regulatory requirements at all times.

Rathbones is classified under the Capital Requirements Directive (CRD) as a banking group and performs an Internal Capital 
Adequacy Assessment Process (ICAAP) which is presented to the FSA on an annual basis. Regulatory capital resources for 
ICAAP purposes are calculated in accordance with CRD rules. These require certain adjustments to and certain deductions 
from accounting capital, the latter largely in respect of intangible assets. The ICAAP compares regulatory capital resources 
against regulatory capital requirements derived using the CRD’s Pillar I and Pillar II methodology. The Group has adopted the 
standardised approach to calculating its Pillar I credit risk component and the basic indicator approach to calculating its 
operational risk component. Capital management policy and practices are applied at both Group and entity level.

At 31 December 2010 the Group’s regulatory capital resources, including retained earnings for 2010, were £85,250,000 
(2009: £94,462,000). The reduction is principally due to the increase in intangible assets during 2010.

In addition to a variety of stress tests performed as part of the ICAAP process, and daily reporting in respect of treasury 
activity, capital levels are monitored and forecasted on a monthly basis to ensure that dividends and investment requirements 
are appropriately managed and appropriate buffers are kept against adverse business conditions. Regular exercises are  
also run to ensure that the Group structures remain optimal.

Regulatory capital requirements have been met throughout the financial year ended 31 December 2009 and 2010.

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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. No indemnities were required during 
the year (2009: no indemnities).

(b)  Capital expenditure authorised and contracted for at 31 December 2010 but not provided in the financial statements 

amounted to £594,000 (2009: £592,000).

(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 (2009: £nil).

2010 
£’000 

583 
7,724 

8,307 

2009
£’000

5 
5,260 

5,265 

(d)   The Group leases various offices and other assets 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   

2010 
£’000 

5,215 
11,206 
7,749 

24,170 

2009
£’000

4,879 
  13,064 
8,656 

  26,599 

(e)  In addition to the Financial Services Compensation Scheme levies accrued in the year (note 7) further levy charges  

may be incurred in future years although the ultimate cost remains uncertain.

31  Related party transactions

The remuneration of the key management personnel of the Group, who are defined as the Company’s Directors, is set out  
in the audited part of the Remuneration report on page 38. At 31 December 2010 key management and their close family 
members had gross outstanding deposits of £904,000 (2009: £1,178,000) and gross outstanding loans of £490,000 
(2009: £193,000), of which £490,000 (2009: £193,000) 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 2010 £4,000 was due from  
the pension schemes (2009: £3,000).

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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32  Consolidated statement of cash flows

For the purposes of the statement of cash flows, cash and cash equivalents comprise the following balances with less than 
three months until maturity from the date of acquisition:

Cash and balances at central banks (note 13) 
Loans and advances to banks (note 14)   
Available for sale investment securities (note 16) 

2010 
£’000 

4 
39,565 
39,500 

79,069 

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 flows 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 

2010 
£’000 

4 
732 

(283) 

453 

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  

Satisfied by: 
Cash and cash equivalents 

Net cash flow arising on disposal: 
Consideration received in cash and cash equivalents 
Cash and cash equivalents disposed of   

2010 
£’000 

– 
– 
– 
– 
– 
– 
– 

– 
– 

– 

– 

– 
– 

– 

2009
£’000

22 
2,799 

(628)

2,193 

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 statement of financial position date

There have been no material events occurring between the statement of financial position date and the date of signing  
this report.

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Company financial statements

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Company statement of comprehensive income
for the year ended 31 December 2010

Profit for the year 

Other comprehensive income: 
Net actuarial loss on retirement benefit obligation 
Revaluation of available for sale investment securities: 
–  net gain/(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 

44 

16 

2010 
£’000 

2009
£’000

39,192 

  20,922

(3,005) 

(8,626)

155 

(13) 
782 

(2,081) 

(59)

17
2,415

(6,253)

37,111 

  14,669

Company statement of changes in equity
for the year ended 31 December 2010 

Share  
capital 
£’000 

Share 
premium 
£’000 

Note 

Available
for sale 
reserve 
£’000 

Retained 
earnings 
£’000 

Total  
equity 
£’000

At 1 January 2009  
Profit for the year 
Net actuarial loss on retirement benefit obligation 
Revaluation of available for sale investment securities 
Deferred tax relating to components of 
other comprehensive income   
Dividends paid 
Issue of share capital 
Share-based payments: 
–  value of employee services  
–  transfer to liabilities for cash settled awards 
–  costs of shares issued/purchased 
–  tax on share-based payments 

At 1 January 2010  
Profit for the year 
Net actuarial loss on retirement benefit obligation 
Revaluation of available for sale investment securities 
Deferred tax relating to components of other 
comprehensive income 
Dividends paid 
Issue of share capital 
Share-based payments: 
–  value of employee services  
–  costs of shares issued/purchased 
–  tax on share-based payments 

2,143  28,957 

2,119  11,693  44,912 
  20,922   20,922  
(8,626) 
(59) 

(8,626) 

(59) 

11 
26 

22  

2,799  

17  

2,415  

2,432  
(18,066)  (18,066)
2,821 

2,165 

31,756  

2,077  

155  

(13) 

11 
26 

4  

732  

1,219  
(119) 
(1,096) 
(94) 

1,219  
(119) 
(1,096) 
(94)

8,248   44,246  
39,192   39,192 
(3,005)
(3,005) 
155

782  

769
(18,167)  (18,167)
736 

1,054  
(569) 
351  

1,054 
(569)
351

At 31 December 2010 

2,169   32,488  

2,219   27,886   64,762

The accompanying notes form an integral part of the Company financial statements.

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Company statement of financial position
as at 31 December 2010

Non-current assets 
Investment in subsidiaries 
Other investments   
Trade and other receivables 
Deferred tax 

Current assets 
Trade and other receivables 
Current tax asset 
Cash and cash equivalents 

Total assets 

Current liabilities  
Borrowings 
Trade and other payables  

Net current assets 

Non-current liabilities 
Employee benefits   

Total liabilities 

Net assets 

Equity 
Share capital 
Share premium account 
Available for sale reserve 
Retained earnings   

Equity shareholders’ funds  

Note 

38 
39 
40 
41 

40 

42 
43 

44 

45 
45 

2010 
 £’000 

37,975 
3,087 
3,538 
2,405 

47,005 

29,380  
469  
410  

30,259  

77,264  

(3,089) 
(2,770) 

(5,859) 

24,400  

2009 
£’000 

2008
£’000

  22,999  
2,932  
4,098  
2,925  

  22,562
2,991
3,268
1,436

  32,954  

  30,257

27,746  
323  
185  

  30,944 
40
135

  28,254  

  31,119

  61,208  

  61,376

(6,155) 
(1,394) 

(7,549) 

(9,201)
(1,540)

(10,741)

20,705  

  20,378

(6,643) 

(12,502) 

(9,413) 

(16,962) 

(5,723)

(16,464)

64,762 

  44,246 

  44,912

2,169 
32,488 
2,219 
27,886 

64,762 

2,165 
  31,756 
2,077 
8,248 

2,143
  28,957
2,119
  11,693

  44,246 

  44,912

The financial statements were approved by the Board of Directors and authorised for issue on 16 February 2011 and were 
signed on its behalf by:

A D Pomfret 
Chief Executive 

R P Stockton 
Finance Director

Company registered number: 01000403.

The accompanying notes form an integral part of the Company financial statements.

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Company statement of cash flows
for the year ended 31 December 2010

Cash flows from operating activities 
Profit before income tax from continuing operations 
Investment revenues 
Finance costs 
Defined benefit pension scheme charges  
Share-based payment charges 
Interest paid 

Changes in operating assets and liabilities: 
–  net decrease/(increase) in trade debtors 
–  net (increase)/decrease in prepayments, accrued income and other assets 
–  net increase/(decrease) in accruals, deferred income, 
  provisions and other liabilities 

Cash generated from operations 
Defined benefit pension scheme contributions paid  
Tax received 

Net cash used in operating activities  

Cash flows from investing activities
Interest received 
Intercompany dividends received 
Other dividends received 
Liquidation of subsidiary, net of cash transferred 
Investment in subsidiaries 

Net cash generated from investing activities 

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

Net cash used in financing activities  

Net increase in cash and cash equivalents 
Cash and cash equivalents at the beginning of the period 

Cash and cash equivalents at the end of the period 

Note 

2010  
£’000  

2009 
£’000

39,877 
(39,984) 
67 
1,510 
1,729 
(75) 

3,124 

266 
(1,360) 

728 

2,758 
(7,285) 
809 

(3,718) 

114 
39,781 
90 
274 
(15,250) 

  21,393 
(21,572)
186 
1,852 
1,219 
(314)

2,764 

(831)
3,095 

(33)

4,995 
(6,788)
96 

(1,697)

3 
  21,488 
80 
13 
(450)

25,009 

  21,134 

(286) 
453 
(3,066) 
(18,167) 

(21,066) 

225 
185 

410 

(468)
2,193 
(3,046)
(18,066)

(19,387)

50 
135 

185 

8 
8 

25 

38 

32 
42 
11 

50 

The accompanying notes form an integral part of the Company financial statements.

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Notes to the Company financial statements
for the year ended 31 December 2010

34	 Significant	accounting	policies

Statement of compliance

The individual financial statements of the Company are presented as required by the Companies Act 2006 and have 
been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. 
These are the Company’s first financial statements prepared in accordance with IFRS and IFRS 1 ‘First time adoption of 
International Financial Reporting Standards’ has been applied. An explanation of how the transition to IFRS has affected the 
reported financial position, financial performance and cash flows of the Company is provided in note 51.

On publishing the parent company financial statements here together with the Group financial statements, the Company is 
taking advantage of the exemption in s408 of the Companies Act 2006 not to present its individual income statement and 
related notes that form a part of these approved financial statements.

Developments in reporting standards and interpretations

Developments in reporting standards and interpretations are the same as those set out in note 1 to the consolidated financial 
statements. The financial statements have been prepared on the historical cost basis, except for the revaluation of certain 
financial instruments. The principal accounting policies adopted are as set out below:

Investments in subsidiaries 
Investments in subsidiaries are stated at cost less, where appropriate, provision for impairment.

Management charges 
Intra-group management charges arise in relation to staff costs and other administrative expenses that are initially borne by 
the Company and then recharged to other Group companies, when incurred.

Accounting policies in relation to: impairment, interest income, dividend income, operating leases, borrowings, foreign 
currency, retirement obligations, taxation, cash and cash equivalents and share-based payments are the same as the 
accounting policies set out in note 1 to the consolidated financial statements.

35	 Critical	accounting	judgements	and	key	sources	of	estimation	and	uncertainty

The critical accounting judgements and key sources of estimation and uncertainty arise from the Company’s defined 
benefit pension schemes and loan notes issued to former subsidiaries. These are described in note 2 to the consolidated 
financial statements.

36	 Profit	for	the	year

As permitted by Section 408 of the Companies Act 2006 the Company has elected not to present its own income 
statement for the year. Rathbone Brothers Plc reported a profit after tax for the financial year ended 31 December 2010 of 
£39,192,000 (2009: £20,922,000).

Auditor’s remuneration for audit and other services to the Company are set out in note 7 to the consolidated 
financial statements.

The average number of employees during the year was as follows:

Investment Management 
Unit Trusts 
Trust and Tax Services 
Shared Services 

37	 Dividends

2010 

443 
24 
43 
179 

689 

2009

428
24
40
179

671

Details of the Company’s dividends paid and proposed for approval at the Annual General Meeting are set out in note 11 to 
the consolidated financial statements.

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38	 Investment	in	subsidiaries

At 1 January 2009  
Additions 
Disposals 

At 1 January 2010  
Additions 
Disposals 

At 31 December 2010 

Equities

Subordinated loans 
to Group undertakings 
£’000 

– 
250 
– 

250 
15,000 
– 

15,250 

Equities 
£’000 

  22,562 
200 
(13) 

22,749 
250 
(274) 

22,725 

Total 
£’000

  22,562 
450 
(13)

22,999
15,250
(274)

37,975

The Company completed the voluntary liquidation of its wholly owned subsidiaries Rathbone Trust Company B.V. on 6 July 
2010, Rathbone Bank (BVI) Limited (held indirectly) on 5 November 2010 and Rathbone Insurance Limited on 30 December 
2010. The Company applied for its wholly owned subsidiaries Rathbone Bros & Co (UK) Limited and Rathbones Limited to be 
struck off on 14 September 2010 and on 22 September 2010 respectively. This process was completed on 11 January 2011 
for Rathbone Bros & Co (UK) Limited and on 18 January 2011 for Rathbones Limited. The disposal of these companies is 
included in the results for 2010.

On 19 July 2010, the Company acquired 250,000 non-voting redeemable preference shares of £1 each (issued at par) in 
Harlequin Insurance PCC Limited Cell RAT36, which represents the entire share capital of that cell, for cash consideration. 
Harlequin Insurance PCC Limited Cell RAT36’s year end is 31 March 2011.

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 
of £13,000.

At 31 December 2010 the principal subsidiary undertakings were as follows:

Subsidiary undertaking 

Rathbone Investment Management Limited 

Rathbone Investment Management International Limited1 
Rathbone Trust Company Limited 
Rathbone Unit Trust Management Limited1 
Rathbone Pension & Advisory Services Limited 

1  held by subsidiary undertaking

Country of incorporation 

England & Wales 

Jersey 
England & Wales 
England & Wales 
England & Wales 

Activity and operation

Investment management and 
banking services 
Investment management
Trust services 
Unit trust management
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.

Subordinated loans to Group undertakings

The amounts subject to subordinated loan agreements are shown below:

Counterparty  

Repayment date 

Interest rate 

Rathbone Investment 
Management Limited 
Rathbone Pension &  
Advisory Services Limited 

None 

None 

Bank of England base rate plus 2.50% 
to a maximum of 5% 
Bank of England base rate plus 2.50% 
to a maximum of 5%

2010 
£’000 

15,000 

2009  
£’000  

– 

250 

250 

15,250 

250 

2008
£’000

–

–

–

The fair value of the subordinated loans is not materially different to their carrying amount.

During 2010 the Company issued a £15,000,000 (2009: £250,000) subordinated loan to a subsidiary as part of the  
Group’s capital management activities. Interest is paid monthly in arrears. No repayment of the loan shall be made in whole,  
or part, earlier than five years from the date the loan was made, or five years from the date on which the Company gives 
written notice to the subsidiary undertaking and the FSA.  The FSA has the right under the agreement to refuse consent  
to the repayment.

The Group has not had any defaults of principal, interest or other breaches with respect to its subordinated loans during 
the period.

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39	 Other	investments

Available for sale securities 

Equity securities – at fair value 
–  listed 
–  unlisted 

40	 Trade	and	other	receivables

Loans issued 
Prepayments and other receivables 
Amounts owed by Group undertakings 

Current  
Non-current 

2010 
£’000 

2,513 
574 

3,087 

2010 
£’000 

3,832 
479 
28,607 

32,918 

29,380 
3,538 

32,918 

2009 
£’000 

2,153 
779 

2,932 

2008
£’000

1,529
1,462

2,991

2009 
£’000 

4,098 
686 
  27,060 

2008
£’000

3,268
841
  30,103

  31,844 

  34,212

27,746 
4,098 

  30,944
3,268

  31,844 

  34,212

Included within loans issued 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 refinancing of the operations disposed of.

The notes bear no interest for three years from issue. Interest is then rolled-up into the loan at the Bank of England base rate 
on half of the notes’ nominal value for the following two years. Thereafter, interest is rolled-up 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 2010 
(2009: £3,267,000; 2008: £3,268,000) and interest income is recognised over the expected life of the notes under the 
effective interest rate method. During the year the forecast interest rate attaching to these notes was reviewed and reduced 
in line with the Directors’ revised expectations for the Bank of England base rate in the medium term.

Included within loans issued is a Swiss Franc denominated loan to the acquirer of the Group’s Switzerland trust operations 
with a nominal value equivalent to £565,000 at 31 December 2010 (2009: £831,000; 2008: £nil). The loan does not bear 
interest and is repayable in three approximately equal annual instalments ending in February 2012.

41	 Deferred	tax

Deferred income taxes are calculated on all temporary differences under the liability method using an effective tax rate of 
27.0% (2009: 28.0%; 2008: 28.0%).

The movement on the deferred tax account is as follows:

At 1 January 
Adjustments in respect of prior years: 
–  to the income statement 
–  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 
Effect of change in corporation tax rate on deferred tax: 
–  charged to the income statement 
–  credited directly to equity 

2010  
£’000  

2,925 

(64) 
56 

(1,534) 
841 
313 
(43) 

(42) 
(47) 

2,405 

2009  
£’000  

1,436 

(59) 
41 

(790) 
2,415 
(135) 
17 

– 
– 

2008
£’000

2,414

(32)
(418)

(1,551)
12 
(97)
1,108 

–
–

2,925  

1,436

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41	 Deferred	tax	continued

Deferred tax assets

Share-based payments 
Pensions 

Deferred tax liabilities

Available for sale securities 

2010 
£’000 

919 
2,306 

3,225 

2010 
£’000 

820 

The deferred tax charge in the income statement comprises the following temporary differences:

Share-based payments 
Pensions 
Accelerated capital allowances 

2010 
£’000 

(269) 
1,909 
– 

1,640 

2009 
£’000 

298 
3,434  

3,732 

2009 
£’000 

807 

2009 
£’000 

266 
583 
– 

849 

2008
£’000

658
1,602

2,260

2008
£’000

824

2008
£’000

661
217
705

1,583

Deferred income tax liabilities of £448,000 (2009: £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 £2,492,000 at 31 December 2010 (2009: £3,601,000; 2008: £3,804,000).

42	 Borrowings

The Company has drawn down £3,089,000 (2009: £6,155,000; 2008: £9,201,000) of an unsecured term loan which is 
repayable in two equal instalments. One of these instalments was paid in January 2011 and the final instalment is payable on 
4 April 2011. Interest is payable on the loan at 0.7% above the London Inter-Bank Offer Rate. 

43	 Trade	and	other	payables

Accruals, deferred income and other creditors 
Amounts owed to Group undertakings 
Other taxes and social security costs 

2010  
£’000  

1,209 
58 
1,503 

2,770 

2009 
£’000 

421 
78 
895 

2008
£’000

452
182
906

1,394 

1,540

The fair value of trade and other payables is not materially different to their carrying amount. 

All amounts owed to Group undertakings are repayable on demand and are non-interest bearing.

44	 Employee	benefits

Details of the defined benefit pension schemes operated by the Company are provided in note 25 to the consolidated 
financial statements.

The assumptions used by the actuaries are the best estimates chosen from a range of possible actuarial assumptions which, 
due to the timescale covered by the liability, may not necessarily be borne out in practice. The principal actuarial assumptions 
used, which reflect the different membership profiles of the schemes, were:

Rate of increase in salaries 
Rate of increase of pensions in payment 
–  Laurence Keen Scheme 
–  Rathbone 1987 Scheme 
Rate of increase of deferred pensions 
Discount rate 
Expected return on scheme assets 
Inflation1 

2010 
 % 

4.85 

3.70 
3.50 
3.60 
5.40 
6.60 
3.60 

2009 
% 

4.85 

3.70 
3.50 
3.60 
5.70 
6.87 
3.60 

2008
%

4.05

3.40
2.80
2.80
6.15
6.24
2.80

1 

Inflation assumptions are based on the Retail Prices Index, in accordance with the schemes’ rules and related documentation

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44	 Employee	benefits	continued 

The assumed duration of the liabilities for the Laurence Keen Scheme is 18 years (2009: 18 years; 2008: 25 years) and the 
assumed duration for the Rathbone 1987 Scheme is 24 years (2009: 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 in 
note 25 to the consolidated financial statements.

The normal retirement age for members of the Laurence Keen Scheme is 65 (60 for certain former directors). The normal 
retirement age for members of the Rathbone 1987 Scheme is 60 for service prior to 1 July 2009 and 65 from that date 
following the introduction of pension benefits based on Career Average Revalued Earnings (CARE) from that date. The 
assumed life expectancy for the membership of both schemes is based on the PNA00 actuarial tables. The assumed life 
expectations on retirement were:

Retiring today 

– aged 60 
– aged 65 

Retiring in 20 years  – aged 60 
– aged 65 

2010 
Males 

26.9 
22.1 

28.6 
23.7 

2010 
Females 

29.1 
24.3 

30.4 
25.4 

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 

2008
Females

29.0
24.1

30.3
25.3

The amount included in the statement of financial position arising from the Company’s obligations in respect of the schemes 
is as follows:

Present value of defined benefit obligations 
Fair value of scheme assets 

Deficit in schemes   
Death in service benefit reserve – unfunded 

Total deficit 

2010 
£’000 

  (101,353) 
94,710 

(6,643) 
– 

(6,643) 

2009 
£’000 

(85,577) 
77,254  

(8,323) 
(1,090) 

(9,413) 

2008
£’000

(63,993)
  59,311 

(4,682)
(1,041)

(5,723)

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 £10,290,000 (2009: £11,194,000 rise; 2008: £7,764,000 rise).

The cumulative actuarial gains and losses reported in the statement of comprehensive income since the adoption of IFRS 
is as follows:

At 1 January 
Net actuarial losses recognised in year 

At 31 December 

2010 
£’000 

(7,954) 
(3,005) 

(10,959) 

Movements in the present value of defined benefit obligations were as follows:

At 1 January 
Service cost (employer’s part)  
Interest cost 
Contributions from members   
Actuarial losses/(gains) 
Benefits 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 
Benefits paid 

At 31 December 

2009 
£’000 

672  
(8,626) 

(7,954) 

2009 
£’000 

  65,034 
1,740 
4,052 
1,245 
  15,880 
(1,284) 

2008
£’000

716
(44)

672

2008
£’000

70,575
2,556
4,014
1,267
(12,348)
(1,030)

2010 
£’000 

86,667 
2,129 
4,997 
1,245 
7,679 
(1,364) 

  101,353 

  86,667 

  65,034

2010 
£’000 

77,254 
5,616 
4,674 
7,285 
1,245 
(1,364) 

94,710 

2009 
£’000 

  59,311 
3,940 
7,254 
6,788 
1,245 
(1,284) 

2008
£’000

  64,123
4,628
(12,392)
2,715
1,267
(1,030)

77,254 

  59,311

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44	 Employee	benefits	continued 

The analysis of the scheme assets, measured at bid prices, and expected rates of return on those assets at the statement of 
financial position date was as follows:

Equity instruments   
Debt instruments 
Interest rate swap funds 
Cash 

At 31 December 

1.1.10 
Expected 
return 
% 

1.1.09 
Expected 
return 
% 

1.1.08 
Expected 
return 
% 

2010 
Fair 
value 
£’000 

2009 
Fair 
value 
£’000 

2008 
Fair 
value 
£’000 

2010 
Current 
allocation 
% 

2009 
Current 
allocation 
% 

2008
Current
allocation
%

7.45 
4.60 
4.20 
0.50 

7.75 
4.90 
4.50 
0.50 

7.35 
6.15 
4.10 
2.00 

71,053 
57,471  36,726 
17,466  13,047  10,125 
9,135 
4,537 
4,512 
3,325 
2,199 
1,679 

75 
18 
5 
2 

74 
17 
6 
3 

62
17
15
6

94,710 

77,254  59,311

At 31 December 2010 the Rathbone 1987 Scheme held 335 shares (2009: 335; 2008: 496) with a nominal value of 
£4,808,000 (2009: £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 (2009: 3.25%; 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.

45	 Share	capital	and	share-based	payments

Details of the share capital of the Company together with changes thereto are provided in note 26 to the consolidated financial 
statements. Details of options on the Company’s shares and share-based payments are set out in note 27 to the consolidated 
financial statements.

46	 Financial	instruments

The Company’s risk management policies and procedures are integrated with the wider Rathbone Group’s risk management 
process. The Rathbone Group has identified the risks arising from all of its activities, including those of the Company, and has 
established policies and procedures to manage these items in accordance with its risk appetite. The Company categorises its 
financial risks into three areas:

(i)  credit risk;

(ii) 

liquidity risk; and

(iii)  market risk (which includes fair value interest rate risk, cash flow interest rate risk, foreign exchange risk and price risk).

The sections below outline the Group risk appetite, as applicable to the Company, and explain how the Company defines 
and manages each category of financial risk. 

The Company’s risk management policies are designed to identify and analyse the risks that the Company 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 Company regularly reviews its risk management policies and systems to reflect changes in the 
business and the wider industry.

The Company’s overall strategy and policies for monitoring and management of financial risk are set by the Board of 
Directors (the Board). The Board has embedded risk management within the business through the Executive Committee 
and senior management.

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46	 Financial	instruments	continued

(i)  Credit risk

The Company 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 trading activities. The principal sources of credit risk arise from depositing funds with banks and 
through providing long term and working capital financing for subsidiaries. The Company also took on credit exposure through 
the provision of loans as part of the disposal of its subsidiaries in Jersey and Switzerland in 2008 and 2009.

The Company places surplus funds with its banking subsidiary, which operates under the Group’s credit risk management 
policies. Group policy requires that funds are placed with a range of high quality financial institutions. Investments are spread 
to avoid excessive exposure to any individual counterparty.

For the purposes of financial reporting the Company categorises its exposures based on the long term ratings awarded to 
counterparties by Fitch Ratings Ltd (Fitch) or Moody’s Corporation (Moody’s).

Cash equivalents (balances at banks) 
The Company has exposure to financial institutions through its bank deposits (reported within cash equivalents). These 
exposures principally arise from the placement of the Company’s own reserves.

Trade and other receivables 
Trade and other receivables relate to amounts placed with subsidiaries and loans provided to subsidiaries and former 
subsidiaries. The collection and ageing of trade and other receivables are reviewed on a periodic basis by management. 
Impairment provisions are made for any debts which are considered to be doubtful for collection.

Impairment and provisioning policies 
Impairment provisions are recognised for financial reporting purposes only for losses that have been incurred at the  
statement of financial position 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 statement of financial 
position date on a case by case basis.

No impairment losses arose during the year (2009 and 2008: none).

Maximum exposure to credit risk

Trade and other receivables 
–  Loans issued 
–  Amounts owed by Group undertakings 
–  Other financial assets 
Balances at banks   

2010  
£’000  

2009  
£’000  

2008 
£’000 

5,822  
28,607  
135  
410  

34,974  

6,018  
  27,060  
– 
185  

5,000 
  30,103 
–
135

  33,263  

  35,238 

The above table represents the gross credit risk exposure of the Company at 31 December 2010, 2009 and 2008, without 
taking account of any collateral held or other credit enhancements attached.

All trade and other receivables are neither past due nor impaired and are within normal terms and conditions of lending at the 
statement of financial position date (2009 and 2008: all within normal terms of trade).

The terms attached to loans issued are set out in note 40. Amounts owed to Group undertakings do not have specific 
repayment dates and are paid down periodically as trading requires.

Balances at banks 
All balances at banks were neither past due nor impaired. The credit quality of these balances is analysed below by reference 
to the long term credit rating awarded by Fitch, or equivalent rating by Moody’s as at the statement of financial position date.

AA – to AA + 

2010  
£’000  

410 

2009  
£’000  

185 

2008
£’000

135

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46	 Financial	instruments	continued

(i)  Credit risk	continued

Concentration of credit risk 
The Company has counterparty concentration risk within its balances at banks in that the principal exposure is to its  
banking subsidiary. The Board sets and monitors the Group policy for the management of Group funds, which include the 
placement of funds with a range of high rated financial insitutions. 

(a)  Geographical sectors 
The following table analyses the Company’s credit exposures, at their carrying amounts, by geographical region as  
at the statement of financial position date. In this analysis, exposures are categorised based on the country of domicile  
of the counterparty.

At 31 December 2010 

Trade and other receivables 
–  Loans issued 
–  Amounts owed by Group undertakings 
–  Other financial assets 
Balances at banks   

At 31 December 2009 

Trade and other receivables 
–  Loans issued 
–  Amounts owed by Group undertakings 
–  Other financial assets 
Balances at banks   

At 31 December 2008 

Trade and other receivables 
–  Loans issued 
–  Amounts owed by Group undertakings 
–  Other financial assets 
–  Balances at banks  

United  
Kingdom  
£’000  

Jersey  
£’000  

Rest of  
the World  
£’000  

Total  
£’000 

– 
28,485 
28 
410 

3,267 
122 
– 
– 

565  
– 
107  
– 

3,832
28,607
135
410

28,923 

3,389 

672 

32,984

United  
Kingdom  
£’000  

Jersey  
£’000  

Rest of  
the World  
£’000  

Total  
£’000 

– 
  26,961 
– 
185  

3,267 
99 
– 
– 

831 

4,098  
–  27,060  
– 
– 
185
– 

27,146 

3,366 

831  31,343

United  
Kingdom  
£’000  

Jersey  
£’000  

Rest of  
the World  
£’000  

Total  
£’000 

– 
  28,523 
– 
135 

3,268 
– 
– 
– 

– 

3,268 
1,580  30,103 
– 
135

– 
– 

(b)  Industry sectors 
The Company’s credit exposures at the statement of financial position date, analysed by the primary industry sectors in which 
our counterparties operate, were:

  28,658 

3,268 

1,580  33,506

At 31 December 2010 

Trade and other receivables 
–  Loans issued 
–  Amounts owed by Group undertakings 
–  Other financial assets 
Balances at banks   

At 31 December 2009 

Trade and other receivables 
–  Loans issued 
–  Amounts owed by Group undertakings 
–  Other financial assets 
Balances at banks   

Financial  
institutions  
£’000  

– 
24,911 
– 
410 

25,321 

Financial  
institutions  
£’000  

– 
  24,337 
– 
185 

  24,522 

  Subsidiaries  
and other  
companies  
£’000  

3,832 
3,696 
135 
– 

7,663 

Subsidiaries  
and other  
companies  
£’000  

4,098  
2,723  
– 
– 

6,821 

Total  
£’000 

3,832
28,607
135
410

32,984

Total  
£’000 

4,098 
  27,060 
– 
185

  31,343

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46	 Financial	instruments	continued

(i)  Credit risk	continued

At 31 December 2008 

Trade and other receivables 
–  Loans issued 
–  Amounts owed by Group undertakings 
–  Other financial assets 
Balances at banks   

(ii) Liquidity risk

Financial  
institutions  
£’000  

– 
23,794  
– 
135 

  23,929 

Subsidiaries  
and other  
companies  
£’000  

3,268 
6,309 
– 
– 

9,577 

Total  
£’000 

3,268 
  30,103 
– 
135

  33,506

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities 
that are settled by delivering cash or another financial asset. The Company places its funds in short term or demand facilities 
with financial institutions to ensure liquidity. The Company has a bank loan of £3,089,000 which is due to be repaid in  
April 2011, but does not rely on external funding for its activities.

The table below presents the undiscounted cash flows receivable and payable by the Company on its financial assets and 
liabilities by remaining contractual maturities at the statement of financial position date.

Cash flows arising from financial liabilities 

183 

1,545 

1,562 

At 31 December 2010 

Cash flows arising from financial assets 
Trade and other receivables 
–  Loans issued 
–  Amounts owed by Group undertakings 
–  Other financial assets 
Balances at banks   

Cash flows arising from financial assets 

Cash flows arising from financial liabilities 
Borrowings 
Trade and other payables 
–  Amounts owed to Group undertakings 
–  Other financial liabilities 

Net liquidity gap   

At 31 December 2009 

Cash flows arising from financial assets
Trade and other receivables 
–  Loans issued 
–  Amounts owed by Group undertakings 
–  Other financial assets 
Balances at banks   

Cash flows arising from financial assets 

Cash flows arising from financial liabilities
Borrowings 
Trade and other payables 
–  Amounts owed to Group undertakings 
–  Other financial liabilities 

After  
3 months  
but not  
Not  
On   more than   more than  
1 year  
£’000  

3 months  
£’000  

demand  
£’000  

After  
1 year but  
not more  
than  
5 years  
£’000  

After  
5 years  
£’000  

Total 
£’000

– 
28,607 
11 
410  

29,028 

355 
– 
38 
– 

393 

360 
– 
4 
– 

5,229 
– 
82 
– 

364 

5,311 

– 

1,545 

1,562 

58  
125 

– 
– 

– 
– 

– 

– 
– 

– 

28,845 

(1,152) 

(1,198) 

5,311 

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  

– 
– 
– 
– 

– 

– 

– 
– 

– 

– 

5,944
28,607
135
410

35,096

3,107

58 
125 

3,290 

31,806

After  
5 years  
£’000  

Total  
£’000 

– 
  27,060 
– 
185 

27,245 

500 
– 
– 
– 

500 

– 
– 
– 
– 

– 

6,250 
– 
– 
– 

6,750 
– 
–  27,060 
– 
– 
185
– 

6,250  

–  33,995

– 

1,533 

1,574 

3,104 

78  
– 

– 
– 

– 
– 

– 
119 

– 

– 
– 

– 

– 

6,211 

78 
119

6,408

27,587

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Cash flows arising from financial liabilities 

78 

1,533 

1,574 

3,223 

Net liquidity gap   

27,167 

(1,033) 

(1,574) 

3,027 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
46	 Financial	instruments	continued
(ii)  Liquidity risk	continued

At 31 December 2008 

Cash flows arising from financial assets
Trade and other receivables 
–  Loans issued 
–  Amounts owed by Group undertakings 
–  Other financial assets 
Balances at banks   

Cash flows arising from financial assets 

Cash flows arising from financial liabilities
Borrowings 
Trade and other payables 
–  Amounts owed to Group undertakings 
–  Other financial 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  

Total  
£’000 

– 
  30,103 
– 
135 

  30,238 

– 
– 
– 
– 

– 

– 
– 
– 
– 

– 

5,199 
– 
– 
– 

5,199 

– 

1,533 

1,901 

6,516 

182 
– 

– 
– 

– 
– 

– 
– 

5,199 
– 
–  30,103 
– 
– 
135
– 

–  35,437

– 

– 
– 

9,950 

182 
–

Cash flows arising from financial liabilities 

182 

1,533 

1,901 

6,516 

–  10,132

Net liquidity gap   

  30,056 

(1,533) 

(1,901) 

(1,317) 

–  25,305

Included within the amounts due to trade creditors 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.

Off-balance sheet items 
Cash flows arising from the Company’s off-balance sheet financial liabilities arise solely from operating loans (note 48) and 
are summarised in the table below. Future minimum lease payments under non-cancellable operating leases are reported by 
their contractual payment dates.

Operating lease commitments 

At 31 December 2010 
At 31 December 2009 
At 31 December 2008 

Total liquidity requirement

At 31 December 2010 

Cash flows arising from financial liabilities 
Total off-balance sheet items   

At 31 December 2009 

Cash flows arising from financial liabilities 
Total off-balance sheet items   

At 31 December 2008 

Cash flows arising from financial liabilities 
Total off-balance sheet items   

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2
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1
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After  
3 months  
but not  

After  
1 year  
but not  
  more than   more than   more than  
5 years  
£’000  

3 months  
£’000  

1 year  
£’000  

Not  

168  
168  
168  

505  
505  
505  

2,692  
2,692  
2,692  

After  
3 months  
Not  
but not  
On   more than   more than  
1 year  
£’000 

3 months  
£’000 

demand  
£’000 

After  
1 year but  
not more  
than  
5 years  
£’000 

183 
– 

1,545 
168 

1,562 
505 

– 
2,692 

After  
5 years  
£’000  

3,694  
4,367  
5,040  

Total  
£’000 

7,059  
7,732  
8,405 

After  
5 years  
£’000 

– 
3,694 

Total 
£’000

3,290
7,059

183 

1,713 

2,067 

2,692 

3,694 

10,349

Not  
more than  
3 months  
£’000  

1,533 
168 

After  
3 months  
but not  
more than  
1 year  
£’000  

1,574 
505 

After  
1 year  
but not  
more than  
5 years  
£’000  

3,223 
2,692 

After  
5 years  
£’000  

– 
4,367 

Total  
£’000 

6,408 
7,732

1,701 

2,079 

5,915 

4,367  14,140

Not  
more than  
3 months  
£’000  

1,533 
168 

After  
3 months  
but not  
more than  
1 year  
£’000  

1,901 
505 

After  
1 year  
but not  
more than  
5 years  
£’000  

6,516 
2,692 

After  
5 years  
£’000  

Total  
£’000 

–  10,132 
8,405

5,040 

On  
demand  
£’000  

78 
– 

78 

On  
demand  
£’000  

182 
– 

182 

1,701 

2,406 

9,208 

5,040  18,537

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
46	 Financial	instruments	continued

(iii) Market risk

Interest rate risk

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes  
in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate because of 
changes in market interest rates.

The Company’s principal exposure to cash flow interest rate risk arises from the mismatch between the repricing of its 
financial assets and liabilities.

The table below shows the repricing profile of the Company’s financial assets and liabilities, stated at their carrying amounts, 
categorised by the earlier of contractual repricing or maturity dates.

After 
3 months  
but not 

After 
1 year 
but not 
  more than  more than  more than  more than 
5 years 
£’000  

After 
6 months  
but not  

6 months 
£’000  

3 months 
£’000  

1 year 
£’000  

Not 

At 31 December 2010 

Assets
Investments 
Trade and other receivables 
–  Loans issued 
–  Amounts owed by Group undertakings 
–  Other financial assets 
Balances at banks   

Total financial assets 

Liabilities 
Borrowings 
Trade and other payables 
–  Amounts owed to Group undertakings 
–  Other financial liabilities 

Total financial liabilities 

Interest rate repricing gap   

At 31 December 2009 

Assets 
Investments 
Trade and other receivables 
–  Loans issued 
–  Amounts owed by Group undertakings 
–  Other financial assets 
Balances at banks   

Total financial assets 

Liabilities 
Borrowings 
Trade and other payables 
–  Amounts owed to Group undertakings 
–  Other financial liabilities 

Total financial liabilities 

Interest rate repricing gap   

– 

– 
– 
– 
404  

404  

3,089  

– 
125  

3,214  

(2,810) 

Not 
more than 
3 months 
£’000  

– 

– 
– 
– 
179  

179  

6,155  

– 
– 

6,155  

(5,976) 

– 

– 
– 
– 
– 

– 

– 

– 
– 

– 

– 

After 
3 months  
but not 
more than 
6 months 
£’000  

– 

3,267 
– 
– 
– 

3,267 

– 

– 
– 

– 

3,267 

After 
6 months  
but not  
more than 
1 year 
£’000  

– 

– 
– 
– 
– 

– 

– 

– 
– 

– 

– 

– 

– 
– 
– 
– 

– 

– 

– 
– 

– 

– 

After 
5 years 
£’000  

Non- 
interest 
bearing 
£’000  

Total  
£’000 

– 

– 
– 
– 
– 

– 

– 

– 
– 

– 

– 

3,087 

3,087

565 
28,607 
135 
6 

3,832
28,607
135
410

32,400 

36,071

– 

3,089

58  
– 

58
125

58  

3,272

32,342   32,799

– 

– 
– 
– 
– 

– 

– 

– 
– 

– 

– 

After 
1 year 
but not 
more than 
5 years 
£’000  

After 
5 years 
£’000  

Non- 
interest 
bearing 
£’000  

Total  
£’000 

– 

– 

2,932 

2,932  

3,267 
– 
– 
– 

3,267 

– 

– 
– 

– 

831  

– 
4,098  
–  27,060   27,060  
–  
–  
– 
185 
6  
– 

–  30,829   34,275 

– 

– 
– 

– 

– 

6,155  

78  
119  

78  
119 

197  

6,352 

3,267 

–  30,632   27,923

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46	 Financial	instruments	continued
(iii)  Market risk	continued

At 31 December 2008 

Assets 
Investments 
Trade and other receivables 
–  Loans issued 
–  Amounts owed by Group undertakings 
–  Other financial assets 
Balances at banks   

Total financial assets 

Liabilities
Borrowings 
Trade and other payables 
–  Amounts owed to Group undertakings 
–  Other financial liabilities 

Total financial liabilities 

Interest rate repricing gap   

Not 
more than 
3 months 
£’000  

After 
3 months  
but not 
more than 
6 months 
£’000  

After 
6 months  
but not  
more than 
1 year 
£’000  

After 
1 year 
but not 
more than 
5 years 
£’000  

After 
5 years 
£’000  

Non- 
interest 
bearing 
£’000  

Total  
£’000 

– 

– 
– 
– 
129  

129  

9,201  

– 
– 

9,201  

(9,072) 

– 

– 
– 
– 
– 

– 

– 

– 
– 

– 

– 

– 

– 
– 
– 
– 

– 

– 

– 
– 

– 

– 

– 

– 

2,991  

2,991  

3,268  
– 
– 
– 

3,268  

– 

– 
– 

– 

– 
3,268  
– 
–  30,103   30,103  
– 
– 
– 
135 
6  
– 

–  33,100   36,497 

– 

– 
– 

– 

– 

9,201 

182  
– 

182  
–

182  

9,383

3,268  

–  32,918   27,114

A 1% parallel increase / decrease in the Sterling yield curve would result in an increase / decrease in profit after tax and 
equity of £70,000 (2009: £69,000; 2008: £25,000).

Foreign exchange risk 
The Company does not have any material exposure to transactional foreign exchange risk. The table below summarises the 
Company’s exposure to foreign currency translation risk at 31 December 2010. Included in the table are the Company’s 
financial assets and liabilities, at carrying amounts, categorised by currency.

Sterling  
£’000  

Euro  
£’000  

Other  
£’000  

Total  
£’000

2,518  

569  

– 

3,087

3,267  
28,607  
28  
410  

– 
– 
107 
– 

565 
– 
– 
– 

3,832 
28,607 
135
410

34,830 

676  

565   36,071

3,089 

58 
125 

3,272 

– 

– 
– 

– 

– 

– 
– 

– 

3,089

58
125

3,272

31,558 

676  

565   32,799

At 31 December 2010 

Assets
Investments 
Trade and other receivables 
–  Loans issued 
–  Amounts owed by Group undertakings 
–  Other financial assets 
Balances at banks   

Total financial assets 

Liabilities
Borrowings 
Trade and other payables 
–  Amounts owed to Group undertakings 
–  Other financial liabilities 

Total financial liabilities 

Net on-balance sheet position 

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4
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46	 Financial	instruments	continued
(iii)  Market risk	continued

At 31 December 2009 

Assets 
Investments 
Trade and other receivables 
–  Loans issued 
–  Amounts owed by Group undertakings 
–   Other financial assets 
Balances at banks   

Total financial assets 

Liabilities
Borrowings 
Trade and other payables 
–  Amounts owed to Group undertakings 
–  Other financial liabilities 

Total financial liabilities 

Net on-balance sheet position 

At 31 December 2008 

Assets
Investments 
Trade and other receivables 
–  Loans issued 
–  Amounts owed by Group undertakings 
–  Other financial assets 
Balances at banks   

Total financial assets 

Liabilities 
Borrowings 
Trade and other payables 
–  Amounts owed to Group undertakings 
–  Other financial liabilities 

Total financial liabilities 

Net on-balance sheet position 

Sterling  
£’000  

Euro  
£’000  

Other  
£’000  

Total  
£’000 

2,158 

774 

– 

2,932  

3,267 
  27,060 
– 
185 

– 
– 
– 
– 

831  

4,098  
–  27,060  
– 
– 
185 
– 

  32,670 

774  

831   34,275 

6,155 

78 
119 

6,352 

– 

– 
– 

– 

– 

– 
– 

– 

6,155  

78  
119 

6,352 

  26,318 

Sterling 
£’000 

774  

Euro  
£’000  

831   27,923

Other  
£’000  

Total  
£’000 

1,534 

1,457  

– 

2,991  

3,268 
  30,103 
– 
135 

– 
– 
– 
– 

– 
3,268  
–  30,103  
– 
– 
135 
– 

  35,040 

1,457 

–  36,497 

9,201 

182 
– 

9,383  

– 

– 
– 

– 

  25,657 

1,457 

– 

– 
– 

– 

– 

9,201  

182  
–

9,383 

27,114 

A 10% weakening of the Euro against the Pound Sterling, occurring on 31 December 2010, would have reduced equity and 
profit after tax by £49,000 (2009: £56,000; 2008: £105,000). A 10% strengthening of the Euro would have had an equal 
and opposite effect. This analysis assumes that all other variables, in particular other exchange rates, remain constant.

Price risk 
Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in 
market prices (other than those arising from interest rate risk or foreign exchange risk). The Company is exposed to price risk 
through its holdings of equity investment securities, which are reported at their fair value (note 39).

At 31 December 2010, the fair value of equity securities recognised on the statement of financial position was £3,087,000 
(2009: £2,932,000; 2008: £2,991,000). A 10% fall in global equity markets would, in isolation, result in a pre-tax impact on 
net assets of £309,000 (2009: £293,000; 2008: £299,000); there would be no impact on profit after tax. A 10% rise in 
global markets would have had an equal and opposite effect.

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2
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46	 Financial	instruments	continued
(iii)  Market risk	continued

Fair values 
The fair values of the Company’s financial assets and liabilities are not materially different from their carrying values, with the 
exception of equity investments in subsidiaries which are carried at historical cost (note 38).

The table below analyses financial instruments measured at fair value into a fair value hierarchy based on the valuation 
technique used to determine the fair value:
•  Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
•  Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly 

or indirectly.

•  Level 3: inputs for the asset or liability that are not based on observable market data.

At 31 December 2010 

Available for sale equity securities 

Total financial assets 

At 31 December 2009 

Available for sale equity securities 

Total financial assets 

At 31 December 2008 

Available for sale equity securities 

Total financial assets 

There have been no transfers between levels during the year.

47	 	Capital	management

Level 1  
£’000  

Level 2  
£’000  

Level 3  
£’000  

Total  
£’000 

2,513  

574  

2,513  

574  

– 

– 

3,087

3,087

Level 1  
£’000  

Level 2  
£’000  

Level 3  
£’000  

Total  
£’000 

2,153  

2,153  

779  

779  

– 

– 

2,932

2,932

Level 1  
£’000  

Level 2  
£’000  

Level 3  
£’000  

Total  
£’000 

1,529  

1,462  

1,529  

1,462  

– 

– 

2,991

2,991

The Company’s objectives when managing capital are:
• 

to safeguard the Company’s ability to continue as a going concern so that it can continue to provide returns for 
shareholders and benefits for other stakeholders; and
to maintain a strong capital base to support the development of its business.

• 

For monitoring purposes, the Company defines capital as equity shareholders’ funds. Management monitor the level of 
distributable reserves on a monthly basis and compare this to forecast dividends. Capital is distributed to the Company from 
operating subsidiaries on a timely basis to ensure sufficient capital is maintained. The Board of Directors considers the level 
of capital held in relation to forecast performance, dividend payments and wider plans for the business, although formal 
quantitative targets are not set. The Company’s total capital at the 31 December 2010, together with movements during  
the year then ended, is set out in the Company statement of changes in equity.

There were no changes in the Company’s approach to capital management during the year.

48	 Contingent	liabilities	and	commitments

The Company leases various offices under non-cancellable operating lease agreements. The leases have varying terms and 
renewal rights. The future minimum lease payments under non-cancellable operating leases were as follows:

No later than 1 year 
Later than 1 year and no later than 5 years 
Later than 5 years   

2010 
£’000 

673  
2,692  
3,694  

7,059  

2009 
£’000 

673  
2,692  
4,367  

7,732  

2008
£’000

673 
2,692 
5,040 

8,405

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49	 Related	party	transactions

(i)  Transactions with key management personnel

Key management personnel are defined as those persons having responsibility and authority for planning, directing and 
controlling the operations of the Company. The Company’s key management personnel are its directors.

Full details of the remuneration of the Company’s directors are given in the Remuneration report on page 38.

(ii)  Other related party transactions

During the year, the Company entered into the following transactions with fellow subsidiaries:

Interest 
Charges for management services 

2010  
  Receivable  
£’000  

2010  
Payable  
£’000  

2009  
Receivable  
£’000  

2009 
Payable 
£’000 

113  
3,374  

3,487  

– 
– 

– 

3  
3,197 

3,200  

–
–

–

The Company’s balances with fellow Group companies at 31 December 2010 are set out in notes 40 and 43.

All transactions and outstanding balances with fellow Group companies are priced on an arm’s length basis and are to be 
settled  in cash. None of the balances are secured and no provisions have been made for doubtful debts for any amounts 
due from fellow Group companies.

50	 Statement	of	cash	flows

For the purposes of the statement of cash flows, cash and cash equivalents comprise the following balances with less than 
three months until maturity from the date of acquisition:

Cash and cash equivalents 

51	 Explanation	of	transition	to	IFRS

2010  
£’000  

410  

2009  
£’000  

185  

2008 
£’000 

135 

As stated in note 34, these are the Company’s first set of financial statements prepared in accordance with IFRS.

The accounting policies set out in note 34 have been applied in preparing the financial statements for the year ended  
31 December 2010, the comparative information presented in these financial statements for the year ended 31 December 
2009 and in preparation of an opening IFRS statement of financial position at 31 December 2008 (the opening position  
on 1 January 2009, the date of the Company’s transition to IFRS).

In preparing its opening IFRS statement of financial position, the Company has adjusted amounts reported previously in 
financial statements prepared in accordance with UK generally accepted accounting principles (UK GAAP). An explanation 
of how the transition from previous UK GAAP to IFRS has affected the Company’s reported financial position, financial 
performance and cash flows is set out in the following notes and tables.

Transitional arrangements

IFRS 1 ‘First Time Adoption of International Financial Reporting Standards’ permits companies adopting IFRS for the first 
time to take certain exemptions from the full requirements of IFRS in the transition period. The Company’s application of the 
optional exemptions is as follows:

Assets and liabilities measured at the Group’s transition date to IFRS  
The Company has taken advantage of the option given in IFRS 1 to measure its assets and liabilities at the carrying  
amounts that were included in the Group’s consolidated financial statements, based on the Group’s transition to IFRS on  
1 January 2004.

Employee benefits 
The Company has chosen to recognise all cumulative actuarial gains and losses associated with its defined benefit pension 
schemes since the date of transition in other comprehensive income.

Investments in subsidiaries 
The Company has elected to recognise its investments in subsidiaries at their deemed cost, which was the historical carrying 
value under UK GAAP.

Other investments 
The Company has elected to classify equity instruments with a previous carrying value of £2,932,000 as available for  
sale investments.

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51	 Explanation	of	transition	to	IFRS	continued

Key impacts of IFRS

The significant differences between UK GAAP and IFRS which impact on the Company’s reported financial position,  
financial  performance and cash flows are set out below:

IAS 1 and IAS 39 – Presentation of Financial Statements and Financial Instruments: Recognition and Measurement  
The statement of financial position and applicable notes have been amended to reflect the presentational disclosures 
required by IAS 1 and IAS 39.

IAS 39 – Financial Instruments: Recognition and Measurement  
In accordance with IAS 39, the Company has recognised gains or losses on revaluation of available for sale equity securities 
in other comprehensive income.

IAS 12 – Income Taxes 
IAS 12 requires that deferred tax on equity items is recognised directly in equity. UK GAAP requires that all such  
deferred tax  is recognised in profit or loss. In addition, deferred tax is recognised on available for sale assets under IAS 12. 
No such deferred tax is recognised under UK GAAP. Reported profit after tax for the year ended 31 December 2009 has 
consequently been increased by £2,321,000. Statement of financial position equity at 31 December 2008 was increased  
by £824,000 and statement of financial position equity at 31 December 2009 was increased by £807,000.

IAS 19 – Employee Benefits 
Under UK GAAP, the deficit on defined benefit pension schemes is shown net of related deferred tax. Under IFRS, the 
deferred tax is shown with other deferred tax assets or liabilities. Accordingly a deferred tax asset of £3,434,000  
(2008: £1,602,000) was reclassified on transition to IFRS.

IAS 7 – Statement of Cash Flows 
The Company has prepared its statement of cash flows in accordance with IAS 7. Under IAS 7, the statement of cash  
flows shows the movement in cash and cash equivalents, being defined as cash in hand, demand deposits and short term 
highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant  
risk of change in value. Under UK GAAP, the Company was exempt from the requirement to prepare a statement of  
cash flows. 

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51	 Explanation	of	transition	to	IFRS	continued

Reconciliation of the statement of financial position at 1 January 2009 (date of transition to IFRS)

Non-current assets 
Investments in subsidiaries 
Other investments   
Available for sale equity securities 
Trade and other receivables 
Deferred tax asset   

Current assets 
Amounts owed by Group undertakings 
Other debtors 
Prepayments and deferred income 
Trade and other receivables 
Current tax assets   
Cash and cash equivalents 

Total assets 

Current liabilities  
Borrowings 
Amounts owed to Group undertakings 
Other taxes and social security costs 
Accruals and deferred income  
Trade and other payables 

Net current assets 

Non-current liabilities 
Pension liability 
Employee benefits   

Total liabilities 

Net assets 

Equity 
Share capital 
Share premium 
Available for sale reserve 
Profit and loss account 
Retained earnings   

Total equity 

UK GAAP 
1.1.09  
£’000  

  22,562  
–  
2,991  
–  
–  

  25,553  

  30,103  
3,966  
841  
–  
–  
13  

  34,923  

60,476  

(9,201) 
(182) 
(906) 
(330) 
–  

(10,619) 

24,304  

(4,121) 
–  

(4,121) 

(14,740) 

45,736  

  Presentation  
of financial  
statements  
 (IAS 1 & IAS 39)  

£’000 

–  
2,991  
(2,991) 
3,268  
658  

3,926  

(30,103) 
(3,966) 
(841) 
  30,944  
40  
122  

(3,804) 

122  

–  
182  
906  
330  
(1,540) 

(122) 

(3,926) 

4,121  
(4,121) 

–  

(122) 

–  

2,143  
  28,957  
2,943  
  11,693  
–  

45,736  

–  
–  
–  
(11,693) 
  11,693  

–  

Income taxes  
(IAS 12)  
£’000  

IFRS  
1.1.09  
£’000 

–  
–  
–  
–  
778  

778  

–  
–  
–  
–  
–  
–  

–  

  22,562  
2,991  
–  
3,268  
1,436 

  30,257 

–  
–  
–  
  30,944  
40  
135 

  31,119 

778  

61,376 

–  
–  
–  
–  
–  

–  

–  

–  
(1,602) 

(1,602) 

(1,602) 

(824) 

–  
–  
(824) 
–  
–  

(824) 

(9,201) 
–  
–  
–  
(1,540)

(10,741)

20,378 

–  
(5,723)

(5,723)

(16,464)

44,912 

2,143  
  28,957  
2,119  
–  
  11,693 

44,912

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51	 Explanation	of	transition	to	IFRS	continued

Reconciliation of the statement of financial position at 31 December 2009 
(date of most recent UK GAAP financial statements) 

Non-current assets 
Investments in subsidiaries 
Other investments   
Available for sale equity securities 
Trade and other receivables 
Deferred tax asset   

Current assets 
Amounts owed by Group undertakings 
Other debtors 
Prepayments and deferred income 
Trade and other receivables 
Current tax assets   
Cash and cash equivalents 

Total assets 

Current liabilities  
Borrowings 
Amounts owed to Group undertakings 
Other taxes and social security costs 
Accruals and deferred income  
Trade and other payables 

Net current assets 

Non-current liabilities 
Pension liability 
Employee benefits   

Total liabilities 

Net assets 

Equity 
Share capital 
Share premium 
Available for sale reserve 
Profit and loss account 
Retained earnings   

Total equity 

UK GAAP  
31.12.09 
£’000  

22,749  
–  
2,932  
–  
–  

  25,681  

27,310  
4,719  
686  
–  
–  
68  

32,783  

58,464  

(6,155) 
(78) 
(895) 
(304) 
–  

(7,432) 

25,351  

(5,979) 
–  

(5,979) 

(13,411) 

45,053  

2,165  
  31,756  
2,884  
8,248  
–  

45,053  

  Presentation  
of financial  
statements  

  (IAS 1 & IAS 39)  

£’000  

Income taxes  
(IAS 12)  
£’000  

IFRS  
31.12.09  
£’000 

250  
2,932  
(2,932) 
4,098  
298  

4,646  

(27,310) 
(4,719) 
(686) 
27,746  
323  
117  

(4,529) 

117  

–  
78  
895  
304  
(1,394) 

(117) 

(4,646) 

5,979  
(5,979) 

–  

(117) 

–  

–  
–  
–  
(8,248) 
8,248  

–  

–  
–  
–  
–  
2,627  

2,627  

–  
–  
–  
–  
–  
–  

–  

  22,999  
2,932  
–  
4,098  
2,925 

  32,954 

–  
–  
–  
27,746  
323  
185 

  28,254 

2,627  

61,208

–  
–  
–  
–  
–  

–  

–  

–  
(3,434) 

(3,434) 

(3,434) 

(807) 

–  
–  
(807) 
–  
–  

(807) 

(6,155) 
–  
–  
–  
(1,394)

(7,549)

20,705

–  
(9,413)

(9,413)

(16,962)

44,246 

2,165  
  31,756  
2,077  
–  
8,248 

44,246

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Five year record

Operating income   
Underlying operating profit 
Exceptional items 
Profit before tax 
Tax   
Profit after tax 
Equity dividends paid and proposed 

Basic earnings per share  

Diluted earnings per share  

Net dividends per ordinary share 

2010  
£’000  

  127,184 
38,503 
(8,420) 
30,083 
(8,531) 
21,552 
19,067 

49.76p 

49.35p 

44.0p 

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

Equity shareholders’ funds 

  185,374 

182,489 

184,631 

184,750 

159,149

Total funds under management 

 £15.63bn 

£13.10bn 

£10.46bn 

£13.12bn 

£12.24bn

The amounts disclosed for 2006 include the results of operations that were discontinued in 2008 and 2009. The amounts 
disclosed for 2007 include the results of operations that were discontinued in 2009.

Corporate information

Company	Secretary	and	registered	office

R E Loader FCA
Rathbone Brothers Plc 
159 New Bond Street 
London W1S 2UD

Company No. 01000403 
www.rathbones.com 
richard.loader@rathbones.com

Registrars	and	transfer	office

Equiniti 
Aspect House 
Spencer Road 
Lancing 
West Sussex 
BN99 6DA

www.equiniti.com

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Our offices

Head	office

159 New Bond Street 
London W1S 2UD
Tel +44 (0)20 7399 0000 
Fax +44 (0)20 7399 0011

Investment	Management	offices

Rathbone Investment Management Limited

159 New Bond Street  
London W1S 2UD
Tel +44 (0)20 7399 0000 
Fax +44 (0)20 7399 0011

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

North Wing, City House 
126 – 130 Hills Road 
Cambridge CB2 1RE
Tel +44 (0)1223 229 229 
Fax +44 (0)1223 229 228

1 Northgate 
Chichester
West Sussex PO19 1AT 
Tel +44 (0)1243 775 373 
Fax +44 (0)1243 776 103

28 St Andrew Square 
Edinburgh EH2 2AF
Tel +44 (0)131 550 1350 
Fax +44 (0)131 550 1360

The Senate 
Southernhay Gardens 
Exeter EX1 1UG
Tel +44 (0)1392 201 000 
Fax +44 (0)1392 201 001

The Stables 
Levens Hall 
Kendal
Cumbria LA8 0PB 
Tel +44 (0)1539 561 457 
Fax +44 (0)1539 561 367

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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 
International Limited

Rathbone House, 15 Esplanade 
St Helier 
Jersey JE1 2RB
Channel Islands 
Tel +44 (0)1534 740 500 
Fax +44 (0)1534 740 599

Unit	Trust	office

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	offices

Rathbone Trust Company Limited

159 New Bond Street 
London W1S 2UD
Tel +44 (0)20 7399 0000 
Fax +44 (0)20 7399 0011

Port of Liverpool Building 
Pier Head 
Liverpool L3 1NW
Tel +44 (0)151 236 6666 
Fax +44 (0)151 243 7001

It is important to us that all materials used in the production of this  
document are environmentally sustainable. The paper is FSC certified  
and contains 50% recycled fibre and 50% virgin fibre from sustainable 
sources. Once you have finished with this report please recycle it.

Designed and produced by Linnett Webb Jenkins.

 
 
 
 
 
 
 
 
Rathbone	Brothers	Plc
159	New	Bond	Street	
London	W1S	2UD

Tel	+44	(0)20	7399	0000	
Fax	+44	(0)20	7399	0011

www.rathbones.com