REPORT & ACCOUNTS 2023
DRIVEN BY PURPOSE
DELIVERED BY PEOPLE
We are driven by our purpose,
to think, act and invest for everyone’s
tomorrow. We deliver for and with
people: our clients, our colleagues and
partners. We listen, engage and adapt
to our stakeholders’ changing needs,
reinforcing our commitment to delivering
enduring sustainable value for the
benefit of everyone’s future.
On 21 September 2023, following regulatory approval,
Rathbones Group Plc completed its planned combination
with Investec Wealth & Investment UK (IW&I). Throughout
this report figures stated include IW&I, unless otherwise
indicated. Where practicable, a 2022 like-for-like
comparative has been included.
CONTENTS
01
2
STRATEGIC REPORT
88 GOVERNANCE REPORT
2 What we do and where we do it
89 Chair’s governance letter
8
9
11
Investment case
Chair’s statement
91
Corporate governance report
99 Nomination committee report
Group chief executive officer’s review
102 Audit committee report
DRIVEN BY PURPOSE
DELIVERED BY PEOPLE
Find out more about how we are
delivering to our clients.
Our reporting suite
This report and accounts forms part
of our wider reporting suite where
you can find more about our
full activities
16 Understanding the external environment
107 Group risk committee report
WE THINK CREATIVELY
19 Our purpose driven approach
110 Remuneration committee report
20 Our culture and values
21 Our business model
22 Our strategic priorities
27 Our key performance indicators
30 Group chief financial officer’s review
32 Financial performance
36 Segmental review
44 Financial position
48 Liquidity and cash flow
49 Section 172 statement
49 Creating sustainable value for
our stakeholders
58 Responsible business review
66 Task force on climate-related financial
disclosures summary
75 Non-financial and sustainability
information statement
77 Risk management and control
82 Principal risks
87 Viability statement
124 Annual report on remuneration
136 Directors’ report
139 Statement of directors’ responsibilities
140 FINANCIAL STATEMENTS
141
Independent auditor’s report to the
members of Rathbones Group Plc
151 Consolidated financial statements
155 Notes to the consolidated
financial statements
213 Company financial statements
216 Notes to the company financial statements
233 FURTHER INFORMATION
234 Five-year record
234 Corporate information
Through MyRathbones
we respond to our clients’
needs. We update the app
regularly in response to
client feedback.
Read more: See page 5
WE ACT COLLABORATIVELY
Our client team shares
how we engaged with
IW&I as we began
integrating our client
offering.
Read more: See page 6
WE INVEST RESPONSIBLY
The Rathbone Greenbank
Global Sustainable Bond
Fund, responds to
changing markets and
client interest.
Read more: See page 7
FURTHER INFORMATION LINKS
Throughout this report we use these icons
to indicate where you can find out more.
Read more
Visit website
Responsible
business
update 2023
Task force on
climate-related
financial
disclosures
report 2023
Responsible
investment
report 2023
Gender pay gap
report 2023
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 WHAT WE DO AND
WHERE WE DO IT
02
WEALTH MANAGEMENT
ASSET MANAGEMENT
WHERE WE DO IT
INVESTMENT MANAGEMENT
Clients of this discretionary service can expect
a tailored investment strategy that meets
individual objectives backed by an investment
process that aims to provide risk-adjusted
returns to meet clients’ needs today and in
the future.
FINANCIAL PLANNING AND ADVICE
We provide financial planning and advisory
services through Rathbones Financial Planning,
IW&I, Saunderson House Limited and Vision
Independent Financial Planning. We also offer
UK trust, tax and legal services through the
Rathbones Trust Company.
Clients can choose a financial planning service
as a standalone offering or combine it with one
of our investment management services.
THREE LEVELS OF ADVICE
We can deliver our financial planning services
to clients in one of three ways:
— One-off advice
— Initial advice and planning
— Ongoing advice and planning.
COMPLEMENTARY SERVICES
As a licensed deposit taker we are able to offer
our clients a range of banking services including
currency and payment services, fixed interest
term deposits and loans to existing clients.
Through IW&I, we also offer SIPP administration
services to clients.
OUR SPECIALIST CAPABILITIES
— Charities and not-for-profit organisations
— Our specialist ethical arm, Greenbank
— Personal Injury and Court of Protection
— Rathbones Investment Management
International.
OUR SERVICES
Bespoke service
Provides clients access to a dedicated investment
manager who will construct and manage a
bespoke portfolio that is specifically tailored
to their needs.
Managed service
Provides clients with access to a dedicated
investment manager who will invest in a
range of ready-made, diversified multi-asset
portfolios managed by Rathbones Asset
Management (RAM). IW&I also offer a
managed portfolio service.
Select
Provides clients direct access to a range of
ready-made, diversified multi-asset portfolios
managed by Rathbones Asset Management
(RAM). Select does not come with a dedicated
investment manager; it is a more appropriate and
cost-effective solution for smaller value portfolios.
Rathbones Asset Management is a UK fund
manager, offering actively managed equity, fixed
income and multi-asset capabilities for retail-
and institutional-type investors. Our range of
single-strategy and multi-asset funds are
designed to potentially meet investors’ core
investment needs, or provide ‘building blocks’
for wealth solutions, with distribution primarily
through UK advisers.
International clients may also access our funds
through the Rathbone Luxembourg Funds SICAV,
which allows access to a similar range of actively
managed funds.
With offices throughout the UK and the
Channel Islands1, clients are never far away
from high-quality, personalised wealth
management services.
Rathbones offices
Investec Wealth &
Investment (IW&I)
offices
Both
23
locations in the UK and Channel Islands
3,500+
employees
£105.3bn
managed by us for our clients
FTSE 250
Guernsey
Jersey
company listed on the London Stock Exchange
1. Includes Vision Independent Financial Planning
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 HIGHLIGHTS OF 2023
03
FINANCIAL HIGHLIGHTS
STRATEGIC HIGHLIGHTS
STAKEHOLDER HIGHLIGHTS
PROFIT BEFORE TAX
UNDERLYING PROFIT
BEFORE TAX*1
NUMBER OF INVESTMENT
MANAGERS
NUMBER OF FINANCIAL
PLANNERS
CLIENT RETENTION3,4
EMPLOYEE SHARE
OWNERSHIP
£57.6m
2022: £64.1m
£127.1m
2022: £97.1m
681
2022: 355
117
2022: 74
92.7%
2022: 93.7%
6.3%
2022: 9.6%
BASIC EARNINGS PER SHARE
UNDERLYING EARNINGS
PER SHARE*1
52.6p
2022: 83.6p
135.8p
2022: 130.8p
TOTAL FUNDS UNDER
MANAGEMENT AND
ADMINISTRATION
£105.3bn
2022: £60.2bn
STEWARDSHIP
ENGAGEMENTS WITH
COMPANIES3
752
2022: 671
RETURN ON CAPITAL
EMPLOYED (ROCE)*
UNDERLYING RETURN ON
CAPITAL EMPLOYED (ROCE)*2
4.9%
2022: 7.7%
12.1%
2022: 11.8
DIVIDEND PAID AND
PROPOSED PER SHARE
87p
2022: 84p
For a full five-year record
See page 234
* This measure is considered an
alternative performance measure
(APM). Please refer to page 34 for
more detail on APMs
1. A reconciliation between
underlying profit before tax and
profit before tax is shown on
page 34
2. Underlying profit after tax as a
percentage of underlying quarterly
average equity at each quarter end
3. This highlight excludes IW&I
4. Includes clients who have left
within the financial year, outflows
from existing or remaining clients
are not included in this calculation
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
DRIVEN BY
PURPOSE
DELIVERED
BY PEOPLE
04
We are committed to thinking, acting
and investing for everyone’s tomorrow.
We focus on long-term sustainable outcomes,
which enable us to build enduring value for our
clients, make a wider contribution to society
and create a lasting legacy. We are committed
to operating in a way that actively addresses
adverse impacts our activities have on society,
people and the environment.
This means understanding the issues that
matter to our stakeholders and evolving the
way we do business to meet their changing
needs and expectations.
Read more: See page 19
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 WE THINK
CREATIVELY
05
The MyRathbones app,
supports clients in viewing their
investments and communicating
with their investment team.
Client feedback is a primary
input into the ongoing
development of our digital
services. This client-centric
approach allows us to align to
clients’ preferences, ensuring
we deliver updates that improve
the app’s functionality, making
it quick and easy to access their
information. The collaborative
process brings our clients along
with us as we continually
improve our offering, resulting
in a more tailored and user-
friendly digital experience that
our clients themselves have
helped shape.”
Mark Watson
Lead Product Owner
Read more: See page 23
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 WE ACT
COLLABORATIVELY
06
OUR COMBINATION WITH IW&I
Between November 2023 and January 2024, the Rathbones
and IW&I proposition teams participated in a roadshow,
bringing teams across the group together. In total 14 sessions
were run and well received.
The roadshow introduced the breadth of the Rathbones’
proposition (across financial planning, investment
management, asset management, and the strategic
partnership with Investec Bank Plc), the detail of Select,
Managed and Bespoke, and our plans for proposition
integration and development.
Following the roadshows, we surveyed attendees and
received 105 responses. The feedback informs the
prioritisation of topics to present in the awareness programme
such as Investment research process, Rathbones’ suitability
process, investment risk monitoring and introduction to
Greenbank. The roadshows allowed the proposition team
early visibility of the future combined proposition
and solicit feedback on topics such as the direction of
travel for target markets on our flagship offering Bespoke
discretionary management.
We received feedback such as:
As a new joiner on
14 August, it is good
to have had the
opportunity to meet
colleagues from both
firms already”
Birmingham Office
It is really helpful to gain
a better understanding
of what the future looks
like, it gets our buy in at
an early stage. It allows
us to speak with our
clients about it too as
they are interested”
Edinburgh Office
It was reassuring to have
the team come over and
talk us through the plans
and much appreciated”
Keep the information
coming, appreciate
these meetings being
done in person”
Belfast Office
Guildford Office
Read more: See page 24
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
GOVERNANCE
REPORT
FINANCIAL
STATEMENTS
FURTHER
INFORMATION
RATHBONES GROUP PLC REPORT & ACCOUNTS 2023
07
07
WE INVEST
RESPONSIBLY
LAUNCHING A NEW
SUSTAINABILITY FUND
Bryn Jones, Fund Manager
Rathbones Asset Management
Rathbone Greenbank Global Sustainable Bond Fund
Q: Why was the new fund created?
A: The Rathbone Greenbank Global Sustainable Bond Fund
was established in response to client demand for a diversified,
sustainable global bond offering that complements existing
fixed income strategies. Clients sought investment opportunities
that backed sustainable projects and businesses, contributing
to a better future.
Q: What does it offer our clients?
A: This fund is aimed at investors who want flexible global
bond exposure with strong sustainability policies. The
global fixed income market is huge, and the fund’s flexibility
means it can go anywhere across this broad market, to
identify the best investments for building a well-diversified
portfolio of sustainability screened global corporate and
government bonds.
Q: What are the aims of the fund?
A: Our objective is to deliver a greater total return, after fees,
than a benchmark we have created to represent the global
fixed income market over any rolling five-year period. At the
same time, we avoid investing in activities that we believe
make the planet or its inhabitants worse off.
Q: Why is it different to our other offerings?
A: Distinct from our other offerings, the fund enjoys the
backing of Greenbank, a team with a track record in ethical,
sustainable and impact investing. As the fund’s manager,
I bring nearly 20 years of experience from leading the
Rathbone Ethical Bond Fund. All securities, including
government bonds, are subject to Greenbank’s screening
process, providing a safeguard against greenwashing and
enhancing what we believe to be the fund’s unique appeal.
Read more: See page 23
STRATEGIC REPORTRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 INVESTMENT CASE
08
A GROWING BUSINESS WITH REWARDING CHARACTERISTICS FOR INVESTORS
Rathbones specialises in the UK wealth market which benefits from embedded structural growth, underpinned by strong long-term trends that support the demand for our services.
Following our combination with Investec Wealth & Investment UK (IW&I), we are well-positioned to provide attractive value for shareholders.
There is an increasing need for
individuals to save and grow long-term
wealth as state pensions erode and life
expectancy increases.
There is a growing demand for financial
planning as regulatory changes
encourage individuals to take on the
responsibility of retirement planning.
There is significant intergenerational
wealth transfer to a new cohort of
potential clients that expect a
digital presence.
There is a rising interest in responsible
and thoughtful investing.
There are consolidation opportunities
in a fragmented market.
KEY DRIVERS FOR INDUSTRY GROWTH, CLIENT NEED AND LONG-TERM OPPORTUNITY
HOW WE ARE POSITIONED TO RESPOND AND SUCCEED
We provide our clients with a wide
range of unbundled wealth and asset
management propositions that can be
tailored to their individual needs and
complexity, delivered through our
highly trained investment managers
working directly with clients or
indirectly with third-party advisers.
We are investing in growing our financial
planning business both through targeted
acquisitions and ongoing marketing and
business development.
We are committed to our digital
investment programme that
complements our personalised
face-to-face client experience and
will benefit the enlarged group.
We believe it is in the best interest of our
clients that the companies we invest in
adopt best practice in managing ESG
risks and we consider these when
making investment choices. For clients
who want 100% ethical and sustainable
investment management, we have a
dedicated team in Greenbank, and a
selection of ethical funds offered by
Rathbones Asset Management.
We have secured our future with the
combination of IW&I and can provide
clients with a trusted, long-standing
brand with increasing scale amid
industry change.
6811
117
58%2
20+2
43%2
investment managers with long-term
investment performance
in-house financial planners, with access
to a further 138 in Vision Independent
Financial Planning
of Rathbones’ clients using our digital
portal with plans for expansion across
the enlarged group
years of ethical investment experience
Rathbones’ client net promoter score
(NPS) against industry mean of 34%
OUR RESPONSE TO THIS DEMAND AND STRATEGIC DIRECTION WILL DELIVER VALUE FOR SHAREHOLDERS
A target underlying operating margin of
mid 20s% in 2024, and a medium-term
target (three+ years post IW&I
completion) of 30%+.
A stable revenue margin and robust
fee income stream in addition to a
banking licence that provides
diversified income streams.
Long-term client relationships which
provide annuity value on revenue.
A responsibly managed financial
position with a healthy capital surplus.
A progressive dividend policy with
a dividend that has not been reduced
in more than 25 years.
1. Excludes a further 23 investment professionals in Rathbones Asset Management
2. Data excludes IW&I
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 CHAIR’S STATEMENT
STRONGER TOGETHER
DEAR SHAREHOLDER
Rathbones is a strong and secure business.
It is well-equipped to manage and navigate
challenging market conditions.
2023 was a difficult period for the UK economy:
global conflicts, rising interest rates and
continued inflation reduced economic growth
in many parts of the world, directly impacting
the investment returns of our clients. These
collective challenges have highlighted the
importance of our adaptability, resilience and the
reassurance that we provide our stakeholders.
During 2023, we announced a transformational
combination with Investec Wealth & Investment
UK (IW&I). This transaction presents a
compelling strategic and financial rationale for
our shareholders, whilst it also better serves
our clients, and secures our future as the UK’s
leading discretionary wealth manager.
We are delighted to welcome our IW&I
colleagues to our business. I look forward to the
year ahead as we work together, as one business,
to realise the significant proposition and
financial benefits for all our stakeholders.
CLIENTS
Our clients are at the heart of our strategy
and their interests are a key consideration in
everything that we do. In 2023, we continued
Clive C R Bannister
Chair
09
to prioritise engaging with clients through a
variety of methods including focus groups
and targeted surveys, virtual and in-person
conferences and events as well as regular
communications updating them on the business,
macro themes, the IW&I transaction and our
investment propositions. We will continue this
dialogue during 2024.
SHAREHOLDER RETURNS
AND DIVIDENDS
Rathbones generates long-term value creation
for our shareholders. Following our combination
with IW&I, we commit again to our progressive
dividend policy. This has been in place for more
than 25 years, over which period we have never
reduced our dividend. Given the strength of our
enlarged business, we are pleased to be able to
sustain this dividend commitment, even in the
context of difficult markets.
At our half year results in July, we announced
an interim dividend of 29p. We also brought
forward payment of a portion of the final 2023
dividend to shareholders on the register shortly
prior to the completion of the combination by
way of a second interim dividend of 34p, paid in
October. The final dividend in respect of FY23
has therefore been reduced accordingly to 24p
per share. This brings the total dividend for the
year, for shareholders on the register prior to the
combination, to 87p per share (2022: 84p) a 3.6%
increase on the prior year. The final dividend will
be paid on 14 May 2024, subject to shareholder
approval at our 2024 Annual General Meeting on
9 May 2024, for shareholders who are on the
register on 19 April 2024.
RESPONSIBLE BUSINESS
Our responsible business programme enables
us to deliver on our purpose to think, act and
invest for everyone’s tomorrow. We seek to create
long-term value for our stakeholders, built upon
the foundations of strong governance.
FIVE-YEAR DIVIDEND GROWTH
2023: 87p
23
22
21
20
19
87
84
81
72
70
Our programme ensures we deliver through
various initiatives, including our responsible
investment approach, diversity, equality and
inclusion (DE&I) efforts, community investment
and reducing the environmental impact of
our operations.
GOVERNANCE AND CULTURE
The board recognises that enduring business
success is not possible without a clear purpose,
and that good governance is about more than
just complying with rules. It is about culture,
behaviours and how we treat our clients. The
board is committed to ensure that the firm’s
purpose, values and culture are embedded
throughout the firm. The board regularly reviews
its ‘culture dashboard’ and, this year, we paid
particular attention to the impact on the
organisation from the combination with IW&I.
It remains incredibly important to ensure that
the businesses are culturally aligned with client
focus at our core.
More information on the how the board
monitored and assessed culture can be found
in the full corporate governance report.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 CHAIR’S STATEMENT CONTINUED
COLLEAGUES
There are tremendous skills across our enlarged
group of 3,500 colleagues. In 2023, our
management teams and the board continued to
engage through employee engagement surveys
and the board’s own workforce engagement
programme. We remain committed to improving
our colleagues’ experience at work, which is even
more important during the period of integration
with IW&I.
BOARD COMPOSITION AND SUCCESSION
Because of our combination with IW&I, there
has been necessary and welcome changes to
our board. Most notably, Henrietta Baldock and
Ruth Leas are now new shareholder directors,
nominated by Investec Group. These
appointments were approved by our nomination
committee in September 2023, reflecting the
29.9% voting rights shareholding owned by
Investec Group Plc. Both have extensive
knowledge of the financial services sector and
I look forward to working with them in the
years ahead.
Succession planning is vital to ensure the board
has the necessary plans in place for orderly
succession to both the board and senior
management positions. The board believes that
greater diversity drives better decision-making
and that building a diverse and inclusive
workforce will lead to better outcomes for
clients, colleagues and for our business.
The board has aligned its diversity policy for
board appointments with new targets set out
in the listing rules and is proud to have met
those targets.
At the end of 2023, our board had five female
directors out of nine, which means we exceed
the commitment of female board representation
for FTSE 350 companies set by the FTSE Women
Leaders initiative.
The chair of the remuneration committee
consulted with our top shareholders on proposed
changes to our remuneration policy. The
consultation exercise demonstrated that there
is strong support for changes that will be put to
shareholders at our AGM in May 2024.
LOOKING AHEAD
IW&I integration planning remains on track.
We remain confident that the enlarged group
will deliver efficiencies and benefits to clients,
employees and shareholders. We will continue to
update you on our progress as we grow together
as a combined business.
Finally, on behalf of the board, I would like to
thank our clients, shareholders and colleagues
– old and new – for your enduring commitment
and collaboration. This remains the foundation
of our shared success. Thank you for being the
driving force behind our accomplishments in
spite of the turbulent economic landscape. It has
been through your collective efforts, resilience,
and hard work that we have been able to navigate
these challenges and I am confident we will
emerge stronger than ever.
Clive C R Bannister
Chair
5 March 2024
We continue to meet the requirements of the
Parker Review as we have at least one director
from an ethnic minority background. We see
this as a good foundation on which to build,
but certainly not an end point.
After six years, Sarah Gentleman stepped down
as chair of the remuneration committee in
September 2023, to focus on her role as our
senior independent director. I would like to
thank her for her leadership on remuneration
policy over this time and am delighted that
Dharmash Mistry accepted the role as our new
remuneration committee chair.
In addition, in September 2023 we announced
that after four and half years as group CFO and
executive director, Jennifer Mathias would step
down from the Board on 31 December 2023 and
transition into the new position of group chief of
staff, working with the executive team across all
parts of the combined business. From January
2024, Iain Hooley took on the group CFO role as
Jennifer’s successor. Iain was finance director of
IW&I for more than a decade and was appointed
CEO of IW&I in February 2023, where he played
a key role in the success of the business. I am
grateful to both Jennifer and Iain and look
forward to working with them as we bring our
two businesses together.
ENGAGING WITH SHAREHOLDERS
We strongly believe in meaningful engagement
with shareholders, and I was pleased to meet
many of you this year. We are grateful for the
overwhelming shareholder support for the
combination with IW&I, which was an
affirmation of this transformational transaction.
10
FIND OUT MORE ABOUT OUR
STAKEHOLDER ACTIVITIES
DELIVERING FOR OUR CLIENTS
The group’s clients are at the heart of
our strategy and their interests are a key
consideration in everything that we do.
Read more: See page 52
INSPIRING OUR PEOPLE
Understanding the needs of the group’s
people is essential in developing a
workplace and culture in which they
can reach their full potential and, in turn,
ensure the long-term success of the group.
Read more: See page 53-54
GROWING FOR OUR INVESTORS
Understanding the views of our
shareholders is essential to us delivering
long-term sustainable financial returns.
Read more: See page 55
CORPORATE GOVERNANCE REPORT
The role of the board in providing effective
leadership to promote the long-term success
of the firm.
Read more: See page 88
S172 STATEMENT AND KEY BOARD DECISIONS
Understanding the views and interests of
our stakeholders helps the group to make
better decisions.
Read more: See page 49
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 GROUP CHIEF EXECUTIVE OFFICER’S REVIEW
A TRANSFORMATIONAL
YEAR
2023 IN REVIEW
In a year that continued to offer some
challenging market conditions, our 2023 results
reflect a resilience and a willingness to step
forward and address the structural challenges
that the UK wealth management industry faces.
Our priority has always been to provide the
reassurance and support that our clients expect
over such periods. We also continue to look to
create opportunities for future growth and
shareholder benefits, whilst managing
expenditure carefully.
The combination with Investec Wealth &
Investment UK (IW&I), announced in April
2023, holds the prospect of being truly
transformational. The integration programme is
progressing well, and having spent considerable
time with many new colleagues this year, I am
confident that we have brought together a group
of like-minded individuals who are excited about
the opportunities that the combination provides
our enlarged group.
We remain committed to delivering the planned
synergies from scale, whilst providing stability
to clients and colleagues over what will be a
very busy 2024. I also look forward to building
enhanced propositions and services that
will benefit our clients and deliver value
to shareholders.
Paul Stockton
Group Chief Executive Officer
11
INVESTMENT MARKETS AND GROWTH
There appeared little relief from a general
investment market malaise in the early part of
2023, particularly for those with a defensive
positioning and UK bias. This affected
investment performance across the group,
which remained somewhat subdued until the
final quarter of the year, when both bonds and
equities rallied.
High inflation in the year not only increased
operating expenditure, but also added cost
of living pressures on some clients. Investor
sentiment moved away from equities towards
cash, and a client preference to use invested
capital to repay increasingly expensive debt
emerged. Despite this backdrop, gross inflows
(ex IW&I) of £6.9 billion (2022: £6.5 billion)
remained resilient, representing an annualised
growth rate of 11.4% of opening funds under
management and administration (FUMA) (an
increase from 9.5% in 2022), reaping the benefits
from ongoing client engagement and closer
relationships with key third-party distributors.
Gross outflows (ex IW&I) of £7.4 billion
(2022: £6.1 billion) were elevated, however,
representing 12.2% of opening FUMA (8.9% in
2022). Despite these outflows, client retention
remained high at 92.7% (2022: 93.7%).
IW&I was also impacted by similar trends,
though net outflows in the final quarter of the
year of £0.3 billion also reflected the impact of
known investment manager departures that
predominantly occurred prior to the
announcement of the combination with
Rathbones. Investment manager turnover
has been low since then and engagement with
colleagues at IW&I continues to be very positive.
The UK fund industry suffered one of its
worst years on record for net outflows in 2023.
Against this backdrop, Rathbones remained
resilient and ranked in fifth position for total
net retail sales in the UK in 2023. (2022: eighth
position). Although Rathbones’ single strategy
funds posted net outflows of £0.6 billion for the
year (FY 2022: net outflows of £0.4 billion), our
Global Opportunities and Ethical Bond funds
were in the top quartiles relative to peer groups
for performance in the year. Our multi-asset
and FUMA managed via in-house funds (sold
directly, or as part of our Managed Portfolio or
Rathbones Select solutions) grew significantly,
with net inflows and transfers of £2.4 billion
(FY 2022: £0.6 billion) for the year.
COMBINATION WITH IW&I
The combination with IW&I completed on
21 September 2023, as planned. Collaboration
between the two businesses has been strong and
key decisions on the future structure, systems
and policies have been formulated ahead of plan.
This has enabled us to move quickly to establish
a robust framework for integration and begin
delivery of key actions and projects that will
bring both businesses together. There has been
strong enthusiasm amongst teams across both
businesses, who are working effectively to build
momentum and capture best practices.
In October, we announced the senior leadership
and governance structures for the combined
group, and the new executive team is working
well and interacting positively across the group.
Workstreams to effect common proposition
standards have advanced, and investment
research and investment risk teams are now
under common leadership.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 GROUP CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
Our combination with IW&I was a significant step
in building a scale presence in the UK wealth
management market and presents many
opportunities as an enlarged business.”
The enlarged Rathbones group has a strong
distribution capability working with an
extensive national network of third-party adviser
contacts and counterparties. This adds to our
successful existing relationship with Vision
Independent Financial Planning. In October,
we created the role of Chief Distribution
Officer to lead and build our distribution
capability across both the wealth and asset
management businesses.
Our distribution capability has also been
further enhanced by the combination and
strong partnership we have formed with
Investec Bank. In December, we formed a
dedicated Strategic Partnership Team to work
with them more closely.
To December 2023, we realised £8 million
of the £15 million of run-rate synergies that
were planned for the first full year following
completion (by October 2024), against the
overall stated £60 million annualised synergies.
The impact on 2023 results was negligible given
the timing of when the combination completed.
There is much work to do but I remain confident
in our ability to deliver on these objectives.
In 2024, we expect to let all of our space in 8
Finsbury Circus in London to a high-quality
tenant for the remaining nine year lease term.
Our London-based teams will be located
together in 30 Gresham Street in the latter half
of 2024. We continue to work to consolidate our
offices across the country, where we share
locations and to rebrand the IW&I offices we
now have in our portfolio.
Planning for the successful migration of clients
on to the Rathbones’ platform is well underway.
We continue to expect the client consent process
to be concluded during 2024, using a digital-first
and streamlined approach to minimise
disruption to clients and client facing teams.
We plan to complete pilot exercises, ahead of
the main migration planned for early 2025.
A dedicated project team is already in place
and will ensure that we are able to seamlessly
integrate IW&I, whilst maintaining business
as usual. Our combined resources bring an
extensive level of experience of consent and
migration processes, and we will continue
to apply these skills as we progress through
the year.
A LEADING FINANCIAL
PLANNING CAPABILITY
The group, together with IW&I, Rathbones
Financial Planning (RFP) and Saunderson House
(SHL), operates a team comprising a total of 117
financial planners, delivering a range of leading
advice services. SHL and RFP have been under a
common leadership team for most of 2023, and
IW&I financial planning teams offer an excellent
opportunity to add further scale and strength.
The operational integration of SHL and RFP is
nearing completion, with a high proportion of
clients having agreed to receive or proceed with
advice to migrate to Rathbones’ investment
propositions. £2.4 billion of FUMA has already
migrated and we now expect to complete the
migration process during Q2 2024.
12
FIND OUT MORE ABOUT OUR
STAKEHOLDER ACTIVITIES
OUR PURPOSE LED APPROACH
We are driven by our purpose to think,
act and invest for everyone’s tomorrow.
Read more: See page 19
OUR STRATEGY
We launched our medium-term strategy for
the business in October 2019, setting out
four key strategic objectives.
Read more: See page 22-26
OUR PRINCIPAL RISKS
Our approach to risk management is
fundamental to supporting the delivery
of our strategic objectives.
Read more: See page 82-86
OUR APPROACH TO RESPONSIBLE BUSINESS
Our responsible business approach is
delivered through our four-pillar
programme.
Read more: See page 58
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 GROUP CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
13
During the year, both SHL and RFP advisers
introduced more than 150 new clients to the
group, with expected new assets of more than
£200 million, demonstrating a distribution
reach despite undertaking a time-consuming
migration process. The SHL migration will be
completed over the second quarter of 2024, and
thereafter will increase adviser capacity to grow.
Our next objective is to bring Rathbones and
IW&I financial planning businesses together,
such that all businesses can operate on one
platform to service both new clients and existing
investment clients across our regional offices.
Vision Independent Financial Planning (Vision)
remains an important part of our financial
advice proposition as an independent specialist
financial advice network. We will continue to
leverage its strong relationship with the enlarged
group. In 2023, FUMA in Vision was £3.3 billion
(2022: £2.6 billion) with 138 financial planners
(2022: 131). We anticipate further adviser
recruitment in 2024.
FOCUSING ON GROWTH
In addition to our strategic partnerships with
Vision and Investec Bank, Rathbones pursues
growth opportunities via three other key
channels: client-facing teams, third-party
advisers and direct marketing.
Firstly, our client facing investment and
planning teams represent a valuable network,
and we continue to look for ways to improve
capacity. Rathbones Select was designed as a
high-quality, ‘self-select’ (execution only)
investment service for clients with smaller
values to invest, providing a better value
proposition by operating through a dedicated
central team.
The service now has more than £2 billion of
funds under management (FUM), an uplift of
more than £1.4 billion since the beginning of
the year, and client numbers are expected to
increase further in 2024 as we offer the service
to eligible clients of IW&I.
We also continue to build specialist teams to
serve target client groups, last year taking
advantage of the IW&I combination to establish
a dedicated ultra-high-net-worth team to operate
across the enlarged business.
Secondly, the third-party adviser market
continues to be an important channel for us,
generating an annualised net growth rate of
5.0% in 2023 (2022: 4.8%). We now offer an
extensive range of investment solutions and
over 340 IFA firms (2022: 280), are now
utilising our Reliance on Adviser (ROA) model
(where responsibility for the suitability of the
investment mandate for the client rests with the
adviser, and Rathbones is instructed to manage
the client portfolio to a risk mandate). This
service clarification provides a clear pricing
model for clients and advisers and creates
internal efficiencies that make us easier to do
business with.
Together with IW&I, our offering to
intermediaries is comprehensive and
incorporates a full range of services, from
bespoke and managed Discretionary Fund
Management (DFM), through to our third-party
Managed Portfolio Services (MPS) and
Rathbones Select service, with ESG, tax and
offshore optionality, as well as our broad range
of single strategy funds. This capability will be
central to what we can offer to third-party
advisers in 2024 and beyond.
Lastly, in 2023 we have taken some positive
steps to improve how we can build our digital
distribution capability. This has been supported
by the launch of a refreshed brand and
proposition suite that is much more digestible
and targeted on our key markets. Alongside
Rathbones, which has seen website referrals
increase by 100% year on year, we have
established Rathbones Asset Management
(RAM) and Greenbank as distinct identities.
IW&I has been incorporated into the group,
albeit that full alignment will only occur
following migration in 2025.
EMBRACING TECHNOLOGY
Throughout the year we continued to develop
and deploy applications and technology that
improve the way in which we service our clients.
The number of clients using MyRathbones
continues to grow, reaching 58% in 2023 (2022:
50%). The visibility, access to messaging and
reporting that this application offers is an
important part of how we interact with clients.
In October 2023, we reported that the time
frame associated with our client lifecycle
management (CLM) system development was
likely to move to deployment in the first quarter
of 2024. The system is now expected to go live
by the middle of 2024, using the period after
go-live and up to the migration of IW&I clients in
early 2025 to deploy further enhancements to
the solution and better align it with IW&I
requirements. This is later than we anticipated
but scope has been planned carefully to protect
the IW&I migration and also ensure that we take
best advantage of applications within IW&I that
we can benefit from.
The final phase of implementation of the Charles
River Investment Management solution into
Rathbones Asset Management will be completed
during the first half of 2024, adding the
functionality to improve investment processes
and the reporting capability that we are
confident will deliver operational efficiency.
While we continue to carefully manage scope,
as previously stated in our Q3 2023 results,
the expected total costs of our digital project
increased from £40 million to £45 million,
with £30.7 million of this incurred up to
31 December 2023.
INSPIRING OUR PEOPLE
We have prioritised this critical strategic
objective across the business as we progress our
post-combination integration work. Employee
engagement, by both the board and executive
teams, has been extensive, supported by town
halls and meetings across all office locations as
well as employee surveys. We remain committed
to a culture that fosters high performance and
builds rewarding careers for our colleagues.
Results from our engagement activity have
reaffirmed our expectations of the skills,
capabilities and cultural alignment within IW&I,
and has supported a collaborative approach to
working together that will bring out the very
best from both businesses.
Employee wellbeing continues to be high on
our agenda, and we have implemented various
measures to promote the mental and physical
health of our people. This year, we continued
to offer access to our employee assistance
programme, including a free and confidential
phone and online advice service.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 GROUP CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
14
RISK MANAGEMENT AND REGULATION
Risk management practices continue to be
embedded across the business as we remain
conscious of the impact of the changing risk
landscape to our firm and industry, particularly
in an uncertain economic climate. We are also
carefully assessing and mitigating the risks
associated with our planned change
programmes, including the IW&I integration.
We continue to respond appropriately to
regulatory changes and acknowledge recent FCA
and PRA consultation activity and statements.
The FCA’s Consumer Duty regime reinforces
behaviours and standards that we have
recognised for a long time, and we support the
principles that underpin the rules. Our ethos,
whole-of-market approach to investment,
flexible approach to financial planning, and
unbundled pricing are all well positioned.
The UK market remains highly competitive
from a value perspective and this is reflected in
pricing levels generally, particularly in the
third-party advisers, charities and asset
management markets.
The Consumer Duty regime presented a good
opportunity to outline our propositions to the
market. As we streamline policies and practices
across the enlarged group, the pillars of
Consumer Duty will continue to be a focus for
us well into 2024 and beyond.
OUTLOOK FOR 2024
Whilst we will continue to be impacted by
market reactions to political instability or
adverse geopolitical events, as a strong business
with increased scale, Rathbones is well-equipped
to manage and navigate these challenges. Recent
indicators that interest rates may fall in the
medium term should be positive for equity
markets and increase client confidence to invest.
This in turn should be positive for net organic
growth rates and the group as a whole.
The successful integration of IW&I is a priority
of course, but this is alongside other important
objectives to develop our investment process,
further enhance our client engagement, embrace
technology and build out our distribution
capability. Rathbones remains well positioned to
take advantage of both the benefits of scale and
future growth opportunities, and I would like to
thank our people in our combined group for their
unwavering commitment, which continues to be
the driving force behind our success.
Paul Stockton
Group Chief Executive Officer
5 March 2024
Alongside these services, our wellbeing team
and inclusion networks have run awareness
sessions on several topics from cancer and
menopause awareness to mental health and
neurodiversity.
RESPONSIBLE INVESTMENT
We are proud of our long history of ethical
and sustainable investment, managed by
Greenbank, which continues to receive industry
recognition. This year, Greenbank won the ‘Best
Sustainable Investment Wealth Manager/DFM
Group’ at the Investment Week Sustainable
Investment Awards, as well as achieving ‘Silver’
for ESG company of the year at the 2023 Magic
Circle Awards.
In addition to Greenbank’s bespoke service,
RAM offers investment strategies through the
Rathbone Greenbank Global Sustainability Fund,
Rathbone Ethical Bond Fund, Rathbone
Greenbank Multi-Asset Portfolios and, more
recently, through the launch of our new
Rathbone Greenbank Global Sustainable
Bond Fund.
Beyond our investment offerings, Rathbones
incorporates ESG considerations, and the
influence they can have on our clients’ portfolio
returns, into our investing decisions. By
integrating the analysis of ESG factors into our
investment processes, we aim to understand
ESG risks and identify high-quality investments,
with attractive financial characteristics, that also
make a positive contribution to society. More
information on our approach to responsible
investment can be found in the responsible
business review of this annual report and our
standalone responsible business report, which
will be published in full next month.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 MEET THE GROUP
EXECUTIVE COMMITTEE
The group executive committee (GEC) is chaired
by Paul Stockton, Group Chief Executive Officer,
and he is supported by the senior management
team. The key role of the GEC is day-to-day
management of Rathbones. The committee
actively reviews and assesses business
performance supported by a range of
committees that operate across the group.
Full biographies of the group executive
committee are available on our website.
Read more on the
Group Executive Committee
15
Paul Stockton
Group Chief Executive Officer
Iain Hooley
Group Chief Financial Officer
Rupert Baron
Chief Executive Officer
Investment Management
Andy Brodie
Group Chief Operating Officer
Ivo Darnley
Managing Director,
RIM
Gaynor Gillespie
Group Chief People Officer
Murray Mackay
Managing Director,
IW&I
Jennifer Mathias
Group Chief of Staff
Martin McGovern
Group Chief Client Officer
Tony Overy
Chief Executive Officer,
SHL/RFP
Sarah Owen-Jones
Group Chief Risk Officer
Jayne Rogers
Group Chief Distribution Officer,
Executive Chair RAM
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
UNDERSTANDING OUR STAKEHOLDERS
AND THE EXTERNAL ENVIRONMENT
16
THE OPPORTUNITY IN THE UK WEALTH SECTOR¹
The UK wealth sector is attractive and underpinned by strong long-term trends including an
increasing savings need as individuals live longer and an increasing need for financial advice
as individuals are given more flexibility around financial decisions.
2024F
£2.1trn
SECTOR ASSETS ARE
ESTIMATED TO BE NEARING
£2.1 TRILLION BY 2024
2020
£1.6trn
UK AND GLOBAL ECONOMY
TREND
RISING INTEREST RATES (UK)2
4.5%
2022: 1.5%
Rising inflation and interest rates have
moved investor sentiment away from
equities towards cash
The current macroeconomic environment,
both at home and abroad, is facing headwinds.
Persistent inflation has suppressed asset
values and presented cost of living pressures
for some clients, resulting in dampened
inflows. Rising interest rates elevated
outflows as clients use portfolio assets to
repay increasingly expensive debt.
ALIGNMENT WITH OUR PRINCIPAL RISKS
— Sustainability
— Regulatory and compliance
— Third-party suppliers
— Suitability.
HOW WE ARE RESPONDING
Reposition portfolios to withstand
market corrections, continue to engage
with our clients and offer relevant
propositions.
We continually monitor, manage and
reposition our portfolios. Our teams have
spent considerable time talking clients
through market movements and help them
plan for the future. We have also increased the
interest paid to clients and offered fixed-term
deposits during the year.
1. Sources PAM Directory and Oliver Wyman estimates
2. Bank of England (average interest rate in the year)
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 UNDERSTANDING OUR STAKEHOLDERS AND THE EXTERNAL ENVIRONMENT CONTINUED
17
DEMOGRAPHICS
TECHNOLOGICAL INNOVATIONS
TREND
Growing need for savings and
advice for retirement planning
Demographic trends continue to forecast
increased life expectancy and a general need
to save. Expectations for growth in investible
wealth continue, and this combines with the
ongoing demise of defined benefit pension
schemes alongside greater pension freedoms
that allow individuals more flexibility, and
drive a well-chronicled need for financial
advice.
ALIGNMENT WITH OUR PRINCIPAL RISKS
— Sustainability
— Change
— People.
% OF POPULATION AGED 45+
EXPECTED BY 20343
47%
2019: 44%
TREND
Technology enables multichannel
interactions with clients
Clients are becoming more and more
accustomed to using technology to
communicate and manage their financial
affairs. Keeping pace with this change is
fundamental to remaining competitive and
sustaining a quality service, particularly as
inter-generational wealth transfers accelerates.
UK INDIVIDUALS’ USAGE OF SMARTPHONES
TO ACCESS FINANCIAL SERVICES4
55%
2020: 46%
HOW WE ARE RESPONDING
Enhanced advice offering
We continue to develop our product and
service and advice offering. We work with
clients to support them at each stage of our
clients’ lifecycle, be it in their retirement
planning, discussions around inter-
generational wealth transfer or how to build a
foundation for their family.
ALIGNMENT WITH OUR PRINCIPAL RISKS
— Change
— Information security and cyber
— Regulatory compliance and legal
— People
— Third-party
— Sustainability.
HOW WE ARE RESPONDING
Develop our technology offering to
further support client engagement.
We are coming towards the end of a multi-year
plan to enhance our digital client experience,
to provide multi-channel communication to
clients. This includes upgrading client
relationship management tools and ensuring
we build relationships with the next
generation of clients using relevant technology
to facilitate retention of investment portfolios.
3. ONS expectation of life in Great Britain
4. Yougov technology tracker
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 UNDERSTANDING OUR STAKEHOLDERS AND THE EXTERNAL ENVIRONMENT CONTINUED
18
RESPONSIBLE BUSINESS AND CLIMATE CHANGE
CONSOLIDATION OPPORTUNITIES
IMPACT ON OUR STAKEHOLDERS
Stakeholder ESG demands increasing
CLIENTS THAT IDENTIFY CLIMATE CHANGE
AS A KEY FINANCIAL CONCERN5
The role of the wealth management industry
in managing social and environmental issues
continues to increase.
c.17%
IMPACT ON OUR STAKEHOLDERS
Highly fragmented sector offers further
consolidation opportunities
The wealth management sector remains
highly fragmented, and benefits of scale
remain strong both in terms of operating
leverage and service diversification. There
remains a long tail of sub-scale wealth
managers who may have experienced greater
operational strain through the pandemic.
M&A ANNOUNCED OR COMPLETED IN
INVESTMENT MANAGEMENT AND
WEALTH MANAGEMENT IN H1 20236
324
H1 2022: 307
Climate change is no longer a distant threat. It
has become a critical issue that is disrupting
the status quo across industries. The risks
associated with climate change, such as
physical risks from extreme weather events
and transition risks from shifting to a low-
carbon economy, are becoming material
considerations in investment strategies.
ALIGNMENT WITH OUR PRINCIPAL RISKS
— Sustainability
— Regulatory compliance and legal
— Suitability
— Information security and cyber
— People
— Third-party supplier.
HOW WE ARE RESPONDING
Broaden our ESG proposition
and investment range
ALIGNMENT WITH OUR PRINCIPAL RISKS
— Sustainability
— People.
HOW WE ARE RESPONDING
Apply experience and discipline to market
scanning for further opportunities
Alongside our responsible business
programme, we continue to broaden our
existing ESG proposition and investment
range, ensuring they remain relevant for our
clients. It is also a priority of ours to maintain
dialogue with companies we invest in to
support and encourage more sustainable
long-term performance.
We have a strong track record of M&A and
while we remain focussed on integrating our
combination with IW&I, inorganic growth
remains part of our wider strategy. We will
continue to selectively recruit experienced
professionals to the business.
5. Rathbones (excl. IW&I) Financial Wellbeing Study, 2023. Based on surveys to more than 1,000 clients.
6. 2024 investment management outlook. Deloitte Insights
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 OUR PURPOSE DRIVEN APPROACH
Our strategic priorities
1 Enriching the client and adviser
proposition and experience
2
Supporting and delivering growth
Our stakeholders
3 Inspiring our people
Clients
Society and communities
4 Operating more efficiently
Our people
Partners and regulators
Shareholders
19
We are driven by
our purpose to
think, act and invest
for everyone’s
tomorrow
THIS IS DELIVERED
BY OUR PEOPLE
WE MEASURE SUCCESS
THROUGH THE PROGRESS
WE MAKE AGAINST OUR
STRATEGIC PRIORITIES
AND THE SUSTAINABLE
VALUE WE CREATE FOR
OUR STAKEHOLDERS
OUR CULTURE AND VALUES
OUR STRATEGIC PRIORITIES
OUR S172 STATEMENT
The way we do business is shaped
by our culture and values.
Read more: See page 20
OUR BUSINESS MODEL
We create long lasting, personal
relationships with our clients and
advisers enabling us to deliver a
service that is distinctly Rathbones.
Read more: See page 21
Our strategy is centred around our
key stakeholders – creating value for
our customers, advisers and people
– whilst also targeting growth and
operational efficiency across the
business. This is underpinned by the
commitments we have made in our
responsible business framework.
1 2 3 4
Read more: See page 22
OUR KEY PERFORMANCE
INDICATORS
We use financial and non-financial
metrics to monitor our progress,
which in turn determines our
executive remuneration outcomes.
Read more: See page 27
Balancing the needs of our key
stakeholders is incorporated into
our decision-making processes.
Read more: See page 49
CREATING VALUE
FOR OUR STAKEHOLDERS
Understanding and responding to
the changing needs of our
stakeholders is critical in delivering
our purpose.
Read more: See page 49
OUR RESPONSIBLE
BUSINESS FRAMEWORK
We are committed to making a wider
contribution to society through our
responsible business framework.
Read more: See page 58
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
OUR CULTURE AND VALUES
The importance of culture
THE HEARTBEAT OF THE ORGANISATION
A strong, positive organisational culture
underpins the value the organisation
creates. As the heartbeat of the organisation,
culture drives its success and impact. It’s the
invisible force and unwritten rules that
create a virtuous cycle that drives
engagement, satisfaction and commitment
and leads to improved organisational
performance and positive outcomes for
clients, shareholders and communities.
It reflects how supported and connected
each of us are with our colleagues and the
business we work in. Culture steers the
social norms and ways of working within
the organisation. It manifests day to day by
how we treat each other, work together and
the level of care we give and get back.
It’s the values we share, the behaviours and
norms that shape the way individuals and
groups interact within the workplace.
Culture is the thread that runs through
employee engagement, retention, team
collaboration, innovative and creative
thinking, decision-making, leadership,
morale, pride and belonging, attracting top
talent, adapting to change, wellbeing, client
satisfaction and our firm’s reputation. It’s the
heartbeat. And here at Rathbones, it’s strong.
Our purpose represents our commitment
as a business to all our stakeholders and
wider society. It underpins our strategy,
defines our culture and values and helps
to guide our business model. Our purpose –
thinking, acting and investing for everyone’s
tomorrow – determines what we do.
Our culture – which is shaped by our
interactions with our stakeholder groups –
determines how we do what we do.
OUR CULTURE FRAMEWORK
The board plays a critical role in setting the firm’s
strategy, purpose, business model and culture.
Each director recognises the role we have to
play in setting the ‘tone from the top’; and in
monitoring how the firm’s culture and values
are ‘lived’. The board recognises the critical
importance that culture and values play in the
long-term success of the firm, and therefore the
role of the board in monitoring and assessing
culture. Our culture framework has been
developed to centre around our stakeholders and
align with our section 172 structure in order to
enable us to monitor how we are delivering on
our purpose and living our culture.
MONITORING CULTURE
The board spends time monitoring, and
satisfying itself as to the alignment of the group’s
purpose, values and strategy with its culture.
During the year, the board monitored, assessed
and promoted the group’s culture, including in
the following ways:
— annual review and discussion of the culture
dashboard, which includes setting out an
assessment of culture, and conduct metrics
across the firm focused on the key drivers
— feedback received from employees across the
group in regular employee opinion surveys
— updates on activities across the group in
relation to culture and values, including
employee training programmes
— consideration of culture, behaviour and
conduct issues by the remuneration
committee on assessing the employee
stock purchase plan award to executives
— review of the group’s whistleblowing
arrangements
— regular direct engagement with employees
as part of the board’s workforce engagement
programme, including office visits and
participation in town hall meetings
— encouraging and enabling eligible employees
to participate in schemes to promote share
ownership. Eligible employees are able to
participate in the group’s Save As You Earn
(SAYE) and Share Incentive Plan (SIP)
schemes, which provide cost-effective
opportunities for employees to acquire
shares in the company.
The activities described above have allowed the
board to monitor the group’s culture effectively
during the year and to ensure that culture
continues to be aligned with the group’s purpose,
values and strategy. Further information can be
found in our corporate governance report on
page 88.
20
OUR VALUES
RESPONSIBLE AND ENTREPRENEURIAL
IN CREATING VALUE
It’s through responsible entrepreneurship
that we achieve the best results for our
clients. Being responsible for today and
tomorrow, we are open to the new yet
always guided by the long view.
COURAGEOUS AND RESILIENT IN
LEADING CHANGE
Responsibility demands courage. We are
not afraid to ask difficult questions or
make changes that need to be made.
We have the discipline and resilience to
see things through.
COLLABORATIVE AND EMPATHETIC
IN DEALING WITH PEOPLE
Managing wealth responsibly takes
collaboration: with each client, among
colleagues and with professional partners.
Empathy brings insight. It’s our
responsibility to understand each
generation’s changing priorities.
PROFESSIONAL AND HIGH PERFORMING
IN ALL OUR ACTIONS
We take our professional responsibilities
seriously. Investment in our people and
the fabric of our firm renews our culture of
high performance. Never compromising on
quality because we have a responsibility to
be here tomorrow.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 21
OUR BUSINESS MODEL
We are creating the UK’s leading
discretionary wealth manager.
Our combination with IW&I provides
clients with stability and continuity.
WHAT SETS US APART
We have a well established and trusted brand
where clients feel safe and supported by a business
with increasing scale in a fragmented market
We service financial needs for the long term
by offering product and service optionality
that grows and adapts with clients’ needs
We are able to offer our clients a range of
banking services as a licensed deposit taker and
the prospect of additional services through our
relationship with Investec Bank
We care about personal relationships with clients
and advisers and provide face-to-face contact, an
increasingly hard to find offering in the industry
We understand that because the world is
changing, our digital presence must complement
our face-to-face approach
Our colleagues stay with us for the long term.
They have strong financial expertise, supported
by an informed investment process and training
We care about the future and our purpose to
think, act and invest responsibly underpins our
strategy, defines our culture and values, and is
fundamental in our future business ambitions
OUR BUSINESS IS SIMPLE BUT OUR EXECUTION IS BASED ON EXPERTISE AND EXPERIENCE
Supporting clients through a
breadth of offerings to help
them manage their wealth
Offering a range of products
and services that can be used
separately or together to suit
individual needs
WEALTH MANAGEMENT
ASSET MANAGEMENT
INVESTMENT
MANAGEMENT
FINANCIAL PLANNING
AND ADVICE
ASSET MANAGEMENT
(FUNDS)
DIRECTLY OR
INDIRECTLY VIA IFAS1
USING IN-HOUSE
FINANCIAL PLANNERS OR
VISION’S INDEPENDENT
IFA1 NETWORK
DISTRIBUTED PRIMARILY
THROUGH IFAS
Bespoke portfolio services with a
dedicated investment manager
Managed fund solutions investing
in multi-asset portfolios with access
to a dedicated investment manager
A cost-effective solution
investing in multi-asset
portfolios without a dedicated
investment manager
One-off advice
Initial advice
and planning
Ongoing advice
and planning
Tax and trust services
Actively managed
single strategy funds
Actively managed
multi-asset funds
Creating sustainable value for
our clients and other
stakeholders
Helping to generate stable,
recurring revenue streams
to enable a cash generative
business
ESG considerations and the impact they have on clients’ portfolio returns
are incorporated into our investing decisions
Wealth and asset management fees represent the majority of our revenue base
Financial planning advisory fees continue to contribute to income
as we expand our adviser base and diversify income streams
Our banking license allows us to earn diversified income streams
Creating value for our stakeholders: See page 49
Responsible investment report 2023
Our strategy: See page 22
1. Independent Financial Adviser
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
OUR STRATEGIC PRIORITIES
We launched our medium-term strategy for the
business in October 2019, to support our purpose of
thinking, acting and investing for everyone’s tomorrow.
Our four strategic priorities are set out here.
22
1
2
3
4
ENRICHING THE
CLIENT AND ADVISER
PROPOSITION AND
EXPERIENCE
SUPPORTING AND
DELIVERING GROWTH
INSPIRING
OUR PEOPLE
OPERATING
MORE EFFICIENTLY
Enhancing valued services
Penetrating specialist markets
Our culture and corporate values
Driving productivity
Deepening investment skills
Driving organic growth
Read more: See page 23
Read more: See page 24
Read more: See page 25
Read more: See page 26
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 OUR STRATEGIC PRIORITIES CONTINUED
1
ENRICHING THE CLIENT AND ADVISER
PROPOSITION AND EXPERIENCE
HIGHLIGHTS
OVERALL SATISFACTION SCORE ACCORDING
TO MOST RECENT CLIENT SURVEY1
8.5/10
2022: 8.3/10
NUMBER OF IFA FIRMS USING RELIANCE
ON ADVISER
340
2022: 280
NUMBER OF INVESTMENT MANAGEMENT
CLIENTS FOR THE ENLARGED GROUP
114,200
2022: 67,700
STRATEGIC FOCUS
Enhancing valued services − enhancing the
experience for private clients and providing a
dedicated service for financial advisers.
Deepening investment skills − developing our
investment expertise, broadening capability and
coverage, and incorporating ESG factors.
RELEVANT KPIs
— Number of investment management clients
— Net promoter score.
Read more: See page 27
RELEVANT PRINCIPAL RISKS
— Suitability
— Investment performance
— Sustainability
— Regulatory compliance and legal
— People
— Integration
— Information security and cyber.
Read more: See page 82
2023 PROGRESS
— Continued to develop and deploy applications
and technology that improve the way in which
we service our clients, with the number of
clients using MyRathbones growing to 58%
in 2023 (2022: 50%)
— Launched a refreshed brand and proposition
suite that is much more digestible and targeted
to our key markets
— Continued to grow our Reliance on Adviser
(ROA) proposition which provides a clear
pricing model for clients and advisers and
creates internal efficiencies that make us
easier to do business with
— Received customer experience accolades,
including a Gold rating from STAR (the best
practice initiative of improving customer
experience in transferring funds across
platforms) for RAM
— Launched the Rathbone Greenbank Global
Sustainable Bond Fund (see more on page 7)
— Hosted vulnerable client awareness sessions
for our colleagues throughout the year
— Increased our overall engagement with
clients (see more on page 52).
23
PRIORITIES FOR 2024
— Complete the IW&I client consent process with
as little disruption as possible to the client and
adviser experience
— Build enhanced propositions and services that
will benefit clients and advisers
— Launch the client lifecycle management (CLM)
system by the middle of 2024
— Continue to respond appropriately to
regulatory changes, including Consumer Duty.
1. Data excludes IW&I
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 OUR STRATEGIC PRIORITIES CONTINUED
2
SUPPORTING AND DELIVERING GROWTH
24
HIGHLIGHTS
NUMBER OF INVESTMENT MANAGERS
681
2022: 355
STRATEGIC FOCUS
Penetrating specialist markets − focusing on
specialisms, building on existing capabilities and
leveraging Greenbank.
Driving organic growth − managing client-facing
capacity, structuring distribution, driving growth
through financial planning, and building our
asset management business.
GROSS DISCRETIONARY AND
MANAGED INFLOWS
£5.1bn
2022: £4.3bn
RATHBONES SELECT FUM
£2.0bn
2022: £1.4bn
RELEVANT KPIs
— Total FUMA
— Investment management net organic
growth rates
— Underlying operating margin
— Dividend per share
— Underlying earnings per share
— Underlying return on capital employed.
Read more: See page 27
RELEVANT PRINCIPAL RISKS
— Sustainability
— Integration
— People
— Investment
— Performance.
Read more: See page 82
2023 PROGRESS
— Announced a transformative combination
with IW&I that provides scale and synergy
opportunities
— Grew gross discretionary and managed
inflows by 18% in the year
— Appointed a chief distribution officer
to lead and develop our distribution
capability across both the wealth and asset
management businesses
— Improved capacity through the use of
Rathbones Select, designed as a high-quality,
‘self-select’ (execution only) investment
service for clients with smaller values to
invest, providing a better value proposition by
operating through a dedicated central team
— Continued to build specialist teams to serve
target client groups, including taking
advantage of the IW&I combination to
establish a dedicated ultra-high-net-worth
team to operate across the enlarged business
— Established a strategic partnership with
Investec Bank.
PRIORITIES FOR 2024
— Complete the migration of Saunderson House
clients onto Rathbones’ propositions
— Achieve year-one synergies in relation to the
combination with IW&I
— Continue to build relationships with third-
party adviser networks
— Enhance our distribution strategy through
the strong associations we now have with
Investec Bank.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 OUR STRATEGIC PRIORITIES CONTINUED
3
INSPIRING OUR PEOPLE
HIGHLIGHTS
RATHBONES’ EMPLOYEE NET
PROMOTER SCORE1
43%
2022: 39%
EMPLOYEE PARTICIPATION IN SIP¹1
84%
2022: 90%
EMPLOYEE PARTICIPATION IN SAYE¹1
56%
2022: 63%
1. Data excludes IW&I
25
STRATEGIC FOCUS
Our culture and corporate values − becoming
a more diverse and inclusive organisation,
continuing to listen to our people and
improving our commitments to them.
RELEVANT KPIs
— Number of investment professionals
— Number of financial planners.
Read more: See page 27
RELEVANT PRINCIPAL RISKS
— People
— Change
— Integration
— Pension.
Read more: See page 82
2023 PROGRESS
— Established a new diversity, equality and
inclusion (DE&I) committee
— Ran another year of our non-executive
director engagement programme, led by Iain
Cummings and Dharmash Mistry
— Delivered wellbeing events both in person and
on line, with sessions recorded and available
on our wellbeing hub
— After a short delay in Q4 we implemented SAP
Success Factors that will help improve the
efficiency of our processes
— Continued to encourage employee share
ownership through our SIP and SAYE schemes
— Gathered further feedback from colleagues
through our engagement surveys, which ran
throughout the year, with a 76% response rate
to our autumn survey.
Following the combination:
— IW&I participated in their first group-wide
colleague survey, across October – November;
leaders and managers are cascading and
sharing results in Q1 2024
— We worked on creating a strong fit with
Rathbones’ client-centric culture
— Our first joint town hall event was held with
colleagues from both Rathbones and IW&I
— More than 2,000 colleagues attended joint
business function town halls since we
completed our combination, meeting
senior leadership teams, hearing more
about the integration and what to expect
— The group introduced joint MS Teams’
capability as a key collaboration and
connection tool to facilitate conversations,
group meetings and collaborate on work more
easily between IW&I and Rathbones
— We aligned our DE&I networks to support the
relaunch of our groups at the start of 2024
— Rathbones new senior leadership governance
structures were announced.
PRIORITIES FOR 2024
— Continued work to integrate our colleagues
— Launch new inclusion networks
— Offer share ownership across the wider group
— Culture review.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 OUR STRATEGIC PRIORITIES CONTINUED
4
OPERATING MORE EFFICIENTLY
HIGHLIGHTS
% OF CLIENTS USING MYRATHBONES
58%
2022: 50%
SECURE MESSAGES SENT ON
MYRATHBONES
14,702
2022: 13,658
DOCUMENTS DOWNLOADED
DURING 2023
124,461
2022: 115,780
STRATEGIC FOCUS
Driving productivity − providing a quality
client experience and making us easy to do
business with.
RELEVANT KPIs
— Underlying operating margin
— Underlying return on capital employed
— Common Equity Tier 1 ratio.
Read more: See page 27
RELEVANT PRINCIPAL RISKS
— Information security and cyber
— Technology
— People
— Change
— Third-party supplier.
Read more: See page 82
26
2023 PROGRESS
— Appointed integration delivery teams to
work on the combination with IW&I
— Despite delays, we progressed our digital
transformation programme, working to
increase time available to investment
managers to focus on portfolio performance
and winning new clients
— Increased the number of clients using
MyRathbones to 58% in 2023 from 50%
in 2022
— Embedded hybrid working, allowing greater
flexibility, better work life balance, focused
office time and anchor days for greater
team collaboration
— Implemented the Charles River Investment
Management Solution into RAM
PRIORITIES FOR 2024
— Continue to develop and deploy applications
and technology that improve the way in
which we service our clients
— Outsource some of our technology provision
and cyber support to Investec Bank
— Complete the client consent process using
a digital-first approach, in preparation for
IW&I client and asset migration in 2025
— Deploy further enhancements to the
Charles River system into our asset
management business
— Consolidate our offices across the country
where we share locations with IW&I and
rebrand the IW&I offices we now have in
our portfolio.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 KEY PERFORMANCE INDICATORS
(KPIs)
Our strategic priorities
1 Enriching the client and adviser
proposition and experience
2
Supporting and delivering growth
3 Inspiring our people
4 Operating more efficiently
A Alternative Performance Measure
Read more: on APMs, including a reconciliation to the
financial statements (where possible), on page 34
Read more: Remuneration page 110
27
The group considers the following financial and
non-financial measures as key performance
indicators (KPIs) of its overall performance.
Each KPI is aligned with at least one of our four
strategic pillars and is used to measure both
the progress and success of our strategy
implementation. All KPIs presented below are
prepared on a reported basis. Following a review
of historically reported KPIs, we have removed
the following in order to align with what is
reported internally and to focus on metrics that
are more relevant to the business:
— Performance-related variable employee costs
— Percentage of shares held by current
employees
— Employee turnover; we continue to report
this in our responsible business section on
page 58.
FINANCIAL
TOTAL FUNDS UNDER MANAGEMENT
AND ADMINISTRATION £bn
2
UNDERLYING
OPERATING MARGIN %
2 4 A
UNDERLYING RETURN
ON CAPITAL EMPLOYED %
2 4 A
£105.3bn
22.3%
12.1%
23
22
21
63.1
60.2
68.2
42.2 105.3
23
22
21
22.3
21.3
27.7
23
22
21
12.1
11.8
16.1
Incremental uplift from IW&I
DEFINITION
Total FUMA at the end of the year.
STRATEGIC FOCUS
The amount of funds that we manage directly
impacts the level of income we receive.
COMMENTARY
This year, there has been a £42.2 billion uplift
due to inclusion of IW&I. Rathbones FUMA
excluding IW&I increased by 4.7% year-on-year
due to market and investment performance.
DEFINITION
Underlying profit before tax as a percentage of
operating income.
DEFINITION
Underlying profit after tax as a percentage of the
underlying quarterly average total of equity.
STRATEGIC FOCUS
This measure enables the group’s longer-term
operational and segmental performance to be
understood as it is less affected by short-term
market volatility and non-recurring items than
the IFRS operating margin.
COMMENTARY
The inclusion of IW&I from October 2023
uplifted operating income, resulting in an
improved operating margin of 22.3%.
Operating income and underlying operating
expenses in Rathbones (excluding IW&I) grew
at the same rate year-on-year, resulting in a
marginal reduction in the operating profit
margin to 21.1%.
STRATEGIC FOCUS
A useful measure of financial efficiency as it
indicates profitability after factoring in the
amount of capital employed by the business.
COMMENTARY
The underlying quarterly average total equity
increased by £295.3 million in 2023 compared
to 2022, reflecting the share issue for the IW&I
combination at the end of the third quarter.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
KEY PERFORMANCE INDICATORS (KPIs) CONTINUED
Our strategic priorities
1 Enriching the client and adviser
proposition and experience
2
Supporting and delivering growth
3 Inspiring our people
4 Operating more efficiently
28
A Alternative Performance Measure
Read more: on APMs, including a reconciliation to the
financial statements (where possible), on page 34
Read more: Remuneration page 110
FINANCIAL
DIVIDEND PER SHARE p
2
UNDERLYING EARNINGS
PER SHARE p
2 A
COMMON EQUITY TIER 1 RATIO %
4
GROUP NET ORGANIC GROWTH
RATES IN FUNDS UNDER
MANAGEMENT %
2
87p
23
22
21
135.8p
17.8%
87
84
81
23
22
21
135.8
130.8
172.2
23
22
21
(0.8)%
(0.8)
23
22
0.6
21
17.8
17.9
18.7
4.9
DEFINITION
Total annual dividend for the year per share
(interim and final).
DEFINITION
Underlying profit after tax divided by the
weighted average number of ordinary shares.
DEFINITION
Common Equity Tier 1 (CET1) capital as a
proportion of total risk exposure amount.
DEFINITION
The value of annual net inflows as a percentage
of opening FUMA.
STRATEGIC FOCUS
Dividends represent an important part of the
returns to shareholders.
COMMENTARY
At our half year results in July 2023, we
announced an interim dividend of 29p. We
also brought forward payment of a portion of
the final 2023 dividend to shareholders on the
register shortly prior to the completion of the
combination by way of a second interim
dividend of 34p, paid in October.
STRATEGIC FOCUS
An important measure of performance as it
shows profitability, reflecting the effects of any
new share issuance.
STRATEGIC FOCUS
As a regulated entity, we must maintain certain
levels of capital. A higher CET1 ratio is an
indicator of financial strength. We seek to
maintain an efficient capital level.
COMMENTARY
The growth in the year is due to increased
underlying profit after tax , which has been
partially offset by the increased number of
shares in issue and the effect of the increased
rate of corporate tax. This KPI has been
calculated for the enlarged group.
COMMENTARY
The CET1 ratio has remained consistent with
prior year, as we increased the capital base
proportionately with the larger size of the group
resulting from the combination with IW&I.
STRATEGIC FOCUS
Measures the ability of the business to grow in
the absence of acquisitions.
COMMENTARY
Gross inflows in our discretionary and
managed proposition were 18.6% higher
than 2022, this increase in inflows has been
offset by net outflows in IW&I (reflecting the
impact of investment manager departures
that predominately occurred pre combination)
and single strategy funds (in line with
industry trends).
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
KEY PERFORMANCE INDICATORS (KPIs) CONTINUED
Our strategic priorities
1 Enriching the client and adviser
proposition and experience
2
Supporting and delivering growth
3 Inspiring our people
4 Operating more efficiently
29
A Alternative Performance Measure
Read more: on APMs, including a reconciliation to the
financial statements (where possible), on page 34
Read more: Remuneration page 110
NON-FINANCIAL
NUMBER OF INVESTMENT
MANAGEMENT CLIENTS
114,200
1
NET PROMOTER SCORE %
1
NUMBER OF INVESTMENT
MANAGERS
1
NUMBER OF FINANCIAL PLANNERS
1
23
22
21
69,000
45,200 114,200
67,700
66,500
43%
23
22
21
N/A
34
40
43
36
39
681
23
22
21
379
302 681
355
341
117
23
22
21
45 117
72
74
72
Incremental uplift from IW&I
Mean
IW&I NPS
Incremental uplift from IW&I
Incremental uplift from IW&I
DEFINITION
The number of investment management clients
who use our services.
STRATEGIC FOCUS
In an industry where scale is important, the
size of our client base helps to determine
market share.
COMMENTARY
The increase in client numbers shows growth
in the business. The basis of this calculation is
dependent on the way client data is structured
on the relevant operating systems. It is therefore
not practicable to apply consistent
methodologies across the RIM and IW&I
businesses until the migration onto a single
system has been completed. We expect the
number to change following migration, but
consider the figure disclosed to be appropriate
in the interim period.
DEFINITION
The likelihood that a client will recommend
Rathbones. Collected through a survey where
clients score the business between -100%
and 100%.
STRATEGIC FOCUS
Our net promoter score highlights client
satisfaction. We benchmark against our peers
and our score shows clients’ willingness to
recommend Rathbones as a business. This is a
new KPI that we have previously reported in the
strategic report.
COMMENTARY
The increase in score reflects an increase in
client satisfaction and likelihood to recommend
Rathbones. The mean is the average of the peer
group net promoter scores.
DEFINITION
Includes individuals who are regulated to
provide discretionary investment management
services to clients.
DEFINITION
Includes in-house planners within Rathbones
Financial Planning, Saunderson House Limited
and IW&I.
STRATEGIC FOCUS
This reflects our capacity to efficiently service a
growing client base. This is a new KPI that we
have previously reported in the strategic report.
STRATEGIC FOCUS
This reflects our capacity to efficiently service a
growing client base. This is a new KPI that we
have previously reported in the strategic report.
COMMENTARY
The increase in investment managers over the
year shows that we are able to attract new talent,
creating more capacity to service our clients.
This KPI excludes investment professionals in
our asset management business (2023: 23, 2022:
24, 2021: 21).
COMMENTARY
The increase in financial planners over the year
shows that we are able to attract new talent,
creating more capacity to service our clients.
This KPI excludes external Vision financial
planners (2023: 138, 2022: 131, 2021: 131).
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
GROUP CHIEF FINANCIAL OFFICER’S REVIEW
COMMITTED
TO DELIVERING
SUSTAINABLE VALUE
opportunities that lie ahead for our combined
business, driven by the core values that the
Rathbones and IW&I businesses share, and the
significant benefits that we will bring to our
clients and shareholders from the scale,
enhanced propositions and depth of capability
that our combined business will offer.
The group has delivered continued progress in
its financial performance despite challenging
market conditions throughout 2023. This has
been achieved alongside the successful delivery
of the IW&I and Rathbones combination during
September 2023. Delivering this transaction
represents a significant milestone not only for
Rathbones and IW&I but for the UK wealth
management industry. We are now focused on
delivering the integration of the businesses and
realising the benefits of the combination.
Underlying profit before tax was £127.1 million
(2022: £97.1 million), an increase of 30.9% in the
year, reflecting the contribution of IW&I to the
group’s performance in Q4 of an underlying
profit before tax of £25.4 million.
Iain Hooley
Group Chief Financial Officer
I am delighted to present my first review since
my appointment as group chief financial
officer on 1 January 2024. Having been part of
Investec Wealth & Investment UK ( IW&I) for
over 23 years, I look forward to the exciting
The Rathbones group excluding IW&I delivered
a 4.7% increase in underlying profit before tax to
£101.7 million. This result is after charging the
£14.4 million of planned expenditure on our digital
programme that we announced in February 2022.
30
Operating income increased 25.3% to £571.1
million (2022: £455.9 million). Excluding
income relating to IW&I of £87.9 million,
operating income grew by 6.0% to £483.2
million. This growth was driven predominantly
by increased interest revenues, reflecting rising
interest rates and the benefits of the group’s
banking activities. Consequently, net interest
income contributed £51.7 million to operating
income in 2023 (2022: £18.3 million).
While interest income increased significantly
during the year, recurring investment
management and asset management fees
(excluding IW&I fees of £70.1 million) also
reported growth, rising 2.3% to £344.7 million
due to higher FUMA which benefited from an
improvement in average market indices.
TABLE 1. GROUP’S OVERALL PERFORMANCE
Expenditure also increased, reflecting the
inflationary environment, increased headcount
and investment in our digital programme. The
increase in headcount reflects additional client
facing roles and related support in addition to
change and technology resource, including that
which is part of our preparation for delivering
the integration of IW&I. The FSCS levy reduced
by £4.6 million in 2023 as a result of one-off
factors and we expect the levy to revert to
normal levels in 2024.
Despite the increase in total expenditure
the underlying operating margin, which is
calculated as the ratio of underlying profit
before tax to operating income, improved to
22.3% (2022: 21.3%).
2023
£m
(unless stated)
IW&I
£m
(unless stated)
Rathbones
excl. IW&I
£m
(unless stated)
87.9
(62.5)
25.4
28.9%
15.0
483.2
(381.5)
101.7
21.0%
42.6
Operating income
Underlying operating expenses1
Underlying profit before tax1
Underlying operating margin1
Profit before tax
Effective tax rate
Taxation
Profit after tax
Underlying earnings per share1
Earnings per share
Dividend per share2
Return on capital employed (ROCE)1
Underlying return on capital employed1
571.1
(444.0)
127.1
22.3%
57.6
34.9%
(20.1)
37.5
135.8
52.6
87.0p
4.9%
12.1%
1. Reconciliation between the measure and its closest IFRS equivalent is shown in table 3
2. The total interim and final dividend proposed for the financial year
2022
£m
455.9
(358.8)
97.1
21.3%
64.1
23.6%
(15.1)
49.0
130.8p
83.6p
84.0p
7.7%
11.8%
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 GROUP CHIEF FINANCIAL OFFICER’S REVIEW CONTINUED
31
The development of our client lifecycle
management system has continued during the
year and is now expected to go live mid-way
through 2024, albeit with the overall cost
expected to increase from £40.0 million to
£45.0 million, as set out in our Q3 2023
statement. The Charles River Investment
Management Solution will be fully implemented
into Rathbones Asset Management in the first
half of 2024, adding functionality that will
improve investment processes and reporting
capability, that we are confident will deliver
significant operational efficiency.
Statutory profit before tax for 2023 was £57.6
million (2022: £64.1 million). The 10% reduction
(2022: 32% reduction) is driven by increased
acquisition execution and integration costs, along
with higher amortisation charges following the
IW&I transaction. The majority of the integration
costs incurred during the year relate to IW&I but
also include the final amounts payable in relation
to the Saunderson House and Speirs & Jeffrey
acquisitions, which amount to £7.8 million for
the year.
The board primarily considers underlying
measures of income, expenditure and earnings
when assessing the performance of the group.
These are considered to provide useful additional
information on business performance, rather
than reviewing results on a statutory basis only.
These measures are also widely used by research
analysts covering the group. A full reconciliation
between underlying results and the closest IFRS
equivalent is provided on page 34.
OUTLOOK AND GUIDANCE
The Group’s financial performance remains
closely linked to the behaviour of global
investment markets which, despite making
positive progress during the latter part of
2023, remain sensitive to the continued
heightened uncertainty in the economic
and geopolitical environment.
We remain focused on our key strategic priorities
to successfully integrate the IW&I and Rathbones
Investment Management businesses, complete
the migration of Saunderson House client assets
to Rathbones investment solutions, and deliver
the successful launch of our new client lifecycle
management system. The IW&I integration
project is progressing well and while this project
is planned to continue into 2025, synergy
realisation for the combination remains on
track and we continue to expect 25% of
synergies in the first full year following
completion as guided at the time of the
combination, which will benefit the group’s
profitability going forward from the point the
synergies are achieved. The one-off costs to
achieve the annualised synergies remain as
stated and will predominantly fall under
non-underlying costs over the next two years.
The operational integration of Saunderson House
and Rathbones Financial Planning is nearing
completion, with a high proportion of clients
having agreed to receive or proceed with advice
to migrate to Rathbones’ investment
propositions. £2.4 billion of FUMA has already
migrated and we now expect to complete the
migration process during Q2 2024. Assets once
migrated are expected to generate a total revenue
margin of c.1%. On a proforma basis, FUMA of
£4 billion would generate annualised revenue
of c.£40 million, split across advice, investment
management and asset management income.
As noted above and advised in the reporting of
our half year results, the costs to deliver the
client lifecycle management system increased
from £40.0 million to £45.0 million, with
£30.7 million incurred up to 31 December 2023.
The costs of the implementation project continue
to be monitored closely.
The reduction in the rate of UK inflation is
welcome and we remain focused on ensuring
a high degree of discipline in managing our cost
base to ensure we mitigate the effects of inflation
as far as possible. Employee costs in 2023
will reflect salary inflation of approximately
4% during the year plus the full impact of
recruitment activity in 2023. A lower rate of net
recruitment is expected for 2024 relative to 2023
outside of that directly related to the IW&I
integration project.
We have considered the implications for our
business of the FCA’s recent ‘Dear CEO’ letter to
platform and SIPP providers relating to interest
revenues. We consider that the FCA’s
requirement to cease the charging of fees in
respect of cash assets within a firm’s custody
which generate interest revenues is relevant to
the small element of our FUMA that is under an
execution-only mandate. We will therefore no
longer apply fees to the cash element of these
portfolios from 1 March 2024. We expect the
adverse impact on income to be small at
approximately £0.6 million per annum.
We previously guided to a high-20s underlying
operating margin for 2024, with 30%+ three
years post completion of the IW&I combination
(i.e. from September 2026). The scale and
benefits of the combined business and the
synergies that we have committed to, mean we
are well positioned to achieve our end state of
30%+ margin, albeit, the path will now be
mid-20% in 2024. The primary drivers of this
change are the continuing investment in our
digital programme and the time required to
complete the migration of Saunderson House
clients, in addition to the impact of ongoing
inflationary pressure.
The group maintains a robust financial position
and is well placed financially to support the
investment that is required to deliver on our
strategic priorities as we drive forward with our
plans during 2024.
HIGHLIGHTS:
FINANCIAL PERFORMANCE
FUMA
OPERATING MARGIN
£105.3bn 10.1%
2022: £60.2bn
2022: 14.1%
UNDERLYING ROCE1
12.1%
2022: 11.8%
EPS
52.6p
2022: 83.6p
UNDERLYING
OPERATING
MARGIN¹
22.3%
2022: 21.3%
DIVIDEND
PER SHARE
87p
2022: 84p
UNDERLYING EPS¹
CET1 RATIO
135.8p
2022: 130.8p
17.8%
2022: 17.9%
1. This measure is considered an APM. Please refer
to page 34 for more details on APMs
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 GROUP CHIEF FINANCIAL OFFICER’S REVIEW CONTINUED
FINANCIAL PERFORMANCE
BUSINESS PERFORMANCE: FUNDS UNDER MANAGEMENT AND ADMINISTRATION
(FUMA)
Total group FUMA at 31 December 2023 was £105.3 billion (2022: £60.2 billion). The increase during
the year is driven predominantly by the addition of £40.8 billion of IW&I FUMA from 30 September
2023, following the completion of the combination with IW&I during the year. Based on a pro forma
opening position of £101.0 billion, FUMA has increased by 4.3% during the year from an opening
position of £101.0 billion (Table 2) despite challenging market conditions that have placed adverse
pressure on net flows.
Rathbones discretionary and managed net inflows of £0.7 billion reflect gross inflows of £5.1 billion,
an increase of 18.6% relative to 2022, as the business continued to drive strong levels of new
business despite the difficult economic backdrop. In total, net flows relating to Rathbones
discretionary and managed FUMA represented an annual rate of growth of 1.5% (2022: 2.6%), with
the reduction relative to the prior year being the result of higher gross outflows offsetting the higher
level of gross inflows. In addition to net flows, discretionary and managed FUMA benefited from the
continued migration of Saunderson House client assets into Rathbones investment solutions.
Gross outflows were elevated throughout the year. Rathbones Investment Management outflows of
£3.8 billion (2022: £2.6 billion) reflected the effect of higher inflation and interest rates, as existing
clients prioritised reducing debt and meeting cost of living pressures. The increase in outflows is
therefore principally driven by partial withdrawals by existing clients and not client losses, but does
reflect the loss of two large charity mandates during the year. Direct net flows into our multi-asset
fund range, including that which is managed as part of Investment Management portfolios, remained
robust, reflecting the diversification and efficient offering these funds provide for smaller portfolios.
IW&I has contributed £0.8 billion of gross inflows during the final quarter of the year following
completion of the combination. These inflows were offset by elevated gross outflows, resulting in net
outflows for the period of £0.3 billion. The level of gross outflows reflects both the market backdrop,
consistent with the Rathbones discretionary and managed FUMA, along with expected outflows
relating to investment manager departures that predominantly occurred prior to the announcement
of the combination. Since then, investment manager turnover has been low, supported by positive
engagement as our integration work progresses.
The general backdrop for the asset management industry has been challenging during 2023, with
substantial withdrawals from UK funds being seen across the industry. Our single strategy funds
were not immune from this backdrop but showed relative resilience with net outflows of £0.5 billion
for the year (2022: £0.4 billion outflow), representing 8.5% of opening FUMA. Investment returns for
these funds were relatively strong during the year, resulting in total FUMA remaining relatively
consistent year-on-year at £6.7 billion (2022: £6.5 billion).
32
Table 2 presents separately the FUMA and associated movements in those services and products
which support our wealth management propositions. Wealth management FUMA incorporates
our core bespoke discretionary portfolio and managed portfolio services. It also includes direct
sales into our range of risk-targeted multi-asset funds, which are designed to be used as wealth
management solutions for both our direct clients and those of investment platforms and financial
advisers. Asset management FUMA includes our focused range of specialist ‘single-strategy’ funds,
which are designed to act as individual holdings within investment portfolios.
TABLE 2. GROUP FUMA AND FLOWS BY SERVICE LEVEL ON PROFORMA BASIS1
Year ended
31 December 2023
Rathbones
Investment
Management
Bespoke
portfolios
Managed via
in-house funds
Multi-asset funds
Rathbones
discretionary
and managed
Non-discretionary
service
IW&I1
Saunderson
House
Total wealth
management
Single-strategy
funds
Execution only
and banking
Opening
FUMA-
pro
forma
basis
£bn
Gross
inflows
£bn
Gross
outflows
£bn
Net
flows
£bn
Transfers
£bn
SHL
migrated
assets
£bn
Market &
investment
performance
£bn
Closing
FUMA
£bn
Net
growth
(flows)
%
44.3
4.2
(3.8)
0.4
(0.2)
2.4
1.9
48.8
0.9%
42.9
3.8
(3.5)
1.4
2.2
0.4
0.9
(0.3)
(0.6)
0.3
0.1
0.3
(0.9)
0.7
−
1.1
1.3
−
1.6
45.0
0.6%
0.3
−
3.8
2.5
10.1%
13.8%
46.5
5.1
(4.4)
0.7
(0.2)
2.4
1.9
51.3
1.5%
0.7
40.8
4.1
92.1
6.5
2.4
0.1
0.8
0.1
6.1
1.3
0.3
7.7
(0.1)
(1.1)
(0.0)
(0.3)
(0.1)
(0.1)
−
−
(0.5)
(0.4)
−
(2.4)
(6.1)
(0.0)
(0.4)
(1.8)
(0.5)
(0.6)
(0.3)
(8.5)
(0.8)
−
0.4
–
–
−
−
–
0.1
1.9
0.3
0.7
42.3
(2.9%)
(0.8%)
1.6
(9.5%)
4.2
95.9
(0.0%)
0.7
0.2
5.1
6.7
(8.5%)
2.7 (10.4%)
105.3
(0.8%)
Total group
101.0
1. 2023 Group FUMA and flows by service level has been prepared on a proforma basis, opening FUMA has been uplifted by
£40.8 billion to include IW&I FUMA acquired with effect from 30 September
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 GROUP CHIEF FINANCIAL OFFICER’S REVIEW CONTINUED
FINANCIAL PERFORMANCE CONTINUED
33
Opening
FUMA
£bn
Gross
inflows
£bn
Gross
outflows
£bn
Net
flows
£bn
Transfers
£bn
SHL
migrated
assets
£bn
Market &
investment
performance
£bn
Closing
FUMA
£bn
Net
growth
(flows)
%
OPERATING EXPENSES
Operating expenses of £513.5 million (2022: £391.8 million) comprise underlying operating
expenses discussed below, together with non-underlying operating expenses discussed on page 34.
Year ended 31
December 2022
Rathbones
Investment
Management
Bespoke
portfolios
Managed via
in-house funds
Multi-asset funds
Rathbones
discretionary
and managed
Non-discretionary
service
Saunderson
House
Total wealth
management
Single-strategy
funds
Execution only
and banking
Total group
68.2
49.3
3.5
(2.6)
0.9
(0.2)
48.0
1.3
2.0
3.3
0.2
0.8
(2.5)
0.8
(0.3)
(0.1)
(0.4)
0.1
0.4
0.1
−
51.3
4.3
(3.0)
1.3
(0.2)
1.0
4.9
0.0
0.3
(0.1)
(0.1)
(0.1)
(0.5)
(0.2)
(0.0)
57.2
4.6
(3.6)
1.0
(0.3)
8.3
2.7
1.7
(2.1)
(0.4)
0.2
6.5
(0.4)
(6.1)
(0.2)
0.4
−
0.3
–
−
−
−
−
–
−
−
–
−
−
–
(5.7)
44.3
1.9%
(5.6)
42.9
1.6%
(0.1)
(0.2)
1.4
2.2
10.3%
20.0%
(5.9)
46.5
2.6%
(0.1)
0.7
(7.4%)
(0.6)
4.1
(4.9%)
(6.6)
51.3
(8.9%)
(1.4)
6.5
(4.5%)
(0.4)
2.4
(9.0%)
(8.4)
60.2
0.6%
OPERATING INCOME
Operating income increased by £115.2 million in 2023 to £571.1 million, predominantly due to the
IW&I business contributing £87.9 million of income for the final quarter of the financial year
following completion of the combination.
Excluding IW&I, the increase in total income is largely driven by higher interest revenues, reflecting
the rising interest rate environment during the year and the benefit of the group’s banking activities.
Recurring investment management fees and asset management income benefited from higher
average markets and the continued migration of Saunderson House client assets into Rathbones
investment solutions, which moved this income £7.7 million (2.3%) higher. This was offset by a short
term reduction in Saunderson House advice income during the client migration process and lower
transaction-based investment management commission income, as the trend towards cleaner
fee-only charges continued.
Underlying operating expenses increased by £85.2 million (23.7%) to £444.0 million (2022:
£358.8 million). £62.5 million of this increase is due to IW&I costs incurred since completion of the
combination, consisting of £29.4 million fixed staff costs, £14.3 million variable compensation, and
£18.8 million non-staff costs.
Underlying operating expenses excluding IW&I increased by 6.3% to £381.4 million (2022: £358.8
million). Underlying staff costs in the year (excluding IW&I), increased by £24.3 million to £269.9
million (2022: £245.6 million). Some £13.2 million of this increase is the result of higher average
headcount (excluding that relating to Saunderson House and staff engaged on digital capability).
Salary inflation increased costs by £7.3 million. The balance of the increase reflects the effect of
inflation on other staff-related costs and other specific factors.
Year-on-year decreases in spend within Saunderson House and the strategic investment in
developing our digital capability was partially offset an increase of £4.8 million (2022: £18.0 million
increase) in non-staff costs excluding IW&I. The cost base of the Saunderson House business
decreased by £3.2 million in 2023 due to the delivery of cost synergies and a reduction in the
Saunderson House FSCS levy. The remainder of the group also benefited from a one-off reduction
in the FSCS levy, which reduced by £4.6 million for the group overall relative to 2022 prior to an
expected return to normal levels in 2024. Strategic investment in developing our digital capability
was £1.9 million lower than prior year at £14.4 million (2022: £16.3 million). The Charles River
Investment Management Solution was successfully launched in the Rathbones Asset Management
business during the year. The development of our client lifecycle management system has continued
during the year and is now expected to go live mid-way through 2024, albeit with the overall cost
expected to increase from £40.0 million to £45.0 million, as set out in our Q3 2023 statement.
Rathbones average headcount rose by 21.7% to 2,498 (2022: 2,053) (see note 10). Rathbones
headcount excluding IW&I rose by 5.8% to 2,173 in 2023 (2022: 2,053), reflecting additional client
facing roles and related support in addition to recruiting further change and technology resource,
including that which is part of our preparation for delivering the integration of IW&I.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 GROUP CHIEF FINANCIAL OFFICER’S REVIEW CONTINUED
FINANCIAL PERFORMANCE CONTINUED
34
TABLE 3. RECONCILIATION OF UNDERLYING PERFORMANCE MEASURES TO CLOSEST EQUIVALENT
IFRS MEASURES
2023 comprises
ALTERNATIVE PERFORMANCE MEASURES
Alternative Performance Measures (APMs) are a financial measure of historical or future financial
performance, financial position, or cash flow, other than a financial measure under IFRS.
2023
£m
(unless stated)
IW&I
£m
(unless stated)
Rathbones
excl. IW&I
£m
(unless stated)
2022
£m
(unless stated)
Operating income
Underlying operating expenses
Underlying profit before tax1
Charges in relation to client relationships
and goodwill
Acquisition-related and integration costs
Profit before tax
Taxation
Profit after tax
Operating margin
Underlying operating margin2
Weighted average number of shares in issue
Earnings per share (p)
Underlying earnings per share (p)3
Quarterly average total equity
Underlying quarterly average total equity4
ROCE5
Underlying ROCE6
571.1
(444.0)
127.1
(25.2)
(44.3)
57.6
(20.1)
37.5
10.1%
22.3%
71.3m
52.6
135.8
787.9
798.5
4.9%
12.1%
87.9
(62.5)
25.4
(6.3)
(4.1)
15.0
483.2
(381.5)
101.7
(18.9)
(40.2)
42.6
455.9
(358.8)
97.1
(19.5)
(13.5)
64.1
(15.1)
49.0
14.1%
21.3%
58.6m
83.6
130.8
632.7
650.4
7.7%
11.8%
1. Operating income less underlying operating expenses
2. Underlying profit before tax as a percentage of operating income
3. Underlying profit after tax divided by the weighted average number of shares in issue
4. Quarterly average equity adjusted for underlying operating expenses
5. Profit after tax as a percentage of quarterly average total equity
6. Underlying profit after tax as a percentage of underlying quarterly average total equity
CHARGES IN RELATION TO CLIENT RELATIONSHIPS AND GOODWILL (NOTE 22)
As explained in notes 1.14 and 2.1, client relationship intangible assets are recognised when we
acquire a business or investment management contracts as a result of the recruitment of experienced
investment managers who have the capability to attract significant FUMA to the group.
These intangible assets are amortised over the expected duration of the respective client
relationships. The amortisation is charged to the income statement each year. This represents a
significant non-cash profit and loss item which is therefore excluded from underlying profit in order
to present an alternative measure that represents largely cash-based results of the financial reporting
period. These amortisation charges are therefore excluded from underlying profit, which otherwise
represents largely cash-based earnings and more directly relates to the financial reporting period.
Research analysts commonly exclude these amortisation costs when comparing the performance
of firms in the wealth management industry.
ACQUISITION-RELATED AND INTEGRATION COSTS (NOTE 9)
Acquisition and integration-related costs are significant non-recurring costs that arise from strategic
investments to grow the business rather than from the business’ operating activities and are therefore
excluded from underlying results.
These costs primarily comprise professional fees directly related to the execution of the relevant
transaction, certain elements of deferred consideration that are conditional upon continuing
employment with the group and the costs of integrating the acquired businesses with those of the
existing group.
Deferred consideration costs are generally significant payments that form part of the total
consideration payable under the terms of the acquisition agreement and are considered to be capital
in nature, reflecting the cost to acquire the business and the transfer of its ownership. However, in
accordance with IFRS 3, any deferred consideration that is payable to former shareholders of the
acquired business who are required to remain in employment with the group must be treated as
remuneration and are therefore expensed to the income statement over the period to which the
employment condition applies.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
35
BASIC EARNINGS PER SHARE
Basic earnings per share for the year ended 31 December 2023 were 52.6p (2022: 83.6p). The
decrease in the year reflects the impact of the IW&I combination costs on statutory profit after tax,
the increase in the statutory rate of tax and the increased number of shares in issue.
On an underlying basis, basic earnings per share were 135.8p in 2023, compared to 130.8p in 2022
(see note 13). The increase in the year is due to increased underlying profit after tax that has been
partially offset by the increased number of shares and the increase in the statutory rate of tax.
RETURN ON CAPITAL EMPLOYED
The board monitors the underlying return on capital employed (ROCE) as a key performance
measure. For monitoring purposes, underlying ROCE is defined as underlying profit after tax
expressed as a percentage of underlying quarterly average total equity across the year.
Assessment of underlying return on capital is a key consideration for all investment decisions,
particularly in relation to acquired growth.
In 2023, underlying ROCE was 12.1% (2022: 11.8%). Underlying quarterly average total equity
increased by £148.1 million in 2023 compared to 2022, reflecting the share issue for the IW&I
combination with effect from the fourth quarter.
GROUP CHIEF FINANCIAL OFFICER’S REVIEW CONTINUED
FINANCIAL PERFORMANCE CONTINUED
During 2023, £3.9 million of deferred consideration payments (2022: £6.5 million) and £2.9 million
of integration costs (2022: £3.4 million) were charged to the income statement in relation to the
acquisition of Saunderson House. In addition, £1.0 million of deferred consideration payments
were charged to the income statement in relation to the acquisition of Speirs and Jeffery (2022:
£3.5 million).
During 2023, £36.5 million of acquisition and integration costs have been incurred as a result of the
IW&I transaction. This comprised £21.3 million of one-off legal and professional costs relating to the
execution of the transaction, £6.2 million of costs relating to awards made to key employees of the
business, and £9.0 million of integration costs, which form part of the total expected costs to deliver
the integration and achieve the related synergies.
ACQUISITION RELATED PROPERTY COSTS (NOTE 9)
As part of the process of integrating IW&I with the existing Rathbones group, it is expected that
some leasehold properties will be vacated earlier than their respective lease expiry dates. The useful
lives of these properties’ right-of-use assets and their fixtures and fittings were revised to reflect the
expected exit dates. Consequently, the assets’ residual values were calculated and their depreciable
amounts were restated during the year. The assets were also reviewed for impairment at 31
December 2023 to determine whether their carrying amounts could be supported by their
recoverable amounts. As a result, the group recognised £4.5 million in relation to accelerated
depreciation and impairment charges on property assets during the year. These costs represent
additional non-recurring costs in excess of the normal ongoing operating costs incurred in relation to
the group’s properties and were recognised as non-underlying operating expenses, and are therefore
not included within underlying operating profit. They form part of the total acquisition and
integration costs of £36.5 million referred to above.
TAXATION
The corporation tax charge for 2023 was £20.1 million (2022: £15.1 million) (see note 11). The
effective tax rate increased to 34.9% in 2023 (2022: 23.5%), this reflected the increase in the average
statutory rate to 23.5% (2022: 19.0%) and the impact of disallowable legal and professional costs
incurred in relation to the IW&I transaction.
In 2024, we expect the effective tax rate to return to 4 to 5 percentage points above the statutory
rate (reflecting disallowable costs for deferred consideration payments (see note 2.3), as the impact
of IW&I disallowable expenses experienced in 2023 will not be repeated given these costs are
non-recurring.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 SEGMENTAL REVIEW
The group operates through two segments: Wealth Management and Asset Management.
TABLE 4. RECONCILIATION OF SERVICE LEVELS TO SEGMENTAL PRESENTATION AS AT
31 DECEMBER 2023
Wealth
Management
FUMA
(including
intra-group
holdings)
£bn
Intra-group
holdings1
£bn
Wealth
Management
FUMA
£bn
Asset
Management
FUMA
£bn
Rathbones Investment
Management
Bespoke portfolios
Managed via in-house funds
Multi-asset funds
Rathbones discretionary and
managed
Non-discretionary service
IW&I
Saunderson House
Total wealth management
Single-strategy funds
Execution only and banking
Total group
48.8
45.0
3.8
−
48.8
0.7
42.3
1.6
93.4
−
2.7
96.1
(4.3)
(0.6)
(3.7)
−
(4.3)
–
−
(0.3)
(4.6)
−
−
(4.6)
44.5
44.4
0.1
−
44.5
0.7
42.3
1.3
88.8
−
2.7
91.5
1. Intra-group holdings represent in-house funds held within an Investment Management portfolio
4.3
0.6
3.7
2.5
6.8
−
−
0.3
7.1
6.7
−
Group
FUMA
£bn
48.8
45.0
3.8
2.5
51.3
0.7
42.3
1.6
95.9
6.7
2.7
WEALTH MANAGEMENT
The activities of the group are described in detail on pages 2 to 5. The Wealth Management segment
comprises those activities described under the headings ‘Investment Management’, ‘Financial
Planning and Advice’ and ‘Complementary services’ on page 2. The results of the Wealth
Management segment described below include the trading results of Rathbones Investment
Management, Rathbones Trust Company, Vision Independent Financial Planning, Saunderson
House and IW&I.
Wealth Management income is largely driven by revenue margins earned from FUMA. Revenue
margins are expressed as a basis point return, which depends on a mix of tiered fee rates,
commissions charged for transactions undertaken on behalf of clients and the interest margin
earned on cash in client portfolios and client loans.
36
FUNDS UNDER MANAGEMENT AND ADMINISTRATION
Year-on-year changes in the key performance indicators for Wealth Management are shown in table 5
(which incorporates IW&I in 2023). Total Wealth Management FUMA increased by 86.0% to £91.5
billion as at 31 December 2023. The majority of this increase was driven by the combination with
IW&I, which added £40.8 billion to the Group’s FUMA from 30 September 2023 following completion
of the combination. Excluding the acquired IW&I FUMA, Wealth Management FUMA has increased
by 3.0% during the year.
CHART 1. WEALTH MANAGEMENT – NUMBER OF CLIENTS AND INVESTMENT MANAGERS
23
23
22
22
21
21
69.0
45.2 114.2
67.7
66.5
379
302 681
352
332
Number of investment managers
Number of investment management clients (’000)
Incremental uplift from IW&I
TABLE 5. WEALTH MANAGEMENT – KEY PERFORMANCE INDICATORS
13.8
105.3
FUMA at 31 December
Rate of total net growth (net flows) in Wealth Management funds under
management and administration1
Average net operating basis point revenue margin2
Number of Investment Management clients3
Number of investment managers
2023
2022
£91.5bn
£49.2bn
0.3%
1.2%
74.3bps
72.4 bps
114
681
68
355
1. See table 6 (percentages calculated on unrounded figures)
2. See table 10
3. The basis of this calculation is dependent on the way client data is structured on the relevant operating systems. It is therefore
not practicable to apply consistent methodologies across the RIM and IW&I businesses until the migration onto a single system
has been completed. We expect the number to change following migration, but consider the figure disclosed to be appropriate
in the interim period
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 37
Saunderson House FUMA stood at £1.3 billion at 31 December 2023 (2022: £4.1 billion). The
reduction during the year reflects the continuing progress that has been made to migrate Saunderson
House clients into Rathbones investment solutions. Once migrated, this FUMA is included with
Wealth Management or Asset Management FUMA depending on the proposition that the FUMA has
moved to. At the year end, FUMA on Vision Independent Financial Planning’s discretionary wealth
management platform that was not managed by the group (and is not therefore included in the
Group’s FUMA) totalled £0.9 billion (2022: £0.8 billion).
Table 7 (overleaf) provides an analysis of FUMA and new business by channel and service level.
Growth in discretionary and managed net flows is driven by interactions through financial adviser
networks, helped by the impact of Saunderson House new business flows. £2.4 billion of assets were
migrated from Sanderson House in 2023 and the remaining £1.3 billion of assets are expected to be
migrated in 2024.
Switches into execution-only services largely reflect the transfer of clients' funds into probate
following their death (£0.4 billion).
IW&I net outflows of £0.3 billion include the effect of expected outflows related to investment
manager departures that predominantly occurred prior to the announcement of the combination.
Since then, investment manager turnover has been low.
SEGMENTAL REVIEW CONTINUED
TABLE 6. WEALTH MANAGEMENT – FUNDS UNDER MANAGEMENT AND ADMINISTRATION
As at 1 January
Inflows
— organic1
— acquired2
Outflows
Market movement3
Total group
Rate of total net growth4
Year ended
31 December
2023
£bn
Year ended
31 December
2022
£bn
49.2
46.3
5.5
40.8
(6.1)
2.1
91.5
0.3%
55.2
4.1
4.0
0.0
(3.7)
(6.3)
49.2
1.2%
1. Value at the date of transfer in/(out)
2. Value at date of acquisition, includes £42.3 billion IW&I FUMA acquired with effect from 30 September 2023
3. Represents the impact of market movements and investment performance
4. Net new business and acquired inflows as a percentage of opening funds under management and administration
excluding SHL and IWI
Table 6 reconciles the movement in FUMA during the year. Organic inflows of £5.5 billion, 11.2%
of opening FUM are dominated by flows into discretionary bespoke portfolios, with 33% of flows
coming from the adviser channel as our revised ‘Reliance on Adviser’ proposition rolled out (2022:
30.6%). 'Reliance on Adviser' is an operating model with which financial advisers can engage with
RIM. It is an approach whereby client suitability rests with the adviser, affording them total control
over their client relationship and the advice process. Our investment managers retain responsibility
for the suitability of the portfolio and for executing the mandate that has been requested by the
adviser on the client's behalf. Outflows of £6.1 billion, representing 12.4% of opening FUM are
elevated as a result of market conditions, with existing clients making partial withdrawals of their
investments to repay debt (which has become increasingly expensive in the environment of higher
interest rates) and meet the higher cost of living, along with those relating to property purchases
and inheritance tax planning. In addition, outflows also reflect the loss of two large charity mandates
during the year.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 SEGMENTAL REVIEW CONTINUED
38
TABLE 7. WEALTH MANAGEMENT – NEW BUSINESS BY CHANNEL ON A PROFORMA BASIS1
Opening FUMA
- pro forma basis
£bn
Gross
inflows
£bn
Gross
outflows
£bn
Net flows
£bn
Transfers
£bn
SHL migrated
FUMA
£bn
Market
movement &
performance
£bn
2023
Gross closing
£bn
2023
Intra-group
holdings²
£bn
2023
Net closing
FUMA
£bn
2022
Net FUMA
£bn
Bespoke portfolios
Managed via in-house funds
Total direct
Bespoke portfolios
Managed via in-house funds
Total financial adviser linked
Total discretionary and managed
Execution only and banking
Non-discretionary service
Total wealth management
Saunderson House
IW&I
Total Wealth Management for
enlarged group
33.0
0.7
33.7
9.9
0.7
10.6
44.3
2.4
0.7
47.4
4.1
40.8
92.3
2.6
0.1
2.7
1.2
0.3
1.5
4.2
0.3
0.1
4.6
0.1
0.8
5.5
(2.7)
(0.1)
(2.8)
(0.8)
(0.2)
(1.0)
(3.8)
(0.6)
(0.1)
(4.5)
(0.5)
(1.1)
(0.1)
−
(0.1)
0.4
0.1
0.5
0.4
(0.3)
−
0.1
(0.4)
(0.3)
(0.9)
0.6
(0.3)
(0.1)
0.2
0.1
(0.2)
0.4
(0.1)
0.1
−
(0.1)
(6.1)
(0.6)
–
−
−
–
1.1
1.3
2.4
2.4
−
−
2.4
(2.4)
−
–
1.0
0.1
1.1
0.7
0.1
0.8
1.9
0.2
0.1
2.2
0.3
1.9
4.4
33.0
1.4
34.4
12.0
2.4
14.4
48.8
2.7
0.7
52.2
1.6
42.3
−
−
–
−
−
–
(4.3)
−
−
(4.3)
(0.3)
−
−
−
–
−
−
–
44.5
2.7
0.7
47.9
1.3
42.3
96.1
(4.6)
91.5
−
−
−
−
−
−
42.0
2.4
0.7
45.0
4.1
−
49.1
1. 2023 Group FUMA and flows by service level has been prepared on a proforma basis, opening FUMA has been uplifted by £40.8 billion to include IW&I FUMA acquired as at 30 September
2. Holdings of the group’s in-house funds in Investment Management client portfolios and in-house funds for which the management of the assets is undertaken by Investment Management teams; the corresponding FUMA is reported within Funds
The high inflation rates experienced in 2022 continued into 2023, resulted in Rathbones adopting a
cautious approach on bonds, with a preference for shorter-dated debt less sensitive to changes in
interest rate expectations.
Rathbone Financial Planning also saw a strong year in 2023, increasing revenues by 18% from 2022,
and growing FUMA to £2.0 billion as at 31 December 2023 (31 December 2022: £1.6 billion).
From September we became much more optimistic on longer-dated government bonds, particularly
east of the Atlantic and, indeed, bond markets have rallied strongly as they look ahead to rate cuts in
2024 following a plunge in key measures of inflation in the UK and Eurozone.
Overall, 2023 was another strong year for our specialist teams. Greenbank Investments continued to
grow its net new business by 3.3%, despite the difficult market, and reached FUMA of £2.1 billion at
31 December 2023 (2022: £1.9 billion). The Personal Injury and Court of Protection business ended
2023 with £1.3 billion of FUMA (2022: £1.0 billion).
Vision Independent Financial Planning grew well in 2023, advising on client assets of £3.3 billion at
the year end (2022: £2.6 billion), and seeing a net growth in the network of IFAs to 138 at the year
end (2022: 130).
Saunderson House has made significant progress in migrating assets to the new Rathbones'
proposition. £2.7 billion of Saunderson House clients' assets are now invested in Rathbones' products
(2022: £63 million), with £1.3 billion (2022: £4.1 billion) of assets remaining under management by
Saunderson House at year end. It is expected that the migration process will be completed by the end
of June 2024.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 SEGMENTAL REVIEW CONTINUED
FINANCIAL PERFORMANCE
Underlying profit before tax in Wealth Management increased by 49.1% in the year to £105.4 million,
this represents an underlying operating margin of 20.9% (2022: 18.0%), which, when adjusted to
exclude £14.4 million of operating expenses incurred in relation to the delivery of digital strategy,
rises to 23.8% (2022: 22.1%).
Net investment management fee income increased by £75.2 million (27.4%) in 2023. £70.1 million of
the increase is attributable to the effect of the IW&I combination in the final quarter of 2023. The
remaining £5.1 million uplift is due to higher FUMA in the Wealth Management segment excluding
IW&I, reflecting the benefit of new revenues generated from the migration of Saunderson House
funds and the favourable market movement, with the average level of the MSCI PIMFA Balanced
index at the quarterly billing dates being 2.2% higher than the prior year.
Net commission income increased by 9.6% to £53.6 million (2022: £48.9 million). A £9.4 million
uplift in commission income as a result of the IW&I combination has been partially offset by a
reduction of £4.7 million in the Wealth Management segment excluding IW&I commission income
due to the continued movement towards a fee-only basis of charging, which is increasingly replacing
transaction-based commission charges.
The increase in the Bank of England Base Rate from 3.5% at the start of 2023 to 5.25% by December
2023 contributed an additional £32.1 million to net interest income in the year. The rates of interest
payable to clients in respect of the cash element of their portfolios also increased significantly during
the year as we ensured our interest rates remained competitive. However, the overall increase in our
net interest margin illustrates the benefit of our banking permissions.
Fees from advisory services and other income fell by 2.1% to £50.3 million. Fees from advisory and
other services excluding IW&I fell by 15.8% (2022: 88.3% increase). This expected reduction was
partially offset by £7.0 million of other income from IW&I, as advice fees to Saunderson House clients
were suppressed during the period in light of the extent to which advice was related to the migration
process. We expect advice fee levels relating to Saunderson House clients to recover once the
migration of assets has been completed.
Underlying operating expenses during the year were £398.5 million (see table 11); an increase of
23.6% on the prior year. When adjusted for Q4 IW&I underlying expenses of £62.5 million, the
year-on-year increase in underlying expenses for the Wealth Management segment excluding IW&I
is £13.7 million (2022: £47.8 million). An £8.3 million increase in fixed staff costs (2022: £20.2
million) was partially offset by a reduction of £3.0 million (2022: £5.0 million increase) in variable
staff costs due to a number of profit share schemes vesting in 2022. Other operating expenses of
£154.2 million (2022: 145.9 million) include property, depreciation, settlement, IT, finance and
other central support services.
39
TABLE 8. WEALTH MANAGEMENT – FINANCIAL PERFORMANCE
Net investment management fee income1
Net commission income
Net interest income
Fees from advisory services2 and other income
Operating income
Underlying operating expenses3 4
Underlying profit before tax
Underlying operating margin5
2023 Comprises
2023
£m
350.1
53.6
49.9
50.3
503.9
(398.5)
105.4
20.9%
IW&I
£m
70.1
9.4
1.4
7.0
87.9
(62.5)
25.4
28.9%
Rathbones
excl. IW&I
£M
280.0
44.2
48.5
43.3
416.0
(336.0)
80.0
19.2%
2022
£m
274.8
48.9
17.8
51.4
392.9
(322.3)
70.7
18.0%
1. Net investment management fee income is stated after deducting fees and commission expenses paid to introducers
2. Rathbones excl. IW&I Fees from advisory services includes income from trust, tax and financial planning services
(including Vision and Saunderson House)
3. See table 11
4. Included within underlying operating expenses are £14.4 million of costs relating to the group’s digital strategy, of which
£1.6 million relates to asset management
5. Underlying profit before tax as a percentage of operating income. Excluding £14.4 million of expenditure on our digital
strategy in the year, the underlying operating margin was 23.8%
TABLE 9. WEALTH MANAGEMENT – AVERAGE FUNDS UNDER MANAGEMENT AND ADMINISTRATION
Valuation dates for billing
— 5 April
— 30 June
— 30 September
— 31 December
Quarterly average1
Average MSCI level2
IW&I
Valuation dates for billing
— 30 November
Average MSCI level2
2023
£bn
45.7
45.4
45.4
48.0
46.1
2022
£bn
47.9
43.8
43.2
45.1
45.0
1,721
1,684
2023
£bn
40.7
1,700
2022
£bn
−
−
1. Rathbones quarterly average FUMA excluding Saunderson House and IW&I
2. MSCI PIMFA Balanced Index considered to reflect Rathbones' composition of portfolios most closely. Based on the corresponding
valuation dates for billing
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 SEGMENTAL REVIEW CONTINUED
40
TABLE 10. WEALTH MANAGEMENT – REVENUE MARGIN
Basis point return1 from:
— fee income
— commission
— interest
Basis point return on FUMA
2023
£m
61.5
9.5
3.3
74.3
2022
£m
61.1
10.8
0.5
72.4
ASSET MANAGEMENT
The financial performance of the Asset Management segment is principally driven by the value of
FUM. Year-on-year changes in the key performance indicators for asset management are shown in
table 12.
FUNDS UNDER MANAGEMENT
Following the challenging trading conditions in 2022, 2023 continued to be a tough environment
for the industry. Net redemptions in the asset management industry to 30 November 2023 totalled
£41.6 billion (£49.7 billion in the full year to December 2022), as reported by the Investment
Association (IA), albeit mainly in the institutional space. Industry-wide funds under management
grew by only 1.5% to £1.4 trillion at the end of November 2023.
1. Operating income (see table 8), excluding interest on own reserves, interest payable on Tier 2 notes issued, interest payable on
lease assets, fees from advisory services and other income, divided by the average funds under management and administration
on the quarterly billing dates (see table 9)
Other operating expenses of £173.1 million include property, depreciation, settlement, IT, finance
and other central support services costs (2022: £145.9 million).
The basis point return on fund under management and administration for the Wealth Management
segment excluding IW&I increased by 0.5bps in the year to 72.9bps, this is predominately due to the
increase in interest income, offset by lower commission as a higher proportion of clients have
migrated to fee-only rates.
TABLE 11. WEALTH MANAGEMENT – UNDERLYING OPERATING EXPENSES
Staff costs1
— fixed
— variable
Total staff costs
Other operating expenses
Underlying operating expenses
Underlying cost/income ratio2
2023
£m
147.2
78.2
225.4
173.1
398.5
79.1%
2022
£m
109.5
66.9
176.4
145.9
322.3
82.0%
1. Represents the costs of investment managers and teams directly involved in client-facing activities
2. Underlying operating expenses as a percentage of operating income (see table 8)
Gross inflows in Rathbones Asset Management improved 48% from £3.1 billion to £4.6 billion in
2023, with Saunderson House assets migrating into Rathbones funds responsible for a large part of
this growth. Continued investor concerns over inflation, interest rates and equity market valuations
have driven cautious investor sentiment. Despite these macroeconomic impacts on investor
confidence, our range of funds, well balanced between multi-asset and single-strategy, has helped
serve our clients’ changing needs and provided some shelter from the market volatility for our overall
FUM. The diverse nature of our multi-asset investment mix, and thus its obvious continuing appeal
to clients in these tougher times, has ensured that positive net flows have continued to stream into
these funds, creating some offset for the outflows experienced in the single-strategy space.
Investors continue to exhibit an elevated propensity for withdrawing some of their investable assets
to pay down debt, which has become increasingly expensive, and meet rising costs of living. These
factors have led to a continuation of the elevated gross outflows experienced in 2022. Strong gross
flows, leading to positive net flows in Multi-asset funds and favourable investment performance
offsetting net outflows in single strategy funds, ensured total funds under management grew to a
record high of £13.8 billion at the end of 2023, an increase of 25.5% during the year (see table 14).
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
SEGMENTAL REVIEW CONTINUED
41
TABLE 12. ASSET MANAGEMENT – KEY PERFORMANCE INDICATORS
CHART 2. FUNDS – ANNUAL NET FLOWS (£M)
FUM at 31 December1
Rate of net growth in Asset Management FUM1
Underlying profit before tax2
1. See table 14
2. See table 16
2023
£13.8bn
13.7%
£21.7m
2022
£11.0bn
0.4%
£26.4m
TABLE 13. ASSET MANAGEMENT – FUNDS UNDER MANAGEMENT BY PRODUCT
48
23
22
21
20
19
1,511
1,498
2,076
943
Rathbone Global Opportunities Fund
Rathbone Multi-Asset Portfolios
Rathbone Ethical Bond Fund
Rathbone Income Fund
Offshore funds
Rathbone Active Income Fund for Charities
Rathbone High Quality Bond Fund
Greenbank Multi-Asset Portfolios
Other funds1
Rathbone Core Investment Fund for Charities
Rathbone Strategic Bond Fund
Rathbone Global Sustainability Fund
Rathbone UK Opportunities Fund
2023
£bn
2022
£bn
3.6
5.3
2.2
0.7
0.6
0.2
0.2
0.4
0.1
0.2
0.1
0.1
0.1
3.4
3.0
2.2
0.7
0.6
0.2
0.2
0.2
0.2
0.1
0.1
0.1
−
1. £213 million of ‘Bespoke’ other funds transferred out during 2022 post the switch of Authorised Corporate Director (ACD)
from Rathbones Asset Management Limited to Evelyn Partners, an independent ACD
13.8
11.0
Despite adverse market conditions, Rathbones featured in the Pridham Report industry top ten
for net retail sales in all 4 quarters of 2023 as well as fifth for net retail sales in the full year.
Volatility managed funds (multi-asset portfolios) were the IA’s top net seller in the year up to
November 2023 with £5.8 billion of net sales and this trend was mirrored in Rathbones which
accounted for 33% of the industry total, with net sales in the year, totalling £1.9 billion in the year
to November 2023 and £2.1 billion in the full year, up £1.4 billion when compared to 2022.
Rathbones largest fund, Rathbone Global Opportunities Fund, saw a net £305 million outflow over
the course of the year.
Rathbone Ethical Bond Fund also suffered from net redemptions in the year (£187 million), due to
the market uncertainty brought on by the volatility in bond yields. Both funds, however, delivered
positive market returns in the year ensuring that, overall, both funds grew year-on-year.
The Ethical Bond and Global Opportunities funds maintained their excellent industry long-term
track performance records and both finished the year in the first quartile for performance measured
over five years, which is a key factor in investors’ decision-making.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 SEGMENTAL REVIEW CONTINUED
42
During the year, the total number of investment professionals running the funds reduced by one to
23 at 31 December 2023 (2022: 24).
TABLE 15. ASSET MANAGEMENT – PERFORMANCE1, 2, 4
TABLE 14. ASSET MANAGEMENT – FUNDS UNDER MANAGEMENT
As at 1 January
Net inflows
— inflows1
— outflows1
— Bespoke2
Market adjustments3
As at 31 December
Rate of net growth4
2023
£bn
11.0
1.5
4.6
(3.0)
–
1.3
13.8
13.7%
2022
£bn
13.0
−
3.1
(2.9)
(0.2)
(2.0)
11.0
0.4%
1. Valued at the date of transfer in/(out)
2. Bespoke funds transferred out during 2022 post the switch of Authorised Corporate Director ('ACD') from Rathbones Asset
Management Limited to Evelyn Partners, an independent ACD
3. Impact of market movements and relative performance
4. Net inflows as a percentage of opening FUM
In 2022 £213.0 million of ‘Bespoke’ other funds transferred out during the year post the switch of
the Authorised Corporate Director (ACD) from Rathbones Asset Management Limited to Evelyn
Partners, an independent ACD.
2023/(2022) Quartile ranking³ over
1 year
3 years
5 years
Rathbone Ethical Bond Fund
Rathbone Global Opportunities Fund
Rathbone Income Fund
Rathbone Strategic Bond Fund
Rathbone UK Opportunities Fund
1 (2)
1 (4)
3 (2)
1 (3)
1 (4)
2 (2)
3 (2)
2 (2)
3 (3)
4 (4)
1 (1)
1 (1)
2 (2)
3 (3)
4 (4)
1. Quartile ranking data is sourced from FE Trustnet
2. Excludes multi-asset funds (for which quartile rankings are prohibited by the Investment Association (IA)), High Quality Bond
Fund, which has no relevant peer group against which to measure quartile performance, non-publicly marketed funds and
segregated mandates
3. Ranking of institutional share classes at 31 December 2023 and 2022 against other funds in the same IA sector, based on total
return performance, net of fees (consistent with investment performance information reported in the funds’ monthly factsheets)
4. Funds included in the above table account for 59% of the total FUM of the fund's business
FINANCIAL PERFORMANCE
Asset management’s income is primarily derived from annual management charges, which are
calculated on a daily basis on the value of FUM of each fund, net of rebates payable to intermediaries.
Net annual management charges increased to £64.7 million in 2023, reflecting the rise in average
FUM. Net annual management charges as a percentage of average FUM fell by 0.9bps to 53.9 bps
(2022: 54.8 bps), led by a higher proportion of FUMA held in S-Class units in the Multi Asset funds,
which have a lower annual management charge. Alongside higher net annual management charges,
interest and other income increased by £1.7 million in the year. As a result, total operating income as
a percentage of average FUM increased to 55.4 bps in 2023 from 54.7 bps in 2022.
Underlying operating expenses detailed in Table 17 increased by £8.9 million to £45.5 million (2023:
£36.6 million). Fixed staff costs of £7.1 million for the year ended 31 December 2023 were £0.2
million higher than 2022. This reflects general inflationary rises as well as the impacts of staffing
changes in the period.
Variable staff costs of £13.4 million were 19.6% higher than 2022. These costs relate to deferred
awards which are spread over multiple years, the current year cost does not solely reflect
performance in the current year.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 SEGMENTAL REVIEW CONTINUED
Other operating expenses have increased by 35.9% to £25.0 million in 2023. A large part of this cost
increase relates to direct investment in our core Charles River system, enhancing functionality and
creating an efficient platform for delivering to existing clients as well as positioning the business well
for future growth. Recurring operational spend in the Asset Management segment for the Charles
River Investment Management Solution is £1.5 million per annum. The operating margin net of
these investment costs was 37%. Administration costs of £6.1 million were up £0.8 million on 2022,
driven by increasing FUM and flows, as well as inflationary indexing on third-party supplier
contracts, which was also evident on technology costs.
TABLE 16. ASSET MANAGEMENT – FINANCIAL PERFORMANCE
Net annual management charges
Interest and other income
Operating income
Underlying operating expenses1
Underlying profit before tax
Operating % margin2
1. See table 17
2. Underlying profit before tax divided by operating income
2023
£m
64.7
2.5
67.2
(45.5)
21.7
32.3%
2022
£m
62.2
0.8
63.0
(36.6)
26.4
41.9%
43
2022
£m
7.0
11.2
18.2
18.4
36.6
2023
£m
7.1
13.4
20.5
25.0
45.5
67.5%
57.9%
TABLE 17. ASSET MANAGEMENT – UNDERLYING OPERATING EXPENSES
Staff costs
— Fixed
— Variable
Total staff costs
Other operating expenses
Underlying operating expenses
Underlying cost/income ratio1
1. Underlying operating expenses as a percentage of operating income (see table 16)
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 44
FINANCIAL POSITION
OWN FUNDS
As a banking group, Rathbones is required to operate in accordance with the requirements relating to
capital resources and banking exposures prescribed by the Capital Requirements Regulation, as
applied in the UK by the Prudential Regulation Authority (PRA).
The group is required to ensure it maintains adequate capital resources to meet its combined pillar 1
and pillar 2 requirements.
At 31 December 2023, the group’s regulatory own funds (including verified profits for the year) were
£471.4 million (2022: £338.7 million). The increase in the year of £132.7 million was the result of the
issue of new share capital to fund the group’s acquisition of IW&I. The effect on own funds of the new
shares issued, which resulted in a £2.2 million increase in share capital and a £747.4 million increase
in the merger reserve (net of £2.2 million of share issue costs) (see table 19) was partly offset by the
£585.1 million increase in goodwill and intangible assets resulting from the acquisition.
The net increase in own funds was partially offset by an increase in the group’s total capital
requirement and combined buffers of £106.4 million, which reflected the inclusion of IW&I in the
group. The resulting in a capital surplus at the end of 2023 of £134.5 million represents an increase of
£24.2 million relative to the surplus of £110.3 million 31 December 2022.
The CET1 ratio was 17.8%, broadly in line with the 17.9% reported at the previous year-end. This
increase in the Pillar 1 requirement (see table 20) as a consequence of the enlarged group, was
countered by the increased capital resources (see table 19)
The leverage ratio was 18.7% at 31 December 2023, up from 17.6% at 31 December 2022. The
leverage ratio represents our Tier 1 capital (own funds) as a percentage of the group’s total assets
(exposure measure), excluding central bank exposure, intangible assets, plus certain off-balance
sheet exposures. Whilst total assets and tier one capital increased in the year due to the IW&I
combination, assets excluded from the exposure measure (central bank exposure and regulatory
deductions) represented a lower proportion of the balance sheet. This resulted in an uplift to the
leverage ratio.
At 31 December 2023, neither Rathbones Investment Management Limited nor the Rathbones Group
were subject to a minimum leverage ratio requirement, although monitoring is undertaken on a
regular basis against the minimum leverage requirement of 3.25% which applies to larger banks.
The business is primarily funded by equity, but also supported by £39.9 million of ten-year tier 2
eligible subordinated loan notes, which were issued in October 2021. The notes introduced a small
amount of gearing into our balance sheet as a way of financing future growth in a cost-effective and
capital-efficient manner. They are repayable in October 2031, with a call option for the issuer
annually from 2026. Interest is payable at a fixed rate of 5.642% per annum until the first option call
date, and at a rate of 4.893% over Compound Daily SONIA thereafter (note 28).
As a result of the factors set out above, the total equity of the group (comprising share capital, share
premium and reserves, net of own shares held) was £1,350.2 million at 31 December 2023, up
112.7% from £634.8 million at the end of 2022.
OWN FUNDS AND LIQUIDITY REQUIREMENTS
As required under PRA rules, we perform an Internal Capital Adequacy Assessment Process (ICAAP)
and Internal Liquidity Adequacy Assessment Process (ILAAP) annually for the consolidated group,
which include performing a range of stress tests to determine the appropriate level of regulatory
capital and liquidity that the group should hold. In addition, we monitor a wide range of capital and
liquidity statistics on a daily, monthly or other frequency basis as required. Surplus capital levels are
forecast on a monthly basis, taking account of anticipated dividend and investment requirements, to
ensure that appropriate buffers are maintained. Investment of proprietary funds is controlled by our
treasury department.
We are required to hold capital to cover a range of own funds requirements.
TABLE 18. GROUP’S FINANCIAL POSITION
Own funds
— Common Equity Tier 1 ratio1
— Total own funds ratio2
— Total retained earnings
— Tier 2 subordinated loan notes3
— Total risk exposure amount
— Leverage ratio4
Other resources:
— Total assets
— Treasury assets5
— Investment Management loan book6
— Intangible assets from acquired growth7
— Tangible assets and software8
Liabilities:
— Due to customers9
— Net defined benefit pension asset
2023
£m
(unless stated)
2022
£m
(unless stated)
17.8%
19.4%
263.7
39.9
2,425.6
18.7%
4,224.4
2,601.0
101.7
502.7
30.9
2,253.3
7.0
17.9%
20.3%
297.2
39.9
1,666.8
17.6%
3,447.2
2,664.1
159.7
342.7
26.2
2,516.1
9.4
1. Common Equity Tier 1 capital as a proportion of total risk exposure amount
2. Total own funds (see table 19) as a proportion of total risk exposure amount
3. Represents the carrying value of the Tier 2 loan notes (see note 28)
4. Tier 1 capital as a percentage of total assets, excluding intangible assets, plus certain off-balance-sheet exposures
5. Balances with central banks, loans and advances to banks and investment securities
6. See note 16 to the financial statements
7. Net book value of acquired client relationships and goodwill (note 22)
8. Net book value of property, plant and equipment and computer software (notes 19 and 22)
9. Total amounts of cash in client portfolios held by Rathbones Investment Management as a bank (note 24)
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 45
FINANCIAL POSITION CONTINUED
TABLE 19. GROUP’S REGULATORY OWN FUNDS
Share capital and share premium
Reserves
Less:
Own shares
Intangible assets1
Retirement benefit asset2
Common Equity Tier 1 own funds
Tier 2 own funds
Total own funds
2023
£m
317.7
1,088.1
(55.6)
(911.8)
(7.0)
431.4
40.0
471.4
2022
£m
313.2
374.2
(52.6)
(326.7)
(9.4)
298.7
40.0
338.7
1. Net book value of goodwill, client relationship intangible assets and software is deducted directly from own funds, less any
related deferred tax
2. The retirement benefit asset is deducted directly from own funds
TABLE 20. GROUP’S OWN FUNDS REQUIREMENTS
Credit risk requirement
Market risk requirement
Operational risk requirement
Pillar 1 own funds requirement
Pillar 2A own funds requirement
Total Capital Requirement (‘TCR’)
Combined buffer:
Capital Conservation Buffer (CCB)
Countercyclical Capital Buffer (CCyB)
Total Capital Requirement (‘TCR’) and Combined buffer
Total capital surplus
2023
£m
72.3
–
121.7
194.0
39.4
233.4
60.6
42.9
336.9
2023
£m
134.5
2022
£m
66.3
1.1
65.9
133.3
40.0
173.3
41.6
13.5
228.4
2022
£m
110.3
The purpose of each component of the regulatory capital requirement and what it comprises is set
out below.
PILLAR 1 OWN FUNDS REQUIREMENT
Pillar 1 determines a total risk exposure amount (also known as ‘risk-weighted assets’) for the group,
taking into account expected losses in respect of the group’s exposure to credit, counterparty credit,
market and operational risks, and sets a minimum requirement for the amount of capital the group
must hold.
The increase in credit risk to £72.3 million in 2023 was due to a revised allocation of the group’s
treasury assets along with the consequences of including IW&I exposures.
At 31 December 2023, the group’s total risk exposure amount was £2,425.6 million (2022: £1,666.8
million). The increase was driven principally by the inclusion of IW&I exposures.
PILLAR 2A OWN FUNDS REQUIREMENT
The Pillar 2 requirement supplements the Pillar 1 minimum requirement with firm-specific Pillar 2A
requirements and a framework of regulatory capital buffers.
The Pillar 2A own funds requirement is set by the PRA as part of its supervisory review process and
the calculation of it remains confidential to the PRA. The requirement reflects those risks that are
specific to the firm that are not fully captured under the Pillar 1 own funds requirement. The
group-specific risks that are reflected in the Pillar 2A requirement are set out below:
PENSION OBLIGATION RISK
The potential for additional unplanned capital strain or costs that the group would incur in the event
of a significant deterioration in the funding position of the group’s defined benefit pension schemes.
See note 29 for further detail on the movement in the year to the net defined benefit pension asset.
INTEREST RATE RISK IN THE BANKING BOOK
The group operates on a non-trading book basis, whereby all assets held are with the intent of holding
to maturity. Assets are not actively traded in secondary markets for speculative purposes. The
resulting interest rate risk represents losses that could arise for a 2% parallel shift in the Bank of
England base rate. The exposure would measure the time to reprice interest bearing assets and
liabilities.
CONCENTRATION RISK
Greater potential exposure as a result of the concentration of borrowers located in the UK relative to
other overseas jurisdictions.
The group is also required to maintain a number of regulatory capital buffers, all of which must be
met with CET1 capital.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
FINANCIAL POSITION CONTINUED
46
CAPITAL CONSERVATION BUFFER (CCB)
The CCB is a general buffer, designed to provide for losses in the event of a stress, and is set by the
PRA. The CCB is set at 2.5% of the group’s total risk exposure amount as at 31 December 2023.
COUNTERCYCLICAL CAPITAL BUFFER (CCYB)
The CCyB is designed to act as an incentive for banks to constrain credit growth in times of
heightened systemic risk. The value of the buffer is calculated as a percentage of the group’s total
risk exposure amount. For UK credit risk exposures, the percentage rate that applies is set by the
Financial Policy Committee (‘FPC’). For other jurisdictions where the group has exposures, the
percentage rate applicable to each jurisdiction is applied.
The percentage buffer rate for UK exposures is currently 2.0%. The group has relevant credit
exposures in other jurisdictions where a different rate applies, resulting in a weighted rate of
1.8% as at 31 December 2023.
CAPITAL MANAGEMENT
In managing the group’s regulatory capital position, we take into account:
— potential future volatility in pension scheme valuations that affect both the level of CET1 own
funds and the value of the Pillar 2A requirement for pension risk;
— expected additional increases in the UK countercyclical capital buffer rate; and
— the demands of acquisitions which would generate intangible assets and, therefore, directly
reduce CET1 resources; and
— expected and potential regulatory developments.
We keep these issues under review by forecasting capital and liquidity on a monthly basis, whilst
taking into account all known and anticipated macroeconomic and idiosyncratic changes.
The group’s Pillar 3 disclosures are published annually on our website (rathbones.com/investor-
relations/results-and-presentations) and provide further details about regulatory capital resources
and requirements.
TOTAL ASSETS
Total assets at 31 December 2023 were £4.2 billion (2022: £3.4 billion), of which £2.3 billion
(2022: £2.5 billion) represents the cash element of client portfolios that is held as a banking deposit.
RIM TREASURY ASSETS
As a licensed deposit taker, Rathbones Investment Management Limited holds our surplus liquidity
on its balance sheet together with clients’ cash. Cash in client portfolios held on a banking basis of
£2.3 billion (2022: £2.5 billion) (note 24) represented 4.7% of total Investment Management funds
under management and administration at 31 December 2023, compared to 5.3% at the end of 2022.
Cash held in client money accounts was £8.4 million (2022: £5.7 million). These balances are held off
balance sheet in accordance Client Money Rules of the FCA.
During the year, the share of treasury assets held with the Bank of England reduced to £1.0 billion
(2022: £1.4 billion), as investment in certificates of deposit and UK treasury bills increased in
accordance with our treasury policy and risk appetite as the environment of rising interest rates
presented greater opportunity for the management of our treasury assets.
The treasury department of Rathbones 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 described in note 33 to the
financial statements. It invests in certain securities issued by a diversified range of highly-rated
counterparties. These counterparties must be single ‘A-' rated or higher by Fitch at the time of
investment and are regularly reviewed by the banking committee.
IW&I TREASURY ASSETS
The manner in which Investec Wealth & Investment Limited (a wholly owned subsidiary of
Rathbones Group Plc) holds its surplus client money is governed by the CASS rules. In this regard
these monies are off-balance sheet.
The IW&I Cash & Credit Management Committee (CCMC) is mandated by the Operations Committee
to consider, approve, and keep under review, the suitability of financial institutions for the placement
of firm’s and clients' cash deposits in accordance with the CASS rules on client money and assets.
Approved institutions are subject to the IW&I Credit Policy and annual due diligence which is
undertaken in accordance with the CASS rules. Total Client Money held was £1.3 billion as at
31 December 2023 (2022: £1.9 billion) representing 3.1% of Investment Management funds
under management at 31 December 2023 compared to 4.7% at the end of 2022.
Investec Wealth & Investment Limited also hold Firm's money, which is on balance sheet, also subject
to the IW&I Firms Credit Policy Statement and overseen by the CCMC. Total Firms Money held was
£161.9 million as at the 31 December 2023 (2022: £209.6 million)
The treasury department of Investec Wealth & Investment Limited are responsible for the cash
management of both the Client and Firm's money, reporting to the CCMC and operating in
accordance with the Treasury Mandate. Treasury monitor diversification and liquidity on a daily
basis. Approved Institutions, other than group companies, must have a minimum of S&P Short Term
rating of A-2, a S&P Long Term Rating of BBB+ and are reviewed quarterly by the CCMC.
LOANS TO CLIENTS
Loans are provided as a service to Wealth Management clients who have short to medium term cash
requirements. Such loans are normally made on a fully secured basis against portfolios held in our
nominee, with a requirement that the value of the loan is covered two times by the value of the
secured portfolio. Loans are usually advanced for five years (see note 16 to the financial statements).
In addition, charges may be taken on property held by the client to meet security cover requirements.
Our ability to provide such loans is a valuable additional service to clients who require bridging
finance when buying and selling their homes.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 47
DEFINED BENEFIT PENSION SCHEMES
We operate two defined benefit pension schemes. With effect from 30 June 2017, we closed both
schemes, ceasing all future benefit accrual and breaking the link to salary.
At 31 December 2023 the combined schemes’ liabilities, measured on an accounting basis, had
increased to £101.1 million, up 6.8% from £94.7 million at the end of 2022. This increase primarily
reflected a reduction in discount rates at the end of the year, and a small decrease in the assumed
future rate of inflation. The reported position of the schemes as at 31 December 2023 was a surplus
of £7.0 million (2022: surplus of £9.4 million).
The funding position of the schemes improved during 2023, with increased gilt yields driving a
reduction in the schemes’ liabilities. As a result of this, the Company supported the Trustees’ decision
to switch the schemes’ assets into self-sufficiency credit funds in order to better secure the funding
position against future changes in bond yields and inflation expectations. This switch has further
lowered the level of gearing in the scheme’s assets and reduced the exposure to future margin calls.
The triennial funding valuations, with a valuation date of 31 December 2022 were undertaken
during the year by the scheme actuary. As for the previous valuations, a self-sufficiency funding basis
was used to calculate the schemes’ liabilities. The valuations were completed in August 2023 and
identified that the shortfall in the schemes’ funding position at 31 December 2022 was fully covered
by the £2.75 million deficit contribution made by the Company in August 2023. Therefore, no further
deficit funding plan was necessary and the Company is not required to make any further
contributions to the scheme at this time.
During 2023, the Company, working with the Trustees and the Scheme Actuary, undertook a review
of the feasibility of insuring the schemes’ liabilities via an insurance “buy in”. In December 2023, a
request for quotation was issued to a shortlist of insurers.
FINANCIAL POSITION CONTINUED
Loans advanced to clients decreased to £101.7 million at end of 2023 (2022: £159.7 million).
As borrowing costs increased, we saw lower demand for new loans as clients looked to reduce
outstanding debt and finance their cash requirements from other means, including drawing down
from investment portfolios, leading to higher outflows of funds under management and
administration.
INTANGIBLE ASSETS
Intangible assets arise principally from acquired growth in funds under management and
administration relating to business combinations and are categorised as goodwill and client
relationships. Intangible assets reported on the balance sheet also include purchased and
developed software.
At 31 December 2023, the total carrying value of goodwill and client relationship intangible assets
was £1,010.5 million (2022: £342.7 million). The significant increase in 2023 is principally the result
of the IW&I combination. In addition, other purchases of client relationship intangible assets of
£2.6 million were capitalised during the year (2022: £1.0 million). £2.8 million of client relationship
intangible assets were disposed of in the year, predominately in relation to earn-outs which were paid
(2022: £2.6 million).
Client relationship intangible assets are amortised over the estimated life of the client relationship,
which is generally a period between 10 and 15 years. Should client relationships be lost, any related
intangible asset is derecognised in the relevant year. The total amortisation charge for client
relationships in 2023, including the impact of any lost relationships, was £22.4 million (2022:
£16.9 million).The increase in the year was the result of amortisation for the IW&I client relationship
intangible asset during the final quarter following completion of the combination.
Goodwill, which arises from business combinations, is not amortised but is subject to a test for
impairment at least annually. No goodwill was identified as impaired during the year. Further detail
is provided in note 22 to the financial statements.
CAPITAL EXPENDITURE
Capital expenditure during 2023 amounted to £4.5 million (2022: £8.0 million).
Expenditure on the development of our systems that was capitalised amounted to £4.0 million in
the year, a reduction of £1.8 million relative to the prior year. Whilst we have continued our digital
investment programme, the portion of this investment that represents development expenditure that
falls to be capitalised under accounting standards has reduced in line with our increasing adoption of
cloud-based, strategic technology solutions. The costs of cloud-based solutions are largely charged to
profit or loss at the time the cost is incurred, with the subsequent benefit of a reduction in the level of
depreciation cost in future years.
Property expenditure fell by £1.7 million in 2023. This reflected a pause in planned office
refurbishments as we considered our property strategy for the newly enlarged group as a result of
the IW&I combination.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 48
Cash used in investing activities included a net outflow of £241.8 million from the purchase of
certificates of deposit (2022: net outflow of £278.1 million), as we continued to reduce the proportion
of treasury assets held with the Bank of England in favour of UK Government short-dated Treasury
Bills and debt securities. All investment decisions were made under the existing low risk appetite
framework set by the RIM Banking Committee. Included within cash used in investing activities is
cash of £172.6 million acquired from the acquisition of IW&I in the year.
The other significant non-operating cash flows during the year were as follows:
— outflows relating to the payment of dividends of £71.4 million (2022: £48.6 million);
— outflows relating to payments to acquire intangible assets of £5.6 million (2022: £8.8 million),
which includes payments in respect of investment managers under earn-out agreements, and
development of client applications;
— outflows of £5.1 million relating to capital expenditure on tangible property, plant and
equipment (2022: £4.3 million), which relates predominantly to property fit-out costs; and
inflows of £2.9 million from a partial sale of the group’s shareholding in Euroclear.
LIQUIDITY AND CASH FLOW
As a bank, we are subject to the PRA’s ILAAP regime, which requires us to hold a suitable liquid assets
buffer to ensure that short-term liquidity requirements can be met under certain stressed scenarios.
Liquidity risks are actively managed on a daily basis and depend on operational and investment
transaction activity.
Cash and balances at central banks amounted to £1.0 billion at 31 December 2023 (2022: £1.4
billion). We continue to hold a substantial portion of the group’s overall liquidity with central banks.
The reduction during the year reflects increased investment in both debt securities issued by
high-quality counterparties, and central government issued short-dated treasury bills, which was
in response to the rising interest rate environment.
Cash and cash equivalents, as defined by accounting standards, includes cash, money market funds
and banking deposits, which had an original maturity of less than three months (see note 33 to the
financial statements). Consequently, cash flows, as reported in the financial statements, include the
impact of capital flows in treasury assets.
Net cash outflows from operating activities in the year largely reflect a £251.4 million decrease in
banking client deposits (2022: £181.9 million increase). Cash held in client portfolios reduced due to
portfolio asset allocation moving to alternative liquid assets, such as UK Government Treasury Bills,
due to the high interest rate environment. Loans and advances to banks and customers decreased
by £87.4 million in the year, this was partly attributable to the reclassification of a £14.5 million term
deposit (2022: £30.0 million) that is due to mature within three months of the year end into cash and
cash equivalents.
TABLE 21. EXTRACTS FROM THE CONSOLIDATED STATEMENT OF CASH FLOWS
Cash and cash equivalents at the end of the year
Net cash inflows from operating activities
Net change in cash and cash equivalents
2023
£m
2022
£m
1,302.9
1,572.7
(86.4)
(269.8)
292.9
(80.9)
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
49
CREATING SUSTAINABLE VALUE FOR OUR STAKEHOLDERS
SECTION 172 STATEMENT
Understanding the views and interests of our
stakeholders helps the group to make better
decisions with the aim of generating long-
term value for the company’s shareholders
whilst contributing to wider society by
building mutually beneficial relationships
with our other key stakeholders.
Section 172 of the Companies Act 2006 requires
the directors to act in a way they consider will
promote the success of the company for the
benefit of its stakeholders as a whole. You can
read more about how we engage with and
respond to the interests and needs of our key
stakeholders and how the board engaged in 2023
on pages 49 to 57.
THE BOARD HAS DISCHARGED ITS
SECTION 172 DUTIES
The directors are briefed on their duties as
part of the group’s induction programme and
each also has access to the group company
secretary for advice on the application of those
duties. The directors’ awareness of their duties
to the company, combined with the knowledge
and insights they obtain on the views and
interests of the group’s key stakeholders and
the impact of the group on wider society,
enables them to make decisions that promote
long-term sustainable value for the company’s
shareholders.
In practice, the group operates within a corporate
governance framework whereby responsibility
for day-to-day decision-making is appropriately
S172 FACTOR
MORE INFORMATION
The likely consequences of any decision
in the long term
Our strategic priorities: See page 22
Key board decision: See page 51
The interests of the group’s employees
Our strategic priorities: See page 22
Our people: See page 53
The need to foster business relationships
with the group’s suppliers, clients
and others
Our strategic priorities: See page 22
Creating value for our stakeholders:
See page 49
The impact of the group’s operations on
the community and the environment
Responsible business: See page 58
TCFD: See page 66
The desirability of the group maintaining
a reputation for high standards of
business conduct
Our culture and values: See page 20
Corporate governance: chair: See page 89
The need to act fairly as between the
company’s shareholders
Our strategic priorities: See page 22
Shareholders: See page 55
delegated. In considering their duties under
section 172 when setting the group’s strategy,
values and framework of policies, the board aims
to ensure that the consideration of stakeholder
interests and the group’s long-term success is
embedded across its business. The board
recognises that the impact of each decision made
by it, and elsewhere in the group’s governance
framework, will be different for each of its key
stakeholders and understands the importance
of considering the impact on each of those
stakeholders when making decisions.
The group’s board and committee paper
templates encourage paper authors to consider
and highlight the impact on the group’s
stakeholders of the matters covered. In addition
to acting as an aid to the board in discharging its
duties and facilitating focused debate, this is
intended to provide an additional layer of
comfort that paper authors have properly
considered and taken into account the interests
of stakeholders. Further details of how the board
considers each of the specific matters set out in
section 172 are set out in the following section,
along with some examples of how those
considerations have influenced decisions taken
by the board and group more widely.
CONSIDERING THE LONG TERM
The board sets the strategy, values and culture,
and develops and oversees the group’s
framework of governance, risk management
and internal controls to promote and safeguard
the group’s long-term success. The strategic
goals and objectives it sets are focused around
developing the group’s proposition and service to
fulfil the long-term needs of its clients. You can
read more about the group’s strategy on pages 22
to 26 of the strategic report. Details of how
stakeholder considerations influenced the
board’s decision-making regarding the strategy
can be found in the case study on page 51. The
group provides an essential service to its clients
in a highly regulated environment. The
identification, management and mitigation
of risks to the group’s business is key to
ensuring the delivery of its strategy over the
longer term, and the consideration of risk plays
an important part in decision-making. You can
read more about how the group evaluates and
manages risk along with a description of the
principal and non-financial risks relating to the
company’s operations on pages 77 to 86 of
the strategic report.
MAINTAINING A REPUTATION FOR HIGH
STANDARDS OF BUSINESS CONDUCT
The board supports the chief executive and the
group executive committee in embedding a
culture that encourages the group’s colleagues
to live our values and help the group deliver on
its strategic objectives and purpose. The board
approves and oversees the group’s adherence to
policies that promote high standards of conduct
and receives regular updates on the group’s
culture through KPIs that form part of the chief
executive’s business performance update.
SHAREHOLDER MEETINGS
The AGM is scheduled to take place on 9 May
2024. Further details will be set out in the Notice
of AGM, which will be sent to shareholders in due
course. The board acknowledges the importance
of shareholders receiving presentations from the
board at the meeting and being able to ask
questions on the business of the AGM and the
performance of the group. The company will
provide a means for them to ask questions of the
directors. All voting at general meetings of the
company is conducted by way of a poll. All
shareholders have the opportunity to cast their
votes in respect of proposed resolutions by
proxy, either electronically or by post. Following
the AGM, the voting results for each resolution
are published and made available on the
company’s website.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 CREATING SUSTAINABLE VALUE FOR OUR STAKEHOLDERS CONTINUED
50
OUR APPROACH TO
STAKEHOLDER ENGAGEMENT
Our aim is to maintain an open and transparent
approach to stakeholder engagement based on
building constructive relationships with our
key stakeholders and ensure there is a two-
way dialogue.
Across the firm, there are many examples of
stakeholder engagement influencing both
day-to-day actions and strategic initiatives. The key
strategic developments set out on pages 50 to 57
illustrate some of our significant stakeholder
considerations that informed the board’s
decision-making during the year and this approach
is designed to be consistent with our section 172
statement. Details of the framework through which
this is governed are set out in the table on
the right.
OUR STAKEHOLDER FRAMEWORK
The firm has identified the following key
stakeholder groups and by considering their
perspectives, insights and opinions, the board
seeks to ensure outcomes of operational,
investment or business decisions that are more
robust and sustainable.
In doing so our board has regard to the matters
set out in section 172, see page 49.
OUR REGULATORS
Rathbones group is regulated by all appropriate
regulatory bodies in line with our business lines
and activities. The group’s continued compliance
with its regulatory obligations and the interests
and views of the PRA and FCA are primary
considerations in decision-making across
the group.
OUR STAKEHOLDER FRAMEWORK
OUR STAKEHOLDERS
INPUT FROM OUR ENGAGEMENT WITH STAKEHOLDERS
OUTPUT FROM ENGAGEMENT
CLIENTS
OUR PEOPLE
SHAREHOLDERS
— Client engagement allows us to obtain feedback which
enables our proposition to evolve and meet the needs of
the client of the future
— Understand clients evolving priorities and requirements
— Client insight and feedback on service, technological
— Deliver bespoke and relevant products for the future
— Ensure ongoing high quality service
— Develop client centric propositions
— Support clients with intergenerational
wealth management.
needs and products.
— Engagement helps us attract, retain and develop
— Provide an inclusive and talented workforce
our people
— Input into the sustainable employee model
— Understand the importance of DE&I and implement
changes across the firm’s network.
to service client needs
— Ensure continuing strong engagement with colleagues
— Offer a benefits package that supports our people
— Deliver relevant learning and development
programmes for all employees to ensure
ongoing support.
— Engagement is designed to ensure confidence
— Ensure sustainable long-term shareholder returns
in the long-term success of the firm
— Provide insight into the firm’s strategic
and investment direction.
through our business model
— Maintenance of our progressive dividend policy
— Provide ongoing updates on the IW&I integration and
other strategic objectives
— Proposed new remuneration policy.
SOCIETY AND
COMMUNITIES
— We recognise our responsibility to wider society
— Implement and refine initiatives
and communities we operate within
— Obtain specific environmental and social perspectives.
aligned with our responsible business agenda
— Maintained our levels of community investment
— Engaged community partners
— Progress on our net zero programme.
PARTNERS AND
REGULATORS
— Engagement with regulators and our partners is
— Respond to evolving regulatory requirements and
fundamental to the running of the firm and servicing
of clients
— Provide feedback to ensure ongoing collaboration
standards in order to maintain the firm’s high standards
— Ongoing engagement with all our regulators
— Work with our key suppliers to ensure ongoing
and anticipate any regulatory changes
business resilience.
— Engagement with our suppliers and partners supports
our ability to deliver our commitments.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 CREATING SUSTAINABLE VALUE FOR OUR STAKEHOLDERS CONTINUED
KEY BOARD DECISIONS AND CONSIDERATION OF STAKEHOLDER INTERESTS
RATHBONES’ COMBINATION WITH INVESTEC WEALTH & INVESTMENT UK (IW&I)
WHY THIS COMBINATION?
— Enhanced and enriched client
proposition across investment
management, financial
planning, fund management
and banking services
— Leverage the Rathbones investment
in technology to deliver optimal
client experience whilst improving
operating efficiency
— Ensure continued stability and
continuity of service with a
competitive pricing model.
HOW THE BOARD REACHED ITS DECISION
During 2023, the board considered and agreed to
an all-share combination of Rathbones Group Plc
with IW&I.
The board was supported by the risk committee
and the firm’s second line of defence function on
various elements of the transaction including,
the potential market, legal, regulatory, capital
and operational risks. These risks were
mitigated through extensive due diligence and
engagement with IW&I to ensure the interests
of our stakeholders were protected throughout
this transaction.
The transaction has brought two businesses with
closely aligned cultures and long-standing
heritage in the UK wealth management together.
When the board was considering the Rathbones
and IW&I combination, it considered all aspects
of both businesses including the long-term
implications on our strategic direction, day-to-
day operations and key stakeholders. The board
believe the combination with IW&I would
provide the following benefits to our stakeholders.
— Clear combined operating model,
leveraging strategic suppliers
including Investec Group, creating
stronger relationships with our
suppliers across our combined
supply chain
— Maintain independent and robust
governance structures across
both firms
— Increased regulatory capital surplus
throughout the integration
— Increased engagement with our
regulatory partners.
CLIENTS
OUR PEOPLE
RATHBONES
GROUP PLC
BOARD
PARTNERS AND
REGULATORS
SHAREHOLDERS
SOCIETY AND
COMMUNITIES
— Larger opportunity on which to base the stewardship team’s
investee engagement
— Increased opportunities for positive societal impact, through
our community partners and employee giving programmes
— Maintain our net zero commitment including engagemnet
with companies, in which we invest on behalf of our clients.
51
— Attract and retain the best industry
talent through a leading employee
proposition centred around
client service
— Secured future as an independent
wealth manager
— Career development opportunities
across a larger business with focus
on multi disciplines.
— Increased scale and operational
efficiency to support organic growth
— Maintaining the group’s
independence through the
relationship agreement and agreeing
lock-in/ standstill arrangements with
Investec Bank Plc
— Growth opportunity from strategic
partnership with Investec Bank Plc
— Generate attractive financial returns
via EPS growth over the next three
years.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 CREATING SUSTAINABLE VALUE FOR OUR STAKEHOLDERS CONTINUED
52
Our strategic priorities
1 Enriching the client and adviser
proposition and experience
2
Supporting and delivering growth
3 Inspiring our people
4 Operating more efficiently
CLIENTS
Clients are at the heart of our strategy and
their interests are a key consideration in
everything that we do.
HOW THE FIRM RESPONDED
— Twelve financial awareness courses
held virtually
STRATEGIC PRIORITY
1
HOW THE BOARD ENGAGED
The group executive committee and the board
regularly receive updates on client proposition,
investment performance outcomes and
service levels.
HOW THE FIRM ENGAGED
We engaged with our clients through a variety
of different methods including:
— focus groups and targeted surveys
— participated in the NMG Consulting 2023
client experience benchmark survey
— regular meetings held between investment
managers, financial planners and clients
— user experience testing of our digital solutions
and propositions
— virtual and in-person conferences held for
private clients, intermediaries and IFAs
— regular CEO letters and research notes issued
to clients to update them on the firm, the IW&I
transaction, integration process, and our
investment proposition.
KEY TOPICS RAISED
— Practical help on how to achieve their financial
goals, and invest in line with ‘responsible’ or
ESG values
— Help to navigate challenging times: inflation,
cost of living crisis and market volatility
— Frameworks and guidance to help make the
best financial decisions and ultimately achieve
good outcomes.
— Development of new products and services to
meet current and future client needs including
ESG proposition with Rathbones Preference
and the Rathbone Greenbank Global
Sustainable Bond fund
— Continued development of MyRathbones
with over 58% take up by clients
— Continued to develop our ability to deliver
our proposition and client reporting digitally
— Additional financial planning capability to
support client needs in conjunction with
investment management services.
OUR SURVEY RESULTS
Amid significant political and economic
challenges in the UK leading to a market
downturn, our client satisfaction and likelihood
to recommend scores have increased from 2022.
Rathbones scores higher than average on brand
reputation, fit of products/services, and relative
value for money. Client feedback reveals
relationships with individual investment
managers are highly valued and contribute
heavily towards satisfaction. There are some
variances across client segments, with strength
in the relationship highest among older, tenured
clients with a segment of younger, newer clients
at greater risk of withdrawing funds (less familiar
with market and performance volatility).
Satisfaction with digital experience is high
which bodes well as more clients are demanding
more in the digital offerings. There is more work
to be done in effective client communications
and clarity of costs (fees and charges).
Enhancement to these areas will allow for a
greater client experience and addressing
Consumer Duty requirements.
NET PROMOTER SCORE1,2
Client likelihood to recommend Rathbones
(-100% to 100%)
23
22
20
Mean
34
43
36
39
39
60
OVERALL SATISFACTION1,2
Overall satisfaction with Rathbones
(0 to 10)
23
22
20
Mean
SATISFACTION WITH THEIR
INVESTMENT MANAGER1,2
Overall satisfaction with their primary
investment manager (0 to 10)
23
22
20
Mean
8.3
8.5
8.2
8.3
8.4
8.9
8.8
8.9
8.7
8.8
8.7
9.1
1. The mean is the average score of the eight firms who participated
in the 2023 NMG private client survey. It is also the average
from historic AON benchmark client surveys
2. Data excludes IW&I
Stakeholder interests and
engagement: See page 49
Enriching our proposition: See page 23
Engaging with clients to support
product development
Engagement with our clients is through a
variety of studies and surveys. The
information gathered supports our planning
and communication. Information has been
gathered via:
— Financial Wellbeing Study 2023: to
understand the primary financial
wellbeing concerns facing high net worth
individuals
— Compeer Wealth Services for females,
digital demands and sustainable
investing: insight into the wants and
needs of clients from a digital and ESG
perspective
— NMG CSAT 2023: our deep dive survey
into Rathbones’ client satisfaction
— Savanta Brand Vue: painting a picture of
how the Rathbones’ brand is interpreted
by potential clients
— Compeer Wealth Services for
Accountants, Lawyers and HNWI:
investigating the wants and needs of
lawyers and accountants
— NMG IFA Distribution Study:
understanding the wants and needs of
IFAs and how do we serve them better
— Oxford Risk Financial Personality
Insights: a look into how the financial
personality of Rathbones ‘clients
compares to the Oxford Risk benchmark.
We act collaboratively: See page 6
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
CREATING SUSTAINABLE VALUE FOR OUR STAKEHOLDERS CONTINUED
OUR PEOPLE
Understanding the needs of the group’s
people is essential in developing a
workplace and culture in which they can
reach their full potential and, in turn,
ensure the long-term success of the group.
STRATEGIC PRIORITY
3
HOW THE BOARD ENGAGED
The board receives feedback from employees
through several channels. Regular reports are
tabled by our chief people officer (CPO) covering
matters ranging from employee sentiment to
DE&I, with reports based on extensive KPIs.
Feedback is also received through our non-
executive director workforce engagement
programme led by Iain Cummings and Dharmash
Mistry. Read more about the key themes from this
initiative on the next page. The views of
colleagues are also obtained via regular colleague
surveys. Detailed results are shared with the
group executive committee, with key themes and
issues escalated to the board for consideration.
HOW THE FIRM ENGAGED
We engaged with our people through the
following activities:
— day-to-day interaction through our
management structures coordinated and
supported by a dedicated function under
our CPO
— regular colleague opinion surveys to measure
engagement, wellbeing and opinions, this was
rolled out to IW&I in Q4
— ongoing and regular virtual management
briefings, over 2,000 colleagues attended
joint business function town halls in Q4
— webcast, internal magazine and
management blogs
— virtual presentations by the executive team to
discuss performance and the firm’s progress
on the strategic plan
— peer recognition scheme to identify colleagues
who demonstrated outstanding behaviours
and conduct aligned to our values
— workforce engagement sessions held with the
non-executive directors.
KEY TOPICS RAISED
— What will the impact and opportunities should
our people expect following the IW&I
combination?
— How does the firm’s people strategy help our
colleagues develop their careers?
— What does the future working style at
Rathbones look like and how will our culture
evolve following the IW&I transaction?
— The continued importance of diversity
equality and inclusion (DE&I).
HOW THE FIRM RESPONDED
— Frequent engagement on the combination
process and integration plans to support clear
communication and regular engagement
opportunities to raise questions
— Introduced joint MS Teams capability as a key
collaboration tool between the businesses
— Announced new senior leadership
appointments and team structures that will
bring our teams together
— Continued work to develop our recruitment
processes as part of our commitment to
attract, cultivate and retain diverse talent
— Involved all leaders and teams in the cascade
of our strategy
— Focusing on developing our people and
enabling our culture
— Roll out of our DE&I strategy across the firm.
EMPLOYEE RESPONSE RATE2
76%
2022: 82%
OVERALL ENGAGEMENT2
8.0/10
2023 Benchmark1: 7.9
2022: 8.0 (benchmark 7.8)
EMPLOYEE NET PROMOTER SCORE²
Employee likelihood to recommend Rathbones
37
2023 Benchmark1: 26
2022: 39 (benchmark 22)
I FEEL WELL COMMUNICATED WITH²
7.7/10
2023 Benchmark1: 7.6
2022: 7.8 (benchmark 7.6)
MY MANAGER CARES ABOUT ME AS A PERSON²
8.7/10
2023 Benchmark1: 8.6
2022: 8.5 (benchmark 8.6)
1. Benchmarks are set by Peakon and relate to the broader
financial service sector clients
2. Data excludes IW&I
Responsible business review: See page 58
Culture: See page 20
Gender pay gap report
53
Our strategic priorities
1 Enriching the client and adviser
proposition and experience
2
Supporting and delivering growth
3 Inspiring our people
4 Operating more efficiently
Engagement as a driver
for change
Our colleague engagement survey is a
primary driver for understanding and
improving how we experience work at
Rathbones. Throughout the year, we
encourage our colleagues to give their
anonymous feedback on what it’s like to
work at Rathbones through our colleague
engagement survey. Aggregated group
results are shared across the firm with notes
on areas of strength and focus for
improvement. In response, leaders and
managers commit to action planning at
strategic and local levels to actively respond
to colleague feedback. Our colleague
engagement survey is a key tool for
informing and delivering our people
strategy; and by asking, listening, and taking
action, we can make sure Rathbones
continues to respond to colleagues and
becomes an even greater place to work.
Our people: See page 61
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
CREATING SUSTAINABLE VALUE FOR OUR STAKEHOLDERS CONTINUED
OUR APPROACH TO WORKFORCE ENGAGEMENT WITH THE BOARD
Iain Cummings and Dharmash Mistry are
our two designated non-executive directors
responsible for gathering employee feedback.
A workforce engagement framework was
developed using existing employee engagement
activities already in place to provide a range of
opportunities to engage directly with employees
and receive feedback. The two-way dialogue
between the board and employees is facilitated
by a combination of engagement methods,
which in normal circumstances would include
face-to-face meetings, office visits and
attendance at employee events. These tools
complement the established annual all-
employee survey process and the board’s review
of findings. The adoption of a diverse range of
listening channels has been based on the
principle that everyone in the firm should have a
voice and is consistent with employee feedback
of the benefit of multiple platforms to raise areas
for discussion. In turn, it supports the board in
gathering a fair and representative view of the
issues that are important to employees and
builds an appreciation of how these may differ
by role and geography. Engagements can be
classed as formal and informal, with both
required to identify ongoing themes. Typically,
the formal approach is used to gather a
structured and holistic view across a large
population of individuals at a point in time.
The board’s informal methods provide a greater
depth of feedback, truer understanding of
underlying sentiment and support the
development of constructive relationships
with employees.
I felt the session was really well
set up, if we had longer I am sure
we would have kept going.”
Iain and Dharmash were very
good at ensuring everyone had a
chance to speak.”
This is another example of the
‘openness’ of our organisation
which makes it good to work for”
KEY THEMES IN 2023 CENTRED AROUND THE FOLLOWING AREAS:
COMBINATION WITH IW&I
— Positive reaction received from colleagues
on the combination with IW&I due to the
benefits it can bring to the group
— Anticipated improvements to service
delivery to clients as well as increased
opportunity for learning and development
— Awareness that the combination may
bring uncertainty and possible instability
in the short term to colleagues. The board
need to monitor and mitigate this risk
with ongoing communications during the
integration.
CULTURE
— Our people continue to believe the group’s
culture and values remains a key strength
which should be retained whilst
recognising the need to embrace IW&I
into the group
— Strong employee engagement score of 8
out of 10, indicates high levels of
satisfaction in working at Rathbones with
loyalty scores above industry average
— Whilst hybrid working has empowered
colleagues, it should not be at the expense
of the next generation of wealth managers.
ON DIVERSITY, EQUALITY &
INCLUSION (DE&I):
— Recognition that the group had made
good progress on DE&I as both our
Women In Finance and board
representation targets had been achieved
— DE&I networks had been created across
the country which were contributing to
the group’s progress
— Additional resource had been introduced
to help drive change and embrace the
differences in our people
— The nomination committee monitors
progress against key milestones of the
strategy to ensure we maintain
momentum in this critical area.
54
OUR WORKFORCE PROGRAMME
DURING 20231
EMPLOYEE ENGAGEMENT SURVEYS
(FACILITATED EXTERNALLY)
2
BOARD BRANCH VISITS
2
NED DROP-IN SESSIONS ACROSS VARIOUS
OFFICES
6
CEO MEETINGS WITH
FRONT OFFICE TEAMS
18
TOWN HALLS HELD
5
Key board decision: See page 51
Our people: See page 61
Responsible business update: See page 58
Gender pay gap report
1. Data excludes IW&I
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 CREATING SUSTAINABLE VALUE FOR OUR STAKEHOLDERS CONTINUED
55
Our strategic priorities
1 Enriching the client and adviser
proposition and experience
2
Supporting and delivering growth
3 Inspiring our people
4 Operating more efficiently
SHAREHOLDERS
Understanding the views of our
shareholders is essential to us delivering
long-term sustainable financial returns.
KEY TOPICS RAISED
— How will the company deliver on the
combination with IW&I?
NUMBER OF INVESTOR MEETINGS HELD IN 20231
STRATEGIC PRIORITY
2
HOW THE BOARD ENGAGED
Information on how we engage with our
shareholders and how the board is made aware
of shareholder sentiment and interests can be
found below. The views and interests of the
company’s shareholders are key considerations
when the board determines the level of dividend
payments, and when setting the group’s strategy
and business priorities.
HOW THE FIRM ENGAGED
We engaged with our shareholders through the
following activities:
— executives, our board chair and committee
chairs held meetings with and gathered
feedback from our investors, both directly, via
our corporate brokers and through various
conferences
— we continued to expand sell-side analyst
research coverage of the company
— we commissioned an independent analyst
perception study, to gain insight into our
shareholder/investor’s opinions. The results
were presented to the board
— our AGM provided the opportunity for all
shareholders to ask questions of our board.
— How will the new remuneration policy
support delivery of the strategic objectives?
— How is the integration of Saunderson House
progressing?
— How will the company improve
organic growth?
— What is the progress update on client
lifecycle management (CLM) in terms of
budget and benefits?
HOW THE FIRM RESPONDED
— Discussed the IW&I transaction and associated
benefits with our top shareholders
— Presented the proposed new remuneration
policy to shareholders ahead of the AGM vote
and received support for the proposal
— Provided regular updates on the company’s
financial and strategic performance, through
our quarterly market updates and half-yearly
results presentations
— Updated the market on strategic progress as
part of result statements throughout the year
— Responded to several environmental, social
and governance (ESG)-related questionnaires
during the year and issued our Task Force on
Climate-related Financial Disclosures (TCFD)
report and responsible business report
— Restated our commitment to our progressive
dividend policy which was maintained
throughout the year
— Maintained meaningful dialogue with the
sell-side analyst community.
23
22
21
84
110
96
NUMBER OF NEW INVESTORS IN 2023²
23
22
21
107
95
73
1. Calculation methodology was changed for number of
meetings in 2023, with one group meeting counted as one
rather than reflecting the number of investors who attended
2. Number of new investors includes both retail shareholders
and institutional investors
Engagement on the Investec
Wealth & Investment (IW&I)
combination
In April 2023 we announced the
combination with IW&I that not only
presents a compelling strategic and financial
rationale, but also secures our future as the
UK’s leading discretionary wealth manager.
We met with all of our top shareholders to
discuss the transaction and throughout the
year we have continued to update investors
and the wider market on our progress. We
were grateful for the overwhelming support
for the combination, which was a positive
affirmation of this transformational
transaction.
In addition to engaging with our
shareholders we discussed the transaction
with our broader stakeholder base. More
information can be found in our IW&I
case study.
Stakeholder interests and engagement:
See page 49
Group chief executive officer’s review:
See page 11
Enriching our proposition: See page 23
Key board decision: See page 51
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
CREATING SUSTAINABLE VALUE FOR OUR STAKEHOLDERS CONTINUED
SOCIETY AND COMMUNITIES
We are conscious of the impact of the
group’s operations on the community
and environment and understand the
importance of being a good
corporate citizen.
KEY TOPICS RAISED
— How has the firm responded to donation
appeals across the world?
— How do we consider our climate strategy and
the environmental impact of our operations?
— How do we best support the communities in
STRATEGIC PRIORITY
which we operate?
1 2
HOW THE BOARD ENGAGED
The group’s responsible business programme,
which is sponsored by the chief executive, has
continued to deliver on commitments that were
made in 2021 relating to responsible investment,
our people, society and communities and the
environment. You can read more about our
responsible business programme on pages 58 to
65, our Task Force on Climate- related Financial
Disclosure (TCFD) report and responsible
business progress update. Details of how
consideration of our wider community has
shaped some of our recent initiatives can be
found on page 63.
HOW THE FIRM ENGAGED
We engaged with society and the communities
in which we operate through the following
activities:
— we encouraged high standards of governance
as an investment manager and frequently
engaged with companies on environmental,
societal, and corporate governance concerns
— used our community investment network to
support discussion around regional charity
projects and employee matching
— worked with industry bodies to understand
and respond to the growing stakeholder
expectation around management of climate
risk and emissions exposure.
HOW THE FIRM RESPONDED
— We successfully coordinated donation
appeals to support the disasters emergency
committee’s response to the crisis in Syria
and Turkey
— We supported the communities in which
we operate through the Rathbones Group
Foundation, corporate donations and
employee volunteering. In 2023, we gave
more than £589,000 (2022: £795,000)
— Restructured our community investment
structure in response to integration
— Expanded our stewardship team to support
our engagement activities
— Reviewed our approach to reporting on
climate risk. See our TCFD report for more
information
— Published our fossil fuel statement and
thermal coal position policy.
Responsible business review:
See page 58
Responsible investment report
Responsible business update
56
Our strategic priorities
1 Enriching the client and adviser
proposition and experience
2
Supporting and delivering growth
3 Inspiring our people
4 Operating more efficiently
CARBON DISCLOSURE PROJECT (CDP) SCORE1
23
22
21
B
B
C
DIRECT ENGAGEMENT WITH INVESTEE
COMPANIES1
23
22
21
752
671
705
TOTAL AMOUNT DONATED1
23
22
21
£589,000
£795,000
£418,000
1. Data excludes IW&I
Reviewing our responsible
business strategy
Having set our responsible business (RB)
strategy three years ago, in 2023 we
initiated a review. Following a review of
incoming regulation and reporting
frameworks from Sustainability Disclosure
Requirement to the International
Sustainability Standards Board expectations
an issue matrix was drawn up, which we
then tested with our stakeholders. Through
workshops with our colleagues, questions in
a client survey, reviewing regulatory
thematic updates and conversations with
external SMEs we drew out those topics that
appeared most material to Rathbones.
Whilst this work was due to be completed in
2023, following the IW&I announcement,
the decision was made to extend our
engagement to ensure outcomes were
suitable for the enlarged group. Work will
therefore continue through 2024, and an
updated RB strategy will be published in
our 2024 annual and responsible
business reports.
Responsible business: See page 58
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
CREATING SUSTAINABLE VALUE FOR OUR STAKEHOLDERS CONTINUED
PARTNERS AND REGULATORS
Engagement with our regulators and
partners is fundamental to the running
of the firm and servicing our clients.
STRATEGIC PRIORITY
4
HOW THE BOARD ENGAGED
The board is regularly briefed on regulatory
developments and expectations, and the board’s
risk, audit and remuneration committees receive
detailed insights into specific areas such as the
Internal Capital Adequacy Assessment Process
(ICAAP) and Internal Capital and Risk
Assessment (ICARA), Client Assets Sourcebook
(CASS), Regulatory Activity (COBS, SYSC, DISP,
SMCR) as well as managing FCA regulation
including Consumer Duty and the Sustainable
Disclosure Requirements. The board also
receives updates in relation to specific matters,
such as areas of interest to the FCA/ PRA
including operational resilience, conduct risk
and the management of culture. The group
maintains regular contact with the PRA and FCA
to ensure awareness of its concerns, expectations
and agenda, and this informs the prioritisation of
activities within the group’s annual operating
plan. The board discussed the November Dear
CEO letter laying out its expectations for wealth
and stockbroking firms.
HOW THE FIRM ENGAGED
We engaged with our partners and regulators
through the following activities:
— we held regular meetings with our regulators
during the year and continue to have a
proactive and transparent relationship with
them. The number of meetings increased in
2023 given the IW&I transaction
— we engaged with our suppliers to understand
both their exposure to environmental, social
and governance (ESG) risk (including modern
slavery risk) and their management of these
matters. Our modern slavery statement is
updated annually and reviewed by our board
— we maintained ongoing relations with our key
suppliers and partners during the year with
the board receiving regular updates on
engagement with our existing partners.
KEY TOPICS RAISED
— How the planned combination of Rathbones
with IW&I would create value for stakeholders
— Rathbones response to Consumer Duty
dialogue with regulators with timely response
to requests?
— Do we provide fair and transparent terms with
our suppliers?
HOW THE FIRM RESPONDED
— All responses to regulators have been made
within the agreed deadline
— Trained our board on key topics. See page 97
in our governance section for more on board
training
— Worked in close collaboration with the firm’s
regulators, including through the transaction
period relating to IW&I
57
Our strategic priorities
1 Enriching the client and adviser
proposition and experience
2
Supporting and delivering growth
3 Inspiring our people
4 Operating more efficiently
% OF SUPPLIERS PAID WITHIN 30 DAYS1
Engaging with our suppliers
23
22
21
% OF PAYMENTS MADE TO SUPPLIERS
IN AGREED TIMEFRAME1
23
22
21
1. Data excludes IW&I
70%
95%
96%
94%
94%
92%
— Reviewed our preferred, strategic and critical
suppliers for their ESG policies and processes.
See more on page 63
— Interacted with the industry bodies and
associations we are affiliated with to ensure
we were engaged with issues impacting
our industry
— Engaged with our existing lending partner
— Adhered to payment terms with suppliers.
Rathbones’ supplier management team has
enhanced the process for on-boarding a new
supplier, renewing and existing supplier and
adding additional services to an existing
supplier in Q2 2023.
The process now includes an assessment
of the supplier’s responsible business and
ethical practices via the Rathbones’ ESG
questionnaire completed by the supplier
and reviewed to ensure it is in line with
Rathbones’ standards.
In 2023, work was undertaken to identify
supplier partners that work with both
Rathbones and IW&I. In 2024, work
will begin on the integration of our
supply chains.
Stakeholder interests and engagement:
See page 49
Risk management and control:
See page 77
Responsible business: See page 63
regulation
— Maintained a constructive relationship
— How do Rathbones ensure open and clear
with HMRC
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
58
RESPONSIBLE BUSINESS REVIEW
OUR RESPONSIBLE BUSINESS FRAMEWORK
Our responsible business approach is delivered
through our four-pillar programme. We work
with a number of partners, recognising that
collaboration will help drive the change we want
to see.
AMBITION AND IMPACT
We believe that our focus on the long term
enables us to build value for our clients, whilst
making a wider contribution to society. We are
committed to investing for everyone’s tomorrow.
This means understanding the environmental,
social and governance (ESG) issues that matter
to both our stakeholders and to our business, and
looking beyond the short term for the most
sustainable outcome.
ROBUST GOVERNANCE
Our commitment to operating in a way that
creates long-term value for our stakeholders
includes putting in place strong governance
foundations to hold ourselves to account.
Alongside clear accountability we set targets,
track and monitor our progress and report on our
commitments in a transparent and timely
manner. Our responsible business programme
enables us to deliver on our purpose through our
various initiatives, including our responsible
investment approach, DE&I, community
investment and reducing the environmental
impact of our operations, both direct and
through the investments we make on behalf of
our clients.
COLLABORATION
We know that we cannot deliver the level of
change needed to impact the world’s most
pressing environmental, social and governance
issues on our own. Therefore, we have joined
forces and operate in alignment with selected
recognised frameworks and initiatives.
These engagements alongside our work with
regulators and delivery partners support our
understanding of stakeholder expectations and
best practice response opportunities. A selection
of our affiliations and partnerships can be seen
on our website, including our continued support
for the United Nations Global Compact.
HIGHLIGHTS
In 2023, our responsible business committee,
co-chaired by our group chief executive and the
managing director of our investment business,
discussed matters ranging from incoming
regulatory requirements such as the
Sustainability Disclosure Requirements, to the
increasing ESG reporting requirements
introduced by frameworks such as those
published by the International Sustainability
Standards Board and the final Taskforce on
Nature-related Financial Disclosures framework.
The committee received updates on initiatives
across our four pillars, including:
— progress towards our net zero commitment
— our stewardship activities
— our DE&I programme, including our gender
pay gap
— continued engagement with suppliers and our
modern slavery statement
— the changing shape of our community
investment programme
— an update on the quality of carbon offsets
following a review undertaken by Climate
Impact Partners.
LOOKING FORWARD
In 2023, we undertook a high-level materiality
analysis. The outcomes will be used in 2024 to
support a review of our responsible business
strategy and approach and its associated
governance. The new strategy will reflect the
broader group including IW&I.
OUR APPROACH TO RESPONSIBLE BUSINESS
Our purpose is to think, act and invest
for everyone’s tomorrow
RESPONSIBLE INVESTMENT
We will apply an active and thoughtful
approach to responsible investment
OUR ENVIRONMENTAL IMPACT
We will play our part in the move
to a net zero economy
OUR
PILLARS
OUR PEOPLE
We will work to become
the employer of choice for the
wealth management sector
SOCIETY AND COMMUNITY
We aim to be a trusted partner in
the societies in which we operate
OUR PILLARS ARE UNDERPINNED
BY OUR CRITICAL FOUNDATIONS
Robust
governance
Positive
corporate culture
Identified
material issues
AND ACTIONED THROUGH
Risk and opportunity
informed targets and actions
SDG aligned
outcome metrics
Executive non-financial
strategy linked remuneration
Responsible business update
Partnership and memberships
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 RESPONSIBLE BUSINESS REVIEW CONTINUED
OUR RESPONSIBLE BUSINESS PROGRESS
PILLAR
AND ISSUE
RESPONSIBLE
INVESTMENT
AREAS OF FOCUS
ESG integration
Voting with purpose
Engagement with consequences
Transparency
OUR PEOPLE
Diversity, equality and inclusion
Culture and values
Employee wellbeing
Learning and development
SOCIETY AND
COMMUNITIES
Supplier engagement
Community investment
OUR
ENVIRONMENTAL
IMPACT
MyRathbones (our client app)
Resource consumption²
Funds under management and administration (FUMA)
aligned with science-based targets
59
2023 PROGRESS1
FURTHER
INFORMATION
Published the group fossil fuel statement and thermal coal phase out plan, which
will support management of the carbon intensity of the investments we make on
behalf of our clients
Read more: See page 60
Responsible business update
Voted on 48.04% of resolutions following our voting policy. The policy is
customised: we determine what matters to our clients, rather than purely applying
the views of an external proxy voting consultant
Undertook 752 direct engagements in line with priorities shared in our
engagement action plan. This covered topics such as board diversity, biodiversity,
net zero and modern slavery
77% PRI score - governance and strategy, following the reassessment of scoring
from 2022, more can be found in our responsible investment report
Launched new inclusion networks, seven are now operating and from 2024 these
will be active across the enlarged group, including IW&I colleagues
eNPS score of 37 (benchmark of 26)
Our wellbeing team ran webinars for colleagues covering topics such as
menopause awareness, mental wellbeing, neurodiversity and anxiety
Delivered six webinars with charity partners on how to best identify and support
vulnerable clients, supporting our work on Consumer Duty
76% of our in scope suppliers were reviewed through our responsible business
assessment. Topics raised include net zero commitments and modern slavery
1.38% of pre-tax profit invested in our local communities, this supported 77
charity partners at both a national and regional level
58% of our clients are using MyRathbones. The increase supports us in achieving
our digital ambition and reflects investment in our technology offering
19 sites (out of 33) using renewable electricity, which covers 64% of our total
consumption (kWh)
30% of Rathbones FUMA (excluding IW&I) has committed to set or has set their
own Science Based Targets initiative aligned targets. The group remains on track to
meet our 2025 near-term target of 35%
Read more: See page 61
Responsible business update
Gender pay gap report
Read more: See page 63
Responsible business update
Read more: See page 64
Responsible business update
Human rights - anti-bribery and corruption training
95.2% in scope employees completing anti-bribery and corruption training
Carbon intensity Scope 1 and 2 – location-based emissions
(tCO2e/FUMA £bn)²
12.9 (down 1.1pp from 13.8 in 2022)
1. Our 2023 responsible business data excludes IW&I. Integration will take place through 2024 to support consolidated reporting for year end 2024
2. Environmental data includes IW&I. Totals have been recalculated and restated for the past three years
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 RESPONSIBLE BUSINESS REVIEW CONTINUED
RESPONSIBLE INVESTMENT
HIGHLIGHTS1
PRI: POLICY GOVERNANCE AND
STRATEGY SCORE
77%
2022: 72%
4 of 5
2022: 4 out of 5 stars
DIRECT ENGAGEMENTS
752
2022: 671
VOTES MADE AGAINST MANAGEMENT
786
2022: 971
Further information is available in our:
Responsible investment report
Engagement report
Stewardship code report
1. Data excludes IW&I
OUR APPROACH
We recognise that the environment, society and
financial stability are connected. It is therefore
our responsibility to incorporate environment,
social and governance (ESG) factors and the
effect they can have on our clients’ portfolio
returns into our investment and ownership
decisions. By embedding the analysis of ESG
factors into our investment process, we strive to
understand ESG risks and identify high-quality
investments with attractive financial
characteristics that can deliver on clients’
long-term investment objectives. We also
recognise the benefits that society can reap from
our ability to potentially identify long-term
sustainable investments for our clients.
With the support of our specialist financial, ESG
integration and stewardship analysts and input
from third-party data providers, we consider the
following factors:
— environmental: we examine the challenges
and opportunities faced by companies
because of the impact of climate change on
resource management, new regulations, and
other environmental challenges
60
— social: we assess the legal and reputational
risks faced by companies to ensure they have
adequate policies and procedures to deal with
issues such as employee relations, community
impacts and human rights risks
— governance: we review factors that highlight
the quality and robustness of a company’s
internal structure and practices for issues such
as executive pay, board composition and audit,
as well as business ethics.
Our analysis considers relevant sustainability
frameworks and includes data sourced from at
least three ESG data providers.
Following a review, our responsible investment
(RI) policy has been updated to better reflect
group application of our RI principles. This both
ensures clarity of our overarching framework
whilst supporting application at a business unit
level that makes most sense for our clients.
Governance of the policy was also reviewed and
where applicable committee structure,
membership and terms of reference have been
updated. Our updated RI policy is available on
our website.
ESG INTEGRATION
In 2023, we refined our investment process to
include a sustainability alignment lens into our
investment analysis - broadly, how a company’s
intentions translate into real outcomes. The
approval of our fossil fuel positioning statement
and thermal coal phase out plan, supports
delivery on our net zero commitments. The
publication of our phase-out plan aligns with the
validation of our near-term net zero targets by
the Science Based Targets initiative at the end of
2022, which asks that investment in thermal
coal ceases by 2030.
ENGAGEMENT
We engage with the companies in which we
invest on behalf of our clients, prioritising
engagement where we can help make a
difference in addressing systemic ESG
challenges. We are prepared to escalate our
engagement activity or reduce our holdings in
companies that continue to present an ESG risk
over time. All engagement activity is covered by
our RI policy, and supported by our engagement
policy. In 2023, we undertook 752 engagements
(2022: 671).
VOTING
We actively vote in a manner that allows us to
focus our resources where we believe we can
make the most difference. This may involve
voting against management to help drive
positive change. In 2023, we voted on 11,966
resolutions at 853 company meetings (2022:
13,071 resolutions at 1,013 company meetings).
In 2023, we undertook a regular review of our
voting process in 2023 to ensure we maximise
our impact across all voting channels. This
process will be reviewed again as part of the
integration process with IW&I. Our aim is to both
maximise the percentage of holdings we vote on,
whilst ensuring our votes are impactful.
TRANSPARENCY
We are committed to being transparent about
our approach to RI, ensuring that commitments
or promises we make can be substantiated with
clear evidence of action. Relevant committees
receive regular updates on investments which
may breach the thresholds we have established.
We have established an RI communications
coordination group and are reviewing and
updating collateral and approaches to support
both our Green Claims Code review process and
Consumer Duty considerations. Our approach is
recognised with our PRI Score improving in
many areas from 2022, see more in our RI report.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 RESPONSIBLE BUSINESS REVIEW CONTINUED
OUR PEOPLE
HIGHLIGHTS1
EMPLOYEE ENGAGEMENT SCORE
8.0
Benchmark: 7.9
(2022: 8.0 / benchmark 7.8)
% OF EMPLOYEES PARTICIPATING
IN SHARE SCHEMES (SIP/SAYE)
84% / 56%
(2022: 90% / 63%)
% OF EMPLOYEES SHARING DIVERSITY DATA
63%
(2022: 64.9%)
EMPLOYEE TURNOVER
7.59%
(2022: 7.2%)
1. Data excludes IW&I
OUR APPROACH
We are a people business, so it is imperative that
our strategy sets a culture that drives
performance and builds long, rewarding careers
for our colleagues. Based around a common set
of corporate values and a commitment to DE&I,
we are focused on leveraging the talent in our
business, as we develop more career paths, build
leadership skills and manage succession.
Our management team and the board continued
to engage with our people through a variety of
channels, ensuring open discussion across our
workforce. A key highlight of the year was our
employee engagement survey, with 76%
response rate (82% in 2022) and an employee
net promoter score of 37 (39 in 2022) which is
above the sector average of 26 (22 in 2022). In
2023, we shared our updated people plan.
CULTURE AND VALUES
Our people strategy was finalised and is being
used by our people business partners with their
stakeholders to frame next steps to support our
strategic ambition of ‘inspiring our culture’.
Through our integration we maintain our
commitment to colleagues across both
businesses to craft an inclusive culture. Read
more about our culture on page 20.
EMPLOYEE WELLBEING
At Rathbones we care about colleague wellbeing.
We have a range of provisions in place to support
the mental and physical health of our people. In
2023, we continued to offer access to our
employee assistance programme, including a
free and confidential phone and online advice
service. Alongside these services our wellbeing
team and inclusion networks have run
awareness sessions on several topics, from
cancer and menopause awareness to mental
health and neurodiversity.
We introduced a socio-economic diversity
network and continued to track our employees’
opinion through our employee surveys. In 2024,
we will be working with our new IW&I
colleagues to ensure we have representatives
from across the group.
LEARNING AND DEVELOPMENT
We are committed to investing in the learning
and development of all employees. We continue
to support participation in appropriate internal
or external programmes. We seek to give all our
people the opportunity to develop the skills,
knowledge and behaviours they require to fulfil
their current roles effectively, supporting them
in realising their potential and enjoying a varied
and engaging career. In 2023, we rolled out
programmes focused on the four pillars of
Consumer Duty and ran awareness sessions on
compliance with the Green Consumer Code. Our
sessions on cyber security and our mentoring
scheme continued to run. Our 2023, training
spend per employee was £529 (2022: £456).
DIVERSITY, EQUALITY AND INCLUSION
At Rathbones, we know that everyone walks a
different path in life. From where we grew up to
the languages we speak, how we think and who
we love – we are all different. By embracing our
different experiences and perspectives we are
working to create and protect an environment
that is inclusive and equal for everyone. With
more than 3,500 people across 23 offices we
recognise that embracing our differences helps
us make better decisions and bring innovation
into everything we do. Embedding DE&I across
the group is critical to achieving our strategic
ambitions and our purpose of investing for
everyone’s tomorrow. Having shared our DE&I
plan in 2022, we tracked progress against our
targets and gathered feedback in our
engagement surveys as well as insights from
colleagues across the group gathered via our
inclusion networks.
61
Measuring our diversity
Success Factors, the platform we ask
employees to self-report their demographic
data, covers many of the Equality Act 2010
protected characteristics.
It’s a secure system with the necessary
governance and controls to store
confidential personal data. The data is
accessible to a limited number of HR
colleagues.
The data extracted from Success Factor
will always be aggregated, anonymised,
with groups of less than 10 not being
reported on. All demographic questions
have been modelled from what is
considered best practice, e.g.: “Is your
gender identity the same as at birth?” or
“What was the main household earner
occupation when aged 14?”.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 62
RESPONSIBLE BUSINESS REVIEW CONTINUED
OUR PEOPLE CONTINUED
To support this 63% of employees (64.9% in
2022) have shared their diversity data with us.
This decrease may be driven by the move to a
new system to collect data which introduced
more categories of diversity data.
BOARD DIVERSITY
At the end of 2023, our board had five female
directors out of nine, which meant we met the
commitment of 33% female board
representation for FTSE 350 companies. We
also had three females on our group executive
committee (GEC). In 2023, we continued to meet
the requirements of the Parker Review, which
encourages the improvement of ethnic and
cultural diversity on boards. We see this as a
good foundation on which to build, but not an
end point. We are signatories to the Women in
Finance Charter and as of September 2023 we
reached 26.5% female representation in senior
management compared to 15.6% female
representation in 2018. Reporting against
compliance requirements can be found in the
tables to the right.
GENDER PAY GAP
We are committed to equality and inclusion.
Addressing our gender pay gap is a key
component of achieving this. To read more on
our approach, please see our gender pay gap
report on our website.
GENDER DIVERSITY 1
AT 31 DECEMBER 2023
Men
Women
Other categories
Not specified/prefer not to say
1. Data excludes IW&I
ETHNIC DIVERSITY
AT 31 DECEMBER 2023
White British or other White
(including minority white groups)
Mixed/Multiple Ethnic Groups
Asian/Asian British
Black/African/Caribbean/
Black British
Other ethnic group, including Arab
Not specified/prefer not to say
Number
of board
members
Percentage
of the board
Number of
senior positions
on the board
(CEO, CFO, SID
and Chair)
Number
in executive
management
Percentage
in executive
management
Total number
of employees
Percentage
of total
employees
4
4
3
5
−
−
−
−
57%
44%
43%
56%
−
−
−
−
5
7
2
2
−
−
−
−
7
8
3
4
−
−
−
−
70%
67%
30%
33%
−
−
−
−
1,175
1,236
995
1,049
−
−
−
−
54%
54%
46%
46%
−
−
−
−
Number
of board
members
Percentage
of the board
Number of
senior positions
on the board
(CEO, CFO, SID
and Chair)
Number
in executive
management
Percentage
in executive
management
Total number
of employees
Percentage
of total
employees
6
8
−
−
1
1
−
−
−
−
−
−
86%
89%
−
−
14%
11%
−
−
−
−
−
−
4
4
−
−
−
−
−
−
−
−
−
−
8
9
−
−
−
−
−
−
−
−
2
3
80%
75%
−
−
−
−
−
−
−
−
20%
25%
−
1,267
−
22
−
98
−
32
−
22
−
844
−
54.45%
−
0.96%
−
4.29%
−
1.40%
−
0.96%
−
36.94%
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
Further information can be found
in this report and on our website:
Inspiring our people
Read more: See page 25
Our culture
Read more: See page 20
Workforce engagement
Read more: See page 54
Our responsible
business update
Our gender
pay gap report
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 RESPONSIBLE BUSINESS REVIEW CONTINUED
SOCIETY AND COMMUNITIES
63
HIGHLIGHTS
% OF IN SCOPE EMPLOYEES COMPLETING
ANTI-BRIBERY AND CORRUPTION TRAINING
95.2%
2022: 99%
% OF SUPPLIERS ENGAGED ON ESG ISSUES
76%
2022: 69%
PERCENTAGE OF PRE-TAX PROFIT INVESTED
IN OUR COMMUNITIES
1.38%
2022: 1.24%
Further information is available in our:
Responsible business update
Modern slavery report
OUR APPROACH
Through our business we aim to add value not
only to our clients but also to the societies and
communities in which we operate. We work with
regulators, partners, suppliers and communities
to understand their aims and ambitions working
to align our approach to best practice across our
programmes.
MODERN SLAVERY
Following the completion of the IW&I
transaction we reviewed our modern slavery
statement to consider alignment and support the
mapping of our expanded supplier universe. Our
updated statement will be approved by our board
and released in May 2024. It will be available on
our website.
HUMAN RIGHTS
Rathbones is pleased to continue to support the
United Nations Global Compact (UNGC). This
commitment aligns with our support for the
International Labour Organization’s standards
and the Universal Declaration of Human Rights.
As a business we will not tolerate child or forced
labour, be it through our operations or the
investments we make. Aligning with our
commitment to decent work and economic
growth, we support the right to freedom of
association and collective bargaining.
ESG INTEGRATION WITH SUPPLIERS
As a UK-based financial services business,
Rathbones has a relatively low human rights risk
within its direct supply chain. Indirect suppliers
further down our supply chain however,
potentially present an elevated risk. In 2023, we
reviewed and updated our supplier maturity
roadmap, including a revision of our ESG
questionnaire. The roadmap outlines our next
steps, including increased business level
management information and a greater focus on
procurement/on-boarding support from the
central team. With 76% of suppliers (equating to
70% of Rathbones third-party spend) having
completed our ESG review, we could see the
main areas of concern raised through the
responses being; modern slavery statements,
living wage compliance (where our smaller
supplier partners response may be limited by
their size) and net zero approaches supported by
near-term targets and data disclosure in our
larger partners.
ANTI-BRIBERY AND CORRUPTION
Rathbones has a zero-tolerance policy towards
bribery and corruption and, in line with this, we
ensure all our employees are adequately trained.
In 2023, this module, alongside other
compliance training, was rolled out to our
Saunderson House colleagues. At the end of the
year, 95.2% (99.2% in 2022) of all Rathbones’
employees assigned completed our anti-bribery
and anti-corruption training.
CODE OF CONDUCT AND
WHISTLEBLOWING
Feeling secure and trusting that they will not
suffer adverse consequences helps our
employees if they feel the need to raise a
concern. Training on our code of conduct and
whistleblowing process occurs each year. In
2023, there were three cases raised via our
whistleblowing process. All three matters were
independently investigated and resolved.
COMMUNITY INVESTMENT
As we work to become a trusted partner, we
deliver both financial and in-kind support
through the Rathbones Group Foundation, our
employee Give As you Earn scheme, our
matching scheme and volunteering.
In 2023, we were pleased to invest £589,172
(2022: £795,116) in community projects. This
represents 1.38% of our pre-tax profit (1.24% in
2022). With our focus on equality of opportunity
and disadvantaged youth, we supported 77
charities. We were pleased to maintain our
support for Social Shifters and Young Enterprise
(YE), aligning with the work we carry out
through our financial awareness programme.
We also supported the Disasters Emergency
Commission (DEC) Turkey-Syria appeal.
With an aim to encourage employee
volunteering, we reviewed our volunteering
policy. We maintained the three days a year,
allowance and saw more offices take the
opportunity of team volunteering days.
Employees at our Jersey office worked with the
Durrell Zoo. In Bristol, teams worked with their
partner FareShare.
Post-completion of the IW&I transaction the
structure of our support and giving was
reviewed and a new structure covering all
offices and colleagues was agreed.
FINANCIAL AWARENESS
We continue to recognise the importance of
financial awareness in society and alongside our
in-house sessions, continued our support for YE.
This partnership enables us to reach a broader
portion of society and run varied sessions in the
communities that need them most. We look
forward to working with YE as they enter their
anniversary year, supporting the delivery of
programmes and creating positive impact in the
communities in which we and they operate. Over
the past ten years, Rathbones sessions for 16-25
year olds have reached more than 12,300 people.
We look forward to working with YE.
To read more about our work in financial
awareness please see our standalone responsible
business update.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 RESPONSIBLE BUSINESS REVIEW CONTINUED
OUR ENVIRONMENTAL IMPACT
HIGHLIGHTS
RESOURCE CONSUMPTION
23,681 tC0₂e
2022: 22,025 tCO₂e
% OF FUMA ALIGNED WITH SBTI TARGETS
30%
2022: 22.9%
% OF CLIENTS USING THE MYRATHBONES
APP
58%
2022: 50%
OUR APPROACH TO MANAGING
OUR IMPACT
In 2021, the group announced our intention to
be a net zero emissions business by 2050 or
sooner. Following the combination with IW&I ,
we will work to consolidate not only our
operational data which can be seen in the table
opposite but also our emissions exposure
through the investments we make on behalf of
our clients. In 2024 we will restate our net zero
near-term targets to reflect these changes.
KEY DRIVERS OF OUR
CARBON FOOTPRINT
We saw emissions increase in 2023, with
purchased goods and services remaining the
largest emissions source. As spend increased our
emissions also increased, 33% since 2020 to
over 4,000 tCO2e. Despite this, emissions grew
slower than spending as cost was focused on
lower-carbon services like legal and professional
services and software support, leading to a
reduction in emissions intensity from 0.16 to
0.12 kgCO2e per £ between 2020 and 2023.
Business travel emissions continued to increase.
The most significant contributors to this increase
were road and air travel, particularly noticeable
in 2023. Long-haul flights and average passenger
travel had an impact, as colleagues returned to
travel post the 2020 period of lockdown. As
commuting is more intensive than working from
home, the change in employee commuting
emissions (1.109 tCO2e/FTE/working year vs
0.681 tCO2e/FTE/working year), results from an
increase in employee headcount, along with a
general decrease in the proportion of days
worked from home.
64
2021
675
675
−
704
701
3
17,974
17,719
255
13,852
856
368
285
14
285
2,197
116
19,353
19,094
258
428
OUR CARBON FOOTPRINT DATA1
(INC. STREAMLINED ENERGY AND CARBON REPORTING)
Location-based emissions (tCO₂e)²
2023
2022
Scope 1 (tCO₂e)
UK3 emissions
Global3 emissions (excl UK)
Scope 2 (tCO₂e)
UK3 emissions
Global3 emissions (excl UK)
Scope 3 (tCO₂e)4, 5, 6, 8
UK3 emissions
Global3 emissions (excl UK)
Scope 3 – category 1: purchased goods and services
Scope 3 – category 2: capital goods
Scope 3 – category 3: fuel and energy-related activities
Scope 3 – category 4: upstream transportation
and distribution
Scope 3 – category 5: waste generated in operations
Scope 3 – category 6: business travel
Scope 3 – category 7: employee commuting
Scope 3 – category 8: upstream leased assets
Total location-based emissions (tCO₂e)
UK emissions
Global emissions (excl UK)
Market-based scope 2 emissions
Total energy consumption (MWh)7
UK consumption
Global consumption (excl UK)
Intensity ratios
584
584
-
773
769
4
22,324
21,878
446
16,842
349
329
274
14
1,158
3,287
70
23,681
23,231
450
478
639
639
−
757
753
4
20,630
20,621
368
15,413
821
379
341
16
775
2,787
98
22,025
21,653
372
540
8,056,025
8,110,666
7,324,444
7,955,402
100,623
7,890,792
94,468
7,189,538
83,971
Scope 1 and 2 – location-based emissions (tCO2e/FUMA £bn)
Total location-based emissions (tCO2e/FUMA £bn)
Total location-based emissions (tCO2e/FTE)
12.9
224.9
6.8
13.8
218
6.6
12.1
170.1
6.5
1. Following agreement of the combination with IW&I we have restated our environmental figures. All figures in the table include
IW&I emissions and are therefore comparable
4. Data centre emissions are reported under Scope 3, as per the WRI GHG Protocol
5. Electricity transmission and distribution (T&D) reflects emissions from line losses associated with electricity transmission and
2. In accordance with best practice introduced in 2015, we report two numbers to reflect emissions from electricity. Location-
distribution
based emissions are based on average emissions intensity of the UK grid and market-based emissions reflect emissions from our
specific suppliers and tariffs. Scope 2 market-based emissions for 2023 are 478 tCO₂e (2022: 540 tCO₂e)
3. Under SECR regulation we are required to split our global and UK emissions. Our global emissions (excl. UK) and global
consumption (excl. UK) reflect electricity emissions and consumption (respectively) from our Jersey office. It is not possible to
split out travel and allocate to our Jersey office at this stage
6. Emissions from water supply and treatment are included in our disclosure for the first time this year; 2021 emissions have been
restated to include these emissions
7. Total energy consumption (kWh) of our Scope 1 and Scope 2 emissions (electricity), and scope 3 (employee cars)
8. Emissions associated with hotel stays and employee cars were reported in business travel in 2022
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 65
RESPONSIBLE BUSINESS REVIEW CONTINUED
OUR ENVIRONMENTAL IMPACT CONTINUED
OUR JOURNEY TO NET ZERO
We have committed to reaching net zero
emissions by 2050 or sooner. Our near-term
net zero emission targets have been validated
by the SBTi.
OUR ROADMAP MILESTONES
KEY LEVERS TO REACH OUR NET ZERO
TARGETS:
— Digitising our business: cloud computing,
data centre consolidation and digital
communications platforms
— Swapping to renewable energy suppliers
— Seeking out green building credentials
— Embedding our travel policy and hybrid
working
— Increasing the amount of relevant
information to support their decisions
— Training to enable our investment
managers to engage clients
— Engaging our suppliers on their climate
commitments
— Carbon removal credits, to offset our
residual emissions.
CHALLENGES AND PROGRESS
Whilst we have the data to support our
operational emission calculations, data related
to the emissions from the investments we hold
on behalf of our clients remain in development.
We regularly engage with data suppliers to
understand both their approach and coverage.
PROGRESS IN OUR
INVESTMENT TARGET
In 2023, 30% of our FUMA had set or
committed to set SBTi aligned targets. This is
up 7.1pp since 2022 and shows that we are on
track to meet our 2025 near-term target.
CHALLENGES IN OUR
OPERATIONAL FOOTPRINT
Whilst an obvious driver of change is the
increase in our property footprint and
employee figures year-on-year, as referenced on
the previous page, key drivers of the increase in
in operational footprint are products and
services, travel and employee commuting.
2020 (BASE YEAR)
2025
2030
2040
2050
ACHIEVING NET ZERO ACROSS OUR OPERATIONS
2020
BASELINE¹
21%
reduction across scope 1, 2 and 3
(categories 1-8)
42%
reduction across scope 1, 2 and 3
(categories 1-8) emissions
NET ZERO
100%
renewable energy sources
for our offices
2020
BASELINE¹
35%
listed equity and bonds portfolio,
by invested value, committing to set or
have set SBTi validated targets by 2025
(category 15)
57%
committing to set or have set SBTi
validated targets by 2030
100%
by 2040
this allows time for
those who have
committed to achieve
their targets
TCFD report
Responsible business update
1. Our environmental target was set base on our 2020 operational and investment emissions footprint. Our investment target covered 91% of our FUMA as at 31 December 2020
ESG engagement across colleagues,
suppliers and clients
ESG integration and training
External collaboration and advocacy
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 TASK FORCE ON CLIMATE-RELATED
FINANCIAL DISCLOSURES STATEMENT
66
Alignment level
TCFD report
Full
Partial
Further work required
INTRODUCTION AND COMPLIANCE
As wealth managers, we have a fiduciary duty on
behalf of our clients to consider all long-term
risks that may impact their investments. We are
committed to helping our clients safeguard their
portfolios against physical and transitional risk as
the world moves to a low-carbon economy. At
Rathbones, we recognise that this is a
collaborative exercise that spans industries and
as such we are continuously engaging with our
stakeholders, including our clients, investors,
regulators and industry organisations, to improve
our collective climate reporting and help smooth
the transition to a net zero economy.
During the financial year ending 31 December
2023, the board has complied with the
requirements of the listing rule 9.8.6. Our report
includes a measurement of how we comply with
the 11 recommendations of the TCFD and with
the mandatory climate-related financial
disclosures (CFD) by publicly quoted companies,
large private companies and LLPs. In developing
the report, we have considered and addressed all
recommendations within the all-sector guidance
as well as the supplemental guidance for asset
managers in full. We have also included a map
to our compliance to the CFD. We continue to
engage with our stakeholders, see pages 49
to 57, to gather input into our understanding
of material issues. The responsible business
committee, amongst others in our governance
structure consider which ESG issues are material
to our business and should be publicly reported.
In 2024, as we re-base our net zero commitment
we will undertake a materiality assessment to
further develop our understanding and
strengthen future disclosures. We have chosen
to publish our full 2023 TCFD disclosure as a
standalone statement, allowing us to report in
more detail and link from that report to applicable
content across our reporting suite. Our
standalone statement will be available as a PDF
on the reports and disclosure page of our website.
The following pages include a summary update
of our approach and also signpost to where more
information can be found.
GOVERNANCE
Disclose the organisation’s governance around climate-related issues and opportunities.
TCFD RECOMMENDED
DISCLOSURE
Describe the board’s
oversight of climate-
related risks and
opportunities
2023 UPDATE
CFD REQUIREMENTS
ALIGNMENT1
FURTHER INFORMATION
Responsibility for managing climate risks and opportunities sits with the Rathbones board. The board
is supported by several committees that maintain responsibility for the consideration and integration
of climate risks and opportunities in their area of specialism as appropriate.
The board is responsible for setting the right tone for the business, supporting a strong risk
management culture and, through our senior leadership team, encouraging appropriate behaviour
and collaboration across the business. The board regularly assesses the most significant risks and
emerging threats to the group’s strategy and receives updates at least twice a year via risk and
responsible business papers.
Oversight of risk management activities is also undertaken through the group risk and audit
committees. They offer support to the board, setting a constructive tone in support of a strong risk
culture, which is integrated into our company culture and which our people embrace as part of their
day-to-day responsibilities.
A description of the
governance arrangements of
the company or LLP in relation
to assessing and managing
climate-related risks and
opportunities
Audit committee
report: See pages
102-106
TCFD report
Describe management’s
role in assessing and
managing climate-related
risks and opportunities
We have assigned climate-related responsibilities to several individuals and committees across the
business. As chair of the responsible business committee, our group chief executive has responsibility
for bringing climate-related matters to the board; and our chief risk officer (CRO) is the senior
management function responsible for climate-related financial risks, as designated in accordance with
the Prudential Regulation Authority’s Supervisory Statement on managing financial risks relating to
climate change (SS3/19).
Additionally, there are a number of teams involved in assessing, managing and reporting on our
climate risk, including our finance, risk and compliance, research and investment teams, alongside
our supplier management function and properties and facilities departments. At an organisational
level responsibility for climate change-related matters lies with the company secretary and is led by
our responsible business manager.
Risk management:
See pages 77-86
TCFD report
1. Where partial alignment is indicated, the response is in full compliance with the relevant TCFD recommendation, however responses could be strengthened by increased availability of data and improvements to industry-wide methodologies
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 TCFD STATEMENT CONTINUED
67
Alignment level
TCFD report
Full
Partial
Further work required
STRATEGY
Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s business, strategy and financial planning where such information is material
2023 UPDATE
CFD REQUIREMENTS
ALIGNMENT
FURTHER INFORMATION
Rathbones’ climate-related risks include physical risks (arising from the physical effects of climate
change on the businesses’ operations, workforce, markets, infrastructure, raw materials and assets)
and transition risks (resulting from policy, legal, technology and market changes occurring from the
shift to a lower-carbon global economy). We have identified transition and physical risks that
materialise over the following timelines: short-term <1 year, medium term 1-5 years and long term >5
years. Importantly, the transition to a low-carbon future also provides Rathbones with opportunities
which, if acted on, stand to benefit the business. An overview, timeframe and a description of our
strategy to mitigate each risk and realise each opportunity is provided in the full report. Climate-
related risks have been integrated into our risk management framework to support our net zero
transition and are shared in the tables on pages 71-74.
A description of the principal
climate-related risks and
opportunities arising in
connection with the
operations of the company or
LLP and the time periods by
reference to which those risks
and opportunities are assessed
Responsible
investment report
TCFD report
Responsible
investment report
TCFD report
A description of the actual and
potential impacts of the
principal climate-related risks
and opportunities on the
business model and strategy
of the company or LLP
TCFD RECOMMENDED
DISCLOSURE
Describe the climate-
related risks and
opportunities the
organisation has
identified over the short,
medium, and long term
Describe the impact of
climate-related risks and
opportunities on the
organisation’s
businesses, strategy
and financial planning
Describe the resilience
of the organisation’s
strategy, taking into
consideration different
climate-related
scenarios, including a
2°C or lower scenario
The climate-related risks and opportunities that we face as a business occur across both our direct
operations and our investments. The actual and potential impacts of each risk and opportunity on our
business is described in the full TCFD report, as well as the mitigating actions we take in response.
By taking these actions, we endeavour to improve our resilience to the impacts of climate change in
our strategic decision-making and financial planning. Whilst our commitment to becoming a net zero
business by 2050 or sooner includes both our direct operations and our investments, we recognise
that the majority of our greenhouse gas emissions and other climate-related risks are derived from the
investments we hold on behalf of our clients. We continue to integrate climate considerations into our
investment approach and provide our clients with products that not only meet their financial needs
but can also adapt to the continually evolving environment. In addition to integrating consideration of
climate risk into our general investment process, we offer investment management offerings from
Rathbone Greenbank Investments, as well as the Rathbone Greenbank Global Sustainability Fund,
Rathbone Ethical Bond Fund and Rathbone Greenbank Multi-Asset Portfolios (GMAPs). We continue
to pursue an absolute reduction in our operational carbon footprint and offset residual emissions,
and in doing so respond to the operational climate-related risks and opportunities that we face as a
business. The focus of our operational carbon reduction efforts is primarily directed on the following
areas: resource consumption, energy efficiency, digitising our business and business travel.
By using climate scenario analysis across physical and transitional risks, we assess the potential
impact of climate change on our portfolio, therefore helping to determine the resilience of our strategy
as an organisation. Considering the implications of different scenarios on assets and operations helps
us better understand and quantify the risks and uncertainties our investee companies may face under
different hypothetical futures, and how current or potential trajectories could drive business value.
At a granular level, it allows us to identify companies that are particularly exposed to transition or
physical risks, and which ones are likely to benefit from low-carbon technology opportunities. We use
these results, combined with other climate metrics, to identify priority companies for engagement
and monitoring, and to explore the role we can play alongside policy and corporate action to mitigate
climate risk and promote climate-related opportunities. View our scenario analysis results in our
TCFD report.
An analysis of the resilience of
the business model and
strategy of the company or
LLP, taking into consideration
different climate-related
scenarios
Responsible
investment report
TCFD report
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
TCFD STATEMENT CONTINUED
RISK MANAGEMENT
Disclose how the organisation identifies, assesses and manages climate-related risks
68
Alignment level
TCFD report
Full
Partial
Further work required
TCFD RECOMMENDED
DISCLOSURE
Describe the
organisation’s processes
for identifying and
assessing climate-related
risks
2023 UPDATE
CFD REQUIREMENTS
ALIGNMENT
FURTHER INFORMATION
Risks are identified within a three-tier hierarchy, with the highest level containing business and
strategic, financial, conduct and operational risks. Risks are assessed on an inherent and residual
basis across a three-year period according to several impact criteria and includes consideration of
the internal control environment and/or insurance mitigation. Climate-related risks such as changes
to existing regulation are identified and assessed as part of our hierarchical approach to risk
management.
A watch list is maintained to record any current, emerging or future issues, threats, business
developments and regulatory or legislative change. The group’s risk profile, risk register and watch
list are regularly reviewed by the executive committee, senior management, board and group
risk committee.
We rely on the stress test work undertaken as part of our ICAAP process to recognise the potential
impact of climate or ESG risk on investment valuations, particularly for securities where ESG risk is
high or unmanaged, thereby connecting these risks to our financial stability.
A description of how the
company or LLP identifies,
assesses and manages climate-
related risks and opportunities
Risk management:
See pages 77-86
TCFD report
Describe the
organisation’s processes
for managing climate-
related risks
We have a well-established approach to risk management, which has continued to evolve in response
to the firm’s growth and external developments. Our risk governance, processes and infrastructure
are designed to ensure that appropriate risk management is applied to existing and emerging
challenges to the firm’s day-to-day activities and strategic objectives.
The board, executive committee and group risk committee regularly review and at least annually
formally approve the group’s risk appetite statement, ensuring it remains consistent with our strategy
and objectives. Our appetite framework is aligned with the group’s overall prudential requirements for
strategic, financial and non-financial risk (conduct and operational), and specific appetite measures
are set for each principal risk.
Risks that have triggered key risk indicators or risk appetite measures are reported and escalated in
accordance with our framework to the executive committee, the group risk committee and the board
as appropriate, so that risk mitigation can be reviewed and strengthened if needed.
Describe how processes
for identifying, assessing
and managing climate-
related risks are
integrated into the
organisation’s overall
risk management
Our risk management framework (RMF) provides the foundation and organisational arrangements for
identifying, monitoring, reviewing and continually improving risk management throughout the firm.
Climate-related risks are identified and assessed as part of our hierarchical approach to risk
management.
More specifically, our exposure to climate-related risks is most material through the investments we
make on behalf of our clients. The management of these risks is integrated into four of Rathbones’
core responsible investment principles and pillars: ESG integration, voting with purpose, engagement
with consequences and transparency. We are in the process of developing our ESG client reporting
framework to support clients in the comprehension and monitoring of the climate and ESG
characteristics of their portfolio.
A description of how processes
for identifying, assessing and
managing climate-related
risks are integrated into the
overall risk management
process in the company or LLP
Risk management:
See pages 77-86
TCFD report
Risk management:
See pages 77-86
TCFD report
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 TCFD STATEMENT CONTINUED
69
Alignment level
TCFD report
Full
Partial
Further work required
METRICS AND TARGETS
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material
TCFD RECOMMENDED
DISCLOSURE
2023 UPDATE
CFD REQUIREMENTS
ALIGNMENT
FURTHER INFORMATION
Describe the targets used
by the organisation to
manage climate-related
risks and opportunities
and performance
against targets
Disclose the metrics used
by the organisation to
assess climate-related
risks and opportunities in
line with its strategy and
risk management process
Using 2020 as a baseline year, we will work to achieve a 42% reduction in operational and supply
chain emissions by 2030, with 35% of the investments held on behalf of our clients having
committed to or having set their own targets by 2025 (57% by 2030). This is in line with our objective
of achieving 100% investment coverage by 2040. Our targets include listed equity and bonds
(common/preferred stock, corporate bonds, ETFs, investments in REITs, real estate).
These were validated in October 2022 by the SBTi, confirming that our scope 1 and 2 target ambition
has been determined in line with a 1.5°C trajectory. Our target for lending and investment portfolios
meets the SBTi’s criteria for ambitious climate goals, meaning they are in line with current
best practice.
These targets correspond to all climate-related risks and opportunities outlined in the table on
pages 71-74.
Description of the targets used
by the company or LLPs to
manage climate-related risks
and to realise climate-related
opportunities and of
performance against
those targets
We use several metrics to measure the progress of our net zero journey, which is the primary
measure of our response to climate-related risks and opportunities. Specifically, these include carbon
emissions (scopes 1, 2 and 3) and GHG intensity indicators. Therefore, percentage reduction across all
scopes is a key performance indicator used to measure our overall progress.
In addition to our operational metrics , we use a selection of other metrics to inform our climate risk
and engagement strategy. The primary performance indicator used to measure progress towards our
SBTi engagement target (detailed above) is the percentage of our portfolio which has set or committed
to setting SBTi targets. This year, 30% of our portfolio has set or is committed to setting an SBTi target,
up from 23% last year. Additionally, we have used a number of data sources to calculate the carbon
emissions associated with our clients’ investments (scope 3, category 15). We worked with our
research team to determine our absolute carbon emissions, weighted carbon emissions and average
weighted carbon intensity. We also consider the coverage of our portfolio that have set or committed
to SBTi aligned targets.
The key performance
indicators used to assess
progress against targets used
to manage climate-related
risks and realise climate-
related opportunities and a
description of the calculations
on which those key
performance indicators
are based
Disclose Scope 1, Scope
2, and, if appropriate,
Scope 3 GHG emissions,
and the related risk
We share our scope 1, 2 and material scope 3 GHG emissions and related risks on page 64, and for
more information on the metrics and targets used, see our standalone TCFD report.
Our environmental
impact: See pages
64-65
Responsible business
update
TCFD report
Our environmental
impact: See pages
64-65
Responsible business
update
TCFD report
Responsible business
update
TCFD report
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
TCFD STATEMENT CONTINUED
ENTITY LEVEL AND BUSINESS REPORTS
70
Alignment level
TCFD report
Full
Partial
Further work required
TCFD RECOMMENDED
DISCLOSURE
Disclose and areas where
entity approaches differ
from those shared in the
group disclosure
2023 UPDATE
CFD REQUIREMENTS
ALIGNMENT
FURTHER INFORMATION
Full details on the entity-level TCFD reports are found in the appendix of our standalone TCFD report.
Including:
n/a
— Rathbones Investment Management
— Rathbones Investment Management International
— Greenbank Investments
— Rathbones Asset Management
— Investec Wealth & Investment UK.
TCFD report
Rathbones
Investment
Management
Rathbones
Investment
Management
International
Greenbank
Investments
Rathbones Asset
Management
Investec Wealth &
Investment UK
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 TCFD STATEMENT CONTINUED
Magnitude
Risk trend
Time horizon
71
High
Medium-high
Medium
Low
Increasing
Stable
Decreasing
Long term
Medium term
Short term
For more details on how we identify, manage and
respond to these risks, please see the risk
management section of the full TCFD report.
CLIMATE-RELATED RISKS
As a business, we consider several transitional
and physical risks and opportunities. In the table
below, we have provided a description of each
climate-related risk and opportunity, an
assessment of the potential impact on the
business and our mitigation response. All risks
and opportunities outlined below are deemed
material to the business and correspond to
Rathbones group principal risk categories (full
definitions of which can be found on pages 82.
TRANSITIONAL
RISK TYPE AND DESCRIPTION
DESCRIPTION OF ACTUAL AND POTENTIAL IMPACT
MITIGATION RESPONSE
REPUTATIONAL
Failure to manage climate
transition risk within our
existing portfolios
RATHBONES GROUP
PRINCIPAL RISK CATEGORY:
Reputational
Claims for financial compensation, loss of business and loss of
market share.
Ongoing risk policy reviews, company engagement with clients and investees, and capability building
for our investment and fund managers.
An increase in the likelihood of compensation and loss of
business if we do not deliver on our fiduciary duty to clients by
managing climate transition in our portfolio construction. This
could also include a potential loss in market share if we fail to
accurately communicate the climate-related credentials of our
ethical and ESG focused investment funds.
We review our investment risk policy at least annually. This, alongside our engagement programme,
which includes a focus on climate and delivery of net zero plans by our investee companies, supports
our response to the changing landscape and increased regulation.
We offer training to our investment managers to support client conversations and risk review as part of
portfolio construction. This training helps to support open and transparent communication with our
stakeholders on consideration of climate risk as part of the investment process.
In 2023, our investment and fund managers continued to engage our clients on ESG integration.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
CLIMATE-RELATED RISKS CONTINUED
Magnitude
Risk trend
Time horizon
High
Medium-high
Medium
Low
Increasing
Stable
Decreasing
Long term
Medium term
Short term
72
TRANSITIONAL CONTINUED
RISK TYPE AND DESCRIPTION
DESCRIPTION OF ACTUAL AND POTENTIAL IMPACT
MITIGATION RESPONSE
POLICY
Failure to maintain compliance
with enhanced emissions-
reporting obligations and
readiness for emerging
regulations
RATHBONES GROUP
PRINCIPAL RISK CATEGORY:
Regulatory, compliance and legal
MARKET RISK
Inability to attract co-financiers
due to uncertain risks related to
climate change
RATHBONES GROUP
PRINCIPAL RISK CATEGORY:
Sustainability
PRODUCT AND SERVICES
Technology – substitution of
existing products and services
with lower emission options
RATHBONES GROUP
PRINCIPAL RISK CATEGORY:
Sustainability
Fines as a result of regulatory action, reputational damage and
increased operational costs due to unplanned remedial action.
Increased climate-related reporting obligations such as SECR and
TCFD incur additional costs to ensure compliance. We expect
that current reporting frameworks out for consultation may also
incur cost for compliance.
Ongoing monitoring of legislative landscape using internal and external resources.
We continue to ensure that our operating model supports our policy and reporting obligations by
increasing the resources allocated to the responsible business function.
We continue the annual retention of external consultants to support the business and ensure continued
compliance with existing and preparation for emerging regulation. Our strategic change agenda focuses
outcomes on emerging regulatory compliance, e.g. the Sustainability Disclosure Requirements.
In 2023, the executive risk committee reviewed our plan to respond to the expanded TCFD reporting
requirements including on-demand client communication.
If the business model does not respond in an optimal manner to
changing market conditions, including environmental and social
factors, such that sustainable growth, market share or profitability
is adversely affected. This could result in loss of clients that could
have a significant revenue impact.
We are aware of the long-term shift in customer expectations and preferences towards more ethical and
ESG focused funds and must adapt accordingly to this market change. In response to this, we continue
to offer ethical and ESG focused funds. Our Ethical Bond Fund reached £2.1 billion at 31 December
2023 (2022: £2.2 billion) while the Rathbone Greenbank Global Sustainability Fund now manages
£69.0 million (2022: £70.6 million).
Rathbones recognise the importance of technology and IT
processes in the transition to a net zero future. Failure to do so
poses a significant risk to our own operations and in our value
chain through increased costs and stranded assets.
We also offer the Rathbone Greenbank Multi-Asset Portfolios (RGMAPs) fund range. The RGMAPs funds
are managed by Rathbones’ multi-asset team and supported by Rathbone Greenbank Investments now
manage £388 million.
To support this growth, we continue to ensure we have the right resource in place and work to have data
available to help our assessment of the risk and opportunities for the investments we make on behalf of
our clients.
We continue to manage and monitor our carbon footprint accurately, which informs our carbon
reduction efforts in line with our SBTi targets. This is achieved through a reduction in utilised
datacentre capacity due to consolidation and transformation, moving services to cloud-based solutions.
Leveraging cloud services means we can scale up and down the services needed thereby saving energy,
cost and effort when not in use. In 2023, we decommissioned 16 physical servers and two storage
devices that allowed us to reduce our power draw by 15.31%. We also completed an assessment on the
remaining data centre and the benefits of migrating to Azure, which has an expected reduction of
203,575kg CO2e over a five-year period.
We further drive digitisation reducing paper in our processes. We have an established print
management system including a centralised print management and reporting facility, and improved
digital tooling. In 2023, an additional 27% of clients used MyRathbones to access valuation and tax
packs as well as custody location reports. At year end, 58% of clients were registered on MyRathbones.
This has also saved £3.5 million in print postage. In 2024, we will roll out digital contract notes that aim
to remove 240,000 paper copies.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
CLIMATE-RELATED RISKS CONTINUED
Magnitude
Risk trend
Time horizon
High
Medium-high
Medium
Low
Increasing
Stable
Decreasing
Long term
Medium term
Short term
73
PHYSICAL
RISK TYPE AND DESCRIPTION
DESCRIPTION OF ACTUAL AND POTENTIAL IMPACT
MITIGATION RESPONSE
ACUTE: EXTREME
WEATHER EVENTS
The impact of climate change-
related extreme weather events
RATHBONES GROUP
PRINCIPAL RISK CATEGORY:
Business continuity
Extreme weather could cause disruption to our business
operations and continuity. Whether directly or through the
impact on our supply chain. This may result in increased
operational expenses to rectify the damage.
CHRONIC:
CHANGES IN WEATHER
PATTERNS
The impact of long-term changes
in weather patterns, such as air
temperature and precipitation
RATHBONES GROUP
PRINCIPAL RISK CATEGORY:
Suitability
We have investments in global companies that are reliant on
efficient manufacturing. Chronic changes in weather patterns or
rising sea levels may impact their operations and consequently
the financial value of their company assets which may result in
increased operational expenses and lower returns for our clients.
This in turn leads to a risk of our current clients leaving and not
being able to attract new clients as they may feel we have not
considered the material risks impacting their investments.
We continue to enhance our business resilience framework. We maintain business continuity plans
(BCP) to facilitate our ability to continue operating in the event of a disruption. At Rathbones, we aim to
have effective, proportionate and resilient business continuity arrangements in place across the group,
to prevent, respond to, recover from and learn from disruption. We ran a cycle of contingency testing
in 2023.
Outside of our direct operations, we maintain oversight of critical and significant supply chain and
undertake an ESG review on all of our critical, strategic and preferred suppliers. This includes whether
they have set environmental targets aligned with a net zero commitment. At year end, we had reviewed
76% of in scope suppliers, more details on the findings of which can be found in our responsible
business update. We also run our third-party suppliers through a spend-based footprint calculation tool
to understand our full scope-three value chain footprint.
We have developed responsible investment frameworks and data to focus on issues such as materiality,
sustainability alignment, climate and other ESG metrics.
Over the past year we have enhanced these frameworks with more granular detail, taking into account
sectoral considerations. In tandem, we are developing sector specific standards informed by industry
focused indicators, our own research expertise and engagement activities.
The application of the integration approach is tailored to fit the relevant investment service or mandate.
This means that the investment manager or fund manager is accountable for interpreting ESG and
stewardship information to inform investment decisions in the context of the suitability of the mandate
or client objective.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
CLIMATE-RELATED
OPPORTUNITIES
Magnitude
Risk trend
Time horizon
High
Medium-high
Medium
Low
Increasing
Stable
Decreasing
Long term
Medium term
Short term
74
Importantly, the transition to a low-carbon economy also provides Rathbones with opportunities
which, if acted on, stand to benefit the business. An overview, timeframe and a description of our
strategy to realise each opportunity is provided in the table below.
OPPORTUNITY AND DESCRIPTION
DESCRIPTION OF ACTUAL AND POTENTIAL IMPACT
STRATEGY TO REALISE OPPORTUNITY
PRODUCTS AND SERVICES
Shift in consumer preferences
leading to increased revenues
from increased demand for
products and services. All of the
regulatory opportunity drivers
listed have the potential to affect
our business through the impact
they may have on companies or
assets in which we invest.
RATHBONES GROUP
PRINCIPAL RISK CATEGORY:
Sustainability
MARKETS
Increase market share by
responding to changing
stakeholder demands
RATHBONES GROUP
PRINCIPAL RISK CATEGORY:
Market and reputation
An opportunity for us lies in the development of new products
and solutions, developing an offering that meets client needs.
All of the regulatory opportunity drivers listed have the potential
to affect our business through the impact they may have on
companies or assets in which we invest.
Where appropriate, and in line with our conflicts of interest
policy, we will seek to engage with reputable sustainability
indexes or collaborative efforts. In line with this, we have
become signatories or aligned with several high-level
collaborative organisations.
We support the work of the: – Principles of Responsible
Investment (PRI) – Institutional Investors Group on Climate
Change (IIGCC) – Net Zero Asset Managers Initiative – Net Zero
Investment Framework. As members of such organisations, we
have the capacity to contribute towards the improvement of
several important climate and ESG issues.
We believe that ESG issues – both risks and opportunities – can
affect the long-term performance of investments. We continue to
build out our research, data and decision frameworks so that we
can better understand and weigh up ESG factors alongside other
investment considerations.
Our client team informs our client proposition, strategy and insight. In 2023, further enhancements
were made to our ESG integration approach. This included further developments to our climate metrics.
We deliver innovative low-carbon solutions that demonstrate our commitment to managing climate
risks and impacts effectively throughout our clients’ financial journeys. By embedding climate risk
thoroughly across client portfolios, we will identify opportunities created by the transition to a
low-carbon economy.
Future client offerings will leverage existing solutions across our business, from our ethical, sustainable
and impact investment specialists at Greenbank, through to sustainable and ethical funds already
available through Rathbones Asset Management, such as the Rathbone Greenbank Global Sustainability
Fund and the new fund range released in 2021, our Rathbone Greenbank Multi-Asset Portfolios
(RGMAPs) fund range. In 2023 RAM released our global sustainable bond fund.
Through our responsible investment and responsible business committees, we have the capacity to
monitor regulatory opportunities as they emerge and incorporate them into our investment policies.
This should enable us to adapt our investment strategies as necessary in order to maintain current levels
of investment performance and continue to meet our clients’ expectations in terms of projected returns.
We believe this approach could support us in expanding our customer base.
We have made it a priority to join collaborative efforts and become signatories of reputable indexes, as
we recognise that many ESG issues are systemic, and hence are more suited to coordinated cross-
sectoral action.
We responded to sustainable disclosure requirements (SDR) consultation, supporting the development
of transparent client communication on sustainability matters. We continued our role as lead investor
for SSE Plc and National Grid Plc through Climate Action 100+ and as lead investors for an IIGCC
engagement with Rio Tinto and Thyssenkrupp on net zero audits. We joined the Taskforce on Nature-
related Disclosures (TNFD) Forum to support broader discussions on biodiversity.
Our aim is to develop a more comprehensive view of a business’ strategy, the way it executes this
strategy and the dynamics of its sector than can be achieved solely through a financial lens. We do this
by using ESG data, engaging with companies and exercising our carefully considered judgement. This
helps us identify companies with stronger sustainability performance and those with whom, through
engagement, we see potential to improve business practices to create value for shareholders.
We continue to integrate ESG factors into our investment processes. In 2023, we identified companies
for climate-related engagement and in line with our pillars of responsible investment. Using scenario
analysis and the map of SBTi commitments against our clients’ investments, we identified priority
companies that we believe by engaging with we could support future alignment to a 1.5oC world.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NON-FINANCIAL AND SUSTAINABILITY
INFORMATION STATEMENT
The information presented here, including the sections referred to, represents our non-financial information statement as required by sections 414CA and 414CB
of the Companies Act 2006. The next pages contain a summary of our approach to management of these aspects of our business and measuring our performance.
75
ISSUE AND SUMMARY
RELEVANT POLICIES AND POLICY OUTCOMES
OVERVIEW OF DUE DILIGENCE PROCESS
EMPLOYEES
We are a people business, it is therefore imperative
that our strategy sets a culture that drives
performance and builds long, rewarding careers
for our colleagues. Based around a common set of
values and our DE&I commitment we are focused
on becoming a more diverse business that will
support us in delivering value to our clients.
Our people: See page 61
— Code of conduct
— Equal opportunities policy
— Health and safety policy
— Compliance framework policy
— Anti-bribery policy
— Rathbones is the employer of choice for the
wealth sector.
SOCIAL IMPACTS
We are committed to being a trusted member of
the communities in which we operate. The
Rathbones Group Foundation supports projects
that align with our focus on opportunities for
disadvantaged youngsters.
Society and communities: See page 63
— Code of conduct
— Community investment Guidelines
— Anti-bribery policy
— Rathbones is a trusted partner in the
communities in which we operate.
— Regular employee engagement surveys
— Workforce engagement programme
— Regular tracking of people metrics and trends
— Diversity, equality and inclusion strategy
— Executive sponsored inclusion networks.
— Responsible business committee has oversight
of our responsible business programme and
how we work to have a positive impact.
HUMAN RIGHTS
Rathbones is committed to respecting the human
rights of others. Our approach aligns with our
membership of the UNGC and commitment to
provide decent work and economic growth.
Society and communities: See page 63
— Code of conduct
— Modern slavery statement
— Anti-bribery policy
— Rathbones understands and manages our human
rights and modern slavery risk.
— Responsible business committee reviewed our
modern slavery statement and received reports
on our ongoing supplier engagement on ESG
matters
— 76% of our suppliers have been reviewed in
alignment with our ethics questionnaire.
MORE INFORMATION
OUR BUSINESS MODEL
Read more: See page 21
OUR KEY PERFORMANCE INDICATORS
Read more: See page 27
OUR PRINCIPAL RISKS
Read more: See page 82
OUR PEOPLE
Read more: See page 61
SOCIETY AND COMMUNITIES
Read more: See page 63
For more information on our strategy
see pages 22 to 26.
Published policies can be found on
our website.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 NON-FINANCIAL AND SUSTAINABILITY INFORMATION STATEMENT CONTINUED
ISSUE AND SUMMARY
RELEVANT POLICIES AND POLICY OUTCOMES
OVERVIEW OF DUE DILIGENCE PROCESS
CLIMATE AND ENVIRONMENT
In 2021, Rathbones committed to achieve net
zero emissions by 2050 at the latest. In 2022, our
SBTi aligned near-term targets were validated.
We continue to monitor and manage the carbon
emissions of our operations, recognising that the
most material exposure is through the
investments we make on behalf of our clients.
Our environmental impact: See page 64
— Responsible investment policy
— Group’s climate statement
— Net zero emissions commitment
— Fossil fuel statement
— Thermal coal exclusion policy
— Rathbones delivers progress against our 2050 net
zero commitment and near-term targets.
ANTI-CORRUPTION AND BRIBERY
Rathbones has a zero-tolerance towards anti-
bribery and corruption.
All employees must comply with our code of
conduct and complete our conflicts of interest
submission.
Society and communities: See page 63
— Anti-bribery policy
— Conflicts of interest policy
— Whistleblowing policy
— Rathbones maintains our zero tolerance to
anti-bribery and corruption culture seeking to
prevent, detect and report any identified cases of
bribery and corruption
— In 2023, there were three cases raised via our
whistleblowing hotline.
76
MORE INFORMATION
OUR ENVIRONMENTAL IMPACT
Read more: See page 64
OUR TCFD REPORT
Read more: See page 66
— Climate governance structure in place
— Responsible business committee monitors the
climate-related risks operationally
— Responsible investment committee oversee the
investment aspects of our net zero commitment
and the impact on the investments we hold on
behalf of our clients
— Engagement committee proposes our
stewardship programme
— Executive risk committee oversees an annual
review of our climate risk appetite.
— Risk-based training for employees, in 2023 it
was completed by 95.2% of in scope employees
SOCIETY AND COMMUNITIES
— Due-diligence of all third-party relationships
— Gifts and entertainment policy
— Conflict of interest policy
— Whistleblowing policy.
Read more: See page 63
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 RISK MANAGEMENT AND CONTROL
77
Our approach to risk management is
fundamental to supporting the delivery
of our strategic objectives. Our risk
governance and risk processes are designed
to enable the firm to manage risk effectively
in accordance with our risk appetite and to
support the long-term future of the firm.
MANAGING RISK
The board has overall responsibility for risk
management across the group, regularly assessing
the most significant risks and emerging threats to
the group’s strategy. The board delegates oversight
of risk management activities to the group risk
and audit committees. Our risk governance and
risk management framework supports the chief
executive and executive committee members
with their day-to-day responsibility for
managing risk.
RISK CULTURE
The risk culture embedded across the group
enhances the effectiveness of risk management
and decision-making. The board promotes a
strong risk culture, reinforced by our executive
and senior management team, which encourages
appropriate behaviours and collaboration on
managing risk across the group.
Risk management is an integral part of
everyone’s day-to-day responsibilities and
activities; it is linked to performance and
development, as well as to the group’s
remuneration and reward schemes. We aim
to create an open and transparent working
environment, encouraging employees to engage
positively in risk management in support of the
achievement of our strategic objectives.
Read more about our risk management
process: See page 80
RISK GOVERNANCE AND THREE LINES OF DEFENCE
We operate a three lines of defence model to support risk governance and risk management across the group
BOARD
AUDIT COMMITTEE
GROUP RISK COMMITTEE
GOVERNANCE
Sets strategy and risk appetite
across the group, and is ultimately
accountable for risk management.
Monitors and reviews the
effectiveness of internal controls
with oversight of the internal
audit function in line with the
group’s risk profile on behalf of the
board. It also oversees the
appointment and relationship
with the external auditor.
Oversees effectiveness of the
risk management framework
and activity across the group.
Advises the board on risk appetite,
risk assessment, risk profile and
risk culture.
EXECUTIVE COMMITTEE
EXECUTIVE RISK COMMITTEE
BANKING COMMITTEE
First line committees with
responsibility for management
of risk and internal control
across the group.
BUSINESS AREAS AND LINES OF DEFENCE
1
2
3
FIRST LINE OF DEFENCE
SECOND LINE OF DEFENCE
THIRD LINE OF DEFENCE
Senior management
Business operations and control functions
Risk, compliance and anti-money
laundering functions
Internal audit
RESPONSIBILITY
Responsible for managing risk in line with
risk appetite by developing and maintaining
an effective system of internal control.
RESPONSIBILITY
Responsible for the risk management
framework and the independent
oversight and challenge of first line
risk management activity.
RESPONSIBILITY
Responsible for providing independent
assurance to senior management on the
effectiveness of governance, risk
management and internal control.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 78
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RISK MANAGEMENT AND CONTROL CONTINUED
RISK MANAGEMENT FRAMEWORK
(RMF) OVERVIEW
Our RMF provides the foundation for identifying,
evaluating, managing and reporting risk and
continually improving the effectiveness of risk
management throughout the firm.
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RISK GOVERNANCE
BOARD AND
COMMITTEES
ROLES AND
RESPONSIBILITIES
POLICIES
Read more about our risk management
process: See page 80
RISK APPETITE
RISK STRATEGY
RISK FACTORS
PAST
— Loss events
— Near misses
— Could it happen here
CURRENT
— Issues
— Change
— Threats
FUTURE
— Emerging risks
— Horizon scanning
— Scenario analysis
RISK
REPORTING
RISK
IDENTIFICATION
RISK
MANAGEMENT
PROCESS
RISK MITIGATION
AND CONTROL
RISK
EVALUATION
RISK DATA, SYSTEMS AND INFRASTRUCTURE
RISK CULTURE AND TRAINING
RISK BASED DECISION-MAKING
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79
Our strategic priorities
1 Enriching the client and adviser
proposition and experience
2
Supporting and delivering growth
3 Inspiring our people
4 Operating more efficiently
RISK CATEGORIES
RISK APPETITE STATEMENT
STRATEGIC ALIGNMENT
BUSINESS AND
STRATEGIC RISK
Business and strategic risks will be identified and actively
managed to protect the ability to deliver sustainable growth.
BUSINESS RESILIENCE
Supporting and delivering growth
Change initiatives will be orientated towards longer-term
client, stakeholder and societal expectations.
2
FINANCIAL RISK
Financial risks will be actively managed to preserve the
group’s overall resilience.
FINANCIAL RESILIENCE
Supporting and delivering growth
NON-FINANCIAL RISK
(CONDUCT AND
OPERATIONAL)
Credit and market risk exposures will be managed to board
approved instruments and limits in order to protect company
assets and maintain prudent levels of liquidity and regulatory
own funds.
The group will also continually monitor and respond to risks
arising from its pension scheme obligations.
2
Conduct and regulatory risks associated with our business
are recognised; however, we have no appetite for intentionally
inappropriate behaviour or action by any entity within the
group or employees that could have a material detrimental
impact on clients, key stakeholders and our reputation.
REGULATORY AND
OPERATIONAL RESILIENCE
Enriching the client and adviser
proposition and experience
Operational risks and losses can arise from inadequate
or failed internal processes, people or systems, or from
external events. We have an extremely low appetite for losses
and no appetite for systemic or materially high risk events
that could affect the operational resilience of important
business services.
Inspiring our people
Operating more efficiently
1
3 4
RISK MANAGEMENT AND CONTROL CONTINUED
RISK APPETITE
The board approves the firm’s risk appetite
statement and framework at least annually to
ensure it remains consistent with our strategic
objectives and prudential responsibilities.
Specific risk appetite statements are set and
measures established for each principal risk.
The risk appetite framework supports strategic
decision-making, as well as providing a
mechanism to monitor our risk exposures.
The position against our risk appetite statements
and measures is assessed and reported on a
regular basis to the executive committee, group
risk committee and the board.
Given the current economic outlook and the
evolving regulatory landscape within the sector,
the board remains committed to having a
relatively low overall appetite for risk in line
with our strategy. The board recognises our
performance is susceptible to fluctuations in
investment markets and has the potential to
bear losses from financial and non-financial
risks from time to time, either as reductions in
income or increases in operating costs.
Risk appetite measures and thresholds have
been approved by the board for 2024, taking into
account the combination between Rathbones
and IW&I. This year’s measures reflect the scale
of the enlarged group but, other than this, there
have been no other material changes to our
appetite for risk. As the business models
integrate, our position against these measures
will be closely monitored and exceptions
reported as required.
Read more about our strategic priorities:
See page 22
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
RISK MANAGEMENT AND CONTROL CONTINUED
RISK MANAGEMENT PROCESS
Our risk management process is a defined
approach to identify, assess and respond to risks
that could affect delivery of strategic objectives
and annual business plans. The board, executive
and senior management are actively involved in
this process.
Risks are identified within a three-tier hierarchy,
with the highest level containing business and
strategic, financial, conduct and operational
risks. Risks are assessed on an inherent and
residual basis across a three-year period
according to several impact criteria, which
include consideration of the internal control
environment and/or insurance mitigation.
We maintain a watch list to identify and evaluate
current issues and emerging risks as a result of
business development or changes in the
regulatory landscape, as well as threats and
issues in the wider external environment.
This helps inform the view of the firm’s current
and longer-term risk profile, and influences
management’s decisions and actions.
Stress tests are undertaken to include
consideration of the impact of a number of
severe but plausible events that could impact
the business. This work takes account of the
availability and likely effectiveness of
mitigating actions that could be taken to
avoid or reduce the impact or likelihood of
the underlying risks materialising.
The group’s risk profile, risk register, watch
list and stress tests are regularly reviewed
and challenged by the executive, senior
management, group risk committee and
the board.
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— Risk information is routinely reported at
governance committees across the group
— Group risk committee convenes at
least quarterly
— Executive risk committee meets
every month
— A standing agenda across both committees
is defined to ensure complete coverage of
risk reporting and executive attendance
is tracked.
— Control environment established to
mitigate risks to an appropriate level
— Independent control assurance processes
are established across the three lines of
defence as well as through routine reviews
conducted by external auditors
— Risk indicators are developed for each
principal risk to provide an early signal of
increasing risk exposure. Thresholds dictate
an early warning trigger, a breach of risk
tolerance through to invocation of the
recovery and resolution plan
— ICAAP and ILAAP is used to calculate
regulatory capital required in the event that
principal risks should crystallise.
RISK
MANAGEMENT
PROCESS
— Risks are identified in the context of the
group’s strategic objectives and aligned with
our approved group risk taxonomy
— Risks are identified from a top-down and
bottom-up basis from group executive and
business unit risk owners
— In addition, a watch list is a key tool used to
highlight current and emerging issues,
potential threats and both business and
regulatory change likely to affect the group’s
overall risk profile
— Enterprise risk management (ERM)
software is embedded to capture all
risk information.
— Risks are assessed on both an inherent and
residual basis considering their impacts
and likelihood
— Risk impact is considered through multiple
lenses including client, financial, regulatory
and reputational
— Likelihood is considered over a three-year
period
— Risk events and issues are recorded within
the ERM software and linked to risks based
on materiality to help evaluate control
effectiveness and the residual risk ratings
— Internal Capital Adequacy Assessment
Process (ICAAP) and Internal Liquidity
Adequacy Assessment Process (ILAAP)
stress test principal risks across the group.
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STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
RISK MANAGEMENT AND CONTROL CONTINUED
EXTERNAL EMERGING RISKS
AND THREATS
Emerging risks, including legislative and
regulatory change, which have the potential to
impact the group and delivery of our strategic
objectives, are monitored through our watch list.
During the year, the executive committee
continued to recognise and respond to a number
of emerging risks and threats to the financial
services sector as a whole and to our business.
In addition, throughout 2023 we have continued
to develop our approach to monitoring strategic
risks and horizon threats.
Our view for 2024 is that we can reasonably
expect current market conditions and
uncertainties to remain, given the wide range of
global economic and political scenarios which
could emerge.
81
NEAR TERM
GLOBAL AND UK
SPECIFIC POLITICAL
TENSIONS
Geopolitical risk remains a significant threat to financial stability. War in the Middle East and war between Russia and Ukraine as well as
tension between the US and China has driven increased inflation and market volatility. To help us identify and monitor this risk we’ve
partnered with geopolitical risk experts to define relevant red flags that will in turn help us to adjust our portfolios accordingly.
UK AND GLOBAL
ECONOMIC
CHALLENGES
The UK economy continues to show signs of stress accompanied by falling inflation. The former is mainly a consequence of past increases
in interest rates, while the latter has been helped by easing global price levels, particularly for energy. Analysts predict the GDP growth for
the UK will be modest and momentum in other economies will be slower.
CYBER THREATS
AND SUPPLY CHAIN
RESILIENCE
The sophistication of cyber attacks is ever-evolving, especially as our digital environment advances. Attacks have become far more
persistent with a notable increase in frequency since the invasion of Ukraine. Rathbones is committed to enhancing the technology
infrastructure to help mitigate the risk.
MEDIUM TERM
CHANGING
REGULATORY
EXPECTATIONS
The regulatory landscape is an area of fast paced change centred on client advocacy, transparency and integrity. Of note Consumer Duty
requirements have successfully been implemented throughout 2023. Work on fair consumer outcomes will continue following the
issuance of the Dear CEO letter FCA Expectations for Wealth Managers and Stockbroking Firms. The look ahead shows that 2024 will be
another busy year with key implementation dates for regulatory change.
PANDEMIC
Whilst operational resilience to a future pandemic is much improved following the COVID-19 outbreak, a future infectious disease
epidemic could emerge and with that comes the economic repercussions and slow recovery from it.
CLIMATE CHANGE
TRANSITION RISK
Climate and environmental risk is a key focus as we move towards achieving net zero emissions by 2050 or sooner. Alongside reviewing
our governance structures, we will continue to integrate data, develop metrics and increase disclosures in our client reporting.
DIGITAL
INNOVATION
NEW ENTRANTS
TO THE MARKET
AND ARTIFICIAL
INTELLIGENCE AI
LONGER TERM
GENERATIONAL
WEALTH CHANGE
Developing technology across the wealth management sector poses a continual threat to maintaining a competitive advantage. Digital
capability is less of a barrier to engaging clients and servicing their needs, in particular younger generations where there is an expectation
of online accessibility. Rathbones is implementing a strategic programme of change to ensure our digital technology meets the needs of
our prospective and existing clients.
The threat of new non-traditional entrants to the investment sector is a higher probability with Fintech developers challenging
established investment providers with their products and services. In addition, AI capabilities, from advanced analytics, automation
and predictive intelligence is fast becoming seen as a future competitive advantage within the financial sector.
Studies show that the over 45s and especially the post-war ‘baby boomers’ retain a significant portion of the UK wealth in the form of
property and pensions. This wealth will begin to transfer to younger beneficiaries over the next 30 years. Generational differences could
drive changes in behaviours and appetite towards investments.
SOCIAL CARE
FINANCING
Accessibility and inequality in the adult social care sector has been a topic of concern for some time and it continues to be a risk to assets
under management, with clients drawing on their investments to pay for their care fees.
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This assessment considers a range of outcomes
that could be experienced, including the
crystallisation of other risks. For some, the
impact of events can also be influenced by
external factors, such as market conditions.
We use ratings of high, medium, low and very low
in our risk assessment. High-risk items are those
that have the potential to impact the delivery of
strategic objectives, with medium, low and very
low rated risks having less impact on the group.
Likelihood is similarly based on a qualitative
assessment.
We consider that the growth of the group
following the combination with IW&I has
proportionately increased the risk profile. The
ratings of the risks below are relative to the new
scale of the organisation.
PRINCIPAL RISKS: RESIDUAL ASSESSMENT
Information security and cyber
Investment performance
Change
Integration
Regulatory
compliance and legal
Third-party supplier
Sustainability
People
Suitability
Pension
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IMPACT
Risk profile
Movement
Low risk
Medium risk
High risk
Increasing
Stable
Decreasing
New
PRINCIPAL RISKS
PROFILE AND MITIGATION OF
PRINCIPAL RISKS
Overall, we believe the group’s underlying risk
profile is stable; however, during the past year it
has fluctuated as a result of market volatility and
the changing economic and political landscape.
We continually assess our risk profile against
both internal and external risk drivers and
are investing further in our people, processes
and technology to improve risk management.
We remain focused on client service, the
resilience of our business and wellbeing of
our colleagues and we believe our approach
continues to be effective.
Based upon our risk assessment processes,
the board believes that the principal risks and
uncertainties facing the group that could impact
the delivery of our strategic objectives have been
identified below. These risks continue to reflect
our strategic initiatives and transformation
programme, continual enhancements to the
group’s business model in response to
environmental, societal and regulatory
expectations, the evolving cyber threat
landscape, operational resilience in relation to
our supply chain, the importance of our people
and the economic and political environment.
The board remains vigilant to potential risks that
could arise from longer-term trends in society,
the economy and markets, and to regulatory
risks that, in turn, may arise from the continuing
development of law, regulation and standards.
Information about our principal risks is set
out below. The risks are mapped out by their
likelihood and impact on a residual risk basis,
having considered the effectiveness of controls
in place to mitigate the risk.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
PRINCIPAL RISKS CONTINUED
Risk profile
Risk trend
Low
Medium
High
Increasing
Stable
Decreasing
New
83
2023 OVERVIEW
Throughout 2023 the principal risk profile has
been relatively stable. We have reflected on both
Rathbones’ internal and external environment
over the course of 2023 and have made some
adjustments to the principal risks for 2024. We
have removed credit as it is no longer a material
concern due to the nature of our exposures. We
have introduced a new risk, integration, in
recognition of the recent completion of the
combination with IW&I UK. We foresee this
risk to be ongoing into 2024 and 2025. In light
of macroeconomic conditions and changes in
the regulatory landscape the prominence of
investment performance has increased therefore
this has been added. Change risk was a
significant risk in 2023 and this remains the
case for the year ahead. Rathbones’ digital
transformation continues to be a strategic
imperative. Our remaining risks remained stable
throughout 2023, with suitability risk reducing
following extensive investment in the
development of policies, procedures
and oversight.
RISK AND OWNER
CONTROL ENVIRONMENT
RISK TREND 2023
CHANGE
The risk that the change portfolio does not support delivery of the
group’s strategy
RISK OWNER: chief operating officer
RISK PROFILE:
RISK APPETITE MEASURES:
— Priority programmes rated red
— Programme overspend
INTEGRATION
The risk that the integration of systems, people and processes
fails or is ineffective
RISK OWNER: chief operating officer
RISK PROFILE:
RISK APPETITE MEASURES:
— Budget compliance
— Cost synergy
INVESTMENT PERFORMANCE
The risk that investment performance fails to meet clients’
objectives or expectations
RISK OWNER: managing director Rathbones Investment
Management
RISK PROFILE:
RISK APPETITE MEASURES:
— Actual performance versus performance benchmark
— Portfolio alignment
— Assessment of fund value rating
— Executive and board oversight of material change programmes
— Differentiated governance approach to strategic change programmes and
business projects
— Dedicated change delivery function and use of internal and, where required,
external subject matter experts
— Two-stage assessment, challenge and approval of project plans
— Planning and budgeting, monitoring of variances and actions to address.
This risk has increased in 2023 as our digital
transformation programmes moved through critical
delivery milestones. Executive and senior management
oversight has remained agile and focused on targeted
delivery outcomes, benefits realisation, budget
alignment and the impact of change on our risk profile.
— Integration project plan
— Executive oversight of integration programme
— Board oversight of programme delivery
— Transformation office programme board oversight and delivery-focused
operating model
— Cost/benefit monitoring
— KRI tracking
— External party appointed to provide independent assurance.
This is a new risk in 2023 as we begin the process of
integrating Rathbones and IW&I businesses.
An Integration Management Office (IMO) was established
in September to coordinate the delivery of our
integration.
The impact of integration on other risks will be
considered throughout 2024.
— Investment policy
— Performance versus benchmarking monitoring
— Defined investment strategy
— Exception reporting
— Product and proposition oversight
— Client engagement and portfolio reviews.
Challenging market conditions are likely to continue in
2024. The position of client portfolios and investment
performance are closely monitored.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
PRINCIPAL RISKS CONTINUED
Risk profile
Risk trend
Low
Medium
High
Increasing
Stable
Decreasing
New
84
RISK AND OWNER
CONTROL ENVIRONMENT
RISK TREND 2023
PENSION
The risk that the cost of funding our defined benefit pension
schemes increases, or their valuation affects dividends, reserves
and regulatory own funds
RISK OWNER: chief financial officer
RISK PROFILE:
RISK APPETITE MEASURES:
— Pillar 2A Net Stressed deficit
— IFRS deficit
REGULATORY COMPLIANCE AND LEGAL
The risk of failure by the group or a subsidiary to fulfil its
regulatory or legal requirements and comply with the
introduction of new or updated regulations and laws
RISK OWNER: group chief executive officer and
chief risk officer
RISK PROFILE:
RISK APPETITE MEASURES:
— Compliance monitoring review outcomes
— Regulatory review outcomes
— Complaints data
SUSTAINABILITY
The risk that the business model does not respond sufficiently to
changing market conditions, including environmental and social
factors, such that sustainable growth, market share or profitability
are adversely affected
RISK OWNER: group chief executive officer
RISK PROFILE:
RISK APPETITE MEASURES:
— Net organic growth rate
— Net organic outflow rate
— Climate targets
— Diversity targets
— Board, senior management and trustee oversight
— Monthly valuation estimates
— Triennial independent actuarial valuations
— Investment policy
— Senior management review and defined management actions
— Annual ICAAP.
The group continues to work with the pension scheme
trustees and advisers to manage this risk.
— Board and executive oversight
— Management oversight and active involvement with industry bodies
— Compliance monitoring programme to examine the control of key
regulatory risks
— Separate anti-money laundering function with specific responsibility
— Oversight of industry and regulatory developments
— Documented policies and procedures
— Employee training and development
— Panel of external legal advisers
— Whistleblowing policy and process.
While this risk has remained stable in 2023, the
landscape and expectations on firms and our sector
continue to evolve. We have continued to invest in and
develop our first and second line oversight teams,
including the deployment of software to support
regulatory compliance.
The introduction of Consumer Duty in 2023 was a key
priority and its significance continued as new policies,
procedures and governance begun to be embedded.
— Board, executive and responsible business committee oversight
— A documented strategy, including responsible investment policy
— Monitoring of strategic risks
— Annual business targets, subject to regular review and challenge
— Regular reviews of pricing structure and client propositions
— Continued investment in the investment process, service standards
and marketing
— Regular competitor benchmarking and analysis
— Trade body participation
— ESG factors integrated into the investment process
— Dedicated responsible investment project to drive changes to achieve
sustainability goals
— Diversity targets included in risk appetite measures.
2023 has presented challenging market conditions given
the external environment, including a volatile economic
and political landscape.
We do, however, have a strong balance sheet and
recognised market position.
Climate risk has been integrated into our risk
management framework to support the transition to
net zero.
Our stakeholders will become more demanding in
response to evolving expectations of firms to manage
climate and other ESG risks, which remain a key priority
of our responsible business agenda.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
PRINCIPAL RISKS CONTINUED
Risk profile
Risk trend
Low
Medium
High
Increasing
Stable
Decreasing
New
85
RISK AND OWNER
CONTROL ENVIRONMENT
RISK TREND 2023
INFORMATION SECURITY AND CYBER
The risk of inappropriate access to manipulation, or disclosure of,
client or company-sensitive information
RISK OWNER: chief operating officer
RISK PROFILE:
RISK APPETITE MEASURES:
— Number of cyber incidents
— Number of data privacy events
— Cyber external threat landscape rating
— Board and executive oversight
— Data governance committee and information security steering group
oversight
— Information security policy, data protection policy and associated
procedures
— System access controls and encryption
— Penetration testing and multi-layer network security
— Training and employee awareness programmes
— Physical security.
The threat landscape in 2023 continues to be influenced
by the volatile external environment. However, we
continue to invest in our control environment and
resources to improve our security posture and ensure
our infrastructure and employees are well positioned
against an ever-changing threat landscape.
THIRD-PARTY SUPPLIER
The risk of one or more third-party suppliers failing to provide or
perform authorised and/or outsourced services to standards
expected by the group, impacting the ability to deliver core
services. This includes intra-group outsourcing activity.
RISK OWNER: chief operating officer and chief executive officer,
Rathbone Asset Management
— Board and executive oversight
— Third-party supplier and outsourcing framework
— Senior dedicated relationship managers
— Supplier contracts and defined service level agreements/KPIs
— Supplier due diligence and approval process
— Close liaison, contractual reviews and regular service review meetings
— Documented policy and procedures
— Whistleblowing policy and process.
Our framework for third-party supplier and outsourcing
risk management has continued to be embedded and
developed in 2023. We continue to focus on technology
enhancements to further improve our controls in this
area, which also supports operational resilience. The
change agenda will continue to drive this work as we
on-board new strategic partners.
RISK PROFILE:
RISK APPETITE MEASURES:
— Supplier chain performance
PEOPLE
The risk of loss of key employees, lack of skilled resources or
inappropriate behaviour or actions. This could lead to lack of
capacity or capability threatening the delivery of business
objectives, or to behaviour leading to complaints, litigation or
regulatory action
RISK OWNER: chief people officer
RISK PROFILE:
RISK APPETITE MEASURES:
— Regretted leavers
— Turnover ratio
— Employee behaviour
— Board and executive oversight
— Succession and contingency planning
— Transparent, consistent and competitive remuneration schemes
— Contractual clauses with restrictive covenants
— Continual investment in employee training and development
— Employee engagement survey
— Appropriate balanced performance measurement system
— Culture monitoring and reporting
— Conduct risk framework and committee
— Training and competence framework
— Whistleblowing policy and process.
We have continued to operate effectively in spite of a
difficult labour market over the past few years.
Continued high inflation and cost of living pressures will
remain a risk driver into next year. Management action,
and our agile approach to support our colleagues, has
been positively received however, we continue to engage
frequently through our employee survey tool. Employee
engagement continues to be positive with satisfaction
scores exceeding the industry benchmarks.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
PRINCIPAL RISKS CONTINUED
Risk profile
Risk trend
Low
Medium
High
Increasing
Stable
Decreasing
New
86
RISK AND OWNER
CONTROL ENVIRONMENT
RISK TREND 2023
SUITABILITY
The risk of an unsuitable client outcome either through service,
investment mandate, investment decisions taken, investment
recommendations made or portfolio or fund construction
RISK OWNER: managing director Rathbones Investment
Management
RISK PROFILE:
RISK APPETITE MEASURES:
— Timely portfolio reviews
— Timely client reviews
— Quality scores
— Board, executive and general managers committee oversight
— Investment governance and structured committee oversight
— Management oversight and segregated quality assurance and
performance teams
— Performance measurement information and attribution analysis
— ‘Know your client’ (KYC) suitability processes
— Weekly investment management meetings
— Training and competence framework
— Investment manager reviews through supervisor sampling
— Compliance monitoring
— Defined investment mandates and tracking
— Exception reporting
— Complaints analysis.
We have continued to improve processes and oversight
of investment and suitability risk in 2023, focusing on
training, management information and new ways of
working. The successful launch of our ‘Reliance on
Adviser’ proposition in particular has supported the
improvement of this risk. Our ongoing investment in
technology will also further improve suitability
processes and controls in 2024.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
VIABILITY STATEMENT
ASSESSMENT OF THE
COMPANY’S PROSPECTS
The board reviews its strategic plan annually.
This, alongside the ICAAP and ILAAP, forms the
basis for capital planning which is discussed
periodically with the Prudential Regulation
Authority (PRA).
During the year, the board has considered a
number of stress tests and scenarios which focus
on material or severe but plausible events that
could impact the business and the company’s
financial position. The board also considers the
plans and procedures in place in the event that
contingency funding is required to replenish
regulatory capital or liquidity. On a monthly
basis, critical capital projections and sensitivities
have been refreshed and reviewed, taking into
account current or expected market movements
and business developments.
The board’s assessment considers all the
principal risks identified by the group and
assesses the sufficiency of our response to all
Pillar 1 risks (defined as credit, market and
operational risks, including conduct) to the
required regulatory standards. In addition,
the crystallisation of the following events
was considered for enhanced stress testing: a
significant fall in the value of FUMA, a loss of
business/competitive threat from a reputational
event, integration risk, business expansion and a
combined FUMA fall and reputational event. The
economic and commercial impacts of the global
pandemic on the prospects of the company were
also factored into the assessment.
The group considers the possible impacts of
serious business interruption as part of its
operational risk assessment process and
remains mindful of the importance of
maintaining its reputation.
Since the business is almost wholly UK-situated,
it does not suffer from any other material client,
geographical or counterparty concentrations.
While this stress test does not consider all of
the risks that the group may face, the directors
consider that this sever but plausible stress
testing-based assessment of the group’s
prospects is reasonable in the circumstances
of the inherent uncertainty involved.
VIABILITY STATEMENT
In accordance with the UK Corporate
Governance Code, the board has assessed the
prospects and viability of the group over a
three-year period considering the risk factors
identified above. The directors have considered
the firm’s current position and the potential
impact of the principal risks and uncertainties
set out above. As part of the viability statement,
the directors confirm that they have carried out a
robust assessment of both the principal risks
facing the group, and stress tests and scenarios
that would threaten the sustainability of its
business model, and its future performance,
solvency or liquidity.
The board regularly reviews business
performance and at least annually its current
strategic plan, alongside a strategic risk
assessment. The board also considers five-year
projections as part of its annual regulatory
reporting cycle, including strategic and
investment plans.
However, the directors have determined and
continue to believe that a three-year period to 31
December 2026 constitutes an appropriate and
prudent period over which to provide its viability
statement given the uncertainties associated
with economic and political factors and their
potential impact on investment markets over a
longer period.
This three-year view is also more aligned to
the firm’s detailed stress testing and capital
planning activity. There is no reason to believe
the five-year view would be different but, as
always, there is more uncertainty over a
longer time horizon particularly in relation
to external factors.
Stress testing and scenario analysis shows that
the group would remain profitable in excess of
our risk appetite tolerances for capital and
liquidity, and able to withstand the impact of
such scenarios. An example of a mitigating
action in such scenarios would be a reduction
in costs, specifically around change initiatives,
along with a reduction in dividend.
SCENARIOS MODELLED INCLUDE:
— Market-wide stress (capital & liquidity): a
30% fall in FUMA for a one-year period, with
recovery over the following three years and
Foreign Exchange illiquidity
— Idiosyncratic reputational stress (capital &
liquidity): a reputation-affecting cyber event,
social media or ESG-related event causing
outflow of 20% of FUMA together with
associated compensation and rectification
costs. Idiosyncratic integration stress (capital):
a specific stress relating to the planned
integration of IW&I into the group, resulting
in outflow of 15% of FUMA together with
additional integration costs and cost synergies
not being achieved
— Combined stress (capital and liquidity):
aggregation of the above market-wide and
integration stresses.
Based on this assessment, the directors confirm
that they have a reasonable expectation that the
company will be able to continue in operation
and meet its liabilities as they fall due over the
period to 31 December 2026.
87
The strategic report 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 annual report.
Statements contained within the strategic
report should be treated with some
caution due to the inherent uncertainties
(including but not limited to those arising
from economic, regulatory and business
risk factors) underlying any such forward-
looking statements. The strategic report
has been prepared by Rathbones Group Plc
to provide information to its shareholders
and should not be relied upon for any
other purpose.
Pages 1 to 87 constitute the strategic report,
which was approved by the board and
signed on its behalf by:
Paul Stockton
Group Chief Executive Officer
Iain Hooley
Group Chief Financial Officer
5 March 2024
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 STRATEGIC
REPORT
FINANCIAL
STATEMENTS
FURTHER
INFORMATION
RATHBONES GROUP PLC REPORT & ACCOUNTS 2023
88
GOVERNANCE
REPORT
88 Corporate governance report
89 Chair’s letter
Corporate governance framework
91
92 Board of directors
94 Compliance with the 2018 UK
corporate governance code
95 Board activities 2023
96 How we are governed
99 Nomination committee report
102 Audit committee report
107 Group risk committee report
110 Remuneration committee report
124 Annual report on remuneration
136 Directors’ report
139 Statement of directors’ responsibilities
in respect of the report and accounts
GOVERNANCE REPORT CORPORATE GOVERNANCE REPORT
CHAIR’S LETTER
89
Clive C R Bannister
Chair
On behalf of the board, it is my pleasure to
present our corporate governance report
for the year ended 31 December 2023.
It summarises the role of the board in
providing effective leadership to promote
the long-term success of the firm.
BOARD LEADERSHIP AND
COMPANY PURPOSE
The key responsibilities of the board are to
ensure effective leadership, the long-term
sustainability of the firm and the creation of
value for all our stakeholders. The board
recognises that sustainable business success is
not possible without a clear purpose and that
good governance is about more than complying
with rules; it is about culture, behaviours and
how we treat our clients. The board is therefore
committed to ensuring that the firm’s purpose,
values and culture are set by the whole board
and embedded throughout the firm. The
executive directors and management team play
an integral role in this, ensuring that our people
understand the firm’s culture and what is
expected of them to achieve our purpose.
I believe that all this, together with our strong
governance framework, allows the board to
ensure that the whole firm is moving in the right
direction as we execute our strategy. Through
specific dashboards aligned to the key focus
areas of our strategy, the board can monitor
and review progress against targets.
These dashboards are used throughout the
group, ensuring alignment on execution and
targets. Additionally, how the board has
considered the group’s opportunities and
risks, the sustainability of its business model,
and how governance around the group’s risk
management framework contributes to the
delivery of its strategic objectives, is set out
in the strategic report.
The board also plays a key role in setting the
group’s culture and monitoring how it is being
embedded to ensure alignment with the group’s
business priorities. The board reviews the
culture dashboard which helps monitor and
analyse the firm’s culture. This dashboard
contains five core drivers that help to shape
the firm’s culture centred around the firm’s
stakeholders. The culture dashboard is updated
every six months and presented to the board for
review and monitoring. In addition, through my
own engagement with employees and through
my colleagues’ workforce engagement
programme, I have been pleased to see the
firm’s strong and distinctive culture in action,
as shown by the continuing commitment on the
part of our employees to support our clients and
the community.
BOARD COMPOSITION
There have been a number of changes to the
board’s composition during the year which
were in line with our succession plans to ensure
successful delivery of the IW&I integration.
Following Sarah Gentleman’s appointment as
Senior Independent Director in 2022, it was
agreed that she would step down as chair of the
remuneration committee to focus on her new
role. As part of the board’s succession planning
programme, Dharmash Mistry was appointed
chair of the remuneration committee as of
1 September 2023. Dharmash has been a
member of the remuneration committee since
his appointment as a non-executive director in
2021 and also co-leads our workforce
engagement programme.
COMBINATION OF INVESTEC
WEALTH & INVESTMENT
The combination with Investec Wealth &
Investment UK (IW&I) presents us with
many opportunities. These include the
chance to capture the benefits of scale that it
will in turn benefit our clients. We were
grateful for the overwhelming shareholder
support for the transaction in June. This was
a positive affirmation of this transformational
transaction. To date, good progress is being
made on integration and we very much look
forward to welcoming the IW&I clients and
new colleagues to form a significant part of
the enlarged Rathbones group. Our future
focus will then move to delivering the benefits
of this transaction to all of our stakeholders.
A full update will be provided in the next
annual report.
Under the terms of the Relationship Agreement
following completion of IW&I combination,
Investec Group Plc is entitled to nominate two
non-executive directors to the board so long as
they hold >20% of the firms shares. Nominated
by Investec Group plc; Ruth Leas and Henrietta
Baldock joined the board as of September 2023.
Ruth was appointed Chief Executive of Investec
Bank Plc in 2019 and has a deep knowledge of
financial services in both the UK and South
Africa. Henrietta was chair and independent
director at IW&I and holds non-executive
directorships at Investec Plc and Legal & General
Group Plc.
In addition, we announced in September 2023
the appointment of Iain Hooley as Group Chief
Financial Officer and Executive Director to the
board with effect from 1 January 2024. Iain has
been Finance Director of Investec Wealth and
Investment Limited (IW&I) for more than a
decade and was appointed CEO of IW&I in
February 2023. Iain has been a key individual in
IW&I’s success and has played an integral role in
the significant growth of the business.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 90
BOARD HIGHLIGHTS 2023
COMBINATION OF INVESTEC WEALTH &
INVESTMENT
Read more: See page 51
STAKEHOLDER ENGAGEMENT
Read more: See page 50
DIVERSITY, EQUALITY & INCLUSION
Read more: See page 61
BOARD CHANGES AND SUCCESSION
PLANNING
Read more: See page 99
CORPORATE GOVERNANCE REPORT CONTINUED
CHAIR’S LETTER CONTINUED
Iain will take over from Jennifer Mathias, who
will step down from the board, and transition
into the role of chief of staff. On behalf of the
board, I would like to thank Jennifer for her work
on the integration of SHL, support in delivering
the IW&I transaction, her unfailing commitment
and professional as a board member and Group
CFO; I look forward to continuing to work with
her in her new role.
In 2023, over 40% of our board was made up of
women, two of our senior board positions were
held by women and we have at least one director
from an ethnic minority background. You can
read more about the policy and the importance
we place on diversity in the recruitment of
non-executive directors and across the
organisation on page 100 of the nomination
committee report.
EXECUTIVE REMUNERATION
Executive remuneration remains an important
area of focus and debate, and the board
continues to monitor developments on this topic
closely. As reported last year, the remuneration
committee has spent considerable time and
effort assessing the impact of regulatory changes
that were introduced in 2023 as part of our
triennial remuneration policy review. As a result,
a number of changes are proposed to the
remuneration policy and are proposed for
approval at this year’s AGM. Further information
on the proposed new policy can be found on
pages 115 to 123. Dharmash Mistry, chair of the
remuneration committee, carried out an
extensive consultation exercise with our largest
shareholders before finalising the new policy.
DIVERSITY, EQUALITY AND INCLUSION
The board agrees that greater diversity drives
better decision-making. We strongly believe that
building a diverse and inclusive workforce will
lead to better outcomes for clients, colleagues
and for our business. You can read more about
our approach to building diversity and inclusion
across our workforce and the initiatives that
support it in our responsible business report on
page 58. The board has aligned its diversity
policy for board appointments with new targets
set out in the Listing Rules and is proud to have
met those targets.
BOARD EVALUATION
This year, in line with the Code, the board
undertook an internal process to review its
effectiveness and performance. The review
concluded that the board remains strong;
independent and effective; and that it has
responded well to the challenges arising from
the uncertain current economic situation.
Further detail on the evaluation can be found
on page 98.
STAKEHOLDER ENGAGEMENT
Stakeholder engagement remains a priority for
the board. The board has used formal meetings
and other opportunities to discuss the firm’s
performance and delivery of our strategy. These
discussions included consideration of their
interests, as well as risks arising from the wider
regulatory, economic and political environment.
The board has engaged with shareholders,
customers, employees, regulators and other
groups. You can find our formal statement in
relation to section 172 of the Companies Act
2006, together with further detail in the strategic
report on pages 49 to 57. The board gains a direct
understanding of employees’ views through
employee survey results, townhalls and branch
visits. Separately, the board’s workforce
engagement programme, led by Iain Cummings
and Dharmash Mistry, continued throughout the
year. Details of this initiative can be found on
page 54.
In addition, both my non-executive director
colleagues and I used formal and informal
opportunities to talk to employees across our
offices through virtual events during the year.
Our shareholders are critical to us and the
group’s success. We managed a comprehensive
engagement programme with them throughout
the year especially as part of the IW&I
transaction during 2023. The group finance
director continues to report to the board
regularly on shareholders’ views regarding the
firm, and the firm’s corporate brokers present to
the board on market developments and
shareholder perceptions. This helps to ensure
that the board is fully briefed on the views and
aspirations of shareholders. The firm’s 2023 AGM
was held in our offices in London and was an
excellent opportunity for our board and myself
to meet with all shareholders.
Our relationship with our various regulators is of
fundamental importance to us and we maintain
an open, constructive dialogue with them to
ensure that we are aware of and meet the
standards that they expect. For more
information about how the directors have had
regard to the interests of our key stakeholders
within the context of promoting the success of
the company, please see our section 172
statement on page 49.
This report, in its entirety, has been approved by
the board of directors and signed on its behalf by:
Clive C R Bannister
Chair
5 March 2024
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 CORPORATE GOVERNANCE REPORT CONTINUED
CORPORATE GOVERNANCE FRAMEWORK
91
Individual
Committee
THE BOARD
CHAIR
SENIOR INDEPENDENT DIRECTOR
NON-EXECUTIVE DIRECTORS
— Leads the board and sets the agenda for board discussions
— Ensures the board’s effectiveness
— Agrees and sets the firm’s business strategy and
— Acts as a sounding board for the chairman and serves
as an intermediary for the other directors if required
— Holds meetings with the non-executive directors
management objectives
— Encourages the presentation of accurate, clear and
timely information
— Promotes effective and constructive discussion
— Chairs the nomination committee, which considers the
composition of the board and its succession plans
(without the chairman present)
— Available to meet with a range of major shareholders
— Develops a balanced understanding of their issues and
concerns and reports the outcome of such meetings
to the board
— Leads the board in the ongoing monitoring and annual
— Provide constructive challenge to management
performance and strategy
— Contribute to the firm’s strategy
— Provide independent judgement to the board
— Review group financial information and ensure the
system of internal control and risk management
framework are appropriate and effective
— Engage with key stakeholders
— Review succession plans for the board and key
— Evaluates the performance of the board, its committees
performance evaluation of the chairman.
senior management.
and individual directors on an annual basis.
NOMINATION COMMITTEE
AUDIT COMMITTEE
GROUP RISK COMMITTEE
REMUNERATION COMMITTEE
Nomination committee report: See page 99
Audit committee report: See page 102
Group risk committee report: See page 107
Remuneration committee report: See page 110
GROUP EXECUTIVE COMMITTEE
— Implements the agreed strategy and the day-to-day
management of the firm
— Reviews and discusses the annual business plan
and budget
— Implements investment process and client proposition
— Approves the expenditure and other financial
commitments within its authority levels, discussing,
formulating and approving proposals to be considered
by the board.
Read more: See page 15
GROUP CHIEF EXECUTIVE OFFICER
— Provides executive leadership and management
GROUP CHIEF FINANCIAL OFFICER
— Provides executive leadership and management
to the business
to the business
— Responsible for the effectiveness of the
— Responsible for the effectiveness of the
executive committee
executive committee
— Delivers on strategic objectives set by the board
— Delivers on strategic objectives set by the board
in line with the group’s risk appetite
in line with the group’s risk appetite
— Maintains strong relationships with the chairman,
the board and key shareholders and stakeholders.
— Maintains strong relationships with the chairman,
the board and key shareholders and stakeholders.
T
H
G
I
S
R
E
V
O
D
N
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G
N
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L
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A
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C
P
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STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
CORPORATE GOVERNANCE REPORT CONTINUED
BOARD OF DIRECTORS
92
N Nomination committee
A Audit committee
Ri Risk committee
Re Remuneration committee
G Group executive committee
Committee chair
N
Re
G
G
G
N
A
Ri
Re
Clive Bannister
Chair
Paul Stockton
Group Chief
Executive Officer
Jennifer Mathias
Group Chief
Financial Officer
Iain Hooley
Group Chief
Financial Officer
Sarah Gentleman
Senior Independent
Director
APPOINTED: 06/04/2021
APPOINTED: 09/05/2019
EXPERIENCE, SKILLS AND
CONTRIBUTIONS
Clive brings a wealth of strategic,
commercial, and financial experience
to the board. He started his career as
a banker at First National Bank of
Boston in 1981 in Boston and London.
In 1984, he joined Booz Allen
Hamilton and became a partner in
their financial consulting practice
in 1990.
In 1994, Clive joined HSBC Investment
Bank as director and head of planning
and strategy in London. He moved to
New York in 1996 to be the deputy
CEO of HSBC Inc and head of
Investment Banking in the US. In
1999, he was appointed Chief
Executive of HSBC Group Private
Banking, became a group general
manager in July 2001, and group
managing director in 2006 responsible
for Group Insurance and Asset
Management at HSBC Holdings Plc.
In 2011, Clive was appointed as group
CEO of the Phoenix Group, the UK’s
largest life and pensions consolidator.
CURRENT EXTERNAL
APPOINTMENTS
Clive is currently the chair of the
Museum of London and a chair of
Beazley plc.
EXPERIENCE, SKILLS AND
CONTRIBUTIONS
Paul was appointed as group chief
executive in May 2019, having served
as managing director of Rathbones
Investment Management from
May 2018. He was previously group
finance director from 2008 to 2019.
Paul brings the following key skills to
the board which supports the firm’s
strategy: executive leadership,
financial services and wealth
management, risk management
and regulation.
Paul qualified as a chartered
accountant with
PriceWaterhouseCooper in 1992,
subsequently accepting a position in
New York before returning to London
in 1996. In 1999 he joined Old Mutual
Plc as group financial controller,
becoming finance director of Gerrard
Limited in 2001. In 2005, two years
after the sale of Gerrard, he left to
work initially for Euroclear and,
subsequently, as a divisional finance
director of the Phoenix Group. He was
formerly a non-executive director of
the Financial Services Compensation
Scheme.
CURRENT EXTERNAL
APPOINTMENTS
Board member of the Personal
Investment Management and Financial
Advice Association (PIMFA) and
Member of the FCA Practitioner Panel.
APPOINTED: 01/04/2019 TO
31/12/2023
EXPERIENCE, SKILLS AND
CONTRIBUTIONS
Jennifer joined Rathbones in April
2019 as a group chief financial officer.
With effect from 31 December 2023,
she stepped down from the board to
take on the role of chief of staff.
Jennifer qualified as a chartered
management accountant in 1999. She
started her career at Lloyds Bank on
their finance graduate programme,
and spent over 10 years in senior
finance and risk roles across the
Commercial Banking division of
Lloyds TSB. Following a period
working directly with the Lloyds TSB
Group CFO she went onto to be the
finance director of the Corporate
Banking division following the HBOS
take over.
After completing the integration of
Lloyds and HBOS she joined Coutts as
the global chief finance officer in 2012
and was part of the team that led the
sale of Coutts International to UBP
Bank. In 2015, she moved to EFG
Private Bank (UK), where she was
chief finance officer and deputy chief
executive officer, where in addition to
finance responsibilities she led the
Treasury and Credit areas.
CURRENT EXTERNAL
APPOINTMENTS
Non-executive director of Welsh
Rugby Union (WRU) board.
APPOINTED: 01/01/2024
APPOINTED: 21/01/2015
EXPERIENCE, SKILLS AND
CONTRIBUTIONS
Iain was appointed as group chief
financial officer on 1 January 2024.
Iain served as finance director of
Investec Wealth & Investment Limited
(IW&I ) for more than a decade and
was appointed CEO of IW&I UK in
February 2023. He brings to his
current role his extensive knowledge
of the sector along with a wealth of
experience of financial and regulatory
reporting, corporate governance and
risk management.
Iain is a fellow chartered accountant
and began his career with Coopers &
Lybrand, which subsequently became
PricewaterhouseCoopers. Working in
the audit practice, Iain had
responsibility for managing a varied
portfolio of audit engagements which
included SMEs and listed companies
across a range of sectors. In 2000, he
joined BWD Securities PLC, which
went on to become IW&I UK, initially
as group financial controller with
responsibility for the management of
the group’s internal and external
financial reporting, tax compliance
and other financial matters.
CURRENT EXTERNAL
APPOINTMENTS
None.
EXPERIENCE, SKILLS AND
CONTRIBUTIONS
Sarah joined Rathbones board in 2015
and was appointed senior independent
director in 2022. Sarah was chair of
the remuneration committee from
June 2017 and August 2023 and was a
designated non-executive director of
the firm’s workforce engagement
programme between 2019 and 2023.
Sarah brings the following key skills to
the board which supports the firm’s
strategy: banking, digital marketing,
risk management, corporate
governance and regulatory experience.
She started her career as a consultant
at McKinsey & Company and then
subsequently spent several years in
the telecoms and digital sectors,
latterly as chief financial officer of the
LCR Telecom Group. In 1999, she
joined the internet bank Egg, the
internet banking subsidiary of
Prudential, where she was responsible
for business development and strategy.
In 2005, she joined Sanford C.
Bernstein & Co, the institutional
research and trading arm of Alliance
Bernstein, as a banking analyst
covering the European banking sector.
Sarah is also an adviser to early-stage
technology companies
CURRENT EXTERNAL
APPOINTMENTS
Non-executive director of Engine B Ltd
and Molten Ventures Plc
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
CORPORATE GOVERNANCE REPORT CONTINUED
BOARD OF DIRECTORS CONTINUED
N
A
Ri
Re
N
A
Ri
Re
N
A
Ri
Re
Terri Duhon
Non-Executive Director
(Independent)
Iain Cummings
Non-Executive Director
(Independent)
Dharmash Mistry
Non-Executive Director
(Independent)
APPOINTED: 02/07/2018
APPOINTED: 05/10/2021
APPOINTED: 05/10/2021
93
Henrietta Baldock
Non-Executive Director
Ruth Leas
Non-Executive Director
Ali Johnson
Group Company
Secretary
EXPERIENCE, SKILLS AND
CONTRIBUTIONS
Terri is chair of the risk committee.
She has over 25 years of experience
in the financial market and brings the
following skills to the board: banking,
investment management, risk
management and regulatory
experience.
Terri graduated with a maths degree
from the Massachusetts Institute of
Technology (MIT). She is a non-
executive director of Morgan Stanley
International where she chairs the risk
committee and is chair of Morgan
Stanley Investment Management
Limited. In addition, she is non-
executive director of Wise Plc and
Hanover Investors Ltd, and is an
Associate Fellow at The Saïd Business
School at Oxford University.
Previously, Terri was a board member
of CHAPS Co and Operation Smile UK
and was a founding member of the
Women’s Leadership Group for the
Prince’s Trust. As an executive, Terri
held a number of senior roles at JP
Morgan and ABN AMRO before setting
up her own consultancy firm.
CURRENT EXTERNAL
APPOINTMENTS
Chair of Morgan Stanley Investment
Management Ltd, non-executive
director of Morgan Stanley
International Ltd, Hanover Investors
Ltd and Wise Plc.
EXPERIENCE, SKILLS AND
CONTRIBUTIONS
Iain is chair of the audit committee
and co-leads the firm’s workforce
engagement programme with
Dharmash Mistry.
To support the firm’s strategy, he
brings a wealth of audit and accounting
regulatory reporting experience,
financial services, corporate
governance and risk management.
Iain is a Fellow of the Institute of
Chartered Accountants in England &
Wales with over 36 years of experience
working in the financial sector. He was
a partner at KPMG for over 24 years
working with banks and other major
financial services firms in both audit
and advisory roles including three
years leading KPMG’s banking audit
practice. His audit roles included large
firms in the investment banking sector
and listed firms in the wealth, asset
management and insurance sectors
while his advisory engagements
focused on aspects of risk, regulation
and internal audit. Iain also served for
a number of years as chairman of the
ICAEW Financial Services Faculty’s
risk and regulation committee and as a
member of the ICAEW’s Technical
Strategy Board.
CURRENT EXTERNAL
APPOINTMENTS
Non-executive director of Skipton
Building Society.
EXPERIENCE, SKILLS AND
CONTRIBUTIONS
Dharmash joined Rathbones as a
non-executive director in October
2021, he is a chair of the remuneration
committee, and co-leads the firm’s
workforce engagement programme
with Iain Cummings.
— APPOINTED: 21/09/2023
EXPERIENCE, SKILLS AND
CONTRIBUTIONS
Henrietta Baldock was appointed as
independent a non-executive director
on 21 September 2023 under the
terms of the Relationship Agreement
following completion of IW&I
combination.
Henrietta has extensive knowledge of
the financial services sector, through
her 25 years’ experience in investment
banking, most recently as chair of the
European Financial Institutions team
at Bank of America Merrill Lynch,
where she advised boards on
significant transactions. In 2021, she
was appointed chair of Investec Wealth
& Investment (UK). Henrietta’s industry
experience demonstrates her valuable
strategic and transformation advisory
skills. Henrietta is a non-executive
director of Legal & General Group PLC,
Hydro Industries Limited, Investec PLC
and Investec Limited.
CURRENT EXTERNAL
APPOINTMENTS
Non-executive director of Legal &
General Group PLC and Hydro
Industries Limited
Dharmash brings the following key
skills to the board which support the
firm’s strategy: financial services,
media & technology experience, digital
transformation, private & public market
investing and corporate governance.
He started his career with Procter &
Gamble as a Brand Manager, followed
by a period with Boston Consulting
Group. He spent eight years in the
media as Group Managing Director of
EMAP Consumer Media and EMAP
Performance. He co-led the 2008
delisting of Emap Plc from the FTSE
100. He was formerly a Partner at
Balderton & Lakestar, leading
investments including Revolut, Glovo,
Infarm, Blockchain.com and Lovefilm
amongst others. He co-founded Blow
LTD and served as Chairman & CEO
until its sale in 2021. His previous
non-executive appointments include:
Hargreaves Lansdown Plc, Dixons
Retail Plc, The British Business Bank
and BBC Commercial Holdings.
CURRENT EXTERNAL
APPOINTMENTS
A board member of Halma plc and
The FA Premier League.
APPOINTED: 21/09/2023
APPOINTED: 01/05/2016
EXPERIENCE, SKILLS AND
CONTRIBUTIONS
Ali joined Rathbones in April 2016 and
was appointed company secretary in
May 2016.
Ali graduated in law and is a fellow of
the Chartered Governance Institute.
He has over 20 years’ experience as a
company secretary in a wide range of
publicly listed companies in the UK
and US. Ali has extensive knowledge
and experience in corporate
governance, executive remuneration,
corporate transactions, stock
exchange listing obligations,
responsible business program,
insurance and employee/ executive
share plans.
EXPERIENCE, SKILLS AND
CONTRIBUTIONS
Ruth Leas was appointed as
independent a non-executive director
on 21 September 2023 under the
terms of the Relationship Agreement
following completion of IW&I
combination.
Ruth has been with Investec for 25
years having joined in South Africa in
1998. In 2002, she moved to London
where she spent 10 years in client
facing roles and was subsequently
appointed as co-head of US Principal
Finance. She joined the credit team
and was subsequently appointed as
Head of UK Investor Relations. In
2016, she was appointed as an
executive director and head of risk
management and as chief risk officer
in 2017. In 2019, she was appointed as
chief executive officer of Investec
Bank plc, the main banking subsidiary
of Investec plc, which includes
Investec Group’s non-Southern African
operations (including the UK, Channel
Islands, Republic of Ireland, US and
India).
CURRENT EXTERNAL
APPOINTMENTS
Chief executive officer of Investec
Bank plc.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
94
CORPORATE GOVERNANCE REPORT CONTINUED
COMPLIANCE WITH THE 2018 UK CORPORATE GOVERNANCE CODE
During the financial year ended 31 December 2023, the board has applied the Principles
and complied with the Provisions of the UK Corporate Governance Code 2018 (the Code)
and additional information can be found below:
SECTION 1: BOARD LEADERSHIP
AND COMPANY PURPOSE
Page
SECTION 2: DIVISION
OF RESPONSIBILITIES
Page
SECTION 3: COMPOSITION,
SUCCESSION AND EVALUATION
Page
SECTION 4: AUDIT, RISK
AND INTERNAL CONTROLS
Page
Leadership of Board by chair
F
G Board composition and
responsibilities
H Role of non-Executive Directors
Company secretary, policies,
I
processes, information, time and
resources
•
•
•
•
•
Board composition
Key roles and responsibilities
General qualifications required of all
Directors
Information and training
Board appointments and succession
planning
A Effective and entrepreneurial Board to
promote the long-term sustainable
success of the Company, generating
value for shareholders and
contributing to wider society
B Purpose, values and strategy with
alignment to culture
C Resources for the Company to meet its
objectives and measure performance.
Controls framework for management
and assessment of risks
D Effective engagement with
shareholders and stakeholders
Consistency of workforce policies and
practices to support long-term
sustainable success
Chairman’s letter
Strategic Report
Board engagement with key
stakeholders
Shareholder engagement
Audit Committee report
Risk Committee report
Conflicts of interest
E
•
•
•
•
•
•
•
9
2
49
55
102
107
101
J
Board appointments and succession
plans for board and senior
management and promotion of
diversity
M Independence and effectiveness of
internal and external audit functions
and integrity of financial and narrative
statements
K Skills, experience and knowledge of
M Fair, balanced and understandable
92
91
101
95
99
L
•
•
•
•
board and length of service of board as
a whole
Annual evaluation of Board and
Directors and demonstration of
whether each Director continues to
contribute effectively
assessment of the Company’s position
and prospects
O Risk management and internal control
framework and principal risks
Company is willing to take to achieve
its long-term objectives
Board composition
Diversity, tenure and experience
Board, committee and Director
performance evaluation
Nomination Committee report
100
100
98
99
•
•
•
•
•
•
Audit Committee report
Risk Committee report
Strategic Report
Fair, balanced and understandable
Annual Report
Going concern basis of accounting
Viability statement
102
107
2
103
103
87
SECTION 5: REMUNERATION
Page
P Remuneration policies and practices
to support strategy and promote
long-term sustainable success with
executive remuneration aligned to
Company purpose and values
Q Procedure for Executive Director and
senior management remuneration
R Authorisation of remuneration
outcomes
•
Remuneration Committee report
110
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 CORPORATE GOVERNANCE REPORT CONTINUED
BOARD ACTIVITIES 2023
BREAKDOWN OF BOARD ACTIVITIES
Our strategic priorities
1 Enriching the client and adviser
proposition and experience
2
Supporting and delivering growth
Our stakeholders
3 Inspiring our people
Clients
Society and communities
4 Operating more efficiently
Our people
Partners and regulators
Shareholders
95
Risk Management
Regulatory and Compliance
Stakeholders
1
3
1
4
1
4
— Approved the firm’s risk framework
and appetite
— Monitored the firm’s principal risks and
compliance programme
— Received detailed reports on significant
regulatory risks and management’s
mitigating actions
— Discussed and monitored the firm’s
suitability programme
— Approved the group’s recovery plan
— Approved the annual review of the ICAAP
and ILAAP
— Reviewed the group’s risk appetite statements
— Reviewed Pillar 3 disclosures
— Reviewed the group’s principal risks and
considered emerging risks
— Reviewed the group’s whistleblowing policy
and received an update on activity.
— Received updates from management on
meetings held with the PRA and FCA during
the year to discuss, amongst other topics,
securities issuances and liquidity
— Received updates on Consumer Duty
implementation
— Approved the group Recovery Plan, designed
to maintain the viability and the financial
position of the group through an effective and
robust set of recovery options in the event of
a broad range of stress scenarios and in
accordance with the recommendations of
the PRA
— Received detailed reports on progress made
against the Annual Compliance Plan
— Received updates from the Money Laundering
Reporting Officers.
— Received regular updates on clients including
survey results
— Regularly monitored morale across the firm
with oversight of employee survey results
and associated management actions
— Reviewed periodic updates on the culture
dashboard
— Received regular feedback on investor relations
activities including meetings with shareholders
and post-results roadshows
— Engagement with various teams and visits to
our Liverpool and Glasgow offices
— Approved the annual Modern Slavery
Statement
— Oversight and approval of remuneration
arrangements for executive directors and the
wider workforce
— Monitored the firm’s people and DE&I strategy.
Structure, Capital and Liquidity
Governance
Financial and Corporate Reporting
1 2
4
— Reviewed the group’s stress testing policy
— Reviewed the group’s treasury policy
— Considered the group’s capital strategy
— Approved the group’s capital and liquidity
planning.
3
1 2
4
— Discussed the key themes and outcomes from
— Monitored the firm’s performance against its
the various workforce engagement
mechanisms
— Assessed and oversaw the firm’s culture and
implementation of its culture dashboard
— Completed an internal board evaluation
exercise and implemented recommendations
— Completed a review of governance
arrangements following completion of the
transaction with IW&I
strategic objectives
— Focused on delivery of organic growth
initiatives through new products
— Monitored the integration of Saunderson House
and financial performance against the plan and
market expectations
— Approved interim and full-year financial
statements, interim dividend and
recommended final dividend
— Undertook a review of, and approved an
— Received reports from the group’s internal
appropriate increase in, non-executive director
fees to align with the market.
audit function
— Reviewed the new disclosure framework to
ensure compliance with TCFD reporting.
Strategy
1 2
4
— Extensive discussion and assessment of the
transaction with Investec bearing in mind
the impact on the firm’s various stakeholders
— Oversight and monitoring of the Integration
of IW&I through various workstreams with a
focus on achieving synergies
— Held a strategy day focused on strategic matters
including the integration of IW&I, digital
solutions, financial advice and the future
client needs
— Reviewed the competitive landscape
— Reviewed and approved the group’s budget
and three-year strategic plan
— Received deep-dive reviews of selected
business areas
— Assessed the firm’s change management
processes and project delivery
— Monitored delivery of the firm’s new digital
strategy including associated expenditure
— Regularly assessed inorganic opportunities
— Assessed the firm’s real estate requirements
over the next three years.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
CORPORATE GOVERNANCE REPORT CONTINUED
HOW WE ARE GOVERNED
BOARD MEETINGS
Most scheduled board meetings are preceded
by a board dinner which allows for broader
discussions on particular topics. The board
dinners also provide an opportunity for the
board to meet members of the management
team or to receive training. In the months where
no formal board meeting is scheduled, an
informal meeting of the non-executive directors,
the chair and the chief executive is generally
held. The non-executive directors also have
informal meetings in the absence of the chair or
chief executive. The roles of the chairman, the
chief executive, the senior independent director
and the non-executive directors have been
clearly defined and agreed by the board to
ensure a separation of power and authority.
At every board meeting, the chief executive
updates the board on the implementation of
strategy and recent developments. The group
chief financial officer reviews the financial
performance and forecasts against plan and
market expectations. The chief risk officer
updates the board on key risk areas and any
emerging regulatory issues which impact the
business. The board is updated on shareholder
sentiment and significant changes in the share
register. In addition, members of the executive
committee attend meetings as required to
present and discuss progress in their individual
businesses and functions.
The board held ten additional meetings in the
year to consider the combination of Rathbones
and IW&I transaction.
MEETING ATTENDANCE
Number of meetings held
Clive Bannister (Chair)
Paul Stockton (CEO)
Sarah Gentleman (SID)
Iain Cummings (NED)
Terri Duhon (NED)
Dharmash Mistry (NED)
Henrietta Baldock1
Ruth Leas1
Former directors
Jennifer Mathias (CFO)2
Board
Nomination
committee
Audit
committee
Risk
committee
Remuneration
committee
8
8/8
8/8
8/8
8/8
8/8
8/8
2/2
2/2
8/8
3
3/3
−
3/3
3/3
3/3
3/3
−
−
−
4
−
−
4/4
4/4
4/4
3/4
−
−
−
5
−
−
5/5
5/5
5/5
4/5
−
−
−
3
3/3
−
3/3
3/3
3/3
3/3
−
−
−
1. Henrietta Baldock and Ruth Leas were appointed on 21 September 2023 as non-executive directors by Investec Bank plc under
the terms of the Relationship Agreement
2. Jennifer Mathias stepped down from the board on 31 December 2023
OPERATIONS OF THE BOARD
The board has a rolling agenda, which ensures
that key matters are addressed. The board held
seven scheduled meetings during the year, a
strategy day and a number of additional formal
and informal meetings. The chair and the
company secretary manage board and
committee meetings and ensure that the board
(and particularly the non-executive directors)
receive appropriate and balanced information.
The company secretary manages the timely
circulation of information to the board. All board
papers are prepared by executives and clearly
indicate any action required. As part of the
annual board evaluation process, board
members provided input on the level and quality
of the information that is provided. In addition,
the company secretary ensures board
procedures are complied with and applicable
rules are followed.
The company secretary facilitates the induction
process for new directors, assists with their
professional development and advises the board
on corporate governance matters and on the
rules and regulations that affect a UK-listed
company. The appointment or removal of the
company secretary is a matter for the board.
96
INDEPENDENCE, FITNESS & PROPRIETY
The board, on the recommendation of the
nomination committee, considers that all of
the non-executive directors are independent,
including the chair. Henrietta Baldock and Ruth
Leas are not considered independent as they
were appointed to the board by Investec Group
plc under the terms of the Relationship
Agreement. All board members are required
to disclose any external positions or interests
which might conflict with their directorship of
Rathbones prior to their appointment so that any
potential conflict can be properly assessed. The
board has regard to the fact that experienced
non-executive directors in financial firms are a
valuable resource and may sit on several boards.
Potential conflicts of interest of non-executive
directors can generally be managed by due
process and common sense.
In line with its regulatory obligations, the firm
undertakes annual reviews of the fitness and
propriety of all those in senior manager
functions, including all of the company’s
directors and a number of other senior
executives. This process comprises assessments
of individuals’ honesty, integrity and reputation;
financial soundness; competence and capability;
and continuing professional development. This
year’s reviews have confirmed the fitness and
propriety of all of the company’s directors and
other senior executives who perform senior
manager functions. Consideration of matters
relating to fitness and propriety also form an
important part of the board’s recruitment
process for non-executive directors.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 97
The board assesses the effectiveness of the firm’s
internal controls on an annual basis and a report
is provided for consideration. The report is
considered one element of the overall assurance
processes, and the board also considers other
sources, which include reports emanating from
first line of defence and second line of defence
assurance teams, including group compliance,
anti-money laundering (AML), as well as
investment risk and information security.
A risk-based approach drives internal audit
coverage, and, over the course of the year,
review work by the function covers all material
controls across the firm including compliance,
operations and finance. The observations arising
from this work form the basis for the annual
internal audit opinion.
CORPORATE GOVERNANCE REPORT CONTINUED
HOW WE ARE GOVERNED CONTINUED
BOARD DEVELOPMENT
The firm is committed to the training and
development of all employees to ensure
professional standards are maintained and
enhanced. All directors are encouraged to update
their skills and any training needs are assessed
as part of the board evaluation process. The
knowledge and familiarity of non-executive
directors with the firm are enhanced by full
access to senior management, in-person visits to
teams in London, Glasgow and Liverpool offices
as well as virtual events held across the country.
The company secretary assists with the
professional development requirements of the
board. In addition, the board receives mandatory
annual training on the following areas:
— Directors’ Prospectus and MAR obligations
— Client Assets and Money (CASS)
— Securities and Exchange Commission (SEC)
obligations
— Internal Capital Adequacy Assessment Process
(ICAAP) and Internal Liquidity Adequacy
Assessment Process (ILAAP)
— Internal Capital and Risk Assessment (ICARA).
CHAIRMAN’S PERFORMANCE
As in previous years, Sarah Gentleman, in
her role as the senior independent director,
led the annual assessment of the chairman’s
performance. This involved discussions with
the other non-executive directors individually,
without the chairman being present, and
consultation with the chief executive. The senior
independent director subsequently provided
feedback to the chairman.
ACCOUNTABILITY
The statement of directors’ responsibility for
preparing the report and accounts is set out at
the end of this governance section. Within this,
the directors have included a statement that the
report and accounts present a fair, balanced and
understandable assessment of the group’s
position and prospects. To help the board
discharge its responsibilities in this area, the
board consulted the audit committee, which
advised on the key considerations to comply
with best practice and the Code’s requirements.
Following the committee’s advice, the board
considered and concluded that:
— the business model and strategy were
clearly described
— the assessment of performance was balanced
— the language used was concise, with clear
linkages to different parts of the document
— an appropriate forward-looking orientation
had been adopted.
RISK MANAGEMENT
In accordance with the Code, the board is
required to monitor the firm’s risk management
and internal control systems on an ongoing basis
and carry out a review of their effectiveness and
report on this review to shareholders. Details of
the company’s ongoing process for identifying,
assessing and managing the principal risks,
including any emerging risks, faced by the firm
are contained in the risk management section on
pages 77 to 86, together with details of those
principal risks and their related mitigating
factors. Whilst the board retains overall
responsibility for the firm’s risk management
and internal control systems, it has delegated
oversight to the audit and group risk committees.
The group’s financial controls framework is
designed to provide assurance that proper
accounting records are adequately maintained
and that financial information used within the
business and for external publication is reliable
and free from material misstatement, thereby
safeguarding the company’s assets.
The board receives regular reports from the chair
of the group risk committee and chief risk officer
on the key risks facing the firm that impact on
operational and financial objectives. This
assessment is completed together with
assurance that the level of risk retained is
consistent with and is being managed in
accordance with the board’s risk appetite. These
reports include current and forward looking
assessments of capital and liquidity adequacy
and a summary ‘risk dashboard’ is presented.
Also, during the year the board reviewed and
approved the operational risk assessment
process for the 2023 ICAAP document, which
includes a capital assessment of financial,
conduct and operational risks.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 CORPORATE GOVERNANCE REPORT CONTINUED
BOARD AND COMMITTEE EVALUATION
98
The effectiveness of the board, individual
directors and the board’s main committees are
reviewed annually. This ensures that they
continue to operate effectively and are
identifying opportunities for improvement and
best practice, as well as helping to inform future
agenda items and areas of focus. In line with the
Code, this year we again completed an internal
board evaluation which was externally
facilitated by Independent Audit Limited (IAL)
and a questionnaire approach was utilised. this
review addressed the effectiveness of both the
board and its committees. IAL have no
connection with the firm or to our directors. The
review took place following a year of significant
activity, primarily the transaction with Investec
Wealth and Investment UK (IW&I). It was an
opportunity to reflect on how effectively the
board had focused on the transaction and other
strategic initiatives, while also handling
business-as-usual activity. Board members were
requested to complete a questionnaire which
focused on the IW&I transaction, board
dynamics, board meetings, strategy, risk,
competitor analysis, culture, stakeholders, and
committees’ effectiveness. IAL analysed
responses which provided the board with
anonymity as well as added rigour to the process.
A full report was prepared and presented to the
board for discussion.
As we are required by the UK Corporate
Governance Code, the board will undertake an
external effectiveness review every three years
which we will do during 2024. We have provided
below a three year overview of progress.
YEAR 1: 2021 - EXTERNAL EVALUATION
YEAR 2: 2022 - INTERNAL EVALUATION
YEAR 3: 2023 - INTERNAL EVALUATION
The full details of the external evaluation completed by IAl,
including the process and its findings, can be found on pages 80 and
81 of our 2021 Annual Report. Below is a summary of the progress
against the actions from the evaluation:
The full details of the internal evaluation, including the process
and its findings, can be found on page 99 of our 2022 Annual
Report. Below is a summary of the progress against the actions from
the evaluation:
Action and Progress
Status
Action and Progress
Status
Competitor analysis
Improved focus on the competitive landscape with
the NEDs feeling better informed on key competitors.
ESG
ESG principles have been further incorporated into
strategy and operations.
Agenda and papers
Agendas reflect the needs of the business and board
and steps taken to shorten papers, such as including
supporting detail in appendices, has improved
their quality.
Diversity and inclusion
Increased focus on diversity and ensuring that
management succession plans have a diverse
pipeline of talent.
Hybrid meetings
Improvements to technology mean that there is
continued support for maintaining a balance of
both in-person and virtual or hybrid meetings.
Board papers
Improved structure and format of board papers via new
reporting templates. This ensured concise but effective
executive summaries supported by detailed materials.
This approach was welcomed by both executives and
NEDs which led to better board discussions.
Competitor analysis
Introduced broader set of financial and non-financial
KPIs as part of board materials. This MI helped the
board have full external visibility on peers and
the industry.
DE&I
Exceeded the Women in Finance Charter commitment
reaching 33% female representation in senior
management by September 2023.
Reported the inclusion dashboards from our
employee survey to help understand the sentiment
and actions needed to maintain a DE&I focus. More
to do in this area.
People
Increased focus on diversity and ensuring that
management succession plans have a diverse
pipeline of talent.
As noted above, an internal evaluation was completed and this
process was led by the SID and company secretary with support from
IAL. The overall findings were that the board continued to operate
effectively and there was confidence in the board’s ability to oversee
strategy whilst delivering a transformational transaction. The review
identified many aspects which are working well along with a number
of recommendations for development.
Strengths
— The chairs of the board and committees all facilitate
inclusivediscussions
— The executive directors kept the board fully appraised of progress
on the IW&I transaction, and the NEDs added value to the process
— NEDs feel they received good insight into the organisation, and
they praised the management for their openness on the
challenges being faced
— NEDs continue to engage well with the workforce, and
management have provided them good insight by use of the
culture dashboard
— All the committees continue to function well, the committees
are well chaired and the meeting process was described as well
established.
— The Secretariat provided excellent support to the board and
its committees.
Areas of focus
— Monitoring and delivery of the IW&I integration: agree format/
dashboard of regular reporting and ensure the board has
sufficient MI during integration
— Continue to focus on the ‘big picture’ and the future of the firm
as well as the direction of the industry
— Increased engagement with management: increase the level of 1:1
meetings between management and the NEDs to ensure board
discussions are better informed and build in additional meetings
between boards to cover topical subjects with management.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 NOMINATION COMMITTEE REPORT
AT A GLANCE
COMMITTEE MEMBERS AND ATTENDANCE
Member
Clive Bannister (Chair)
Terri Duhon
Iain Cummings
Sarah Gentleman
Dharmash Mistry
Meetings
attended
3/3
3/3
3/3
3/3
3/3
The committee held two additional
meetings in the year to consider succession
planning following Investec Wealth &
Investment (IW&I) transaction.
ROLES AND RESPONSIBILITIES
— The responsibilities of the committee
include reviewing the composition of the
board and making recommendations to
the board for the appointment of directors.
The board as a whole then decides on any
such appointment
— The committee has responsibilities for
succession planning and the leadership
needs of the organisation, both executive
and non-executive, to ensure the
continued ability of the firm to implement
its strategy and compete effectively in
the marketplace
— Monitoring the firm’s DE&I programme.
Full terms of reference for the committee
are available on the company’s website.
As outlined in the chair’s statement, two new
shareholder representative directors were
appointed to the board following completion
of the combination with IW&I: Ruth Leas and
Henrietta Baldock. Both will bring substantial
levels of experience and financial services
expertise to the board. The board believes it
will benefit from their experience and expertise.
A biography for both Henrietta an Ruth
highlighting their suitability for the role of
non-executive director can be found on page 93
of this report.
Under the terms of the Relationship Agreement
such appointments required the committee’s
approval. The board agreed that shareholder
directors would not be considered independent
under the Code given their relationships with
appointing shareholders. They will not be
appointed to the audit, remuneration or
risk committees.
As part of the board’s succession plans, the
committee determined that, following Sarah
Gentleman’s appointment as senior independent
director, a new remuneration committee chair
should be appointed during 2023. Following
extensive discussion by the nomination
committee, it was decided that it would be
preferable to appoint an internal candidate as
they would understand the dynamics of both the
board, the relationship with the executive team,
existing remuneration arrangements across the
firm as well as executive directors. This approach
is in line with the UK Corporate Governance
Code requirements to have at least 12 months
service on the remuneration committee ahead
of appointment as chair. As part of this process,
Dharmash Mistry was identified as the best
candidate for the role and his appointment was
announced in July 2023.
Clive Bannister
Chair of the Nomination Committee
This report sets out an overview of the
committee’s roles, responsibilities and its
key activities during the year. Key areas of
focus for the committee in 2023 were board
composition, succession planning and senior
management succession planning in particular,
in relation to the new group’s needs following
completion of the Investec Wealth & Investment
(IW&I) transaction.
SUCCESSION PLANNING
BOARD
Under the terms of the Relationship Agreement
effective from completion of the combination
with IW&I, Investec Bank Plc will be entitled to
nominate for appointment to the board two
shareholder directors for so long as it holds 20%
or more of the total shares of Rathbones Group
Plc. As part of its consideration of the
combination with IW&I, the board carefully
considered the implications of having
shareholder representative directors on
the board.
99
KEY ACTIVITIES IN 2023
The key activities of the committee were:
BOARD SUCCESSION
— assessed the suitability of the proposed
shareholder nominated non-executive
directors and recommended their
appointment to the board
— led the selection and appointment
process of the group chief financial
officer and recommended the
appointment to the board
— reviewed the independence of the
non-executive directors and the
board’s balance of skills, knowledge
and experience
— assessed the contribution and time
commitment of the non-executive
directors.
MANAGEMENT SUCCESSION
— reviewed the composition of the
group executive committee following
completion of the IW&I transaction.
DIVERSITY, EQUALITY AND INCLUSION
— reviewed and challenged management’s
implementation of the firm’s DE&I
strategy to ensure progress.
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100
The firm announced in September 2023, that
Iain Hooley would be appointed chief financial
Officer from 1 January 2024 and Jennifer
Mathias would step down from the board on
31 December 2023 to transition to the new
position of chief of staff. Iain has been finance
director of (IW&I) for more than a decade and
was appointed CEO of IW&I in February 2023.
Iain has been a key individual in IW&I’s success
and has played an integral role in the significant
growth of the business.
EXECUTIVE MANAGEMENT
In consultation with the chief executive, a
formal review of the executive committee
members was completed looking at the
capability and potential of incumbents in key
roles to support the combined enlarged group as
well as the integration of the IW&I. As part of this
exercise, succession planning for these and other
key roles across the firm was completed. The
committee approved the appointments to the
combined group executive committee for the
firm and these were announced in November
2023 with further details on page 89.
The committee recognises the importance of
talent development to ensure that the group
continues to attract, retain and develop skilled,
high potential individuals. This will remain an
important focus in the year ahead. During the
year, the committee was updated on the various
initiatives in place across the group to support
talent development at different levels of the
group’s operations. Further information in
relation to the group’s activities in our
responsible business update.
BOARD DIVERSITY
The board believes that building a diverse and
inclusive workforce is important not just because
it is the right thing to do, but because it is good
for the group’s clients, its business and its
colleagues. The group’s objective is to build a
diverse workforce at all levels and create an
inclusive culture. The board is committed to
creating a culture where people treat each other
with dignity and are encouraged to realise their
full potential. The group’s inclusion and diversity
policy makes clear the group’s aspirations and
commitment; and by defining the roles and
responsibilities that will support it in attaining
these objectives.
BOARD COMPOSITION
Chairman: 11%
Executive: 22%
Non-executive directors
(Independent): 44%
Non-executive directors
(non-independent): 22%
BOARD GENDER DIVERSITY
Male: 4
Female: 5
BOARD INDUCTION
Our executive and non-executive directors are
offered a comprehensive and tailored induction
programme to introduce them to the business,
industry and regulatory context. The programme
is based on one-to-one meetings with relevant
executive directors and executive committee
members, the heads of group functions and the
company secretary and covers the areas of
business outlined below. The induction process
is reviewed on a regular basis and is updated and
tailored to ensure it remains appropriate.
Henrietta Baldock and Ruth Leas were appointed
in September 2023, and a comprehensive and
tailored induction programme was provided.
Each induction programme includes meetings
with chair, executive directors, committee
chairs, group executive committee members,
and external auditors.
BOARD INDUCTION PROGRAMME
BUSINESS REVIEW
PERFORMANCE AND MARKET POSITIONING
— Strategic direction and priorities
— Business strategy and market analysis
— Risk appetite, principal risks and risk
management framework
— Operations.
— Review of financial and market performance
— Recent analyst and media coverage
— Budget review
— Analysis of shareholder base and
investor perception
— Shareholder engagement.
NON-EXECUTIVE DIRECTORS’ TENURE
0–2 years: 57%
3–5 years: 29%
6–8 years: 14%
REGULATORY ENVIRONMENT
PEOPLE, CULTURE AND VALUES
BOARD ETHNICITY
— Overview of the group’s key compliance and
— Discussion of corporate values and the
regulatory policies
firm’s culture
— Recent changes in regulatory landscape and
impact of upcoming regulatory developments
— Hot topics and key priorities.
— Key people and succession plans
— Board procedures and governance framework
— Board interaction with key business areas
— Overview of listed company obligations,
reporting and governance framework
— Directors’ duties and responsibilities
— Group DE&I strategy.
White British or other
White (incl other minority
white groups): 89%
Asian/Asian British: 11%
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FOCUS FOR 2024
Looking ahead to the next financial year, it is
anticipated that the committee will focus on:
— Reviewing and finalising the remaining
outstanding key roles for the combined entity
— Continue to monitor succession planning and
talent pipeline to ensure alignment to the
future strategic needs of the firm
— Continue to deliver our diversity and
inclusion strategy.
Clive C R Bannister
Chair of the Nomination Committee
5 March 2024
NOMINATION COMMITTEE REPORT CONTINUED
The group’s diversity, equality and inclusion
strategy outlines the priority areas of focus
which are currently:
— To build a culture of inclusion where
colleagues feel safe, respected and where
they belong
— To increase ethnic minority representation,
recognising the need to accelerate progress in
this area
— To maintain our commitment to increase
female representation and close the gender
pay gap.
During the period, the committee reviewed
progress against the group’s inclusion and
diversity strategy and action plan including a
number of key achievements details of which
can be found on page 61 of the strategic report.
The board’s diversity policy is designed to
ensure transparency and diversity in making
appointments to the board upon the
recommendation of the nomination committee.
The policy recognises the importance of having
directors with a range of relevant experience,
and embraces the benefits derived from having
directors who come from diverse backgrounds.
The gender and ethnicity balance of the board is
taken into consideration when recruiting a new
non-executive director. This is reflected in the
current composition of our board. To achieve
this goal, we only engage with external search
firms which are signatories to the Voluntary
Code of Conduct for Executive Search Firms for
board-level appointments.
The nomination committee reviews and
evaluates the structure, size and composition of
the board and is responsible for identifying and
recommending new directors for appointment.
Board appointments are made following rigorous
consideration by the nomination committee of
the balance of skills, experience, knowledge and
diversity. When considering board composition
the nomination committee reviews best practice,
including the new listing rules relating to
diversity, the findings of the FTSE Women
Leaders Review and the Parker Review.
NON-EXECUTIVE DIRECTORS’ SKILLS
As mentioned above, a key responsibility of the
committee is to ensure that the board maintains
a balance of skills, independence, knowledge and
experience appropriate to the operation of the
business and as required to deliver the strategy.
The committee considered and was satisfied by
the skillset and experience of the firm’s
independent and non-independent non-
executive directors, including their extensive
experience in financial services.
INDEPENDENCE AND CONFLICTS
OF INTEREST
At Rathbones, we are fortunate to have such
non-executives, that demonstrate independence,
excellent skill and knowledge of financial
services. I maintain a dialogue with each of my
board colleagues on potential conflicts of
interest and time commitments. I am fully
satisfied that incidents of conflicts of interest
are handled appropriately by the individual
concerned and the board’s conflict of
interest policy.
APPOINTMENT AND REAPPOINTMENT
OF DIRECTORS
Prior to the company’s AGM each year,
the committee considers, and makes
recommendations to the board concerning, the
appointment and reappointment of directors,
having regard to their performance, suitability,
time commitment and ability to continue to
contribute to the board.
Following this year’s review in advance of the
2023 AGM, the committee has recommended to
the board that all serving directors at the date of
this report be appointed or reappointed at the
2024 AGM. Sarah Gentleman has served as a
director for more than eight years. The extension
of her term of office has been considered and the
committee has noted her significant contribution
including as remuneration committee chair. The
board, and I as chair, values her knowledge,
experience and continuity.
BOARD EFFECTIVENESS REVIEW
A formal and rigorous evaluation of the board
and committee’s effectiveness was undertaken
during the year as part of the internal board
effectiveness review. The review found that the
committee operated well during the year. Please
see page 98 for more detail.
The committee considers that during the year it
continued to have access to sufficient resources
to enable it to carry out its duties and has
continued to perform effectively.
During the year, the committee reviewed
its terms of reference to ensure that they
remain appropriate.
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102
AT A GLANCE
COMMITTEE MEMBERS AND ATTENDANCE
Member
Iain Cummings (Chair)
Terri Duhon
Sarah Gentleman
Dharmash Mistry
Meetings
attended
4/4
4/4
4/4
3/4
ROLES AND RESPONSIBILITIES
— Provide oversight of the firm’s financial
performance and reporting,
announcement of results and significant
judgement areas
— Review the firm’s whistleblowing
arrangements and ensure appropriate and
independent investigations on matters
— Review the effectiveness of the firm’s
internal controls and of the internal audit
function
— Oversee the appointment, performance
and remuneration of the external auditor,
including the provision of non-audit
services to the firm.
Full Terms of Reference for the
committee are available on the
Company’s website.
More broadly, the group’s internal control
framework is an essential part of ensuring the
integrity of its financial reporting and other
business operations. The committee oversees
the effectiveness of, and ongoing improvements
to, the group’s internal controls, as well as having
responsibility for monitoring and reviewing
the effectiveness of the group’s internal audit
function, which provides assurance on
those controls.
The committee has again had a full agenda and
continued to focus on the key matters across its
principal roles and responsibilities. The key areas
of discussion over the past 12 months have
focused on:
— challenging management on their key
accounting judgements across the group
including key areas related to acquisition
accounting, estimates and assumptions on
which they are based on
— overseeing the financial analysis, disclosures
in connection with the financial information
and consents to be included in the Prospectus
relating to the Investec Wealth & Investment
(IW&I) transaction
KEY ACTIVITIES IN 2023
REPORTING
— Reviewed and scrutinised the 2023
annual report and preliminary
announcement
— Reviewed the firm’s TCFD report
— Reviewed and challenged the key
judgements for the annual report,
including acquisition accounting
assumptions
— Discussed company’s distributable
reserves and 2023 final dividend
recommendations to the board
— Considered the half year report for 2023
— Reviewed the key judgements and
provisioning for the year end process
— Considered the FRC audit quality external
inspection report for 2022.
EXTERNAL AUDITORS
— Reviewed and approved the reporting
accountant services independence
— Reviewed the firm’s ISAE3402 report
— Reviewed and approved the group’s CASS
submission
— assessing the integrity and fair presentation of
— Reviewed and approved audit and
the group’s external financial reporting
including climate change disclosures as well
as our TCFD report
— review and approval of the firm’s client assets
sourcebook audit and submission
— maintaining the independence of Deloitte LLP
while using their services to support the IW&I
transaction
— reviewing the maintenance and effectiveness
of the group’s internal control framework.
The committee monitored and reviewed the
activities and performance of internal and
external audit, along with oversight of non-audit
services provided by the external auditor.
non-audit fees for the year
— Engaged in the succession process of a
new lead audit partner for 2024.
INTERNAL AUDIT
— Reviewed the internal audit effectiveness
self assessment
— Reviewed and approved the internal audit
charter
— Discussed and approved the internal audit
plan for 2023.
WHISTLEBLOWING
— Reviewed and approved the
whistleblowing report and policy.
Iain Cummings
Chair of the Audit Committee
As chair of the audit committee, it is my pleasure
to present my report on the committee’s
activities for 2023. This report provides an
overview of how the committee has discharged
its responsibilities over the last twelve months.
The board delegates responsibility to the
committee to monitor the integrity of the group’s
financial reporting and the processes and
controls that support it. This includes reviewing
and challenging the appropriateness of
accounting policies, significant issues and
judgements, and the assumptions in support of
the company’s ability to continue as a going
concern and its longer-term viability.
A key aspect of the committee’s role in ensuring
the integrity of the financial reporting is its
oversight of the group’s relationship with the
external auditor. This includes making
recommendations to the board in relation to the
appointment of the external auditor, approving
its scope of work, fees and terms of engagement,
as well as reviewing regularly its independence,
objectivity and effectiveness.
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103
We received assurance from our internal
effectiveness review and FRC Audit Quality
Review that our external auditors, Deloitte LLP,
continue to perform satisfactorily. Further
details of work in respect of these and other
key areas are set out in the sections below.
Also, the committee is grateful for the support
of management and Deloitte, as external
auditor, in ensuring the integrity of the firm’s
financial results.
COMMITTEE MEMBERSHIP
The committee acts independently of
management to ensure the interests of
shareholders are properly protected in relation
to financial reporting and internal control. The
committee members bring a diverse range of
experience in finance, risk, control and business,
with particular experience in the financial
services sector. The board has confirmed that
the members of the committee have the
necessary expertise to provide effective
challenge to management; this includes the
chair. The qualification for each of the members
is outlined on pages 92 to 93.
The chair meets with management ahead of
meetings to discuss specific items of focus.
During the course of the year, the committee held
separate sessions with the internal and external
audit teams, without management present.
During the year, I have regular meetings with the
group finance director, company secretary, head
of internal audit and the external audit partner to
discuss key audit-related topics ahead of each
meeting and discuss the agreed agenda.
FINANCIAL REPORTING
ACCOUNTING JUDGEMENTS
The committee spent considerable time
reviewing the interim report and annual report.
The committee discussed and challenged the
key areas of accounting judgement taken by
management in preparing the financial
statements and the external auditor’s work.
This also included consideration of the internal
controls over financial reporting. The committee
noted that there were no new material standards,
or amendments to standards, relevant to the
group that had become effective for the reporting
period. Most of the key judgement areas were
unchanged from the prior year, reflecting
consistency in the firm’s business model and its
approach to financial reporting, but they were
impacted by the first time recognition of IW&I
and its significant impact on goodwill and
intangibles. There was also focus during the
year on property asset impairment reviews,
where the group expects to vacate its leased
properties earlier than the respective lease
termination dates. The main areas of focus are
outlined below. Each of these matters were
discussed with the external auditor and, where
appropriate, have been addressed in the external
auditor’s report.
ACQUISITION ACCOUNTING
Following completion of the IW&I transaction in
September 2023, the committee reviewed and
assessed the acquisition accounting judgments.
External specialists were engaged to support
management on the purchase price allocation
and lease valuation assumptions which were
discussed and reviewed by the committee.
FAIR, BALANCED AND
UNDERSTANDABLE STATEMENT
On behalf of the board, we reviewed the financial
statements as a whole in order to assess whether
they were fair, balanced and understandable.
Ahead of presentation to the committee, a robust
review process of the annual report from across
the business was conducted to ensure
disclosures were balanced and accurate. In
addition, the committee was provided details of
internal challenge for various areas of disclosure
which improved the integrity of the document
further. We discussed and challenged the
balance and fairness of the overall report with
the executive directors and also considered the
views of the external auditor who completed a
thorough review of the annual report against
our obligations and financial reporting practice
generally. In addition, the committee considered
the overall presentation of the financial
statements, including the use and prominence of
alternative performance measures, section 172
reporting and corporate governance disclosures,
and were satisfied that the annual report could
be regarded as fair, balanced and understandable
and proposed that the board approve the annual
report in that respect. During this review the
committee carefully considered the clarity and
coherence of disclosures, in particular in respect
of the climate risk.
ALTERNATIVE PERFORMANCE MEASURES (APM)
The committee reviewed and challenged the
APMs that were included in the annual report to
ensure they were appropriate as well as clear.
REVENUE RECOGNITION
The committee reviewed management’s
approach to revenue recognition, highlighting
the key areas where judgement is required across
interest, fee and commission income.
The committee noted the consistency of
approach with prior years and the detailed
assessment that is performed by management
and challenged by Deloitte. The committee also
received assurance on revenue calculations both
internally through its oversight of the group’s
CASS controls and from the external auditor’s
approach to recalculating significant revenue
streams and carrying out sample testing on the
remainder. The committee received assurance
on revenue calculations internally and
considered the external auditors’ reporting in
relation to it’s audit work on the group’s
revenues. The external auditor’s work included
sample testing of the operational transactions
that drive the revenue to assess that these were
being booked in a timely and accurate fashion.
VIABILITY AND GOING CONCERN
The committee assisted the board in
determining the appropriateness of adopting the
going concern basis of accounting and in
performing the assessment of the viability of the
group. The committee reviewed papers from
management in support of the going concern
basis and the longer-term viability of the group.
The committee assessed the proven stability
of the group’s business model, which is
supported by:
— a diverse portfolio of businesses
— resilience when subjected to internal
stress testing
— a strong capital base
— adequate access to liquidity.
The committee discussed the group’s principal
risks which may affect future development,
performance and financial position.
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104
The committee considered projected profitability
and capital ratios along with funding and
liquidity forecasts, over a period of three years; in
addition, it considered changes in the economic,
technological and regulatory environment.
It was noted that the group’s regulatory capital
and liquidity forecasts reflected the impact of
the IW&I acquisition in the year, as well as the
expected costs to achieve and related synergies
over the next three years. Particular focus was
given to the macroeconomic backdrop, including
funding markets and macroeconomic
uncertainty and volatility. Overall the committee
concluded that it remained appropriate to
prepare the accounts on a going concern basis,
advised the board that three years was a suitable
period of review for the viability statement, and
recommended the viability statement to the
board for approval.
INTERNAL APPROVALS
The audit committee has the primary
responsibility for the oversight of the group’s
system of internal controls including controls
over financial reporting and the work of the
internal audit function. The audit committee,
seeks to ensure that the group operates within
a framework of prudent and effective controls
that allow risk to be identified, assessed and
managed. Policies in relation to IFRS and a
financial control framework are in place across
the group. This first line framework supports the
committee to understand and assess the design
and effectiveness of controls over financial
reporting, covering IFRS and alternative
performance measures. During this review,
the audit committee did not identify any
weaknesses which were determined to be
significant to the preparation of the financial
statements. Where areas for improvement were
identified, processes are in place to ensure that
the necessary actions are taken and progress is
monitored by the audit committee.
IMPAIRMENT OF GOODWILL AND CLIENT
RELATIONSHIP INTANGIBLES
The committee was presented with the annual
goodwill impairment review and annual client
relationship intangible reviews relating to the
group’s business combinations. The committee
was satisfied there was no impairment with
respect to goodwill.
The client relationship intangible impairment
reviews found that, whilst some of the group’s
client relationships experienced a failure in one
of three triggers that management use to test for
an indication of impairment, a full impairment
assessment was undertaken on all of these,
where discounted cash flow forecasts for the
client relationships were produced, and these all
calculated a value-in-use greater than the
carrying amount of the assets at year end.
A detailed presentation on the impairment
indicators, methodology and underlying
assumptions was reviewed. The committee
challenged the appropriateness of the
assessments, including discussing the outcome
with the firm’s external auditor, and concluded
the approach was reasonable. The committee
was therefore satisfied that no impairment
existed at the year end.
IMPAIRMENT OF PROPERTY ASSETS
As part of the combination of Rathbones group
with IW&I, the group’s property portfolio was
reviewed, and properties that will be vacated
earlier than the original lease contracts
permitted were identified. The impact on IFRS
16 and IAS 36 from expected lease breaks and
terminations, as well as possible lease
assignments and sub-lets was considered.
The property assets relating to leases the
group expects to terminate early were reviewed
for impairment.
The assets’ useful lives were revised, and their
recoverable amounts were determined. Any
impairment and accelerated depreciation
charges were recognised in the year outside
of operating profit.
THE VALUATION OF DEFINED BENEFIT PENSION
OBLIGATIONS
The committee reviewed the key assumptions
supporting the valuation of defined benefit
pension obligations, particularly salary
increases, investment returns, inflation and the
discount rate, which are disclosed in note 29
to the financial statements. We reviewed the
professional advice taken by the company and
discussed the assumptions used by us and by
other companies with the external auditor. We
satisfied ourselves that the assumptions used
were reasonable and consistent with the
requirements of IAS 19.
WHISTLEBLOWING CHAMPION
The group is committed to creating a culture of
openness, integrity and accountability. A formal
policy is in place which encourages colleagues
and contractors to raise concerns, in confidence,
about possible wrongdoing in relation to
financial reporting or other matters. Changes to
the policy require the approval of the board, and
the committee has responsibility for regularly
reviewing the adequacy of arrangements to
ensure the proportionate and independent
investigation of matters raised and appropriate
follow up action. These arrangements are
viewed as an important internal control for the
group and the committee regularly updates the
board on their operation and instances of
concerns raised.
During the period, the committee received
regular reporting on the group’s whistleblowing
arrangements, including management
information on concerns raised and completion
rates for internal training.
TCFD CLIMATE RISK REPORTING
The committee reviewed the firm’s TCFD
climate risk disclosure responsibilities as part
of the annual report process for 2023. Our focus
was to ensure that the summary in the annual
report met key statutory and regulatory
obligations with clear cross referencing to
the full TCFD report on the firm’s website.
RESTORING TRUST IN AUDIT AND
CORPORATE GOVERNANCE
The committee has evaluated the impact of the
Department for Business, Energy and Industry
Strategy (BEIS) consultation and resulting
proposals for restoring trust in audit and
corporate governance on the firm. Whilst these
proposals will not be taken forward by
government, an internal team has been created
to assess best practice that the firm may
implement including an audit and assurance
policy over the next year.
In January 2024, the FRC published an updated
UK Corporate Governance Code 2024. The group
is committed to high standards of corporate
governance and is in support of these changes.
We continue to evaluate the impact of the
updated Code changes on the group and plan to
be compliant by 2025.
RISK MANAGEMENT AND INTERNAL CONTROLS
In conjunction with the risk committee, we have
satisfied ourselves that the group’s internal
control framework is effective and adequately
aligned with the group’s risk profile. We are
satisfied that the internal controls in relation to
the financial reporting process are appropriately
designed and effective in identifying risks faced
by the group. Full details of the internal control
framework are given within the risk
management section on pages 77 to 86.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 105
AUDIT COMMITTEE REPORT CONTINUED
At each meeting we receive a report from the
head of internal audit, and we review major
findings into control weaknesses and
management’s response as well as reviewing the
results of our annual ISAE3402 reporting for
clients. We actively follow-up with management
the rectification of identified control weaknesses.
In addition, the committee receives an
assessment from the risk management function
the key accounting judgements and fraud risk
and controls to assist with the review of the
annual report.
FRC CORRESPONDENCE
In October 2023, the FRC wrote to the group
confirming that it had been included in a sample
for their thematic review covering climate
related metrics, targets and net zero plans. The
group’s climate related disclosures in the 2022
annual report were identified as examples of
good practice by the FRC, but there were also
opportunities for improvement which have been
considered and implemented in the preparation
of the 2023 annual report and our standalone
TCFD report.
INTERNAL AUDIT
INTERNAL AUDIT FUNCTION
The internal audit function is an independent
and objective team designed to add value and
improve the firm’s operations by providing
assurance that, for all areas of the group, the risk
management, governance and internal control
processes are operating effectively. The internal
audit function is the third line of defence within
the controls framework, providing independent
and objective assurance to both senior
management and the audit committee.
As referenced in last years report, a new group
head of internal audit joined the group at the
start of 2023 and this transition went smoothly.
The IA function’s detailed work programme is set
out in a rolling audit plan, which is reviewed and
approved by the committee and a continuous
risk assessment informs the audit planning and
priorities during the year. In doing so, the
committee has ensured that the Plan covers the
group’s key risks, regulatory priorities and
strategic ambitions and aligns with the
assurance activity being carried out by the
group’s second line function and the external
auditor. Any modifications to the plan are
approved by the committee.
During the year, the committee received regular
reports on progress against the Plan, the
responsiveness of management in addressing
recommended actions, and the function’s
requirements for resource and access to
management and information. The committee
uses this information to assess the function’s
effectiveness and to ensure that it is adequately
resourced and fully equipped to fulfil its
mandate and perform in accordance with
the Internal Audit Charter and relevant
professional standards.
Having considered the information provided to
it throughout the year, the committee remains
satisfied that the quality, experience and
expertise of the function is appropriate and that
it is operating effectively.
In addition, the audit committee approves an
updated internal audit charter, which sets out
the mandate and remit of the function. It
received regular reports on internal audit
activities across the group detailing areas
identified during audits for strengthening across
the group’s risk management and internal
control framework and management’s progress
on remediation of issues.
INTERNAL AUDIT EFFECTIVENESS
The annual Internal Audit assessment, which
found the governance and risk and control
framework of the group to be generally effective,
was received by the committee in accordance
with the Chartered Institute of Internal Auditors’
guidance.
The committee completed its annual review of
the effectiveness of the internal audit function
and its level of independence. The evaluation for
the year under review was completed internally
and supported by feedback from the committee
and management.
The internal audit function was found to be
working well with a good culture of engagement
between management and internal audit.
In addition to reviewing the internal audit
function’s effectiveness, the committee assessed
the level of internal audit resource and the
appropriateness of the skills and experience of
the internal audit function. It concluded the
function was adequately resourced with
additional co-source available for specialist
skills. An external evaluataion of the function
will be completed in 2024.
As well as meetings with management, I have
regular meetings on a one-to-one basis with the
group head of internal audit to ensure that any
concerns can be raised in confidence.
EXTERNAL AUDIT
AUDIT WORK 2023
The committee oversees the relationship with
Deloitte LLP, its external auditor, covering
engagement terms, fees and independence. Both
the committee and the external auditor have
policies and procedures designed to protect
independence and objectivity.
Deloitte has been auditor to the group since May
2019 and Manbhinder Rana has been the firm’s
lead partner from this date and will be rotating
off this audit in 2024. During the year, the audit
committee chair has engaged in the succession
planning process to appoint a new lead audit
partner and will oversee a smooth handover
process. Mr Rana attends all committee
meetings.
During the year the committee reviewed the
external audit plan and the resulting findings,
which included control observations and areas of
focus. In particular, the committee reviewed and
challenged reports from Deloitte which outlined
their risk assessments and audit plans (including
their proposed materiality level for the
performance of the annual audit), the status of
their audit work and issues arising from it.
Particular focus was given to their testing of
internal controls, their work on the key
judgement areas and possible audit adjustments.
We can confirm that there are no such material
items remaining unadjusted in the financial
statements. Principal matters discussed with
Deloitte are set out in their report on pages 141
to 150.
The company has complied with the Statutory
Audit Services for Large Companies Market
Investigation (Mandatory Use of Competitive
Tender Processes and Audit Committee
Responsibilities) Order 2014 for the year ended
31 December 2023.
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FOCUS FOR 2024
As well as considering the standing items of
business, the committee will also focus on the
following areas during 2024:
— measurement and delivery of synergy benefits
— oversee the transition of audit partner
— maintenance of internal controls through the
integration programme.
Iain Cummings
Chair of the Audit Committee
5 March 2024
AUDIT COMMITTEE REPORT CONTINUED
EXTERNAL AUDIT EFFECTIVENESS
AND APPOINTMENT
We place great importance on the quality,
effectiveness and independence of the external
audit process. In order to review the external
audit process, including the performance of the
external auditor feedback is gathered from both
committee members and management. This
process was undertaken by internal audit. We
also reviewed the FRC Audit Quality Inspection
report prepared on our external auditor and
discussed this report with the audit partner.
No material findings were identified from this
inspection. Taking account of all of these inputs,
the committee was satisfied of the effectiveness
of the external audit of the firm.
Looking ahead, subject to shareholder approval,
Deloitte will undertake the audit of the company
and the group for the year ended 31 December
2024. In conformance with the required rules,
provisions and good corporate governance in
respect of audit tendering and rotation, the group
will be required to tender for the external audit
in the 2029 financial year end.
The committee will consider in due course its
plan for the tender.
AUDITOR INDEPENDENCE AND
NON-AUDIT SERVICES
The committee assesses the independence and
objectivity, qualifications and effectiveness of
the external auditor on an annual basis as well as
making a recommendation on the
reappointment of the auditor to the board. We
discussed the independence of the external
auditor, the nature of non-audit services supplied
by it and non-audit fee levels relative to the audit
fee. The policy includes prohibited services and
sets a fee guide that aims to achieve a cap of 70%
of the average three year statutory audit fee.
The committee’s prior approval is only required
where the fee for an individual non-audit service
is expected to exceed £50,000 and it is on the
list of pre-approved services.
As part of the Investec Wealth & Investment UK
transaction, Deloitte were instructed to support
the group in the preparation of the Prospectus
and Circular. The committee approved this
non- audit service as it was an area of work that
would complement Deloitte’s role as our external
auditor whilst ensuring their independence was
not compromised. As a result, the level of
non-audit fees for 2023 increased materially
compared to previous years, but excluding
services required by national legislation, payable
to the auditor in 2023 were £508,000. This
represents 69% of the three-year average
statutory audit fee of £727,600 (compared to
28% in 2022). Prior to undertaking any non-
audit service, Deloitte also completes its own
independence confirmation processes, which are
approved by the engagement partner. To provide
the committee with oversight in this area, it
submits six-monthly reports on the non-audit
services it has provided.
During the year, the committee also considered
the findings of the FRC’s Audit Quality
Inspection and Supervision on Deloitte and,
in particular, how Deloitte was addressing the
points raised.
Following a formal assessment of the external
auditor’s independence and objectivity, and
taking into account the views of other key
internal stakeholders, the committee
concluded that Deloitte continued to be
independent and objective.
We agreed the external auditor’s fees (which
are shown in note 7 to the financial statements)
and reviewed the audit engagement letter.
We also had discussions with the external
auditor with no management present to provide
an opportunity for any concerns to be raised
and discussed.
RISK MANAGEMENT AND CONTROL
EFFECTIVENESS REVIEW
In conjunction with the risk committee, we
have satisfied ourselves that the group’s internal
financial control framework is effective and
adequately aligned with the group’s risk profile.
We are satisfied that internal financial controls
are appropriately designed and effective in
identifying risks faced by the group. Full details
of the internal control framework are given
within the risk management section on pages 77
to 86. At each meeting the committee is
presented with a report from the head of internal
audit, and reviews major findings relating to
control weaknesses and management’s response.
In addition, a year-end update was provided to
the Committee covering the Group Financial
Control Framework. Additionally, external audit
firms provided ISAE3402 reports on their testing
of controls over the core operating systems
supporting the Investment Management and
Funds businesses. Finally, external audits were
performed covering controls over client assets
held by regulated entities in the group. The
committee was satisfied that no material
weaknesses were identified and that adequate
steps were being taken to remedy control
deficiencies identified.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 GROUP RISK COMMITTEE REPORT
AT A GLANCE
COMMITTEE MEMBERS AND ATTENDANCE
Member
Terri Duhon (Chair)
Iain Cummings
Sarah Gentleman
Dharmash Mistry
Meetings
attended
5/5
5/5
5/5
4/5
ROLES AND RESPONSIBILITIES
The key activities of the committee are to
provide oversight on the firm’s risk appetite
and framework.
To do this we:
— review and discuss reports from the risk
team on risk appetite issues and advise
the board accordingly
— discuss significant loss events, complaints
and near misses, the lessons learned and
management action taken
— review risk and compliance assessments
undertaken and any resulting internal
control enhancements
— advise the board on the risk aspects of
proposed major strategic change
— review (prior to board approval) key
regulatory submissions including the
Group Internal Capital Adequacy
Assessment Process (ICAAP), and the
Internal Liquidity Adequacy Assessment
Process (ILAAP) documents
— receive reports from first line risk owners
on risk management and improvements
to controls and processes.
Full Terms of Reference for the
committee are available on the
Company’s website.
Terri Duhon
Chair of the Group Risk Committee
As chair of the risk committee, I am pleased to
present the committee’s report on the activities
undertaken in the year under review.
The committee plays a key role in overseeing the
integrity of the robustness of the group’s system
of internal control and financial and risk
management.
The group’s approach to risk management, how
it evaluates and manages the principal risks and
uncertainties the group faces are set out on pages
77 to 86.
The external environment over the last 12
months, of ongoing economic uncertainty,
higher inflation and increased cost of living has
remained. Agenda items at the risk committee
this year have continued to reflect this, including
monitoring our operational risk indicators,
evolving our operational resilience programme
and evolving our various stress scenarios.
We continue to progress against our regulatory
agenda, with a particular focus on Consumer
Duty this year as well as conduct risk, cyber risk
and third-party risk. The committee receives
updates on each of these areas and I remain
confident that we are well positioned to meet the
challenges and uncertainties that each of these
will pose.
The group has been evolving it’s risk control self
assessment process which captures key risks
across various business areas. This year has seen
a significant amount of work on this and the
committee has been kept apprised throughout
the year.
In addition, the committee has regularly
reviewed reports from the risk and compliance
functions on the effectiveness of the processes
that support the management and mitigation of
both principal and emerging risks.
During the year, the group continued to embed
its risk management software that houses all risk
assessments as well as linking to other areas of
the risk framework with regular reports
presented to the risk committee.
The committee also focused on programmes
to further align and integrate the group risk
management framework in anticipation of
the combination with Investec Wealth &
Investment (IW&I).
The year ahead is likely to remain challenging
and we will focus on the integration risk,
operational and digital risks whilst ensuring we
continue to progress against the regulatory
agenda particularly around Consumer Duty.
The following sections set out the committee’s
membership, its key responsibilities and the
principal areas of risk upon which we have
focused during the year.
107
KEY ACTIVITIES IN 2023
REGULATORY REPORTING
— reviewed and approved the ICAAP 2023
and operational risk scenarios
— reviewed and approved firm’s operational
resilience self-assessment
— approved Pillar 3 public disclosure
document
— reviewed and approved the firm’s annual
anti-money laundering report
— discussed and approved ILAAP liquidity
and funding stress results
— reviewed and approved the firm’s
recovery plan and resolution pack.
MONITORING KEY RISKS
— oversight and delivery of the Group’s
consumer duty obligations
— monitoring of the group’s digital change
programme risks
— discussed the Group’s strategic risk profile
including impact of IW&I transaction
— approved group’s annual review of
risk appetite
— monitored and discussed the group’s
people and culture risk profile
— approved firm’s compliance
monitoring plan.
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108
The committee undertakes a robust assessment
of both the principal and emerging risks facing
the group over the course of the year, and
reviews reports from the risk and compliance
function on the processes that support the
management and mitigation of those risks. As
part of the ongoing review process, a specific
assessment of the principal risks and emerging
risks and uncertainties facing the group is also
carried out by the committee, including those
that would threaten its business model, future
performance, solvency or liquidity.
The committee is also responsible for the inputs,
outputs and the process followed to produce the
following key regulatory reports:
— Internal Liquidity Adequacy Assessment
Process (ILAAP)
— Internal Capital Adequacy Assessment
Process (ICAAP)
— Pillar 3
— Resolution and Recovery.
COMMITTEE TRAINING
Ongoing training is provided to assist committee
members in performing their duties. This year
this included briefing sessions on the
implementation of the FCA’s Consumer Duty,
SEC obligations and pension risk.
RISK REVIEW
The committee has delivered on all of its
planned objectives for the year. The committee
continued its focus on investment risk
throughout the year looking at investment
performance, suitability and governance
enhancements. There has been particular
focus again this year on the firm’s risk appetite
framework, particularly given the programme of
change that has been delivered during the year.
DIGITAL CHANGE PROGRAMME
As referenced in our report last year, the
implementation of the group’s digital change
programme was a significant area of focus by the
risk committee during the year. The committee
received and reviewed reports by management
as well as the chief risk officer on the key risks of
this deployment across the group. These risks
will continue to be a material area of focus of the
committee as we move into 2024.
Our risk management framework underpins our
operational culture to enable a responsive and
forward-looking approach to the risks we face as
a group. During this financial year we conducted
our regular review of principal and emerging
risks, with changes reflected in our risk report on
pages 81 to 86. As ever, the risks posed by the
external environment are multi-faceted and
work on our operational resilience agenda to
manage these has continued apace throughout
the year, with updates to the committee a regular
agenda item. Fraud risk and identification
remain high on our radar and we have benefited
from frequent updates on progress in our cyber
maturity. During this financial year we have
continued to revisit our stress event planning
activities; our annual stress testing exercises
continue to demonstrate our resilience and
sufficient resources of both capital and liquidity.
CULTURE AND RISK
The links between culture, risk and
remuneration are fundamental. The chief people
prepares a report on people risk themes on an
annual basis and the chief risk officer provides
aregular risk culture update from a second line
perspective. In addition, the risk committee
chair and chief risk officer have provided input
to the remuneration committee to ensure
behaviours and the management of risk during
the year were considered in remuneration
committee decisions.
Ensuring that we are fully compliant with the
numerous and ever-changing regulatory
requirements for financial services firms
remains challenging. We engage actively with
regulators and industry bodies to ensure that our
compliance framework remains appropriate and
relevant for all of our businesses. Also, our
compliance team works closely with first and
second line colleagues, providing regulatory
advice in support of our business strategies, as
well as shaping policies, delivering training and
conducting assurance reviews.
GROUP RISK COMMITTEE REPORT CONTINUED
COMMITTEE MEETINGS
Our current members are the independent
non-executive directors, who met formally on
five occasions during the year and informally
three times to review key regulatory reports.
In addition to the members of the committee,
standing invitations are extended to the chair,
the executive directors, the chief risk officer, the
chief operating officer, the managing directors
and the head of internal audit. All attend
committee meetings as a matter of course and
inform the committee’s discussions. Other
executive committee members and risk team
members are invited to attend the committee
from time to time as required to present and
advise on reports commissioned.
I frequently meet with the chief risk officer in a
combination of formal and informal sessions
throughout the year. I also meet with senior
management across all divisions of the group
including the risk and compliance division to
discuss the business environment and to gather
their views of emerging risks.
The committee has an agreed annual standing
agenda to cover key risk items in the year, which
are required to be addressed in accordance with
the terms of reference. The committee always
discusses the chief risk officer’s report which
covers the second line risk view, as well as
reports from management which give the first
line risk view. We also then hear about financial
risks, and finally internal audit gives any
thoughts at the end of the meeting to cover the
third line risk view. Prior to each meeting, I agree
the agenda with the chief risk officer and the
company secretary to identify key issues
impacting on the firm that may require the
committee’s attention, which either become ad
hoc agenda items or standing agenda items
depending on the issue.
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GROUP RISK COMMITTEE REPORT CONTINUED
This year has also seen a further evolution and
expansion of our conduct risk reporting to the
entire group to enable further focus on good
client outcomes with regular reporting to the
risk committee.
CONSUMER DUTY
During the year, the committee has reviewed
and challenged preparations for the
implementation of the Consumer Duty within
the group. The committee has monitored
progress of the implementation plan and
assurance of the deliverables to ensure all
aspects of the regulations have been considered
and delivery was on track prior to completion of
the annual assessment by 31 July 2023. The
committee has scrutinised the outcomes of
product reviews against requirements and
overseen the ongoing development of data to
ensure monitoring and assurance is in place to
embed the Consumer Duty within the firm. As
a result of this work, the committee was able to
recommend to the board that the appropriate
assessments and checks had taken place,
including that its future business strategy has
been assessed to ensure it is aligned with its
obligations under the Consumer Duty including
price and value, with only minor enhancements
to client communications identified to further
support good client outcomes. This will remain
an area of focus as both our processes embed
and FCA guidance develops.
RISK APPETITE
There has been particular focus again this
year on the firm’s risk appetite framework,
particularly given the programme of change that
has been delivered during the year. Also, the
committee continued to focus on conduct risk,
controls and processes, and risk of fraud.
A number of areas of operational and financial
risks were stressed again this year as part of the
annual ICAAP and ILAAP, especially bearing in
mind the increased global economic uncertainty.
Following extensive debate and challenge, the
committee and board were satisfied that the
group’s business model and allocated risk
appetite remained appropriate. This is an
important outcome given the number of
change management programmes underway
across the group.
FOCUS FOR 2024
In reviewing the committee’s priorities for the
coming year, consideration will be given to the
following areas:
— overseeing phase two of the Consumer Duty
programme to ensure the regulatory
expectations are embedded within the
combined firm with continued assurance
in place
— monitor key risks associated to the integration
of IW&I including embedding a common risk
management framework across the new group
and the development of a shared risk culture
— oversight of the firm’s digital change
programme
— continued focus on the firm’s investment
and suitability processes
— oversight of the firm’s supplier framework
andmanaging third party risks.
Terri Duhon
Chair of the Group Risk Committee
5 March 2024
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110
AT A GLANCE
COMMITTEE MEMBERS AND ATTENDANCE
Member
Dharmash Mistry (Chair)
Clive Bannister
Terri Duhon
Iain Cummings
Sarah Gentleman
Meetings
attended
3/3
3/3
3/3
3/3
3/3
The committee held three additional
meetings in the year to consider the
proposed new remuneration policy and
compensation planning.
ROLES AND RESPONSIBILITIES
— determine and set the firm’s remuneration
philosophy, ensuring that it is aligned
with the business plans and risk appetite
— approve the remuneration policy for
executive directors for final approval by
shareholders and make remuneration
decisions within the policy
— approve total annual remuneration for
executive directors based on
achievements against objectives set by
the committee
— review total annual remuneration for
executive committee members and
material risk takers.
Full Terms of Reference for the
committee are available on the
Company’s website.
Dharmash Mistry
Chair of the Remuneration Committee
Following my appointment as the chair of the
remuneration committee on 1 September 2023,
I am pleased to present the Directors’
Remuneration Report for the 2023 financial year.
I would like to place on record my sincere thanks
to my predecessor, Sarah Gentleman, for her
service to the committee and for her support in
ensuring a smooth handover whilst continuing
to be member of the committee. I would also like
to thank my fellow committee members for their
support and contribution to the work of the
committee throughout the year.
This report sets out our pay decisions for the
year, including how we implemented the
Remuneration Policy approved by shareholders
at the 2021 Annual General Meeting (AGM), as
well as our new proposed Director’s
Remuneration Policy (DRR).
2023 PERFORMANCE AND
REMUNERATION OUTCOMES
This year has seen a challenging market
backdrop, with the weaker UK macroeconomic
outlook creating significant uncertainty for
our clients. Against this volatile backdrop,
the group’s well-established business model
enables us to support our clients and our
model is focused on responsible investing and
maintaining our margin levels. It is supported
by a clearly defined risk appetite and a prudent
approach to managing our business and
financial resources.
As referenced in the chair and chief executive
reports, the combination with Investec Wealth &
Investment (IW&I) that was announced in April
2023 dominated the year. From a remuneration
committee viewpoint, we have carefully
considered the impact of this transaction on the
outcome for the annual bonus and our proposed
Remuneration Policy for the next three years.
The committee has sought to ensure the
executive directors are appropriately motived,
retained and aligned with the experience of our
shareholders. We have provided below an
explanation of the committee’s decisions as a
direct result of the combination with IW&I.
Following the group’s solid financial
performance in the year and strong capital
position, and to reflect our continued confidence
in the business model, the board is proposing a
final dividend of 24p per share. This will result in
a full-year dividend per share of 87p (2022: 84p).
The executive team have delivered a significant
amount of activity aligned with our strategic
priorities and details can be found on page 126.
KEY ACTIVITIES IN 2023
REMUNERATION POLICY REVIEW
— designed and proposed a new
remuneration policy for the next three-
year cycle
— new policy will focus on integration of
IW&I and achieving financial and
non-financial targets
— engaged and consulted with our
top 20 shareholders on our new
remuneration policy.
EXECUTIVE REMUNERATION
— reviewed and approved changes to
fixed pay for the CEO during the year
and for 2024
— assessed and approved the 2023 annual
bonus for executive directors and
members of the executive committee
— assessed the Restricted Share Units (RSU)
vesting underpins
— reviewed the annual risk report on
variable pay targets to ensure alignment
with the firm’s risk appetite
— reviewed and approved remuneration
arrangements as part of group chief
financial officer transition
— reviewed and approved the directors’
remuneration report for shareholders.
WORKFORCE REMUNERATION
— reviewed information on wider workforce
pay including salaries, budgets and
forecasted incentive outcomes
— carried out the annual review of
remuneration for material risk takers
across the firm
— annual review of the general principles of
the regulatory remuneration policy.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 REMUNERATION COMMITTEE REPORT CONTINUED
ANNUAL BONUS OUTCOMES
The 2023 annual bonus was assessed against
two financial measures, underlying profit before
tax and total net organic growth in FUMA. These
are the key indicators of performance used by
the firm and investors, as well as strategic
measures. These specific targets are reviewed
annually to ensure the nature of the targets and
weightings are appropriate to achieve alignment
between the interests of our executive directors,
our strategy and the interests of our
stakeholders.
At the start of the year, the committee set equally
weighted PBT and organic growth measures
(30% each of the annual bonus). When we set
measures and targets for the year, we set these
on the basis of no IW&I transaction. During the
year, the circumstances changed and we
announced to the market on 4 April 2023 of our
intention to combine with IW&I, and this
transaction ultimately completed on
21 September 2023.
The priorities of the board and management
understandably pivoted as a result, to focus on
underlying business performance as measured
through profitability together with the
successful delivery of the transaction. Noting the
delivery of a material amount of inorganic
growth in the year, the committee decided to
re-weight the financial components of the
annual bonus towards PBT increasing this KPI to
40%, with a corresponding de-weighting of
organic growth to 20%. When making this
change the committee were comfortable that the
resulting bonus scorecard was equally as
stretching as when it was initially set.
As stated, 2023 was a challenging year whereby
market conditions impacted the group in terms
of its financial results. Despite this backdrop
management still delivered a robust profitability
outcome. When assessing the outcome against
the bonus measure the committee excluded any
profit delivered by IW&I post transaction – to
ensure the targets and outcome are assessed on
a ‘like for like’ basis. This led to an outcome of
£102 million, slightly ahead of target. The organic
growth measure was below threshold. Whilst the
IW&I transaction led to inorganic growth of
c.40% of FUMA this is not reflected in the two
financial measures used for bonus measures.
In terms of delivery of our key strategic
objectives, strong progress had been made
during the year which resulted in an outcome of
34% out of a maximum of 40% for this measure.
We have set out in more detail the outcomes
against targets for 2023. After consideration, the
remuneration committee decided that these
outcomes were appropriate and consistent for
the year and no discretionary adjustment was
required.
RESTRICTED STOCK PLAN OUTCOMES
The first RSP is due to vest in May 2024, and the
committee assessed the performance underpin
over the 2020-23 period. In summary, over the
three-year period:
— total dividends paid have increased
— return on Capital Employed (ROCE) was
higher than our Weighted Average Cost of
Capital (WACC)
— satisfactory operational performance has
been maintained
— our risk and control environment was robust
and no significant failings or events have
occurred.
111
As such the committee confirmed that the
underpins had been met and therefore the RSP
will vest in full.
2024 DIRECTORS’
REMUNERATION POLICY
Our DRR which was approved at the 2021 AGM
is reaching the end of its three-year lifespan. This
provides us with a unique opportunity to
implement a new policy that has the success of
the combination with IW&I at its core, and which
ensures strong alignment between executive
remuneration outcomes and the successful
implementation of our strategy and delivery of
shareholder value. Our combined business is
now materially larger and more complex, and we
have clear but stretching plans to successfully
integrate these two legacy businesses, deliver
synergies and drive shareholder value.
PROPOSED CHANGES TO OUR
REMUNERATION POLICY
Following the completion of the IW&I
transaction, the group materially increased in
size. This led to a material increase in the roles
and responsibilities of our executive directors. At
the same time, the committee are aware that
delivering shareholder value requires us to
successful integrate these two businesses over
the coming years.
In this context, the committee’s key principle
when conducting this policy review has been to
increase the focus on long term performance,
aligning executive pay with the delivery of
shareholder value from this transaction.
As a result, the main change that we are
proposing is to replace the Restricted Stock Plan
(RSP), which is still a minority practice in the UK
plc market and was introduced three years ago
primarily due to regulatory drivers under CRD V,
with a market aligned Performance Share Plan
(PSP). The PRA’s proposed lifting of restriction in
relation to the ratio of fixed to variable
remuneration also reinforces our preference to
move to a PSP structure.
A summary of the proposed changes to our
remuneration policy is detailed below:
PERFORMANCE SHARE PLAN – AWARD OF UP
TO 200% OF FIXED PAY, ASSESSED OVER A
THREE-YEAR PERFORMANCE PERIOD
The PSP award will be assessed against
stretching three-year performance conditions,
delivering stronger alignment with our strategic
objectives by providing the opportunity to
directly link vesting outcomes to delivery of the
integration and strategy, and the realisation of its
benefits for shareholders.
For the 2024 PSP, to ensure strong alignment
with the success of the IW&I deal, the proposed
measures are:
— 30% Relative TSR vs bespoke peer group
— 30% EPS
— 40% Cumulative synergies delivered.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 112
REMUNERATION COMMITTEE REPORT CONTINUED
ANNUAL BONUS – NO CHANGE TO QUANTUM BUT
MINOR CHANGE TO PERFORMANCE ASSESSMENT
The structure and quantum of the annual bonus
will remain unchanged, with a maximum
opportunity of 135% of Fixed Pay. We are
proposing one change, to adjust the weighting of
the financial measures from a minimum of 60%
to a minimum of 50%.
Following the IW&I transaction, and the material
increase in FUMA from c.£60 billion to
c.£100 billion, there is a need to manage the cost
baseline in a disciplined manner and to make a
fast start to integrating these two businesses in
order to achieve scale and synergy benefits of
the deal. By their nature this means the
associated targets are strategic, rather than
financial. The committee set a number of
qualitative and quantitative targets under each
of the strategic measures – which will be
reported on retrospectively.
In combination with the new PSP, these changes
will mean that, for 2024, 80% of the Executives’
total variable pay will be determined directly by
Rathbones’ financial performance, compared
with around 40% under the current scheme.
This provides a highly transparent link between
pay and performance. These financial targets are
directly aligned to creating shareholder value,
and if targets are not met, then executives’
remuneration will be lower than under the
current RSP.
QUANTUM UNDER OUR PROPOSED
REMUNERATION POLICY
The proposed maximum PSP quantum is set at
200% of fixed pay, representing an increase in
target and maximum pay opportunity on
successful delivery of the integration and strategy.
However, if performance conditions are not met,
pay outcomes will be materially lower than
under the current, more certain, RSP structure.
We carefully considered where to position the
quantum of the PSP, in combination with
decisions taken in relation to fixed pay:
— From a strategic perspective the committee’s
desire was to increase the overall weighting on
long term performance given the focus on
delivering the integration successfully over
the next three years. Despite the significant
increase in roles and responsibilities post
transaction we sought to moderate any fixed
pay increase and provide upside opportunity
through the PSP
— From an overall quantum and pay positioning
perspective, we reviewed various market
benchmarks to ensure our proposals were
consistent with market norms.
We are confident that a maximum PSP of 200%
is appropriate for a company of Rathbones’ size
and complexity, noting the annual bonus at
135% of fixed pay is below market norms.
FIXED PAY OF CHIEF EXECUTIVE OFFICER
As stated above, whilst the combined business
is materially larger and more complex, the
committee have sought to primarily make any
increases in executive remuneration through
the PSP, linking any increase in reward to the
delivery of stretching goals. However, for the
CEO a moderate fixed pay increase was deemed
appropriate, to reflect the increased
responsibilities and scope of his role. An increase
of 6% has been applied, effective September 2023.
SHAREHOLDER ENGAGEMENT
The company consulted extensively with major
shareholders and their representative bodies on
remuneration issues, including the development
of this new directors’ remuneration policy and
our approach to fixed pay. The consultation was
well received by investors and their feedback
helped inform the final scheme design. While we
did not consult explicitly with employees on this
new policy, the committee took account of
remuneration policies elsewhere in the group.
Our new remuneration policy will have
immediate effect, subject to approval from our
shareholders. Full details of the proposed
changes to our policy is set out below, with
further details presented on pages 115 and 123.
When finalising our decision, we carefully
considered remuneration benchmarking data of
peers in the context of the new larger business
and the following factors:
— The CEO’s fixed pay is materially below the
median of the FTSE 250 and FTSE 250
financial services
— If the proposed PSP is approved, the CEO’s
total target remuneration will move from
below the lower quartile of the FTSE 250 and
FTSE 250 financial services to between lower
quartile and median.
— Conversely, by market capitalisation,
Rathbones is in the top third of the FTSE 250.
Whilst we are not led by benchmarking, this
comparison gave the committee comfort that the
proposed remuneration levels are consistent
with those in the wider market, and appropriate
following completion of the IW&I transaction.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
REMUNERATION COMMITTEE REPORT CONTINUED
113
ENVIRONMENTAL, SOCIAL AND
GOVERNANCE METRICS
The committee is conscious that shareholders
are increasingly expecting environmental, social
and governance measures (ESG) to be embedded
within remuneration frameworks for senior
management, especially as they align with our
purpose. As part of the review of annual bonus
for 2023, the committee took into account the
firm’s progress towards leveraging our ESG
credentials by integrating responsible investing
across the firm and laying the foundations to
achieving our net zero targets.
FEES AND SALARIES
The committee will continue to keep fixed pay
levels under review, taking into account
workforce pay and policies as per the UK
Corporate Governance Code, the firm’s
performance and the views of shareholders. In
conducting any review of fixed pay levels the
committee will take into account the continued
development of both executives since their
appointment. The remuneration arrangements of
other firms of similar size and complexity are
also reviewed for guidance.
In relation to Paul Stockton’s fixed pay for 2024,
the committee proposes to make a modest
increase of 3% which is below workforce levels.
Non-executive director fees were also reviewed
during the year and it is proposed these are
increased in the year for the first time since 1
January 2020. Full detail on changes to these
fees is on page 128.
CONCLUSION
The remuneration landscape continues to be the
subject of many political and regulatory policy
changes and, as these evolve, the committee will
ensure that our policy and practices remain
compliant, balancing the need to remain
performance-driven and competitive. I welcome
any feedback you may have during the year and
hope to receive your support for the approval of
the remuneration report. I would like to thank
shareholders for the support they have given this
year, and I hope you will recognise and approve
of the changes that have been made and support
our 2023 DRR at the 2024 AGM.
Dharmash Mistry
Chair of the Remuneration Committee
5 March 2024
EXECUTIVE DIRECTOR CHANGES
In September 2023, we announced that Jennifer
Mathias would step down from the board as of
31 December 2023 and would transition into the
role of chief of staff. Her pay on stepping down
from the board was determined in accordance
with her service contract and our remuneration
policy. She was eligible to receive a full bonus
reflecting relevant performance for 2023 and her
period of employment this year. The bonus
outcome was carefully considered in the context
of performance in the round prior to stepping
down from the board. As Jennifer remains an
employee of the Group there is no impact on
unvested share awards.
Iain Hooley was appointed to the board as chief
financial officer effective 1 January 2024. His fixed
pay was set at £436,800 and variable remuneration
will be in line with our proposed Remuneration
Policy, subject to shareholder approval.
GROUP-WIDE EMPLOYEE
REMUNERATION
With regards to the average salary increase
for the general population, an increase of 3.5%
was agreed for 2024. The increase reflects the
continuing pressures on wages and the cost
of living, driven by the current inflationary
environment, and ensures those most susceptible
to the economic environment are best protected.
The group continues to pay all employees at or
above the national living wage, which is in
excess of the national minimum wage.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 REMUNERATION SUMMARY FOR 2023
114
ONE-YEAR MEASURES
REMUNERATION OUTCOMES (£’000)
Underlying profit margin
Total net organic Growth in FUMA
Strategic objectives
% of award
Achieved
40%
20%
40%
26%
0%
34%
100%
60%
40%
40%
26%
34%
20%
PAUL STOCKTON
Minimum
Target
Maximum
Actual
23*
22
23*
22
23*
22
23*
22
578
534
1,399
967
1,711
1,255
1,413
765
THREE-YEAR MEASURES
JENNIFER MATHIAS
100%
100%
The RSP was subject to the following underpins:
Achieved
ROCE was higher than WACC over
the last 3 years
Total dividends continued to
increase over the last 3 years
Satisfactory operational and risk
management over the last 3 years
100%
100%
100%
Minimum
Target
Maximum
Actual
23*
22
23*
22
23*
22
23*
22
390
375
943
679
1,154
882
956
541
* Targets and outcomes for 2023 take into consideration
the RSP award that was awarded in 2021
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 PROPOSED REMUNERATION POLICY OVERVIEW
The diagram below illustrates how our proposed Remuneration Policy will operate in 2024. The policy table on pages 116 to 123 set out how this differs from our current Policy.
In summary the proposed Policy:
— ensures strong alignment between executive remuneration outcomes and the successful implementation of our strategy and integration
— better aligns executive remuneration to shareholder value, increasing the % total pay directly linked to financial results from c.40% to c.80% for 2024 and onwards
— creates strong alignment to a common outcome and set of performance targets
— if performance conditions are not met, pay outcomes will be materially lower than under the current, more certain, RSP structure.
2024 ILLUSTRATION OF NEW PSP (PERFORMANCE SHARE PLAN) SCHEME
PERFORMANCE
SHARE PLAN
(MAX 200%
OF FIXED)
BONUS
(MAX 135%
OF FIXED)
PAYOUT PROFILE
UNCHANGED
FROM CURRENT
STRUCTURE
FIXED PAY
(100%)
PAYOUT PROFILE
UNCHANGED
FROM CURRENT
STRUCTURE
PRE GRANT
COND’S
SHARES
(100%)
PERFORMANCE
OVER 3 YEARS
SHARES
2-YEAR
HOLDING PERIOD
SHARES
(50%)
1/3
SHARES
RELEASED
CASH
(50%)
1/3
SHARES
RELEASED
1/3
SHARES
RELEASED
0
(GRANT YEAR)
1
2
3
4
5
LINKS TO STRATEGY
2024 MEASURES
The PSP provides a
structure to align
the interests of
shareholders
and directors in
creating long term
shareholder value.
Financial measures 100%:
— 30% TSR. Direct link to
shareholder value creation.
— 30% EPS. Core measure of
overall profitability.
— 40% cumulative synergies
delivered.
The Annual Bonus
rewards short term
performance through
the achievement of
corporate and
individual goals and
aligns the interests of
shareholders and
directors through
the use of deferral.
The core, fixed
component of the
package designed
to enable the
recruitment and
retention of high-
calibre individuals.
Financial measures (50% of total):
— Underlying profit before tax
— Net organic FUMA growth.
Current
Proposed
Strategic measures (50% of total):
Current
— Strategic measures aligned to
core strategic pillars; enriching
Proposed
the client and adviser proposition
and experience, supporting and
Current
delivering growth, inspiring
our people, and operating
more efficiently.
Proposed
The review may be influenced by:
— role, experience, and performance
— group performance and wider
market and economic conditions
— pay increases across the group
— an external benchmarking
comparator.
CURRENT REMUNERATION
POLICY VERSUS PROPOSED
REMUNERATION POLICY
THRESHOLD
Current
100% 65%
Proposed
100%
Current
Current
TARGET
Proposed
Proposed
Current
Current
Current
100% 65%
Proposed
Proposed
Proposed
100%
100% 65%
100%
81%
65%
100%
100%
81%
120%
100% 65%
100%
100%
81%
100%
65%
135%
65%
100%
100%
100%
81%
100%
135%
120%
Current
Current
100%
MAXIMUM
Proposed
Proposed
100%
81%
81%
100%
100%
65%
Fixed pay
81%
65%
135%
65%
Bonus
100%
100%
81%
135%
120%
120%
Current
100%
100%
Fixed pay
65%
135%
135%
100%
65%
Bonus
Proposed
100%
100%
135%
135%
100%
200%
Fixed pay
Fixed pay
Bonus
Bonus
RSP/PSP
115
200%
RSP/PSP
200%
RSP/PSP
200%
RSP/PSP
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
116
DIRECTORS’ REMUNERATION POLICY
This section of the report sets out the 2024
Directors’ Remuneration Policy (DRR) which
will be put to a binding vote at the Annual
General Meeting (AGM) on 9 May 2024 and,
if approved, will apply with effect from the
date of the 2024 AGM unless a revised Policy
is put to shareholders before then.
The current policy, which was approved by
shareholders in May 2021, can be found on
the company’s website.
ALIGNMENT OF POLICY WITH CODE
In determining the Policy, the committee took
into account the principles as set out in the Code,
in addition, the committee ensured that the
proposed policy was transparent, simple and
easily understood, fair and linked group
performance and reward, and to drive the
right behaviour, it is aligned to our purpose,
values and group strategy.
CLARITY
SIMPLICITY
RISK
Our remuneration arrangements are transparent and aligned
with our purpose, values and strategy and our disclosures are
clear to both our shareholders and our employees. Performance
targets are set in line with Group budget plans, reviewed and
tested by the committee.
Our remuneration structures are as simple as they practicably
can be. We follow a standard UK market approach to
remuneration with established variable incentive schemes
that operate on a clear and consistent basis.
Our variable remuneration arrangements take into account risk,
both in determining award quantum and through how awards
are delivered. The remuneration committee retains an overriding
discretion that allows it to adjust formulaic annual bonus
outcomes so as to guard against disproportionate out-turns.
Deferral of the annual bonus into shares, a five-year release
period under the PSP and stretching shareholding requirements
that apply during and post-employment provide a clear link to
the ongoing performance of the group and therefore long-term
alignment with stakeholders. Malus and clawback provisions
apply to all variable pay awards.
PREDICTABILITY
PROPORTIONALITY
ALIGNMENT TO CULTURE
The range of possible values of rewards and other limits or
discretions can be found in the full policy included in the 2023
remuneration report, and the risk section above refers to limits
and committee discretion.
The variable elements of awards are linked to base salary. The
performance targets are closely linked to the corporate, financial,
strategic and other non-financial objectives of the Company. This
enables the committee to reward the executive directors’
contribution to both the annual financial performance and the
achievement of specific objectives of the Company, so that poor
performance cannot be rewarded.
In determining the policy, the committee was clear that this
should drive the right behaviours, reflect our values and support
the Company’s purpose and strategy. The committee will review
the remuneration framework regularly so that it continues to
support our strategy.
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117
FIXED PAY
PURPOSE AND LINK TO STRATEGY
OPERATION
OPPORTUNITY
APPLICABLE PERFORMANCE MEASURES
RECOVERY
The core, fixed component of the
package designed to enable the
recruitment and retention of
high-calibre individuals
Changes from current policy: none
Fixed pay is reviewed annually and is
compared to fixed pay (consisting of
base salary + pension) levels in other
companies of similar size and
complexity to ensure that a
competitive rate is being paid.
Adjustments may be made at other
times to reflect a change of
responsibility.
There is no maximum fixed pay, but
percentage increases will normally
be no higher than the general level
of increase for the wider employee
population, unless there are special
circumstances such as a material
change of responsibilities or where
a salary is significantly below
market median and is being
brought into line.
Not applicable.
Not applicable.
BENEFITS
PURPOSE AND LINK TO STRATEGY
OPERATION
OPPORTUNITY
APPLICABLE PERFORMANCE MEASURES
RECOVERY
Benefits are typically provided to
directors to be generally consistent
with other employees and to
complement the remuneration
package to ensure that it is
sufficiently competitive
Benefits are set by the committee
and may include, for example:
Benefits make up a small percentage
of total remuneration costs.
Not applicable.
Not applicable.
— private medical insurance for
directors and their dependants
— death in service cover
— Share Incentive Plan free and
Changes from current policy: none
matching shares
— Save As You Earn scheme
— annual medicals
— limited legal and professional
advice on company-related matters
— relocation costs.
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118
ANNUAL BONUS
PURPOSE AND LINK TO STRATEGY
OPERATION
OPPORTUNITY
APPLICABLE PERFORMANCE MEASURES
RECOVERY
The maximum Annual Bonus award
is 135% of fixed pay.
Target performance is 60% of
maximum.
Threshold performance is 25% of
maximum.
The annual bonus rewards short term
performance through the
achievement of corporate and
individual goals and aligns the
interests of shareholders and
directors through the use of deferral.
Up to 50% of the Annual Bonus
is paid in cash and the remainder
(at least 50%) is deferred into
Rathbones shares, which vest over a
three-year period in equal tranches
of 1/3 per annum.
The performance measures as
described have been selected to
support the controlled delivery of our
business strategy as set out in the
strategic report.
Changes from current policy:
Minimum weighting on financial
metrics reduced from 60% to 50%.
The committee may award dividend
equivalents on deferred shares in
respect of dividends declared during
the deferral period. If dividend
equivalents cannot be awarded due
to regulations, the number of
deferred bonus shares to be awarded
may be based on a share price
discounted by reference to an
expected dividend yield over the
vesting period.
The committee retains discretion to
make changes to the annual bonus if
required by regulations including but
not limited to the amount deferred,
length of the deferral period,
proportion paid in instruments such
as shares or funds and introduction
of holding periods.
All unvested awards will normally
lapse on termination of office unless
the termination was as a “good
leaver”. A ‘good’ leaver is a director
who leaves on retirement, due to
ill-health or disability, on the sale of
the business or in any other
circumstances where the committee
determines good leaver treatment is
appropriate. Treatment for a good
leaver is defined below.
Malus and/or clawback can be
applied at any time up to seven years
from the date of grant in the case of
share awards and seven years from
the payment of cash on cash awards.
The vesting schedule for the share
awards is 1/3 per annum over
three years.
Malus and/or clawback can be applied
in certain specified circumstances
including: gross misconduct, material
misstatement of results, where there
has been an error relating to the
determination of variable pay,
material adverse event as determined
by the committee, material failure of
risk management, reputational
damage, or corporate failure.
The annual bonus is based on the
remuneration committee’s assessment
of financial and non-financial
performance against a balanced
scorecard of measures, which are
aligned to the company’s strategy.
No less than 50% of the annual bonus
will be based on financial measures.
The remainder will be based on
non-financial performance measured
against strategic objectives.
The performance metrics and range
of outcomes for each financial measure
are set by the committee and reviewed
annually.
Additional considerations
The remuneration committee may
make an adjustment when determining
the level of the annual bonus, including
to zero if appropriate, to take account of
any of the following material events:
— underlying financial performance
— risk management or regulatory
compliance issues
— personal performance.
The remuneration committee may also
make an adjustment when determining
the level of vesting of deferred shares if
there is a material downturn in
financial performance.
This ability to override formulaic
outcomes when determining bonus
outcomes is in addition to the malus and/
or clawback provisions to adjust awards.
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119
PERFORMANCE SHARE PLAN (PSP)
PURPOSE AND LINK TO STRATEGY
OPERATION
OPPORTUNITY
APPLICABLE PERFORMANCE MEASURES
RECOVERY
The PSP provides a structure to align
the interests of shareholders and
directors in creating long term
shareholder value.
Changes from current policy: New
element of remuneration, replacing
the previous Restricted Stock Plan.
The maximum PSP award is 200% of
Fixed pay.
The payout for threshold
performance is 25% of maximum.
Awards are granted based on
satisfactory personal and group
financial performance in the year
prior to grant.
The committee has the discretion to
adjust the number of shares vesting
taking into account business,
individual and wider company
performance.
An annual award of Rathbones shares,
which vest after three years subject to
achievement of specific performance
conditions. An additional holding
period of at least two years will apply
following vesting.
Notional dividends accrued on PSP
awards may be delivered as shares or
cash at the discretion of the
committee at the same time as the
delivery of vested shares. If dividend
equivalents with respect to the
vesting period cannot be awarded
due to regulations, the number of
shares to be awarded may be based
on a share price discounted by
reference to an expected dividend
yield over the vesting period.
The committee has the discretion to
make changes to its PSP policy where
required under regulations including
but not limited to the length of the
vesting period and retention period.
The PSP is based on the remuneration
committee’s assessment of financial and
non-financial performance against a
balanced scorecard of measures, which
are aligned to the company’s strategy.
No less than 60% of the PSP will be
based on financial measures.
The performance metrics and range of
outcomes for each financial measure
are set by the committee and reviewed
annually.
Additional considerations
The remuneration committee may
make an adjustment when determining
the overall award, including to zero if
appropriate, to take account of any of
the following material events:
— underlying financial performance
— risk management or regulatory
compliance issues
— personal performance.
All unvested awards will normally
lapse on termination of office unless
the termination was as a “good
leaver”. A ‘good’ leaver is a director
who leaves on retirement, due to
ill-health or disability, on the sale of
the business or in any other
circumstances where the committee
determines good leaver treatment is
appropriate. Treatment for a good
leaver is defined below.
Malus and/or clawback can be
applied at any time up to seven years
from the date of grant.
Malus and/or clawback can be
applied in certain specified
circumstances including: gross
misconduct, material misstatement
of results, where there has been an
error relating to the determination of
variable pay, material adverse event
as determined by the committee,
material failure of risk management,
or corporate failure.
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SHAREHOLDING REQUIREMENTS
In order to align the interests of executive directors and shareholders, the executive directors are required to acquire and retain a holding in shares or rights to shares equivalent to the value of 250% of fixed
pay for the CEO and 200% of fixed pay for the CFO within five years of the date of appointment. Shares that count towards these guidelines include shares that are owned outright, vested and not exercised
EIP, SIP, RSP and PSP awards and unvested deferred bonus awards. Awards count towards the shareholding requirement on a notional net of tax basis if relevant.
In addition a post-cessation shareholding requirement applies. Executive directors are required to hold 100% of the in employment requirement (or the executive’s actual shareholding on cessation if lower)
for two years following cessation. This requirement can be disapplied in certain exceptional personal circumstances (e.g. death or disability).
CHAIRMAN AND OTHER NON-EXECUTIVE DIRECTORS
BASE FEE
PURPOSE AND LINK TO STRATEGY
OPERATION
OPPORTUNITY
APPLICABLE PERFORMANCE MEASURES
RECOVERY
To enable the recruitment of
high-calibre non-executive directors
with the appropriate skills and
experience.
Base fees are reviewed annually by
the board on 1 April and are
compared to fees in other companies
of similar size and complexity to
ensure that the market rate is being
paid. Adjustments may be made at
other times to reflect a change of
responsibility. Fees are paid in cash.
The current base fee as of 1 January
2024 is £195,000 for the Chairman
and £65,000 for the other non-
executive directors.
Not applicable.
Not applicable.
ADDITIONAL RESPONSIBILITY FEE
PURPOSE AND LINK TO STRATEGY
OPERATION
OPPORTUNITY
APPLICABLE PERFORMANCE MEASURES
RECOVERY
To recognise the additional
responsibility involved in specific
additional roles including for example
chairing a committee (audit, group
risk and remuneration) or being the
senior independent director.
Additional responsibility fees are
reviewed annually by the board on
1 January.
As of 1 January 2024 the additional
responsibility fee is £20,000 per
annum.
Not applicable.
Not applicable.
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CONSULTATION
Maintaining a strong alignment between the way in which we create value for our stakeholders and
our remuneration principles, which then apply to executive director and wider pay arrangements,
is an important and conscious priority for the committee. As a result, the company consulted
extensively with major shareholders and their representative bodies on remuneration issues,
including in the development of this new directors’ remuneration Policy. Also, the committee
considered the new policy for executive directors in the context of wider workforce remuneration
policies and outcomes. Our focus on workforce engagement also allows employee views to be heard
directly by the committee. For example, employees speak directly to the remuneration committee
chair and audit committee chair (who is a member of the remuneration committee) as part of our
Workforce Engagement programme. This direct feedback loop is complemented by a number of wide
communication channels where remuneration matters are shared and feedback is sought from
employees. Overall the committee was comfortable that our current approach of linking
remuneration principles to our purpose and considering executive director remuneration alongside
workforce remuneration.
APPOINTMENT OF NEW DIRECTORS
For new executive and non-executive directors, the structure of the package offered will mirror that
provided to current directors under the new directors’ remuneration policy. The package quantum
will depend on the role and the experience and background of the new director. Advice from our
remuneration consultants will be taken to ensure that the package is commensurate with median
market levels for companies of similar size and complexity and taking into account the skills and
experience of the individual appointed. Any future variable award will be made within the 135%
maximum for Annual Bonus and 200% maximum for PSP (subject to shareholder approval).
The company may pay compensation to new directors for remuneration the individual has forfeited
in order to take up the role with Rathbones. Rathbones will ensure that these awards are no more
generous in either amount or terms than the awards they replace. These awards may be structured
differently from awards made under our standard directors’ remuneration policy in order to best
reflect the remuneration being forfeited.
DIRECTORS’ REMUNERATION POLICY CONTINUED
DEFINITION OF PERFORMANCE METRICS
The annual bonus performance metrics chosen by the committee are key indicators of performance
used by the business and shareholders. Financial measures incentivise the delivery of strong
financial performance for our shareholders in the relevant financial year, whilst non-financial
measures link executive performance to the delivery of key strategic initiatives and projects that
support the firm’s business plan. For the 2024 annual bonus, performance metrics will be profit
before tax, FUMA growth and strategic measures which are the three core KPIs. The committee
reviews the specific choice of performance metrics for the annual bonus on an annual basis at the
beginning of each financial year to ensure that the nature and weighting of these remain appropriate
to ensure alignment between the interests of our executive directors, our business strategy and the
interests of our clients and shareholders. Further details on how the specific choice of measures for
the 2024 annual bonus links to our strategic goals is provided on page 115.
The targets for these measures are considered annually by the committee and are set to encourage
stretching levels of performance without inadvertently motivating inappropriate behaviour.
Rathbones will prospectively disclose the targets on a retrospective basis as these are considered
commercially sensitive.
For 2024, the PSP measures assess cumulative synergies delivered, EPS and relative TSR. These are
chosen as they directly align to our strategic priorities for the coming three-year period, successfully
delivering the required synergies from the integration of IW&I in order to provide growth and EPS
accretion. The relative TSR measures provides direct alignment between PSP outcomes and the
experience of our shareholders.
THE USE OF DISCRETION
The committee may make minor amendments to the policy set out above (for regulatory, exchange
control, tax or administrative purposes or to take account of a change in legislation) without
obtaining shareholder approval for that amendment. In relation to the new plan, the committee
retains discretion when selecting participants, determining the treatment of leavers, agreeing the
timing of awards and reviewing the balanced scorecard of performance measures, targets and
weightings. The committee reserves the right to retrospectively adjust performance measures and
targets if events (for example, a major acquisition) make them inappropriate. Adjustments will not be
made to make the conditions materially easier to satisfy.
The committee reserves the right to make any remuneration payments, and payments for loss of
office (including exercising any discretions available to it in connection with such payments)
notwithstanding that they are not in line with the policy set out above, where the terms of the
payment were agreed (i) before the policy came into effect or (ii) at a time when the relevant
individual was not a director of the company and, in the opinion of the committee, the payment
was not in consideration for the individual becoming a director of the company. For these purposes
‘payments’ include awards of variable remuneration and, in relation to an award over shares,
the associated terms ‘agreed’ at the time the award is granted.
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SERVICE CONTRACTS AND LETTER OF APPOINTMENT
It is company policy that service contracts should not normally contain notice periods of more than
12 months. Details of the notice periods in the contracts of employment of executive directors
serving during the year are as shown below.
Executive director
R P Stockton
I W Hooley
Date of
contract
Notice
period
1 May 2019
12 months
1 January 2024
6 months
There are no provisions within the contracts to provide automatic payments in excess of payment in
lieu of notice upon termination by the company and no predetermined compensation package exists
in the event of termination of employment. Payment in lieu of notice would include fixed pay and
benefits. There are no provisions for the payment of liquidated damages or any statements in respect
of the duty of mitigation. In the event of entering into a termination agreement, the board will take
steps to impose a legal obligation on the director to mitigate any 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, are available for inspection at the
company’s registered office and will be available for inspection at the AGM.
Non-executive directors have a letter of appointment rather than a contract of employment and these
are available for inspection at the AGM. As with all other directors, they are required to stand for
re-election annually in accordance with the UK Corporate Governance Code. The effectiveness of the
non-executive directors is subject to an annual assessment. Any term beyond six years is subject to
particularly rigorous review and takes into account the need for progressive refreshing of the board.
The executive directors are responsible for determining the fees of the non-executive directors.
Non-executive director
C C R Bannister
S F Gentleman
I A Cummings
T L Duhon
D P Mistry
H Baldock
R Leas
Date of
appointment
Notice
period
Length of service at
31 December 2023
6 April 2021
1 month
2 years, 8 months
21 January 2015
1 month
8 years, 11 months
5 October 2021
1 month
2 years, 2 months
2 July 2018
1 month
5 years, 5 months
5 October 2021
1 month
2 years, 2 months
21 September 2023
21 September 2023
1 month
1 month
3 months
3 months
PAYMENTS FOR LOSS OF OFFICE
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 (as stated above), but
mitigation will be applied where appropriate.
Any entitlement to annual bonus, deferred shares and RSP awards will depend on whether the individual is treated as a good or bad leaver, in line with the table below.
STATUS
DEFINITION
TREATMENT
Good leaver
Leave for reasons including retirement, ill health,
sale of the business and any other reason as the
committee determines.
— Annual bonus will be awarded pro-rata in the year of departure, subject to performance.
— All unvested deferred shares will be delivered in line with the existing vesting schedule. The committee has the ability to
accelerate vesting to the date of departure in certain exceptional circumstances (e.g. death or disability)
— The default approach is that all unvested RSP/PSP awards will vest at their normal vesting date, subject to the assessment of
performance and pro-rated for time served. Under the rules of the plan the committee has the ability to accelerate vesting
and/or disapply pro-rating in exceptional circumstances.
— No PSP awards will be made in the year of departure, unless the committee decides otherwise at its absolute discretion.
Bad leaver
Leave for other reasons unless the committee
determines otherwise.
— Annual bonus will not be awarded in the year of departure. All unvested awards will normally lapse.
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OTHER DIRECTORSHIPS
The board believes that the firm can benefit from experience gained when executive directors hold
non-executive directorships. Executive directors are permitted to hold external appointments and to
receive payments provided such appointments are agreed by the board in advance, there are no
conflicts of interests and the appointment does not lead to deterioration in the executive’s
performance.
CONSIDERATION OF REMUNERATION ACROSS THE FIRM
The committee provides oversight of remuneration structures across the firm, including members of
the group executive committee, material risk takers and the risk and compliance teams. In addition,
the committee reviews on an annual basis total remuneration costs across the firm in light of its short
and longer term financial targets and ongoing sustainability.
ILLUSTRATION OF APPLICATION OF REMUNERATION POLICY
The chart below illustrates the potential total remuneration available under the proposed
Remuneration Policy in different performance scenarios.
— Fixed pay levels are £600,000 for CEO and £437,000 for the CFO. Benefits are included at the
same value as paid in 2023.
— Target opportunity includes fixed pay, 60% of maximum bonus (81% of fixed pay) and 50%
vesting of PSP (100% of fixed pay).
— Maximum opportunity includes fixed pay, 100% of maximum bonus (135% of fixed pay) and
100% vesting of PSP (200% of fixed pay).
— Maximum opportunity with 50% share price growth includes maximum pay and 50% share
increase on PSP shares over the vesting period.
The committee is well aware of the remuneration structures across the firm and takes these into
consideration when taking decisions on remuneration for executive directors.
CHIEF EXECUTIVE OFFICER (£’000)
CONSIDERATION OF SHAREHOLDERS’ VIEWS
The remuneration committee has consulted extensively with shareholders and proxy advisors during
2023, in developing this Remuneration Policy. The committee greatly values engagement with our
shareholders and their views have been taken into account in finalising the design of the Policy
presented here.
LEGACY ARRANGEMENTS
Authority is given to the committee to honour previous remuneration awards or arrangements
entered into with current or former directors (such as the payment of a pension or the unwinding of
legacy share schemes). Details of any payments will be set out in the annual report on remuneration
as they arise.
Minimum
Target
Maximum
Maximum +50%
share price growth
100%
£603
36%
23%
19%
29%
36%
£1,689
31%
25%
46%
£2,613
56%
£3,213
Fixed pay
Annual bonus
PSP
CHIEF FINANCIAL OFFICER (£’000)
DIFFERENCE BETWEEN DIRECTORS’ REMUNERATION POLICY AND OTHER EMPLOYEES
All employees, including executive directors, benefit from fixed and variable pay, pension and
non-cash benefits. The company operates a number of variable remuneration schemes within the
group, some fully discretionary, others with mechanistic elements in addition to a discretionary
element. Membership of such schemes is defined by status and job type. Only executive committee
members are eligible to benefit from the PSP awards.
Minimum
Target
Maximum
Maximum +50%
share price growth
100%
£439
36%
23%
19%
29%
36%
£1,230
31%
25%
46%
£1,903
56%
£2,340
Fixed pay
Annual bonus
PSP
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124
REMUNERATION POLICY
The remuneration policy (‘Policy’) was approved at the AGM on 5 May 2021 and can be found on our website. The policy has operated as intended in terms of company performance and quantum. No further
changes have been made to the remuneration policy since it was approved in 2021. This part of the directors’ remuneration report explains how we have implemented our remuneration policy during the
year. This annual report on remuneration is subject to an advisory vote at the 2023 AGM, and the financial information in this part of the remuneration report has been audited where indicated.
ROLE OF REMUNERATION COMMITTEE
The role of the committee is to set the overarching principles of the remuneration policy and provide oversight on remuneration across the firm. Details of the committee’s responsibilities and composition
are noted above. At the invitation of the committee chair, the group chief executive officer and group chief financial officer attend some or all of each meeting. The chief risk officer also advises the
committee on matters relating to remuneration, and attends meetings as required. The company secretary acts as secretary and, with the chairman, agrees the agenda for each meeting. At the end of each
meeting, there is an opportunity for private discussion between committee members without the presence of management. No committee member or attendee is present when matters relating to his or her
own remuneration are discussed. The chairman of the board consults our major shareholders on a regular basis on key issues, including remuneration. A formal consultation exercise was undertaken during
2021 with our major shareholders and shareholder advisory bodies as part of the process of reviewing the remuneration policy. The pay and terms and conditions of employment of employees within the
group are taken into consideration when setting the directors’ remuneration policy and pay of the executive directors. The remuneration committee does not formally consult with employees when setting
the policy, although the employee opinion survey conducted every year includes remuneration as one of the topics surveyed.
UK CORPORATE GOVERNANCE CODE
We continue to be compliant with the executive pay provisions of the 2018 UK Corporate Governance Code.
SINGLE TOTAL FIGURE OF REMUNERATION FOR EACH EXECUTIVE DIRECTOR (AUDITED)
The table below sets out a single figure for the total remuneration received by each executive director for the year ended 31 December 2023 and the prior year:
R P Stockton
2023
2022
J E Mathias
2023
2022
Fixed pay
Variable pay
Fixed pay
£’000
Taxable
benefits and
allowances
£’000
Pensions
£’000
Subtotal
£’000
Annual bonus
£’000
RSP1
£’000
SIP
£’000
SAYE
£’000
Subtotal
£’000
578
534
390
371
3
3
2
2
0
0
0
0
581
537
392
373
470
216
318
152
353
0
237
0
4
6
4
6
5
0
5
0
832
222
564
158
Total
£’000
1,413
759
956
531
1. RSP – this award was made in 2021 and relates to the three-year performance period ending 2023. The award will vest in May 2024 and will be subject to a two-year holding period.
The value of this award was based on the average share price during Q4 2023 of £16.13
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125
TAXABLE BENEFITS
Taxable benefits and allowances represent the provision of private medical insurance for executive directors and their dependants on terms consistent with the company’s workforce.
ANNUAL BONUS
Performance is assessed using a combination of measures that are detailed below:
Financial
Non-financial
Total
Weight %
% of fixed pay
60
40
100
81
54
135
FINANCIAL
The one-year financial performance measures are two key performance indicators actively used by the business, which are closely aligned to strategy. The one-year financial measures and achievement
levels are provided below:
Financial
Underlying profit before tax (£m)
Total net organic growth in funds under management and administration (%)
% of fixed pay
Threshold
(25% of
maximum)
On target
(60% of
maximum)
Maximum of
Actual
Weighted
payout
(% of
fixed pay)
54
27
87.6
2.0
100.0
4.4
112.6
6.0
101.8
-0.8
35
0
The net organic growth in funds under management and administration covers both our Investment Management and Funds businesses.
As outlined in the committee chair’s letter on page 111, whilst the original weightings were 30% / 30% these were adjusted to be 40% / 20% as outlined above. Following the completion of the IW&I
transaction, the priorities of the board and management understandably pivoted to focus on underlying business performance as measured through profitability. Therefore, the committee decided to
re-weight the financial components of the annual bonus towards PBT rather than organic growth.
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ANNUAL REPORT ON REMUNERATION CONTINUED
Our strategic priorities
1 Enriching the client and adviser
proposition and experience
2
Supporting and delivering growth
Our stakeholders
3 Inspiring our people
Clients
Society and communities
4 Operating more efficiently
Our people
Partners and regulators
Shareholders
NON-FINANCIAL STRATEGIC
The non-financial strategic measures are designed to drive strategic goals. Details of the performance measures, assessment and outcomes are detailed below:
PERFORMANCE IN 2023
STRATEGIC DRIVER
STAKEHOLDER IMPACT
OUTCOME
OBJECTIVE: DRIVING GROWTH AND INVESTMENT PERFORMANCE
— Developed the marketing function to achieve lead generation ahead of budget
— Delivered revenue growth from the firm’s financial planning business unit slightly behind budget
— The firm’s client NPS continued to be ahead of peers with a score of 42 in 2023 (40 in 2022)
— Improved client MI and insight dashboard launched
— Greenbank net organic growth of c.3% achieved although behind forecasted budget
— Ensured portfolios were managed to mandate to agreed risk parameters
OBJECTIVE: STRATEGIC PROJECT DELIVERY
— Successful launch of the Charles River system
— Delivered c91% of Saunderson House client transfers to Rathbones though slightly below target
— CLM solution delivery resulted in increased expenditure and longer implementation
OBJECTIVE: PEOPLE AND DEVELOPMENT
1
4
Largely achieved
1 2 3
Partially achieved
— Successful transition of members of the GEC, RAM CEO and appointment of Chief Distribution Officer
— Ensured continuous progress on the firm’s DE&I plans and mobilised networks across the firm
— Maintained strong employee NPS of 37 (15 points ahead of industry benchmark) and high employee engagement
1 2 3
scores of 8/10
OBJECTIVE: INORGANIC GROWTH
— Delivered the IW&I combination
OBJECTIVE: RISK AND GOVERNANCE
— Strategy execution in line with the firm’s risk appetite
— Met all Consumer Duty obligations and deadlines
— Implemented risk and compliance system and enhanced investment risk system capability
— Ongoing improvements in the firm’s suitability processes
— Effective and proactive relationships with the firm’s regulators
1 2 3
1 2 3
Achieved
Achieved
Achieved
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ANNUAL REPORT ON REMUNERATION CONTINUED
TOTAL 2023 ANNUAL BONUS AWARD
In addition to the above specific measures, the committee also considered direct client feedback,
investment performance and other feedback from the risk and audit committees. After taking this
into account, the committee concluded that an overall score for this element of the annual bonus of
34% out of 40% was appropriate, which corresponds to 46% of fixed pay.
Weight % Award achieved
Financial
Non-financial
Total
R P Stockton
J E Mathias
60
40
100
Total award
Delivered in
(£)
470
318
cash (£)
235
159
26
34
60
Deferred in
shares (£)
127
PENSIONS
Since 1 January 2021, Paul Stockton and Jennifer Mathias no longer receive a separate pension
allowance and neither is in receipt of a defined benefit pension. All executive directors are eligible for
death in service benefits on terms consistent with the workforce.
SHARE INCENTIVE PLAN (SIP)
This benefit is the value of the matching and free share awards made in the year under the SIP.
executive directors alongside all employees may contribute up to £150 per month to buy partnership
shares with contributions matched on a one-for-one basis by the company. Free share awards are
linked to EPS growth.
SAVE AS YOU EARN (SAYE)
This benefit is the value of the discount on SAYE options granted during the year.
235
159
PAYMENTS FOR LOSS OF OFFICE (AUDITED)
As announced on 21 September 2023, Jennifer Mathias stepped down from the board as chief
financial officer as of 31 December 2023 and has now transitioned to her new role as chief of staff.
RESTRICTED STOCK PLAN
The performance underpin for the 2020 RSP was assessed based on performance to 31 December 2023.
The committee considered performance over the three years and determined that there was no reason
to reduce the level of vesting. In particular the committee took into account the following factors:
— Dividends payable – dividends increased each year in line with our progressive dividend policy
— ROCE – ROCE materially exceeded WACC in each of the three years of the performance period
— Operational performance – satisfactory over the period, with no events causing the committee to
believe a reduction in vesting is warranted.
— Risk and Compliance – satisfactory over the period, with no events causing the committee to
believe a reduction in vesting is warranted.
— Internal control environment – satisfactory over the period, with no events causing the committee
to believe a reduction in vesting is warranted.
As a result the following awards will vest:
Paul Stockton
Jennifer Mathias
Number of
shares granted
Proportion of
award vesting
Number of
shares vesting
Estimated value
of vested shares1
21,881
14,679
100%
100%
21,881
14,679
£353,089
£236,872
1. Based on average share price over Q4 2023 of £16.13
Jennifer continued to receive her fixed pay and benefits as an executive director until she stepped down
from the board. Jennifer remained eligible to receive an annual bonus for 2023 as outlined above.
As Jennifer is remaining an employee there is no impact on any unvested share awards at this time.
To the extent that Jennifer’s 2022 and 2023 RSP awards vest these will be disclosed as a payment to a
past director in future remuneration reports.
In addition, the firm paid legal and other costs of £30,000 on behalf of Ms. Mathias.
PAYMENTS TO PAST DIRECTORS (AUDITED)
There were no payments made to past directors during the year.
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The 2024 PSP targets are detailed in the table below, all measures have straight line vesting between
threshold and maximum:
Measure
Underlying EPS (2026)
Relative TSR 2024-2026
Cumulative synergies delivered by 31 Dec 2026
Threshold (25%
of maximum
vesting)
Maximum
(100% vesting)
172p
226p
Median Upper quartile
£50m
£72m
Weighting
30%
30%
40%
1. Peer group: abrdn, AJ Bell, Ashmore, Aviva, Close Brothers, Hargreaves Lansdown, Integrafin, Jupiter, Legal & General,
Liontrust, M&G, Ninety One, Phoenix, Quilter, Schroders, St James’s Place
NON-EXECUTIVE DIRECTOR FEES
Non-executive director fees were reviewed in the year for the first time since 1 January 2020. The
following increases were applied:
Non-executive director base fee
Committee chair fee
Fee effective
Fee effective
1 January 2024
1 January 2023
£65,000
£20,000
£60,000
£15,000
ANNUAL REPORT ON REMUNERATION CONTINUED
IMPLEMENTATION OF THE REMUNERATION POLICY IN 2024
FIXED PAY
The fixed pay levels effective 1 January 2024 are £618,000 for Paul Stockton (3% increase) and
£436,800 for Iain Hooley.
ANNUAL BONUS
The annual bonus has a maximum value opportunity of 135% of fixed pay with measures and
weightings as follows:
Financial
— Underlying profit before tax
— Total net organic growth in FUMA
Strategic measures aligned to key objectives
— IW&I integration
— Saunderson House completion of integration
— CLM delivery
— Growth enablement
— Client Satisfaction
— People and culture
Weight
30%
20%
50%
100%
The targets under the financial metrics are deemed to be commercially sensitive and will be
disclosed following the end of the performance period in next year’s DRR.
PERFORMANCE SHARE PLAN (PSP)
The 2024 PSP award will be due to be granted following the AGM in May 2024, subject to shareholder
approval of the new remuneration policy. The remuneration committee determined that it was
appropriate to grant the executive directors an award at the maximum level of 200% of fixed pay. The
remuneration committee will review the level of vesting upon completion of the performance period.
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129
DIRECTORS’ INTERESTS IN SHARES (AUDITED)
The table below sets out details of the directors’ shareholdings and outstanding share awards that are
subject to vesting conditions, as at 31 December 2023:
Executive Director
R P Stockton
J E Mathias
Total
Beneficially owned shares
Subject to relevant holding period
Private shares
153,304
19,758
173,062
SIP
4,330
194
4,524
Total
157,634
19,952
177,586
EIP
30,422
16,976
47,398
Deferred
RSP
bonus shares
68,342
47,029
115,371
20,408
13,880
34,288
SIP (not yet
beneficially
owned)1
1,191
412
1,603
SAYE
1,181
1,181
Total
121,544
79,478
2,362
201,022
1. SIP matching and free shares held for less than three years may be forfeited in certain circumstances and so are not considered
beneficially owned
Unvested shares are subjected to income tax at vesting at the prevailing rate of taxation.
SHAREHOLDING GUIDELINES
In order to align the interests of executive directors and shareholders, the chief executive and chief
financial officer are required to acquire and retain a holding in shares or rights to shares equivalent to
the value of 250% and 200% of fixed pay within five years of the date of appointment respectively.
Shares that count towards these guidelines include shares that are owned outright, vested and not
exercised EIP, unvested deferred bonus, RSP and SIP awards. Percentages are calculated using the 29
December 2023 share price of £17.42.
SHARED OWNERSHIP VERSUS POLICY
R P Stockton (CEO)
J E Mathias (CFO)
89%
475%
355%
367%
0%
100% 200% 300% 400% 500%
600% 700%
800%
900%
1,000%
Beneficially owned
Conditional
Remuneration policy
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 ANNUAL REPORT ON REMUNERATION CONTINUED
130
RESTRICTED STOCK PLAN
Details of the restricted share award held by the executive directors are set out in the table below:
At 1 January 2023
During 2023
At 31 December 2023
Executive directors/Grant date
Face value of
award at grant
£
Number of
securities
originally
granted
Number of
unvested
securities
Securities
granted1
Vested but
unexercised
(subject to sales
restriction
period)
R P Stockton
14/05/2023
07/03/2022
14/05/2021
J E Mathias
14/05/2023
07/03/2022
14/05/2021
418,002
402,579
392,764
288,065
282,767
263,488
−
25,036
21,881
−
17,585
14,679
−
−
−
−
−
−
21,425
−
−
14,765
−
−
−
−
−
−
−
−
Vested but
unexercised
(subject to
two-year
holding period)
–
–
–
–
–
–
Unvested
securities
21,425
25,036
21,881
14,765
17,585
14,679
End of
performance
period
End of holding
period period)2
14/04/2026
14/04/2028
07/03/2025
07/03/2027
14/05/2024
14/05/2026
14/04/2026
14/04/2028
07/03/2025
07/03/2027
14/05/2024
14/05/2026
1. Awards equivalent to 65% of fixed pay were granted. As regulations prohibit the payment of dividend on such awards, the number of shares awarded has been determined by applying a share price over five days preceding the grant date, discounted to reflect the
value of estimated future dividends foregone over the vesting period (2023: £17.18, 2022: £13.87, 2021: £15.87). For the 2023 award, the face value has been calculated using a share price of £19.51 which was the average price over five days preceding the grant
(2022: £16.08 and 2021: £17.95)
2. The award will vest on the third anniversary of the grant date, with associated values to be included in the single figure table, and a further two-year holding period will apply. The awards are subject to malus and clawback provisions
DEFERRED BONUS PLAN
The deferred bonus awards held by executive directors are set out in the table below:
Executive directors/Grant date
Face value of
award at grant
£
Number of
securities
originally
granted
Number of
unvested
securities
Securities
granted1
Number
of securities
vested
Unvested
securities
Vested
securities
Vesting dates
for three equal tranches2
At 1 January 2023
During 2023
At 31 December 2023
R P Stockton
14/04/2023
07/03/2022
J E Mathias
14/04/2023
07/03/2022
108,184
306,917
75,988
205,898
−
−
21,042
21,042
−
−
14,116
14,116
6,030
−
4,235
−
−
6,664
−
4,471
6,030
14,378
4,235
9,645
–
14/04/2024, 14/04/2025, 14/04/2026
6,664
07/03/2023, 07/03/2024, 07/03/2025
–
14/04/2024, 14/04/2025, 14/04/2026
4,471
07/03/2023, 07/03/2024, 07/03/2025
1. The maximum annual bonus opportunity is 135% of fixed pay of which 50% is deferred into Rathbones shares and 50% is paid in cash. As regulations prohibit the payment of dividend on such awards, the number of shares awarded has been determined by applying a
share price over five days preceding the grant date, discounted (based on a three-year historical yield) to reflect the value of estimated future dividends foregone over the vesting period. As the award vests over a three-year period in equal tranches of 1/3 per annum,
for the 2023 award, the face value has been calculated using three share prices (year 1: £18.74, year2: £17.96 , year 3: £17.18 ), and for the 2022 award, the face value has been calculated using three share prices (year 1: £15.35, year 2: £14.61, year 3: £13.87)
2. The award will vest over a three-year period in equal tranches of 1/3 per annum. The awards are subject to malus and clawback provisions
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 131
ANNUAL REPORT ON REMUNERATION CONTINUED
EXECUTIVE INCENTIVE PLAN
Executive directors/Grant date
Type of security
Grant date
At 1 January 2023
During 2023
At 31 December 2023
Face value
of award
at grant1
£
Number of
securities
originally
granted
Vested but
unexercised
(subject to sales
restriction
period)
Number of
unvested
securities
Vested but
unexercised
(subject to sales
restriction
period)
Normal
exercise date
(end of sales
restriction
period) 2
Unvested
securities
R P Stockton
J E Mathias
Conditional shares
23/03/2018
Conditional shares
22/03/2019
Conditional shares
23/03/2020
Conditional shares
06/04/2021
Conditional shares
23/03/2020
Conditional shares
06/04/2021
226,485
376,169
372,435
486,826
202,608
326,592
8,864
16,376
24,326
29,029
13,233
19,474
1,772
6,550
14,595
23,223
7,938
15,579
1,772
3,275
4,865
5,806
2,646
3,895
–
3,275
9,730
17,417
5,292
11,684
– 23/03/2023
13,101 22/03/2024
14,596 23/03/2025
11,612 06/04/2026
7,941 23/03/2025
7,790 06/04/2026
1. Exercise price is nil
2. EIP awards vest in five equal tranches (1, 2, 3, 4 and 5 years from grant). All shares must be held until the fifth anniversary of the grant (the normal exercise date). There are no further performance conditions on these shares
SHARE INCENTIVE PLAN
Executive directors/Grant date
R P Stockton
J E Mathias
Total
At 1 January
2023
Total number
of SIP Shares1
During
2023
Partnership
shares
acquired
4,977
377
5,354
98
98
196
At 31 December
2023
Matching
shares
acquired
Dividend
shares
acquired
Free shares
received
Total number
of SIP shares1
98
98
196
348
33
381
−
−
−
5,521
606
6,127
1. SIP matching and free shares held for less than three years may be forfeited in certain circumstances and so are not considered to be beneficially owned
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 ANNUAL REPORT ON REMUNERATION CONTINUED
132
SAVE AS YOU EARN OUTSTANDING OPTIONS
Number of shares
Executive directors
R P Stockton
J E Mathias
Total
Grant date
21/04/2020
28/04/2023
21/04/2020
28/04/2023
At 1 January
2023
Granted in
2023
Exercised in
2023
Lapsed in
2022
At 31 December
2023
Earliest
exercise date
Option price
£
Market price
on grant
£
Face value
of award1
Value of award
£2
1,658
–
1,658
–
3,316
–
1,181
–
1,181
2,362
1,658
–
1,658
–
3,316
–
–
–
–
–
–
01/06/2023
1,181
01/06/2026
–
01/06/2023
1,181
01/06/2026
2,362
10.85
15.24
10.85
15.24
13.80
19.54
13.80
19.54
22,880
23,077
22,880
23,077
4,891
5,078
4,891
5,078
1. The face value of the award is based on the middle market share price on the grant date multiplied by the number of shares under option
2. The value of the award is based on the middle market share price on the grant date minus the option price
PERFORMANCE GRAPH
The chart below shows the company’s total shareholder return (TSR) against the FTSE All Share
Index for the 10 years to 31 December 2023. TSR is calculated assuming that dividends are
reinvested. TSR compares our dividends and share price performance measures with our selected
index, the FTSE All Share.
% change
100
80
60
40
20
0
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Rathbones – Total Shareholder Return
FTSE All Share – Total Shareholder Return
CHIEF EXECUTIVE OFFICER SINGLE FIGURE
During the 10 years to 31 December 2023, Andy Pomfret was chief executive until 28 February 2014.
Philip Howell was chief executive until 9 May 2019 when he was succeeded by Paul Stockton.
Year
Chief executive
2023
2022
2021
2020
2019
2019
2018
2017
2016
2015
2014
2014
Paul Stockton
Paul Stockton
Paul Stockton
Paul Stockton
Paul Stockton
Philip Howell1
Philip Howell
Philip Howell
Philip Howell
Philip Howell
Philip Howell
Andy Pomfret1
1. Payment relates to holding the role for part of the year
2. RSP vested at 100%, this had an underpin only
Chief executive
single figure of
total remuneration
£’000
EIP award or
short-term bonus
as % of maximum
opportunity
Long-term
incentive vesting as
% of maximum
opportunity
1,413
759
1,155
1,358
1,125
467
1,389
1,104
1,398
1,608
999
342
60
30
85
57
47
52
59
64
66
78
89
n/a
1002
−
−
−
−
−
−
−
67
100
n/a
96
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 ANNUAL REPORT ON REMUNERATION CONTINUED
ANNUAL PERCENTAGE CHANGE IN THE REMUNERATION OF THE DIRECTORS AND EMPLOYEES
The table below shows the percentage year-on-year change in salary, benefits and bonus in 2023 for
the directors compared with the average Rathbones employee.
133
2023
2022
2021
2020
Salary
Benefits
Annual bonus
Salary
Benefits
Annual bonus
Salary
Benefits
Annual bonus
Salary
Benefits
Annual bonus
12.4%
4.0%
5.4%
5.4%
117.0%
109.0%
0.0%
4.7%
5.1%
5.1%
-67.1%
-65.6%
0.0%
0.0%
1.2%
1.2%
-22.1%
-21.1%
0.0%
0.0%
7.1%
5.5%
27%
17.5%
0.0%
7.4%
4.5%
0.0%
8.3%
0.0%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
0.0%
16.4%
8.5%
0.0%
0.0%
n/a
n/a
3.6%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
0.0%
0.0%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
7.1%
7.1%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
9.8%
-20.5%
1.9%
2.1%
-6.4%
3.6%
12.3%
11.9%
Average pay based on all
Rathbones employees5
4.7%
3.6%
2.4%
1. The 2022 and 2023 figures include both ESPP cash and year 1,2 and 3 deferred share ESPP bonus awards. 2023 values include
the 2021-2023 RSU which vests in 2024 but relates to the 2023 performance year
2. Iain Cummings was appointed chair of the audit committee during 2022, comparative values are not for a full year.
Annualised total entitlements are the same
3. Sarah Gentleman was appointed senior independent director during 2022, comparative values are not for a full year.
Annualised total entitlements are the same
4. Dharmash Mistry was appointed as chair of the remuneration committee during 2023
5. The above values for the employee group do not include IW&I staff
6. Ruth Leas is excluded from the above table as she is not an employee of the Rathbones Group
Executive directors1
R P Stockton
J E Mathias
Non-executive
directors
C C R Bannister
I A Cummings2
S F Gentleman3
T L Duhon
D P Mistry4
H Baldock
R Leas6
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 134
CHAIR AND NON-EXECUTIVE DIRECTORS’ FEES
Fees paid to the non-executive directors were not increased in 2023 but will be increased for the
2024 financial year. Any future increases will depend upon a rigorous assessment of the burden of
responsibilities and market rates. Senior independent director and committee chair fees are in
addition to the base fee.
CHAIR AND NON-EXECUTIVE DIRECTORS’ FEES (AUDITED)
Chair
C C R Bannister1
Non-executive directors
I A Cummings2
T L Duhon2
S F Gentleman3
D P Mistry4
H Baldock5
R Leas6
Total
2023
£’000
2022
£’000
195
75
75
85
65
56
n/a
551
195
70
75
81
60
n/a
n/a
481
1. Chair of the board
2. Acts as committee chair
3. Acts as senior independent director and ceased chairing remuneration committee on 31 August 2023.
4. Assumed the role of remuneration committee chair as of 1 September 2023.
5. Henrietta Baldock was appointed on 21 September 2023 as a non-executive directors by Investec Bank plc under the terms of
the Relationship Agreement. The total fee includes payment received for non-executive director position held on the board of
Rathbones Group Plc and Investec Wealth & Investment Limited
6. Ruth Leas was appointed on 21 September 2023 as a non-executive directors by Investec Bank plc under the terms of the
Relationship Agreement. Ruth Leas does not receive a non-executive fee as she is an employee of Investec Bank Plc (subsidiary
of Investec plc)
ANNUAL REPORT ON REMUNERATION CONTINUED
CHIEF EXECUTIVE AND EMPLOYEE PAY RATIO
Year
1 January to 31 December 2023
1 January to 31 December 2022
1 January to 31 December 2021
1 January to 31 December 2020
1 January to 31 December 2019
Method
25th
percentile
pay ratio
Median
(50th
percentile)
pay ratio
75th
percentile
pay ratio
B
B
B
B
B
39:1
21:1
43:1
43:1
42:1
19:1
11:1
15:1
23:1
23:1
10:1
4:1
6:1
11:1
13:1
The chief executive pay ratio provides a comparison of total remuneration paid to the chief executive
in the year ended 31 December 2023 with total remuneration paid to the three employees whose pay
is at the 25th, 50th and 75th percentile of the group’s UK workforce (P25, P50 and P75 respectively).
Where multiple employees are at these percentiles we have selected the most representative job role
from across the group.
The pay data for the chief executive is taken from the total single figure of remuneration on page 132
of this report for Paul Stockton for the year ended 31 December 2023. The three employees have been
identified from our 2023 gender pay gap data under ‘Option B’ of the three methodologies provided
under the regulations, as the equivalent figures to the single figure table for each of the group’s UK
employees (‘Option A’) are not available at the time of producing this report.
Total pay for P25, P50 and P75 has been based on actual earnings for the financial year. Variable
remuneration has been calculated using the group’s forecast financial performance. Total pay and
benefits for the three employees includes the following: base salary, employer pension contributions,
taxable benefits, bonuses, share-based payment awards and profit share. The total pay and benefits
for these individuals is as follows
— P25 38:1 (£36,660)
— P50 19:1 (£75,057)
— P75 10:1 (£136,631)
The reduction in the pay ratio between 2020 and 2021 is primarily driven by the introduction of a
remuneration policy for the CEO and senior management introduced in 2021. This has a lower
maximum opportunity, and these changes only applied to the senior management and not the wider
employees. The group believes the median pay ratio for the year to be consistent with the group’s pay,
reward and progression policies for its UK workforce.
The committee will review these ratios on an annual basis.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 ANNUAL REPORT ON REMUNERATION CONTINUED
135
NON-EXECUTIVE DIRECTORS’ SHARE INTERESTS
The interest of the directors in the ordinary shares of the company are set out below:
STATEMENT OF SHAREHOLDER VOTING
The table below shows the voting outcomes on the directors’ remuneration policy at the 2021 AGM in
May 2021 and directors’ remuneration report at the last AGM in May 2023.
Chair
C C R Bannister
Non-executive directors
I A Cummings
T L Duhon
S F Gentleman
D P Mistry
H Baldock
R Leas
Total
2023
2022
15,300
15,300
2,594
500
1,128
2,500
0
0
1,304
−
100
2,500
n/a
n/a
22,022
19,204
RELATIVE IMPORTANCE OF SPEND ON PAY
The chart below shows the relationship between total employee remuneration and profit after tax for
2023 and 2022. The reported profit after tax has been selected by the directors as a useful indicator
when assessing the relative importance of spend on pay.
RELATIVE IMPORTANCE OF SPEND ON PAY (£m)
Total staff costs
23
22
23
-23%
23
37.5
22
Profit after Tax
23
22
23
22
49.0
37.5
-23%
313.6
28%
313.6
28%
313.6
28%
245.6
245.6
245.6
37.5
49.0
23
22
23
48.6
22
23
49.0
22
Dividends paid
-23%
22
23
22
48.6
48.6
71.4
47%
71.4
47%
71.4
47%
Votes cast in favour
Votes cast against
Total votes cast
Votes withheld
Annual
report on
remuneration
(2023 AGM)
Remuneration
policy
(2021 AGM)
87.99%
12.01%
76.92%
288,326
89.68%
10.32%
75.86%
325,955
ADVISERS TO THE COMMITTEE AND THEIR FEES
PwC were appointed by the committee, as advisers to the committee in August 2017 following a
competitive tender process. They are members of the Remuneration Consultants Group and advise
the committee on a range of matters including remuneration package assessments, scheme design
and reporting best practice. PwC also provide professional services in the ordinary course of
business, including advisory work to the group. The committee is of the opinion that the advice
received is objective and independent. PwC’s fees are charged on a time cost basis and fees for
services to the remuneration committee were £194,000 in 2023. The appointment of advisers is
reviewed annually.
EVALUATING THE PERFORMANCE OF THE COMMITTEE
The annual internal evaluation of the committee’s effectiveness was undertaken as part of the
board’s internal evaluation process during the year. The committee and senior management
attendees were invited to respond to questions on the content, management, and quality and focus of
discussion during meetings. Responses indicated that the committee is performing well with no
particular concerns.
APPROVAL
The remuneration committee report has been approved by the board.
Signed on behalf of the board.
Dharmash Mistry
Chair of the Remuneration Committee
5 March 2024
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 DIRECTORS’ REPORT
136
The directors present their annual report and audited financial statements for the year ended
31 December 2023.
The directors’ report includes the following sections of the annual report and accounts which form
part of the directors’ report:
The company operates a generally progressive dividend policy subject to market conditions. The aim
is to increase the dividend in line with the growth of the business over each economic cycle. This
means that there may be periods where the dividend is maintained but not increased and periods
where profits are retained rather than distributed to maintain retained reserves and regulatory capital
at prudent levels through troughs and peaks in the cycle.
Strategic report
Corporate governance report including the nomination, audit, risk and
remuneration committee reports
Statement of directors’ responsibilities
DTR Rule
DTR 4.1.5R
DTR 7.2.1R
DTR 4.1.5R
Page
2
88
139
STATEMENT BY THE DIRECTORS UNDER SECTION 172 OF THE COMPANIES ACT 2006
(THE ‘ACT’) REGARDING PERFORMANCE OF THEIR STATUTORY DUTIES
The directors consider that they have acted in the way they consider, in good faith, would be most
likely to promote the success of the company for the benefit of its members as a whole and, in doing
so, having regard to the stakeholders and matters set out in section 172(1)(a-f) of the Act. Details of
how they have done this are set out in the strategic report on pages 49 to 57.
SUBSTANTIAL SHAREHOLDINGS
As at 31 December 2023, the company had received notifications in accordance with the Financial
Conduct Authority’s Disclosure and Transparency Rule 5 of the following interests:
Shareholder
Investec Bank Plc
Lindsell Train Ltd
Fidelity Management & Research
BlackRock
Heronbridge Investment Management
Vanguard Group
Holding at
05 March 2024
% held at
05 March 2024
27,056,463
29.87
6,336,500
4,595,026
3,349,362
3,028,667
2,901,077
7.00
5.07
3.70
3.34
3.20
ANNUAL GENERAL MEETING (AGM)
The 2024 AGM will be held on Thursday 9 May 2024 at 8 Finsbury Circus, London EC2M 7AZ.
Full details of all resolutions and notes are set out in the separate notice of AGM.
SHARE CAPITAL
The company’s share capital comprises of two classes of ordinary shares:
GROUP RESULTS AND COMPANY DIVIDENDS
The Rathbones Group Plc group profit after tax for the year ended 31 December 2023 was
£37,503,923 (2022: £48,984,000).
The directors recommend the payment of a final dividend of 24p per share which, if approved by
shareholders at the 2024 AGM, will be paid on Tuesday 14 May 2024 to shareholders on the register
on Friday 19 April 2024.
Classes of Ordinary Shares
As at 31 December 2023
Ordinary shares of 5 pence each with voting rights:
On a show of hands each voting shareholder shall have one vote, and
on a poll each voting shareholder shall have one vote for each ordinary
share of which they are the holder. Ordinary shares rank pari passu in
all respects with each other and rank in full for all dividends and other
distributions thereafter declared, made, or paid in respect of the
ordinary shares.
90,584,129 ordinary shares of
5 pence each with voting rights in
issue (2022: 63,394,837).
First interim dividend
Second interim dividend
Final dividend
Total
2023
2022
Pence
29.0
34.0
24.0*
87.0
£m
17.5
20.5
24.9*
62.9
Pence
28.0
−
56.0
84.0
* Subject to shareholder approval at the 2024 AGM on 9 May 2024
See note 12 to the financial statements.
£m
16.5
−
33.4
49.9
Convertible non-voting ordinary shares of 5 pence each:
The holders of the convertible non-voting ordinary shares are not
entitled to receive notice of nor attend, speak or vote at any general
meeting of Rathbones unless the business of the meeting includes the
consideration of a resolution to vary the class rights attaching to the
convertible non-voting ordinary shares. Convertible non-voting
ordinary shares shall rank pari passu in all other respects with each
other and shall rank pari passu for all dividends and other distributions
thereafter declared, made, or paid. The convertible non-voting ordinary
shares are non-transferrable and are not admitted to trading or listing.
17,481,868 convertible non-voting
ordinary shares of 5 pence each in
issue (2022: nil).
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 DIRECTORS’ REPORT CONTINUED
The company does not hold any shares in treasury. Details of movements during the year are set out
in note 30 to the financial statements. Neither class carries the right to fixed income and all shares
are fully paid.
COMBINATION OF RATHBONES AND INVESTEC WEALTH & INVESTMENT UK
The all-share combination between the company and Investec Wealth & Investment UK (‘IW&I’)
completed on 21 September 2023. Under the terms of the Combination, Rathbones have issued to
Investec Bank Plc as Consideration:
— 27,056,463 ordinary voting shares representing 29.9% of the Rathbones enlarged ordinary
voting share capital
— 17,481,868 convertible non-voting ordinary shares.
such that Investec Group has an economic interest of 41.25% in Rathbones’ enlarged share capital.
Subject to certain customary and other exceptions, Investec Group will be subject to a lock-up for the
first two years following completion during which Investec Group will not be permitted to sell any
consideration shares. In each of years three and four following completion, Investec Group will be
entitled to sell one-third of the consideration shares which it owns. Any disposals of shares by
Investec Group once released from lock-up will be subject to customary orderly market provisions.
The lock-up arrangement will terminate on the fourth anniversary of completion.
A standstill restriction also applies to Investec Group under which it has been agreed, among other
matters, not to acquire shares in, or make an unsolicited takeover offer for Rathbones for the period
up to the fifth anniversary of completion.
NEW ISSUES OF SHARE CAPITAL
Under section 551 of the Companies Act 2006, the board currently has the authority to allot
21,144,460 shares (approximately one third of the issued share capital as at 31 March 2023). The
existing authorities given to the company at the last AGM to allot shares will expire at the conclusion
of the forthcoming 2024 AGM and details of the resolution renewing this authority is set out in the
notice of AGM.
Awards under the company’s employee share plans are satisfied from a combination of shares held in
the employee benefit trust and newly issued shares. During the year, the company issued 132,829
shares to satisfy share awards and no shares were issued to the company’s employee benefit trust to
satisfy future awards.
137
PURCHASE OF OWN SHARES
At the 2023 AGM, shareholders approved resolution 17 which granted the board the authority to
buy back up to a maximum number of 6,343,000 of the company’s shares under certain stringent
conditions. During the year, the company did not utilise this authority, but the board considers it
prudent to renew it. Therefore the company intends to seek shareholder approval for the continued
authority to purchase its own shares at the forthcoming AGM in line with current investor sentiment
and details of the resolution renewing the authority are included in the notice of AGM.
EMPLOYEE SHARE TRUST
On 4 April 2017, Equiniti Trust (Jersey) Limited was appointed as trustee of the employee benefit
trust. The trust is independent and holds shares for the benefit of employees and former employees
of the group. The trustee has agreed to satisfy awards under all the company’s employee share plans.
During the year, the trustee satisfied awards totalling 1,176,445 ordinary shares.
In addition, under the rules of the Rathbones Share Incentive Plan, shares are held in trust for
participants by Equiniti Share Plan Trustees Limited (the ‘Trustee’). At the participants’ direction,
the trustees can exercise the voting rights over ordinary shares in respect of participant share
entitlements. If no such instruction is received by the Trustee then no vote is registered. No person
has any special rights of control over the company’s share capital and all issued shares are fully paid.
APPOINTMENT AND REMOVAL OF DIRECTORS
The appointment and replacement of directors is governed by the company’s Articles of Association,
the UK Corporate Governance Code, the Companies Act 2006 and related legislation and the
Relationship Agreement with Investec Group. Under the terms of the Combination, two Investec
Group representatives joined the board of the company as non-executive directors on completion,
reflecting Investec Group’s position as a significant, strategic shareholder. Investec Group will be
entitled to nominate two non-executive directors for as long as it holds at least 20% of the issued
share capital of the company; and one non-executive director for as long as it holds at least 10% but
less than 20% of the issued share capital of the company.
DIRECTORS
All those who served as directors at any time during the year are listed on pages 92 to 93. All directors
will be submitted for re-election at the 2024 AGM. The directors’ interests in the share capital of the
company as at 31 December 2023 are set out on pages 129 and 135 of the remuneration committee
report.
INSURANCE AND INDEMNIFICATION OF DIRECTORS
The company has put in place insurance to cover its directors and officers against the costs of
defending themselves in civil legal action taken against them in that capacity and any damages
awarded. The company has granted indemnities, which are uncapped, to its directors and the
company secretary by way of a deed. Qualifying third-party indemnity provisions, as defined by
section 234 of the Companies Act 2006, were therefore in place throughout 2023 and remain in force
at the date of this report.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 138
The directors believe that the company is well placed to manage its business risks successfully
despite the continuing uncertain economic and geopolitical 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.
CHARITABLE DONATIONS
As at 31 December 2023, the group had made total charitable donations of £589,172 representing
1.38% of group pre-tax profits (2022: £795,100 representing 1.24% of group pre-tax profits). This
includes the matching of employee donations made through the tax efficient Give As You Earn
(‘GAYE’) payroll giving scheme. In 2023, Rathbones employees made payments totalling £262,567
(2022: £221,400) through this scheme, which is administered by the Charities Aid Foundation.
The company matched employee donations of up to £200 per month made through GAYE and, in
2023, donated £215,974 (2022: £204,500) to causes chosen by employees through this method.
POLITICAL DONATIONS
No political donations were made during the year (2023: nil).
POST-BALANCE SHEET EVENTS
Details of post-balance sheet events are set out in note 39 to the financial statements.
OVERSEAS SUBSIDIARIES
Details of overseas subsidiaries are set out in note 45 to the financial statements.
Approved and authorised for issue by the board of directors.
Ali Johnson
Group Company Secretary
5 March 2024
Registered office: 8 Finsbury Circus, London EC2M 7AZ
DIRECTORS’ REPORT CONTINUED
OUR PEOPLE AND DIVERSITY
Details of the company’s employment practices, including engaging with our people and diversity,
employment of disabled persons and employee involvement practices, can be found in the people
report on pages 61 and 62.
RESPONSIBLE BUSINESS
Information about greenhouse gas emissions and our approach to operating as a responsible business
are set out in the responsible business review on page 64.
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The risk management objectives and policies of the group are set out in note 33 to the
financial statements.
AUDITOR
The audit committee makes a recommendation to the board regarding the appointment, re-
appointment and removal of the external auditor and oversees its relationship with the group,
including the implementation of the policy on audit and non-audit services. Note 7 to the financial
statements sets out details of the auditor’s remuneration. Deloitte LLP was re-appointed as the
external auditor at the 2023 AGM. Having reviewed the independence and effectiveness of Deloitte
the audit committee has recommended to the board that they are re-appointed and resolutions
proposing their re-appointment and authorising the audit committee to set their remuneration
will be proposed at the 2024 AGM.
The directors in office at the date of signing this report confirm that, so far as they are aware, there
is no relevant audit information of which the auditor is unaware and that each director has taken
all reasonable steps that he or she ought to have taken to make him or herself aware of any relevant
audit information and to establish that the auditor is aware of that information.
GOING CONCERN
Details of the group’s business activities, results, cash flow and resources, together with the risks it
faces and other factors likely to affect its future development, performance and position are set out
in the chair’s statement, chief executive’s review, financial performance and segmental review. In
addition, note 1.5 to the financial statements provides further detail.
The group companies are regulated by the Prudential Regulation Authority (PRA) and/or the
Financial Conduct Authority (FCA) and perform annual capital adequacy and liquidity assessments,
which include the modelling of certain extreme stress scenarios. The company publishes Pillar 3
disclosures annually on its website which provide detail about its regulatory capital resources and
requirements. In July 2015, Rathbone Investment Management issued £20 million of 10-year
subordinated loan notes to finance future growth which were repaid in August 2021. In October
2021, Rathbones Group Plc issued £40 million of 10-year subordinated loan notes to finance future
growth. The group has no other external borrowings.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 139
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE REPORT
AND ACCOUNTS
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
— the strategic report and directors’ report include a fair review of the development and performance
of the business and the position of the issuer and the undertakings included in the consolidation
taken as a whole, together with a description of the principal risks and uncertainties that they face.
We consider the report and accounts, taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to assess the group’s position and performance,
business model and strategy.
By order of the board
Paul Stockton
Group Chief Executive Officer
5 March 2024
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
IN RESPECT OF THE REPORT AND ACCOUNTS
The directors are responsible for preparing the report and accounts 2023, and the group and parent
company financial statements in accordance with applicable law and regulations.
Company law 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 UK-adopted International Accounting Standards (International Financial Reporting
Standards (IFRS)) 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, relevant and reliable
— state whether they have been prepared in accordance with UK-adopted International Accounting
Standards (IFRS)
— assess the group and parent company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern
— use the going concern basis of accounting unless they either intend to liquidate the group or the
parent company or to cease operations, or have no realistic alternative but to do so.
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 are responsible for such internal controls as they determine are necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud
or error, and 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 strategic
report, directors’ report, directors’ remuneration report and corporate governance statement that
comply with that law and those regulations.
The directors are responsible for the maintenance and integrity of the corporate and financial
information included on the company’s website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from legislation in other jurisdictions.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 STRATEGIC
REPORT
GOVERNANCE
REPORT
FURTHER
INFORMATION
RATHBONES GROUP PLC REPORT & ACCOUNTS 2023
140
FINANCIAL
STATEMENTS
141
Independent auditor’s report to the
members of Rathbones Group Plc
151 Consolidated financial statements
155 Notes to the consolidated
financial statements
213 Company financial statements
216 Notes to the company
financial statements
FINANCIAL STATEMENTS 141
INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF RATHBONES GROUP PLC
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
1. OPINION
In our opinion:
— the financial statements of Rathbones Group Plc (the ‘parent company’) and its subsidiaries (the
‘group’) give a true and fair view of the state of the group’s and of the parent company’s affairs as at
31 December 2023 and of the group’s profit for the year then ended;
— the group financial statements have been properly prepared in accordance with United Kingdom
adopted international accounting standards;
— the parent company financial statements have been properly prepared in accordance with United
Kingdom adopted international accounting standards 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.
We have audited the financial statements which comprise:
— the consolidated statement of comprehensive income;
— the consolidated and parent company statements of changes in equity;
— the consolidated and parent company balance sheets;
— the consolidated statement of cash flows; and
— the related notes 1 to 61.
The financial reporting framework that has been applied in their preparation is applicable law and
United Kingdom adopted international accounting standards and as regards the parent company
financial statements, as applied in accordance with the provisions of the Companies Act 2006.
2. BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the auditor’s
responsibilities for the audit of the financial statements section of our report.
We are independent of the group and the parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the
Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. The non-audit services provided to the group and parent company for the year are
disclosed in note 7 to the financial statements. We confirm that we have not provided any non-audit
services prohibited by the FRC’s Ethical Standard to the group or the parent company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
3. SUMMARY OF OUR AUDIT APPROACH
KEY AUDIT MATTERS
The key audit matters that we identified in the current year were:
— Acquisition accounting for Investec Wealth & Investment Limited and subsidiary entities;
— Impairment of client relationship intangible assets and goodwill;
— Defined benefit pension scheme assumptions; and
— Investment management fee revenues relating to bespoke fees.
Within this report, key audit matters are identified as follows:
NEWLY IDENTIFIED
INCREASED LEVEL OF RISK
SIMILAR LEVEL OF RISK
DECREASED LEVEL OF RISK
MATERIALITY
The materiality that we used for the group financial statements was £5.0 million which was
determined on the basis of 5% of adjusted profit before tax.
SCOPING
The scope of our audit covered substantially the entire group, with both the investment
management entities and unit trust business being subject to a full scope audit.
SIGNIFICANT CHANGES IN OUR APPROACH
On 21 September 2023, the group acquired 100% of the share capital of Investec Wealth &
Investment Limited and its subsidiary entities (“IW&I”) through an all-share transfer. The total
consideration was £751.9 million. This is a material transaction for the group and involves the
determination of a number of critical accounting estimates, and thus we have identified the
acquisition accounting for this transaction as an additional key audit matter for our 2023 audit.
Our audit included the full scope audit of the main trading entity acquired as part of the
transaction, Investec Wealth & Investment Limited, for the period 21 September 2023 to
31 December 2023. The audit of this component was conducted by the statutory auditor
Ernst & Young LLP under referral instructions from Deloitte LLP as the group auditor.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RATHBONES GROUP PLC CONTINUED
142
4. CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that the directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate.
5.1 ACQUISITION ACCOUNTING FOR INVESTEC WEALTH & INVESTMENT LIMITED AND
SUBSIDIARY ENTITIES
KEY AUDIT MATTER DESCRIPTION
Rathbones Group acquired 100% of the share capital of Investec Wealth & Investment Limited and
its subsidiary entities (“IW&I”) through an all-share transfer on 21 September 2023. The total
consideration was £751.9m of which £350.3m was attributed to recognition of client relationship
intangible assets, which are being amortised over a weighted average of 14 years, and £340.1m to
goodwill.
As detailed in the summary of principal accounting policies in note 1 and note 2, and as disclosed
in note 8, acquisition accounting requires management to make a number of judgments to
determine the fair value of acquired identifiable assets. Management have engaged external
specialists to assist with these judgements. These judgements have also been considered by the
Audit Committee as set out on page 104. We have identified the valuation of the IW&I client
relationship intangible assets as a fraud risk, given the inherent judgment, complexity and level of
estimation involved.
The significant assumptions that underpin the client relationship intangible assets valuation
in management’s model include: the forecasted cash flows, useful economic life and the
discount rate.
Our evaluation of the directors’ assessment of the group’s and parent company’s ability to continue to
adopt the going concern basis of accounting included:
— Evaluating management’s assumptions applied in the going concern assessment in light of the
current economic environment and testing the mechanical accuracy of the underlying forecast;
— Assessing management’s sensitivity analysis on the key assumptions applied to understand those
that could give rise to a material uncertainty on the use of the going concern basis;
— Assessing management’s stress testing for the amount by which the markets would need to fall to
cause a material uncertainty in the use of the going concern basis and comparing this to historical
falls in the markets to assess the likelihood of such an event occurring;
— Assessing the regulatory capital and liquidity position of the group and evaluating management’s
reverse stress test;
— Checking consistency with the forecast assumptions applied in the going concern assessment
across other forecasts within the group; and
— Assessing the disclosures within the financial statements to ensure they are appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the group’s and
parent company’s ability to continue as a going concern for a period of at least twelve months from
when the financial statements are authorised for issue.
In relation to the reporting on how the group has applied the UK Corporate Governance Code,
we have nothing material to add or draw attention to in relation to the directors’ statement in the
financial statements about whether the directors considered it appropriate to adopt the going
concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
5. KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial statements of the current period and include the most significant assessed
risks of material misstatement (whether or not due to fraud) that we identified. These matters
included those which had the greatest effect on: the overall audit strategy; the allocation of resources
in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RATHBONES GROUP PLC CONTINUED
143
HOW THE SCOPE OF OUR AUDIT RESPONDED TO THE KEY AUDIT MATTER
In order to respond to the key audit matter, we performed the following procedures:
— obtained an understanding of relevant controls over the acquisition accounting, in particular
the identification and measurement of the client relationship intangible assets and goodwill and
controls over the acquisition accounting related judgments;
— assessed the competence, capability and objectivity of management’s experts;
— assessed management’s accounting analysis of the acquisition and the accounting treatment in
line with the requirements of IFRS 3;
— engaged our in-house valuation specialists to: assist in the evaluation of the methodology and
the key assumptions used in the valuation of the client relationship intangible assets acquired;
independently determine an appropriate discount rate for the calculation and assessed the
methodology used to establish useful economic lives of assets;
— tested the key data inputs used to determine the useful economic life for completeness and
accuracy;
— challenged the entity’s forecast cash flows by comparing with approved business plans,
historical performance and objective macro-economic indications to assess the achievability of
the forecasts;
— tested the completeness and accuracy of the data inputs into the underlying models used in
determining the client relationship intangible assets valuation and the goodwill value;
— reviewed the share purchase agreement to corroborate the overall deal structure and
transaction price, and agreed the value of the total consideration to supporting documentation;
— with the assistance of our tax specialists, assessed the tax implications arising from this
acquisition; and
— checked the disclosures included in the financial statements to determine whether all
information has been included for a business combination under IFRS 3.
KEY OBSERVATIONS
We conclude that the acquisition accounting in relation to the IW&I transaction and the related
disclosures as at 31 December 2023, is appropriate.
5.2. IMPAIRMENT OF CLIENT RELATIONSHIP INTANGIBLE ASSETS AND GOODWILL
KEY AUDIT MATTER DESCRIPTION
The group holds client relationship intangible assets of £517.5 million (2022: £188.5 million)
comprising both client relationships acquired through business combinations and through
acquisition of individual investment managers and their client portfolios and goodwill of £507.8
million (2022: £167.7 million).
As detailed in the summary of principal accounting policies in notes 1 and 2, client relationship
intangible assets are reviewed for indicators of impairment at each balance sheet date and, if an
indicator of impairment exists, an impairment test is performed. Goodwill is tested for impairment
at least annually, whether or not indicators of impairment exist. These judgements have also been
considered by the Audit Committee as set out on page 104.
For client relationship intangible assets, in determining the appropriate impairment triggers for
each client portfolio, there is a degree of management judgement. This assessment is based on
movements in the value of funds under management and the loss of client relationships in
advance of their amortisation period.
For goodwill, the impairment assessment is performed by comparing the carrying amount of each
cash generating unit (“CGU”) to its recoverable amount from its value-in-use (“VIU”), calculated
using a discounted cash flow method. In determining the VIU for the CGUs, management is
required to make assumptions in relation to an appropriate income growth rate, expenditure
growth rate and the discount rate. The discount rate, annual revenue growth rate and terminal
growth rate used are disclosed in note 22.
We have identified this as a key audit matter given the inherent judgement and level of estimation
in the assumptions that support the annual impairment reviews. In the prior period, we identified
this as a fraud risk, however as a result of increased headroom on the most material impairment
reviews, we did not deem this to be a fraud risk in the current period.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RATHBONES GROUP PLC CONTINUED
144
HOW THE SCOPE OF OUR AUDIT RESPONDED TO THE KEY AUDIT MATTER
We obtained an understanding of relevant controls in relation to the impairment review process
for client relationship intangible assets for both acquired portfolios and individual relationships
and for goodwill.
For client relationship intangible assets, we specifically tested the assumptions used by
management as part of the impairment review exercise to assess whether they meet the
requirements of IAS 36 “Impairment of Assets”. We assessed the key assumptions around the
impairment triggers identified for each client portfolio, which we have assessed for
reasonableness, and we evaluated the accuracy of the inputs used by management.
Where management’s review indicated that an impairment trigger had occurred, we assessed the
relevant assumptions and judgements made by management in determining whether an
impairment needed to be recognised through the calculation of the assets’ VIU. To challenge
management’s VIU model we performed the following procedures:
— tested the key data inputs used to determine the useful economic life for completeness and
accuracy;
— recalculated the underlying calculation to ensure mathematical accuracy;
— stressed management’s assumptions to determine the point at which an impairment would
need to be recognised;
— with the involvement of our valuation specialists we independently determined an appropriate
discount rate for the calculation; and
— with the involvement our in-house economic specialists we have reviewed the growth rate
assumptions used for funds under management to challenge whether they were in line with
consensus.
For goodwill, in order to challenge the appropriateness of the income and expenditure growth
assumptions used in the VIU calculation, we have challenged the assumptions used by
management against historical actual performance and checked for consistency with forecasts
used elsewhere in the business. We challenged the determination of the discount rate applied by
benchmarking to appropriate market rates of interest. We also independently re-performed
management’s VIU calculation.
We have checked the disclosures included within the financial statements to determine whether
all required information has been included for the impairment of client relationship intangible
assets and goodwill.
KEY OBSERVATIONS
We concluded that management’s approach and conclusion was appropriate and that the carrying
value of client relationship intangible assets and goodwill as at 31 December 2023 is appropriate.
5.3 DEFINED BENEFIT PENSION SCHEME ASSUMPTIONS
KEY AUDIT MATTER DESCRIPTION
The group has recognised a defined benefit pension scheme net asset of £7.0 million (2022: net
asset of £9.4 million). The net asset comprises scheme assets of £108.1 million (2022: £104.1
million) and a defined benefit obligation of £101.1 million (2022: £94.7 million).
The calculation of the defined benefit obligation is sensitive to changes in underlying assumptions
and is considered to be a key source of estimation uncertainty for the group as detailed in note 2,
disclosed in note 29 to the financial statements, and as considered by the Audit Committee on
page 104. We have therefore identified this as a key audit matter.
The key assumptions are in respect of the discount rate, inflation rate and mortality rate where
small changes to these assumptions could result in a material change to the valuation of the
defined benefit obligation.
HOW THE SCOPE OF OUR AUDIT RESPONDED TO THE KEY AUDIT MATTER
In order to evaluate the appropriateness of the assumptions used by management, we obtained an
understanding of relevant controls over the determination of assumptions and the calculation of
the obligation to be recognised in the financial statements.
With the involvement of our in-house actuarial specialists, we made direct enquiries of the group’s
actuary to review and challenge each of the key assumptions used in the IAS 19 (“Employee
Benefits”) pension valuation. In particular, we assessed each assumption used by management
against independently determined benchmarks derived using market data.
We have checked the disclosures included within the financial statements to determine whether
all required information has been included for a defined benefit pension scheme..
KEY OBSERVATIONS
We concluded that each of the key assumptions used by management to estimate the defined
benefit obligation are consistent with the requirements of IAS 19 and that the valuation of the
defined benefit pension scheme net asset has been appropriately determined as at
31 December 2023.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RATHBONES GROUP PLC CONTINUED
145
5.4. INVESTMENT MANAGEMENT FEE REVENUE RELATING TO BESPOKE FEES
KEY AUDIT MATTER DESCRIPTION
As detailed in the summary of principal accounting policies in notes 1 and 3, revenue comprises
net investment management fee income of £414.8 million (2022: £337.0 million), net commission
income of £53.6 million (2022: £48.9 million), net interest income of £51.7 million (2022: £18.3
million) and fees from advisory services and other income of £51.0 million (2022: £57.1 million).
Investment management (“IM”) fees from the IM segment account for approximately 80% of total
revenue and are based on a percentage of an individual client’s funds under management (“FUM”).
Due to its many long standing client relationships and history of acquisitions, the number of fee
schedules managed by the group is voluminous. This means that a number of clients are on
bespoke rates rather than the current standard rates or legacy rates that were standard previously
or at the time of acquisition. We identified a risk of potential fraud in respect to bespoke rates. Due
to the time and resources utilised in the audit, we have determined this to be a key audit matter.
HOW THE SCOPE OF OUR AUDIT RESPONDED TO THE KEY AUDIT MATTER
We tested controls over the calculation of IM fees. This included controls relating to the set-up of
client fee rates, rate card amendments, the valuation of FUM and the system generated investment
management fees, including associated IT controls.
We used data analytics to recalculate the system generated amount for the total fee population.
We agreed a sample of bespoke client fee rates through to client contracts and the value of FUM to
third party sources. Where manual fee rate amendments were made to system generated fees, we
inspected evidence of authority and rationale.
We have checked the disclosures included within the financial statements to determine whether
all required information has been included for revenue.
RATIONALE FOR
THE BENCHMARK
APPLIED
KEY OBSERVATIONS
We concluded that the investment management fee revenue is appropriately recognised for the
year ended 31 December 2023.
6. OUR APPLICATION OF MATERIALITY
6.1. MATERIALITY
We define materiality as the magnitude of misstatement in the financial statements that makes it
probable that the economic decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality both in planning the scope of our audit work and in evaluating the
results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a
whole as follows:
GROUP FINANCIAL STATEMENTS
PARENT COMPANY FINANCIAL
STATEMENTS
MATERIALITY
£5.0 million (2022: £3.85 million)
£4.0 million (2022: £3.08 million)
BASIS FOR
DETERMINING
MATERIALITY
5% of adjusted profit before tax
(2022: 5% of adjusted profit
before tax)
Parent company materiality has
been set at 1% of net assets, which
is capped at 80% of group
materiality (2022: 1% of net assets,
which is capped at 80% of group
materiality).
The parent company primarily
holds the investments in group
entities and, therefore net assets is
considered to be the key focus for
users of the financial statements.
Profit before tax has been adjusted
to include the non-recurring
acquisition and integration related
costs incurred in the year. We have
rounded down the materiality
benchmark to £5.0 million for
simplicity.
Adjusted profit before tax has been
used as the basis for determining
materiality as this is the key metric
used by members of the parent
company and other relevant
stakeholders in assessing financial
performance. In determining
adjusted profit before tax, we have
taken the statutory value and
included the non-recurring
acquisition and integration related
costs incurred in the year as
outlined in note 9, on the basis that
they are non-recurring and that this
provides a consistent basis for
determining materiality year
on year.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RATHBONES GROUP PLC CONTINUED
146
ADJUSTED PBT
£101.9M
Adjusted PBT
Group materiality
Group materiality:
£5.0m
Component
materiality range:
£2.5m – £4.0m
Audit Committee
reporting threshold:
£0.25m
6.2. PERFORMANCE MATERIALITY
We set performance materiality at a level lower than materiality to reduce the probability that, in
aggregate, uncorrected and undetected misstatements exceed the materiality for the financial
statements as a whole.
GROUP FINANCIAL STATEMENTS
PARENT COMPANY FINANCIAL
STATEMENTS
PERFORMANCE
MATERIALITY
70% (2022: 70%) of group
materiality
70% (2022: 70%) of parent
company materiality
BASIS AND
RATIONALE FOR
DETERMINING
PERFORMANCE
MATERIALITY
In determining performance
materiality, we considered the
following factors:
— Our risk assessment, including
our assessment of the group’s
overall control environment and
that we consider it appropriate to
rely on controls over a number of
business processes;
— The performance of the group
during 2023; and
— Our past experience of the audit,
which has indicated a low
number of corrected and
uncorrected misstatements
identified in prior periods.
6.3. ERROR REPORTING THRESHOLD
We agreed with the Audit Committee that we would report to the Committee all audit differences in
excess of £250,000 (2022: £192,500), as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure
matters that we identified when assessing the overall presentation of the financial statements.
7. AN OVERVIEW OF THE SCOPE OF OUR AUDIT
7.1. IDENTIFICATION AND SCOPING OF COMPONENTS
Our group audit was scoped by obtaining an understanding of the group and its environment,
including group-wide controls, and assessing the risks of material misstatement at the group
level. Given the IW&I combination during the year, we reassessed the scope of our audit against
previous years.
The group consists of the two main trading subsidiaries Rathbones Investment Management Limited
and the newly acquired Investec Wealth & Investment Limited along with the following entities that
we have identified to be significant for the group audit: Rathbones Group Plc and Rathbones Asset
Management Limited. These entities were subject to a full scope audit and audited to an individual
materiality level determined on their individual financial statements which ranged from £2.5 million
to £4.0 million.
Our full scope audits of the entities we deemed to be significant for the group audit covered 91% of
the group’s revenue; 93% of the group’s profit before tax, and 96% of the group’s net assets.
We performed an audit of the revenue balances for Rathbones Investment Management International
Limited and Saunderson House Limited as well as the cash balances within Investec Wealth &
Investment (Channel Islands) Limited and Murray Asset Management Limited. We performed
analytical procedures on all other entities included in the group consolidation.
REVENUE
Full audit scope: 91%
Specified
audit procedures: 6%
Review at
group level: 3%
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RATHBONES GROUP PLC CONTINUED
147
PROFIT BEFORE TAX
NET ASSETS
Full audit scope: 93%
Specified
audit procedures: 1%
Review at group
level: 6%
Full audit scope: 96%
Specified
audit procedures: 1%
Review at group
level: 3%
7.2. OUR CONSIDERATION OF THE CONTROL ENVIRONMENT
Based on our understanding of the group’s control environment, we have assessed the relevant
business and IT controls for investment management fee income in the IM segment.
The key IT systems relevant to the audit were the financial accounting system, the back-office
databases and core IM business engines and the front office applications. The latter two are pivotal
systems for the provision of the investment management service and directly feed into the
investment management fee and commission income recognised in the IM segment. Therefore, they
are particularly relevant for Rathbones Investment Management Limited, Investec Wealth &
Investment Limited and Rathbones Investment Management International Limited.
With involvement of our IT specialists we tested the controls over the above systems, as well as
supplementary systems and processes within the group. We also tested business controls over
investment management fee income recognised in the IM segment. We have taken a controls reliance
approach to the back-office database and front-office application systems and therefore to investment
management income.
We have tested the controls over the financial accounting system but have not taken reliance due
to the significant degree of manual intervention.
7.3. OUR CONSIDERATION OF CLIMATE-RELATED RISKS
In planning our audit, we have considered the potential impact of climate change on the Group’s
business and its financial statements.
The group continues to develop its assessment of the potential impacts and opportunities of ESG
andclimate change as explained in the strategic report on pages 66 to 74.
As a part of our audit, we have obtained management’s climate-related risk assessment and held
discussions with management to understand the process of identifying climate-related risks, the
determination of mitigating actions and the impact on the Group’s financial statements. We have
engaged our climate specialists to perform a review of the TCFD disclosures.
We have assessed disclosures within note 33 included in the financial statements to consider
whether they are materially consistent with the financial statements and our knowledge obtained
in the audit.
7.4. WORKING WITH OTHER AUDITORS
IW&I was assessed as a material component of the group for which we scoped a full scope audit. Ernst
& Young LLP are the component auditor for IW&I. All other subsidiaries were audited by the group
audit team.
Referral instructions were provided to the component audit team detailing the procedures to be
performed to support the group opinion. The group audit team have utilised virtual meetings and
in-person visits throughout the audit, to monitor and challenge the component audit team,
including the attendance of senior group audit team members at key component meetings.
Furthermore, the group audit team have reviewed the audit file of the component team, focussing
on the following areas:
— Independence and engagement acceptance;
— Audit planning and risk assessment procedures;
— Testing of key controls on which reliance was placed for financial reporting;
— Testing of procedures for compliance with legal and regulatory matters;
— Assessment of key audit matters identified and the work performed on areas of significant risks of
material misstatements; and
— Identified misstatements, controls deficiencies and other significant matters arising from the audit
that could impact the audit opinion.
In addition to the review of the component audit file and discussions with the component auditor,
the group audit team assessed all the responses received from the component auditor to the
referral instructions issued by the group auditor ensuring that the planned procedures had been
performed appropriately.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RATHBONES GROUP PLC CONTINUED
148
8. OTHER INFORMATION
The other information comprises the information included in the annual report, other than the
financial statements and our auditor’s report thereon. The directors are responsible for the other
information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to
the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon.
10. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements, or our knowledge obtained in
the course of the audit, or otherwise appears to be materially misstated.
A further description of our responsibilities for the audit of the financial statements is located on
the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial statements themselves.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact.
We have nothing to report in this regard.
9. RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities statement, the directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view,
and for such internal control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the
parent company’s ability to continue as a going concern, disclosing as applicable, matters related to
going concern and using the going concern basis of accounting unless the directors either intend to
liquidate the group or the parent company or to cease operations, or have no realistic alternative but
to do so.
11. EXTENT TO WHICH THE AUDIT WAS CONSIDERED CAPABLE OF DETECTING
IRREGULARITIES, INCLUDING FRAUD
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in
respect of irregularities, including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
11.1 IDENTIFYING AND ASSESSING POTENTIAL RISKS RELATED TO IRREGULARITIES
In identifying and assessing risks of material misstatement in respect of irregularities, including
fraud and non-compliance with laws and regulations, we considered the following:
— the nature of the industry and sector, control environment and business performance including
the design of the group’s remuneration policies, key drivers for directors’ remuneration, bonus
levels and performance targets;
— the group’s own assessment of the risks that irregularities may occur either as a result of fraud or
error that was approved by the board on 20 February 2024;
— results of our enquiries of management, internal audit, the directors and the Audit Committee
about their own identification and assessment of the risks of irregularities, including those that are
specific to the group’s sector;
— any matters we identified having obtained and reviewed the group’s documentation of their
policies and procedures relating to:
— identifying, evaluating and complying with laws and regulations and whether they were aware
of any instances of non-compliance;
— detecting and responding to the risks of fraud and whether they have knowledge of any actual,
suspected or alleged fraud;
— the internal controls established to mitigate risks of fraud or non-compliance with laws and
regulations; and
— the matters discussed among the audit engagement team including significant component audit
teams and relevant internal specialists, including tax, valuations, actuary, IT, climate and industry
specialists regarding how and where fraud might occur in the financial statements and any
potential indicators of fraud.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RATHBONES GROUP PLC CONTINUED
149
As a result of these procedures, we considered the opportunities and incentives that may exist
within the organisation for fraud and identified the greatest potential for fraud in the following
areas: the acquisition accounting for Investec Wealth & Investment Limited and its subsidiaries
and the investment management fee revenue relating to bespoke fees. In common with all audits
under ISAs (UK), we are also required to perform specific procedures to respond to the risk of
management override.
We also obtained an understanding of the legal and regulatory frameworks that the group operates in,
focusing on provisions of those laws and regulations that had a direct effect on the determination of
material amounts and disclosures in the financial statements. The key laws and regulations we
considered in this context included the Prudential Regulation Authority and the Financial Conduct
Authority’s regulations; UK Companies Act; the Listing Rules; pensions legislation and the UK
tax legislation.
We also communicated relevant identified laws and regulations and potential fraud risks to all
engagement team members including internal specialists and significant component audit teams
and remained alert to any indications of fraud or non-compliance with laws and regulations
throughout the audit.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
12. OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion, based on the work undertaken in the course of the audit:
— the information given in the strategic report and the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
— the strategic report and the directors’ report have been prepared in accordance with applicable
legal requirements.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on
the financial statements but compliance with which may be fundamental to the group’s ability to
operate or to avoid a material penalty. These included the group’s regulatory solvency requirements.
In the light of the knowledge and understanding of the group and the parent company and their
environment obtained in the course of the audit, we have not identified any material misstatements
in the strategic report or the directors’ report.
11.2. AUDIT RESPONSE TO RISKS IDENTIFIED
As a result of performing the above, we identified the acquisition accounting for IW&I; and the
investment management fee revenues relating to client bespoke fees as key audit matters related
to the potential risk of fraud. The key audit matters section of our report explains the matters in
more detail and also describes the specific procedures we performed in response to those key
audit matters.
In addition to the above, our procedures to respond to risks identified included the following:
13. CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-
term viability and that part of the Corporate Governance Statement relating to the group’s
compliance with the provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following
elements of the Corporate Governance Statement is materially consistent with the financial
statements and our knowledge obtained during the audit:
— reviewing the financial statement disclosures and testing to supporting documentation to assess
compliance with provisions of relevant laws and regulations described as having a direct effect on
the financial statements;
— the directors’ statement with regards to the appropriateness of adopting the going concern basis of
accounting and any material uncertainties identified set out on page 138;
— the directors’ explanation as to its assessment of the group’s prospects, the period this assessment
— enquiring of management, the Audit Committee and both in-house and external legal counsel
covers and why the period is appropriate set out on page 57;
concerning actual and potential litigation and claims;
— performing analytical procedures to identify any unusual or unexpected relationships that may
— the directors’ statement on fair, balanced and understandable set out on page 103;
— the board’s confirmation that it has carried out a robust assessment of the emerging and principal
indicate risks of material misstatement due to fraud;
risks set out on pages 81-86;
— reading minutes of meetings of those charged with governance, reviewing internal audit reports
— the section of the annual report that describes the review of effectiveness of risk management and
and reviewing correspondence with HMRC, the Prudential Regulation Authority and the Financial
Conduct Authority; and
— in addressing the risk of fraud through management override of controls, testing the
appropriateness of journal entries and other adjustments; assessing whether the judgements made
in making accounting estimates are indicative of a potential bias; and evaluating the business
rationale of any significant transactions that are unusual or outside the normal course of business.
internal control systems set out on pages 104-105; and
— the section describing the work of the audit committee set out on pages 102-106.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RATHBONES GROUP PLC CONTINUED
150
14. OPINION ON OTHER MATTER PRESCRIBED BY THE CAPITAL REQUIREMENTS
(COUNTRY-BY-COUNTRY REPORTING) REGULATIONS 2013
In our opinion the information given in note 40 to the financial statements for the financial year
ended 31 December 2023 has been properly prepared, in all material respects, in accordance with
the Capital Requirements (Country-by Country Reporting) Regulations 2013.
15. MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
15.1. ADEQUACY OF EXPLANATIONS RECEIVED AND ACCOUNTING RECORDS
Under the Companies Act 2006 we are required to report to you if, in our opinion:
— we have not received all the information and explanations we require for our audit; or
— 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 are not in agreement with the accounting records
and returns.
We have nothing to report in respect of these matters.
17. USE OF OUR REPORT
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.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule
(DTR) 4.1.15R – DTR 4.1.18R, these financial statements will form part of the Electronic Format
Annual Financial Report filed on the National Storage Mechanism of the FCA in accordance with
DTR 4.1.15R – DTR 4.1.18R. This auditor’s report provides no assurance over whether the Electronic
Format Annual Financial Report has been prepared in compliance with DTR 4.1.15R – DTR 4.1.18R.
15.2 DIRECTORS’ REMUNERATION
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of
directors’ remuneration have not been made or the part of the directors’ remuneration report to be
audited is not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
Manbhinder Rana, FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
5 March 2024
16. OTHER MATTERS WHICH WE ARE REQUIRED TO ADDRESS
16.1. AUDITOR TENURE
Following the recommendation of the Audit Committee, we were appointed by shareholders on
9 May 2019 to audit the financial statements for the year ended 31 December 2019 and subsequent
financial periods. The period of total uninterrupted engagement including previous renewals
and reappointments of the firm is 5 years, covering the years ended 31 December 2019 to
31 December 2023.
16.2. CONSISTENCY OF THE AUDIT REPORT WITH THE ADDITIONAL REPORT TO THE
AUDIT COMMITTEE
Our audit opinion is consistent with the additional report to the audit committee we are
required to provide in accordance with ISAs (UK).
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
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
Other operating income
Operating income
Charges in relation to client relationships and goodwill
Acquisition-related and integration costs
Other operating expenses
Operating expenses
Profit before tax
Taxation
Profit after tax
Profit for the year attributable to equity holders of the company
Other comprehensive income:
Items that will not be reclassified to profit or loss
Net remeasurement of defined benefit asset/liability
Deferred tax relating to net remeasurement of defined benefit asset/liability
Other comprehensive income net of tax
Total comprehensive income for the year net of tax 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 year attributable to equity holders of the company:
— basic
— diluted
The accompanying notes form an integral part of the consolidated financial statements.
151
2022
£m
46.3
(28.0)
18.3
462.7
(27.5)
435.2
2.4
455.9
(19.5)
(13.5)
(358.8)
(391.8)
64.1
(15.1)
49.0
49.0
(7.1)
3.4
(3.7)
45.3
84.0p
49.3
83.6p
81.5p
Note
4
5
6
9
7
11
29
21
12
13
2023
£m
128.8
(77.1)
51.7
538.6
(29.7)
508.9
10.5
571.1
(25.2)
(44.3)
(444.0)
(513.5)
57.6
(20.1)
37.5
37.5
(5.8)
1.5
(4.3)
33.2
87.0p
62.9
52.6p
50.8p
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
Note
Share
capital
£m
At 1 January 2022
Profit for the year
Net remeasurement of defined benefit liability
Deferred tax relating to components of other comprehensive income
Other comprehensive income net of tax
Dividends paid
Issue of share capital
Share-based payments:
— cost of share-based payment arrangements
— cost of vested employee remuneration and share plans
— cost of own shares vesting
— cost of own shares acquired
— tax on share-based payments
At 31 December 2022
Profit for the year
Net remeasurement of defined benefit asset
Deferred tax relating to components of other comprehensive income
Other comprehensive income net of tax
Dividends paid
Issue of share capital
Share-based payments:
— cost of share-based payment arrangements
— cost of vested employee remuneration and share plans
— cost of own shares vesting
— cost of own shares acquired
— tax on share-based payments
At 31 December 2023
The accompanying notes form an integral part of the consolidated financial statements.
29
21
12
30
32
32
31
31
29
21
12
30
32
32
31
31
Share
premium
£m
291.0
−
−
−
−
−
19.0
−
−
−
−
−
Merger
reserve
£m
77.0
−
−
−
−
−
−
−
−
−
−
−
3.1
−
−
−
−
−
0.1
−
−
−
−
−
3.2
310.0
77.0
−
–
–
–
–
2.2
–
–
–
–
–
−
–
–
–
–
2.3
–
–
–
–
–
−
–
–
–
–
747.4
–
–
–
–
–
5.4
312.3
824.4
152
Total
equity
£m
623.3
49.0
(7.1)
3.4
(3.7)
(48.6)
19.1
25.9
(12.8)
−
(18.7)
1.3
634.8
37.5
(5.8)
1.5
(4.3)
(71.4)
751.9
24.0
(6.0)
–
(16.0)
(0.3)
Retained
earnings
£m
288.8
49.0
(7.1)
3.4
(3.7)
(48.6)
−
25.9
(12.8)
(2.7)
−
1.3
297.2
37.5
(5.8)
1.5
(4.3)
(71.4)
–
24.0
(6.0)
(13.0)
–
(0.3)
263.7
1,350.2
Own
shares
£m
(36.6)
−
−
−
−
−
−
−
−
2.7
(18.7)
−
(52.6)
−
–
–
–
–
–
–
–
13.0
(16.0)
–
(55.6)
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
153
2022
£m
3.2
310.0
77.0
(52.6)
297.2
634.8
3,447.2
Note
30
30
30
31
2023
£m
5.4
312.3
824.4
(55.6)
263.7
1,350.2
4,224.4
Equity
Share capital
Share premium
Merger reserve
Own shares
Retained earnings
Total equity
Total liabilities and equity
The financial statements were approved by the board of directors and authorised for issue on 5 March
2024 and were signed on its behalf by:
Paul Stockton
Group Chief Executive Officer
Iain Hooley
Group Chief Financial Officer
Company registered number: 01000403
The accompanying notes form an integral part of the consolidated financial statements.
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2023
Assets
Cash and balances with central banks
Settlement balances
Loans and advances to banks
Loans and advances to customers
Investment securities:
— fair value through profit or loss
— amortised cost
Prepayments, accrued income and other assets
Property, plant and equipment
Right-of-use assets
Current tax asset (UK)
Intangible assets
Net defined benefit asset
Total assets
Liabilities
Deposits by banks
Settlement balances
Due to customers
Accruals and other liabilities
Provisions
Lease liabilities
Current tax liabilities (overseas)
Net deferred tax liability
Subordinated loan notes
Total liabilities
Note
2023
£m
2022
£m
14
15
16
17
17
18
19
20
22
29
23
24
25
26
27
21
28
1,038.3
165.7
266.9
115.6
1.2
1,294.6
225.3
16.1
64.5
3.9
1,025.3
7.0
4,224.4
12.4
172.1
2,253.3
209.6
25.5
74.9
0.5
86.0
39.9
2,874.2
1,412.9
65.8
194.7
169.8
11.2
1,045.2
126.7
12.7
39.1
3.5
356.2
9.4
3,447.2
1.0
70.0
2,516.1
114.3
12.9
50.5
0.2
7.5
39.9
2,812.4
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
Cash flows from operating activities
Profit before tax
Change in fair value through profit or loss
Net interest income
Recoveries on financial instruments
Net charge for provisions
Depreciation, amortisation and impairment
Foreign exchange movements
Defined benefit pension scheme (credits)
Defined benefit pension contributions paid
Share-based payment charges
Interest paid
Interest received
Changes in operating assets and liabilities:
— net decrease in loans and advances to banks and customers
— net decrease in settlement balance debtors
— net (increase)/decrease in prepayments, accrued income and
other assets
— net (decrease)/increase in amounts due to customers and
deposits by banks
— net (decrease)/increase in settlement balance creditors
— net increase/(decrease) in accruals, provisions and other
liabilities
Note
4
33
26
17
29
29
2023
£m
57.6
(1.0)
(51.7)
0.1
9.4
47.1
3.4
(0.5)
(2.9)
24.0
(67.7)
111.9
129.7
87.4
133.3
(36.2)
(251.5)
(123.6)
1.0
2022
£m
64.1
0.3
(18.3)
(0.1)
2.0
35.0
(7.1)
(0.3)
(3.9)
25.9
(20.9)
33.9
110.6
8.4
3.9
1.9
181.9
9.8
(5.9)
Cash (used in)/generated from operations
Tax paid
Net cash (outflow)/inflow from operating activities
Cash flows from investing activities
Cash acquired on acquisition of subsidiaries
Purchase of property, plant, equipment and intangible assets
Payment of deferred consideration
Purchase of investment securities
Proceeds from sale and redemption of investment securities
Net cash used in investing activities
Cash flows from financing activities
Issue of ordinary shares
Repurchase of ordinary shares
Dividends paid
Payment of lease liabilities
Interest paid
Net cash used in financing activities
Note
8
8
17
17
38
38
12
27
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
38
2023
£m
(59.9)
(29.5)
(89.4)
172.6
(10.7)
–
(2,059.9)
1,818.1
(79.9)
–
(16.0)
(71.4)
(7.5)
(5.6)
(100.5)
(269.8)
1,572.7
1,302.9
The accompanying notes form an integral part of the consolidated financial statements.
154
2022
£m
310.5
(17.6)
292.9
−
(13.1)
(10.9)
(1,262.5)
984.4
(302.1)
9.3
(18.6)
(48.6)
(8.5)
(5.3)
(71.7)
(80.9)
1,653.6
1,572.7
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS
1 PRINCIPAL ACCOUNTING POLICIES
Rathbones Group Plc (‘the company’) is a public company limited by shares incorporated and
domiciled in England and Wales under the Companies Act 2006.
1.1 BASIS OF PREPARATION
The consolidated and company financial statements have been prepared in accordance with
UK-adopted International Accounting Standards. The company financial statements are presented on
pages 205 to 223.
The financial statements have been prepared on the historical cost basis, except for certain financial
instruments that are measured at fair value (notes 1.9, 1.12, 1.16 and 1.18). The principal accounting
policies adopted are set out in this note and, unless otherwise stated, have been applied consistently
to all periods presented in the consolidated financial statements.
1.2 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.
The group controls an entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the
entity. Subsidiaries are fully consolidated from the date on which control is obtained, and no longer
consolidated from the date that control ceases; their results are included in the consolidated financial
statements up to the date that control ceases. Inter-company transactions and balances between
group companies are eliminated on consolidation.
1.3 DEVELOPMENTS IN REPORTING STANDARDS AND INTERPRETATIONS
Standards and interpretations affecting the reported results or the financial position
The following amendments to standards have been adopted in the current period, but have not had a
significant impact on the amounts reported in these financial statements:
— IFRS 17 Insurance Contracts
— Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2
— Definition of Accounting Estimates – Amendments to IAS 8
— Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to
IAS 12
— International Tax Reform – Pillar Two Model Rules (Amendments to IAS 12)
155
Future new standards and interpretations
The following standards are effective for annual periods beginning on or after 1 January 2024 and
earlier application is permitted; however, the group has not early-adopted the amended standards in
preparing these consolidated financial statements.
None of these standards are expected to have a material impact on the group’s financial statements.
Standards available for early adoption
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
(Amendments to IFRS 10 and IAS 28)
Classification of liabilities as current or non-current (Amendments to IAS 1)
Lease Liability in a Sale and Leaseback – Amendments to IFRS 16
Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7
IFRS S1 General Requirements for Disclosure of Sustainability-related
Financial Information and IFRS S2 Climate-related Disclosures
Lack of Exchangeability – Amendments to IAS 21
Effective date
Optional
01 January 2024
01 January 2024
01 January 2024
01 January 2024
01 January 2024
01 January 2024
1.4 BUSINESS COMBINATIONS
Business combinations are accounted for using the acquisition method. The consideration for each
acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets
transferred, liabilities assumed and equity instruments issued by the group in exchange for control of
the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a
contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent
changes in such fair values are adjusted against the cost of acquisition where they qualify as
measurement period adjustments. All other subsequent changes in the fair value of contingent
consideration classified as an asset or liability are accounted for in accordance with relevant asset /
liability recognition and measurement guidance in IFRS. Changes in the fair value of contingent
consideration classified as equity are not recognised.
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1.5 GOING CONCERN
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. In forming
this view, the directors have considered the company’s and the group’s prospects for a period of at
least 12 months from the date of approval of the annual report. The directors’ assessment included
consideration of the group’s profit and capital forecasts; the impact of capital and liquidity stress tests;
the impact of reverse stress testing and the management actions available to mitigate this impact.
The assessment also ensured that the assumptions applied were consistent with those used in other
forward-looking areas of the financial statements, such as impairment testing. The directors continue
to adopt the going concern basis of accounting in preparing the financial statements.
Net fee and commission income
Portfolio or investment management fees, commissions receivable or payable and fees from advisory
services are recognised on a continuous basis over the period that the related service is provided.
Commission charges for executing transactions on behalf of clients are recognised when the
transaction is dealt at the trade date.
The group has made an assessment as to whether the work performed to earn such fees constitutes
the transfer of services and, therefore, fulfils any performance obligation(s). If so, then these fees are
recognised when the relevant performance obligation has been satisfied; if not, then the fees are only
recognised in the period in which the services are provided.
1.6 FOREIGN CURRENCIES
The functional and presentational currency of the company and its subsidiaries is sterling.
A breakdown of the timing of revenue recognition can be found in note 3.
Transactions in currencies other than the relevant group entity’s functional currency are recorded at
the rates of exchange prevailing on the dates of the transactions. At each balance sheet date,
monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet date. Gains and losses arising on retranslation are included in profit or
loss for the year.
INCOME
1.7
Net interest income
Interest income or expense is recognised within net interest income using the effective interest method.
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.
Other income
The group invests cash held within client portfolios in cash securities with approved financial
institutions. The margin earned on these funds, being the difference between the rate of interest paid
by the custodian bank and that paid to clients, represents the rate of return available to the group
through the pooling of client funds. This margin is included within other operating income in the
financial statements.
The effective interest method is the method of calculating the amortised cost of a financial asset or
liability (or group of assets and liabilities) and of allocating the interest income or interest expense
over the relevant period. The effective interest rate is the rate that exactly discounts the expected
future cash payments or receipts through the expected life of the financial instrument, or when
appropriate, a shorter period, to:
1.8 LEASES
At inception of a contract, the group assesses whether a contract is, or contains, a lease. A contract is,
or contains, a lease if the contract conveys the right to control the use of an identified asset for a
period of time in exchange for consideration. To assess whether a contract conveys the right to
control the use of an identified asset, the group uses the definition of a lease in IFRS 16.
— the gross carrying amount of the financial asset; or
— the amortised cost of the financial liability.
The application of the method has the effect of recognising income (or expense) receivable (or
payable) on the instrument evenly in proportion to the amount outstanding over the period to
maturity or repayment. In calculating effective interest, the group estimates cash flows considering
all contractual terms of the financial instrument but excluding the impact of future credit losses.
The interest charged on the group’s lease liabilities and subordinated loan notes is included within
cash used in financing activities in the group statement of cash flows. Interest charged on client
funds is included within cash generated from operations.
The group recognises a right-of-use asset and a lease liability at the inception date of the lease. The
right-of-use asset is initially measured at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or before the commencement date, plus any initial
direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to
restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use assets are subsequently depreciated on a straight-line basis over the shorter of the
expected life of the asset and the lease term, adjusted for any remeasurements of the lease liability. At
the end of each reporting period, the right-of-use assets are assessed for indicators of impairment in
accordance with IAS 36.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
PRINCIPAL ACCOUNTING POLICIES CONTINUED
1
The lease liability is initially measured at the present value of the lease payments that are not paid at
the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot
be readily determined, the group’s incremental borrowing rate. The group uses its incremental
borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise the following:
— fixed payments, including in-substance fixed payments
— variable lease payments that depend on an index or a rate, initially measured using the index or
rate as at the commencement date
— amounts expected to be payable under a residual value guarantee
— the exercise price under a purchase option that the group is reasonably certain to exercise, lease
payments in an optional renewal period if the group is reasonably certain to exercise an extension
option, and penalties for early termination of a lease unless the group is reasonably certain not to
terminate early.
The group’s incremental borrowing rate of 5.642% is derived with reference to the group’s
subordinated loan notes (note 28), which is the only external financing on the consolidated
balance sheet.
The lease liability is subsequently measured by adjusting the carrying amount to reflect the interest
charge, the lease payments made and any reassessment or lease modifications. The lease liability is
remeasured if the group changes its assessment of whether it will exercise a purchase, extension or
termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the
carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the
right-of-use asset has been reduced to zero.
Where the group is an intermediate lessor in a sub-lease, it accounts for its interests in the head lease
and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the
right-of-use asset arising from the head lease, not with reference to the underlying asset.
Leases that qualify for the low-value asset exemption or short-term lease exemption do not fall within
the scope of IFRS 16 and continue to be treated as off balance sheet.
157
1.9 SHARE-BASED PAYMENTS
The group engages in equity-settled and cash-settled share-based payment transactions in respect of
services received from its employees.
Equity-settled awards
For equity-settled share-based payments, the fair value of the award is measured by reference to the
fair value of the shares or share options granted on the grant date. The cost of the employee services
received in respect of the shares or share options granted is recognised in profit or loss over the
vesting period, with a corresponding credit to equity.
The fair value of the awards or options granted is determined using a binomial pricing model, which
takes into account the current share price, the risk-free interest rate, the expected volatility of the
company’s share price over the life of the option or award, any applicable exercise price and other
relevant factors. Only those vesting conditions that include terms related to market conditions are
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 profit or loss 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 any non-market vesting
conditions are also met. Shares purchased and issued are recorded directly in equity.
Cash-settled awards
For cash-settled share-based payments, a liability is recognised for the services received, and the
related employer’s taxes, at the balance sheet date, measured at the fair value of the liability. At each
subsequent balance sheet date and at the date on which the liability is settled, the fair value of the
liability is remeasured with any changes in fair value recognised in profit or loss.
1.10 TAXATION
Current Tax
Current tax is the expected tax payable or receivable on net taxable income for the year. Current tax is
calculated using tax rates enacted or substantively enacted by the balance sheet date, together with
any adjustment to tax payable or receivable in respect of previous years.
Deferred tax
Deferred tax is accounted for under the balance sheet liability method in respect of temporary
differences using tax rates (and laws) that have been enacted or substantively enacted by the balance
sheet date and are expected to apply when the liability is settled or when the asset is realised.
Deferred tax 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, except where the temporary difference arises:
— from the initial recognition of goodwill;
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1
— from the initial recognition of other assets and liabilities in a transaction, which affects neither the
Classification and subsequent measurement
Financial assets are classified and measured in the following categories:
tax profit nor the accounting profit, other than in a business combination; or
— in relation to investments in subsidiaries and associates, 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.
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.
Current and deferred tax are recognised:
— amortised cost
Financial assets are measured at amortised cost if their contractual terms give rise to cash flows
that are solely payments of principal and interest on the principal amount outstanding and they
are held within a business model whose objective is to hold assets to collect contractual cash flows.
Assets are measured at amortised cost using the effective interest rate method (note 1.7), less any
impairment losses. Interest income, foreign exchange gains and losses and impairment are
recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
— in other comprehensive income if they relate to items recognised in other comprehensive income
— directly in retained earnings if they relate to items recognised directly in retained earnings.
— at fair value through other comprehensive income (FVOCI)
1.11 CASH AND CASH EQUIVALENTS
Cash comprises cash in hand and demand deposits.
Demand deposits include balances with central banks which are realisable on demand.
Cash equivalents includes 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 (overnight cash book
overdraft balances – Note 23), which are included in the group’s cash management.
Debt instruments are measured at FVOCI if their contractual terms give rise to cash flows that are
solely payments of principal and interest on the principal amount outstanding and they are held
within a business model whose objective is both to hold assets to collect contractual cash flows
and to sell the assets.
For debt instruments, interest income is calculated using the effective interest method. For equity
instruments, dividends are recognised as income in profit or loss unless the dividend clearly
represents a recovery of part of the cost of the investment. All other gains and losses on assets at
FVOCI are recognised in OCI.
— at fair value through profit or loss (FVTPL)
1.12 FINANCIAL ASSETS
Initial recognition and measurement
Financial assets, excluding trade debtors, are initially recognised when the group becomes party to
the contractual provisions of the asset. Trade debtors are recognised when cash is advanced to the
borrowers.
Financial assets are initially recognised at fair value plus transaction costs that are directly
attributable to their acquisition (except those assets classified at fair value through profit or loss).
Trade debtors without a significant financing component are initially measured at the
transaction price.
All equity instruments are measured at FVTPL unless the instrument is not held for trading, the
group irrevocably elects to measure the instrument at FVOCI. This election is made on an
investment-by-investment basis.
All financial assets not classified as measured at amortised cost or FVOCI as described above are
measured at FVTPL. On initial recognition, the group may irrevocably designate a financial asset
that otherwise meets the requirements to be measured at amortised cost or FVOCI at FVTPL if
doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Net gains and losses, including any interest or dividend income, are recognised in profit or loss.
Financial assets are not reclassified subsequent to their initial recognition unless the group changes
its business model for managing financial assets, in which case all affected financial assets are
reclassified on the first day of the first reporting period following the change in the business model.
For settlement balances, trade date accounting is applied to all regular way purchases and sales
of assets.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
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Business model assessment
The group assesses the objective of the business model in which a financial asset is held at a portfolio
level. The information considered includes:
The group measures loss allowances at an amount equal to lifetime ECLs, except for treasury book
and investment management loan book exposures (see note 33) for which credit risk has not
increased significantly since initial recognition, which are measured at 12-month ECLs.
— the objectives for the portfolio and how those tie in to the current and future strategy of the group
— how the performance of the portfolio is evaluated and reported to the group’s management
— the risks that affect the performance of the business model (and the financial assets held within
that business model) and how those risks are managed
— how group employees are compensated, e.g. whether compensation is based on the fair value of the
assets managed or the contractual cash flows collected
— the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such
sales and expectations about future sales activity.
Payments of principal and interest criterion
In assessing whether the contractual cash flows are solely payments of principal and interest, the
group considers:
— the contractual terms of the instrument, checking consistency with basic lending criteria
— the impact of the time value of money
— features that would change the amount or timing of contractual cash flows
— other factors, such as prepayment or extension features.
Loss allowances for trust and financial planning debtors are always measured at an amount equal to
lifetime ECLs.
When assessing whether the credit risk of a financial asset has increased significantly between the
reporting date and initial recognition, quantitative and qualitative indicators are used. More detail
can be found at note 33.
Measurement of ECLs
Treasury book and investment management loan book
The group has developed a model for calculating ECLs on its treasury book and investment
management loan book (which includes loan commitments held off balance sheet). The group has
developed three different economic scenarios: a base case, an upside and a downside.
The base case is assigned a 60% probability of occurring with the upside and downside each assigned
a 20% probability of occurring.
The economic scenarios are based on the projections of GDP, inflation, unemployment rates, house
price indices, financial markets and interest rates as set out in the banking system stress testing
scenario published annually by the PRA.
Derecognition
Financial assets are derecognised when the contractual rights to receive cash flows have expired or
the group has transferred substantially all the risks and rewards of ownership.
Management adjust the projections for the economic variables in arriving at the upside and
downside scenarios.
Impairment of financial assets
The group recognises loss allowances for expected credit losses (ECLs) on financial assets measured
at amortised cost and FVOCI and loan commitments held off balance sheet.
A financial asset will attract a loss allowance equal to either:
— 12-month ECLs (losses resulting from possible defaults within the next 12 months); or
— lifetime ECLs (losses resulting from possible defaults over the remaining life of the financial asset).
The latter applies if there has been a significant deterioration in the credit quality of the asset; albeit
lifetime ECLs will always be recognised for trade receivables, contract assets or lease receivables
without a significant financing component.
The maximum period considered when estimating ECLs is the maximum contractual period over
which the group is exposed to credit risk.
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Under each resultant scenario, an ECL is forecast for each exposure in the treasury book and
investment management loan book. The ECL is calculated based on management’s estimate of the
probability of default, the loss given default and the exposure at default of each exposure taking into
account industry credit loss data, the group’s own credit loss experience, the expected repayment
profiles of the exposures and the level of collateral held. Industry credit loss information is drawn
from data on credit defaults for different categories of exposure published by the Council of Mortgage
Lenders and Standard & Poor’s.
1.13 PROPERTY, PLANT AND EQUIPMENT
All property, plant and equipment is stated at historical cost, which includes directly attributable
acquisition costs, less accumulated depreciation and impairment losses. 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 improvements: over the lease term
— plant, equipment and computer hardware: over three to 10 years.
The model adopts a staging allocation methodology, primarily based on changes in the internal and/
or external credit rating of exposures to identify significant increases in credit risk since inception of
the exposure.
The assets’ residual lives are reviewed, and adjusted if appropriate, at each balance sheet date. Gains
and losses on disposals are determined by comparing proceeds with the carrying amount and these
are included in profit or loss.
The group has not rebutted the presumption that if an exposure is more than 30 days past due,
the associated credit risk has significantly increased.
More detail on the group’s staging criteria is provided in note 33.
ECLs are discounted back to the balance sheet date at the effective interest rate of the asset.
Trust and financial planning debtors
The group’s trust and financial planning debtors are generally short term and do not contain
significant financing components. Therefore, the group has applied a practical expedient by using a
provision matrix to calculate lifetime ECLs based on actual credit loss experience over the past four
years.
Credit-impaired financial assets
At each reporting date, the group assesses whether financial assets carried at amortised cost and
FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a
detrimental impact on the estimated future cash flows of the financial asset have occurred. The
group’s definition of default is given in note 33.
Presentation of impairment
The carrying amount of financial assets measured at amortised cost is reduced by a loss allowance.
The carrying value of assets measured at FVOCI, is not adjusted by loss allowance but instead the loss
allowance is recorded in equity.
Impairment losses related to the group’s treasury book and investment management loan book are
presented in ‘interest expense and similar charges’ and those related to all other financial assets
(including trust and financial planning debtors) are presented under ‘other operating expenses’.
No losses are presented separately on the statement of the comprehensive income and there have
been no reclassifications of amounts previously recognised under IAS 39.
INTANGIBLE ASSETS
1.14
Goodwill
Goodwill arises through business combinations and 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 business at the date of acquisition.
Goodwill is recognised as an asset and measured at cost less accumulated impairment losses. It is
allocated to groups of cash-generating units, which represent the lowest level at which goodwill is
monitored for internal management purposes. 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, and are no larger than the group’s operating segments,
as set out in note 3.
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.
Client relationships
Client relationships acquired as part of a business combination are initially recognised at fair value
(note 1.4). Determining whether a transaction that involves the purchase of client relationships is
treated as a business combination or a separate purchase of intangible assets requires judgement. The
factors that the group takes into consideration in making this judgement are set out in note 2.1.
Individually purchased client relationships are initially recognised at cost. Where a transaction to
acquire client relationship intangible assets includes an element of variable deferred consideration,
an estimate is made of the value of consideration that will ultimately be paid. The client relationship
intangible asset recognised on the balance sheet is adjusted for any subsequent change in the value
of deferred consideration. Note 2.1 sets out the approach taken by the group where judgement is
required to determine whether payments made for the introduction of client relationships should be
capitalised as intangible assets or charged to profit or loss.
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Client relationship intangible assets are subsequently carried at the amount initially recognised less
accumulated amortisation, which is calculated using the straight-line method over their estimated
useful lives (normally 10 to 15 years, but not more than 15 years).
Computer software and software development costs
Costs incurred to acquire and bring to use computer software licences are capitalised and amortised
through profit or loss over their 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 group is expected to benefit
from future use of the software and the costs are reliably measurable. Other costs of producing
software are charged to profit or loss as incurred. Computer software development costs recognised
as assets are amortised using the straight-line method over their useful lives (not exceeding
four years).
Client relationship intangibles assets are tested for impairment bi-annually by comparing the fair
value of funds under management and administration for each individually acquired client
relationship, (or, for client relationships acquired with a business combination, each acquired
portfolio of clients), with their associated expected value of funds under management and
administration, as based on the useful lives of the client relationships. An example of evidence of
impairment would be lost client relationships. In determining whether a client relationship is lost, the
group considers factors such as the level of funds withdrawn and the existence of other retained
family relationships. When client relationships are lost, the full amount of unamortised cost is
recognised immediately in profit or loss and the intangible asset is derecognised.
If the recoverable amount of any asset other than goodwill or client relationships is estimated to be
less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount.
Any impairment loss is recognised immediately in profit or loss.
Where services provided by a software-as-a-service arrangement do not result in the recognition of
an intangible asset, non-distinct configuration and customisation costs are expensed when access to
the software is provided. The cost is spread over the contractual term.
1.16 FINANCIAL LIABILITIES
Initial recognition and measurement
Financial liabilities are initially recognised at fair value plus transaction costs that are directly
attributable to their acquisition or issue.
IMPAIRMENT OF GOODWILL AND INTANGIBLE ASSETS
1.15
At each balance sheet date, the group reviews the carrying amounts of its intangible assets to
determine whether there is any indication that those assets have suffered an impairment loss. 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). Where the asset does not generate cash flows that are
independent from other assets, the group estimates the recoverable amount of the cash-generating
unit to which the asset belongs. The recoverable amount is the higher of fair value less costs to sell
and value in use. In assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time value
of money.
Goodwill is tested for impairment at least annually. For the purposes of impairment testing, goodwill
is allocated to groups of cash-generating units. The carrying amount of each group of cash-generating
units is compared to its value in use, calculated using a discounted cash flow method. If the
recoverable amount of the group of cash-generating units is less than the carrying amount of the
group of units, the impairment loss is allocated first to reduce the carrying amount of the goodwill
allocated to that group of units and then to the other assets of the group of units pro rata on the basis
of the carrying amount of each asset in the group of units.
Classification and subsequent measurement
Financial liabilities are classified as measured at amortised cost or at fair value through profit or loss.
The group has not designated any liabilities as fair value through profit or loss and holds no liabilities
as held for trading. Financial liabilities are measured at amortised cost using the effective interest
method (note 1.7). Amortised cost is calculated by taking into account any issue costs and any
discounts or premiums on settlement. Interest expense and foreign exchange gains and losses are
recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
For settlement balances, trade date accounting is applied to all regular way purchases and sales
of assets.
Derecognition
The group derecognises financial liabilities when its contractual obligations are discharged, cancelled
or expired, or when the financial liability is substantially modified.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
162
PRINCIPAL ACCOUNTING POLICIES CONTINUED
1
1.17 PROVISIONS AND CONTINGENT LIABILITIES
Provisions are recognised when the group has a present obligation (legal or constructive) as a result of
a past event and it is probable that an outflow of economic benefits, that can be reliably estimated,
will occur. Provisions are measured at the present value of the expenditures expected to be required
to settle the obligation, discounted using a pre-tax rate that reflects current market assessments of
the time value of money and the risks specific to the obligation.
Contingent liabilities are possible obligations that depend on the outcome of uncertain future events
or those present obligations where the outflows of resources are uncertain or cannot be measured
reliably. Contingent liabilities are not recognised in the financial statements but are disclosed unless
the likelihood of crystallisation is judged to be remote.
1.18 RETIREMENT BENEFIT OBLIGATIONS ON RETIREMENT BENEFIT SCHEMES
The group’s net liability/asset in respect of defined benefit pension plans is calculated separately for
each plan by estimating the amount of future benefit that employees have earned in return for their
service in the current and prior years; that benefit is discounted to determine its present value, and
the fair value of any plan assets (at bid price) is deducted. Any asset resulting from this calculation is
limited to the present value of available refunds and reductions in future contributions to the plan.
The cost of providing benefits under defined benefit plans is determined using the projected unit
credit method, with actuarial valuations being carried out at each balance sheet date. Net
remeasurements of the defined benefit liability/asset are recognised in full in the period in which
they occur in other comprehensive income.
Past service costs or gains are recognised in profit or loss immediately in the period of a plan
amendment. Interest income on defined benefit assets and interest expense on the defined benefit
obligations are also recognised in profit or loss in the period.
The amount recognised in the balance sheet 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.
The company determines the net interest on the net defined benefit liability/asset for the year by
applying the discount rate used to measure the defined benefit obligation at the beginning of the year
to the net defined benefit liability/asset.
Contributions to defined contribution retirement benefit schemes are charged to profit or loss as an
expense as they fall due.
1.19 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.
Operating segments are organised around the services provided to clients.
Transactions between operating segments are reported within the income or expenses for those
segments; intra-segment income and expenditure is eliminated at group level. 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.
IW&I has been identified as a separate operating segment of the group. The results of the segment
have been presented in aggregate with the group’s Wealth Management segment, on the basis that
their long-term characteristics are expected to align following the initial integration period of
the business.
1.20 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. Largely as a result of cash and settlement processing, the group holds money on
behalf of some clients in accordance with the Client Money Rules of the Financial Conduct Authority,
the Jersey Financial Services Commission and the Solicitors’ Accounts Rules issued by the Solicitors
Regulation Authority, as applicable. Such monies and the corresponding amounts due to clients are
not shown on the balance sheet as the group is not beneficially entitled to them.
MERGER RESERVE
1.21
The merger reserve is used where more than 90% of the share capital in a subsidiary is acquired, and
the consideration includes the issue of new shares by the Company, thereby attracting merger relief
under Section 612 of the Companies Act 2006.
1.22 FAIR VALUE MEASUREMENT
The fair values of quoted financial instruments in active markets are based on current bid prices.
Such instruments would be included in level 1 of the fair value hierarchy. If an active market for a
financial asset does not exist, 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. These instruments
would be classified under level 3 in the fair value hierarchy.
The group recognises transfers between levels of the fair value hierarchy at the end of the reporting
period during which the change has occurred.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
163
2
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF
ESTIMATION UNCERTAINTY
The group makes judgements and estimates that affect the application of the group’s accounting
policies and reported amounts of assets, liabilities, income and expenses within the next financial
year. Estimates and assumptions 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.
The following key accounting policies involve critical judgements made in applying the accounting
policy and involve material estimation uncertainty.
2.1 CLIENT RELATIONSHIP INTANGIBLES (NOTE 22)
Critical judgements
Client Relationship intangibles purchased through corporate transactions
When the group purchases client relationships through transactions with other corporate entities, a
judgement is made as to whether the transaction should be accounted for as a business combination
or as a separate purchase of intangible assets. In making this judgement, the group assesses the
assets, liabilities, operations and processes that were the subject of the transaction against the
definition of a business combination in IFRS 3. In particular, consideration is given to whether
ownership of a corporate entity has been acquired, among other factors.
Payments to newly recruited investment managers
The group assesses whether payments made to newly recruited investment managers under
contractual agreements represent payments for the acquisition of client relationship intangible assets
or remuneration for ongoing services provided to the group. If these payments are incremental costs
of acquiring investment management contracts and are deemed to be recoverable (i.e. through future
revenues earned from the FUMA that relate to the investment management contract), they are
capitalised as client relationship intangible assets (note 22). Otherwise, they are judged to be in
relation to the provision of ongoing services and are expensed as remuneration cost in the period that
they are transferred. Upfront payments made to investment managers upon joining are expensed as
incurred, as they are not judged to be incremental costs for acquiring the client relationships.
Estimation uncertainty
Amortisation of client relationship intangible assets
The group makes estimates as to 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 the longevity of client relationships. During the year, client relationship
intangible assets were amortised over a period of between 10 and 15 years.
Amortisation of £25.2 million (2022: £19.5 million was charged during the year). At 31 December
2023, the carrying value of client relationship intangible assets was £502.7 million (2022: £175
million). A reduction of one year in the amortisation period of the group’s client relationship
intangible assets would increase the annual amortisation charge by £4.0 million.
2.2 RETIREMENT BENEFIT OBLIGATIONS (NOTE 29)
Critical judgements
Key judgement was applied in determining that the group will be eligible to receive the surplus
associated with the pension schemes in recognising a pension asset.
Estimation uncertainty
The principal assumptions underlying the reported surplus of £7.0 million (2022: £9.4 million
surplus) are set out in note 29.
In order to set these assumptions, the group engages qualified actuaries to estimate a range of
long-term trends and market conditions to determine the value of the surplus or deficit on the group’s
retirement benefit schemes, based on the group’s expectations of the future. Long-term forecasts and
estimates are inherently highly subjective 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
from that recognised.
The sensitivities of the retirement benefit obligations to changes in all of the underlying estimates are
set out in note 29. Of these, the most sensitive assumption is the discount rate used to measure the
defined benefit obligation. Increasing the discount rate by 0.5% would decrease the schemes’
liabilities by £7.7 million (2022: £7.1 million). Increasing the future rate of inflation by 0.5% would
increase the schemes’ liabilities by £4.4 million (2022: £5.0 million). A lower or higher movement in
these assumptions would result in multiples of these figures. A 0.5% decrease would reduce the
scheme’s liabilities by £4.2 million.
2.3 BUSINESS COMBINATIONS (NOTE 8)
2.3.1 Investec Wealth & Investment
During the year, the group acquired the entire share capital of Investec Wealth & Investment (‘IW&I’).
The group has accounted for the transaction as a business combination. Note 8 contains further
detail on the areas of significant judgement and critical accounting estimates outlined below.
Estimation uncertainty
Fair value of consideration transferred
Total consideration transferred to Investec Bank Plc comprised 27,056,463 ordinary shares and
17,481,868 convertible non-voting ordinary shares. The fair value of the ordinary shares issued was
determined with reference to the share price of Rathbones Group Plc at close of business on 20
September 2023 (being the day before legal completion of the transaction), which was £17.22 per
share at close. The fair value of the non-voting shares of £16.36 was calculated by applying a 5.0%
discount to the closing share price of £17.22, to reflect the fact that the shares are non-marketable
and non-transferable. This produced a total value for consideration paid of £751.9 million. A 2.0%
decrease in the discount applied would have resulted in a £6.0 million increase in the value of the
consideration paid; an increase in the discount would have had an equal and opposite effect.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
164
2
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
CONTINUED
Fair value of goodwill and net assets acquired
The fair value of net assets acquired was valued at £411.8 million (see note 8 for a
detailed breakdown).
Goodwill of £340.1 million was recognised at acquisition, and represents the future economic benefit
expected from an acquired workforce, expected future growth and future client relationships, as well
as operational and revenue synergies. The allocation of goodwill between the group’s cash-generating
units has been based on their respective relative values.
Client relationship intangible assets of £350.3 million were recognised during the year in relation to
the acquisition of IW&I. The multi-period earnings model used to value the intangible assets used
estimates of client longevity and investment performance to derive a series of discounted cash flows.
This was determined with reference to management’s best estimates of future performance and
estimates of the return required to determine an appropriate discount rate. These assets are being
amortised over an average 14-year useful life. A 5.0% increase in the estimated fair value of client
relationship intangible assets would increase client relationship assets by £17.5 million, with a
corresponding increase in deferred tax liabilities of £4.4 million and a decrease in goodwill of £13.1
million.
The group has applied judgement in determining the allocation of acquired goodwill to the relevant
cash-generating units expected to benefit from the acquisition. The allocation of goodwill is
provisional and shall be reviewed and completed before the end of the first annual period after the
acquisition. See note 22.
Other areas of focus
The financial statements include other accounting estimates related to the acquisition of IW&I. While
these areas do not meet the definition under IAS 1 of significant accounting estimates or critical
accounting judgements, the recognition and measurement of certain material balances are based on
assumptions and/or are subject to longer term uncertainties.
Estimation uncertainty
Fair value of equity-settled awards
Share-based incentive awards were granted to certain IW&I employees as part of the acquisition (see
note 8). These awards require the recipients to remain in employment for a specific period, and to
achieve certain conditions relating to the integration of IW&I. The awards will be accounted for as
remuneration for ongoing services and will be expensed over the deferral period. The cumulative
expense at year end of £3.1 million reflects the number of equity instruments granted that are
expected to ultimately vest, as based on expected future attrition rates. A decrease of 10% in the total
unvested options outstanding at year end would decrease the profit or loss charge for the last quarter
of the year by £0.3 million, and therefore this is not considered to be a material estimate.
2.3.2 Saunderson House
Estimation uncertainty
In 2021, the group acquired the entire share capital of Saunderson House Limited as part of a
business combination. The equity-settled deferred payments that are contingent on the recipients
remaining employees of the group for a specific period are accounted for as remuneration for ongoing
services from employment. The group’s estimate of the amounts ultimately payable will be expensed
over the deferral period.
The Saunderson House management incentive scheme is subject to the achievement of certain
operational and performance targets at 31 December 2024. A profit or loss charge has been
recognised in equity for the expected consideration payable. Under the terms of the agreements, the
award is calculated as 0.1% of funds under management (‘FUM’) at the test date of 31 December
2024. The FUM award ranges from a payment of £nil to a maximum possible payment in shares of
£7.5 million; £0.5m of this pool has already been granted to a group of employees. In addition to this
are integration and discretionary awards, capped at £1.0m and £0.5m, respectively.
The minimum threshold for pay-out of this award was previously £5.0 billion in FUM; this was
reduced to £3.5 billion during the year, following review by the Group Executive Committee, to
rebase the scheme to reflect current market conditions. Management’s best estimate of the FUM
award at the year end was £4.8 million, and is based on expected funds under management at 31
December 2024. The discretionary and integration awards are expected to be paid in full.
The maximum FUM award of £7.5 million would result in an additional charge to profit or loss in
2023 of £1.0 million. A payment of £nil would result in a reversal of the accumulated profit or loss
charge since commencement of the award of £3.7 million in 2023.
3 SEGMENTAL INFORMATION
IFRS 8 requires operating segments to be identified on the basis of internal reports about
components of the group that are regularly reviewed by the chief operating decision-maker, which
takes the form of the Group Executive Committee, in order to allocate resources to the segment and to
assess its performance.
For management purposes, the group is organised into two operating segments: Wealth Management
and Asset Management. Centrally incurred indirect expenses are allocated to these operating
segments on the basis of the cost drivers that generate the expenditure; principally, these are the
headcount of staff directly involved in providing those services from which the segment earns
revenues, the value of funds under management and administration and the segment’s total revenue.
The allocation of these costs is shown in a separate column in the table below, alongside the
information presented for internal reporting. Wealth Management Segmental Assets relate to assets
held within the Investment Management, Banking and Trust Business Segments. Asset Management
Segmental Assets are assets held solely within the Asset Management Business Segment.
Unallocated Segmental Assets relate to the Net Defined Benefit Asset held on the balance sheet.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
SEGMENTAL INFORMATION CONTINUED
3
IW&I has been identified as a separate operating segment of the group. The results of the segment have been presented in aggregate with the group’s Wealth Management segment, on the basis that their long-term
characteristics are expected to align following the initial integration period of the business.
31 December 2023
Net investment management fee income
Net commission income
Net interest income
Fees from advisory services 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
Charges in relation to client relationships and goodwill (note 22)
Acquisition-related costs (note 9)
Segment profit before tax
Profit before tax attributable to equity holders of the company
Taxation (note 11)
Profit for the year attributable to equity holders of the company
Segment total assets
165
Total
£m
414.8
53.6
51.7
51.0
571.1
(206.1)
(107.5)
(313.6)
(130.4)
–
(444.0)
127.1
(25.2)
(44.3)
57.6
57.6
(20.1)
37.5
Wealth
Management
£m
Asset
Management
£m
Indirect
expenses
£m
350.1
53.6
49.9
50.3
503.9
(147.2)
(78.2)
(225.4)
(53.7)
(119.4)
(398.5)
105.4
(25.2)
(11.0)
69.2
–
–
–
64.7
–
1.8
0.7
67.2
(7.1)
(13.4)
(20.5)
(12.2)
(12.8)
(45.5)
21.7
–
–
21.7
–
–
–
–
–
–
–
–
(51.8)
(15.9)
(67.7)
(64.5)
132.2
–
–
–
(33.3)
(33.3)
–
–
–
Wealth
Management
£m
Asset
Management
£m
Unallocated
Assets £m
Total
£m
4,099.6
117.8
7.0
4,224.4
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
3
SEGMENTAL INFORMATION CONTINUED
31 December 2022
Net investment management fee income
Net commission income
Net interest income
Fees from advisory services 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
Charges in relation to client relationships and goodwill (note 22)
Acquisition-related costs (note 9)
Segment profit before tax
Profit before tax attributable to equity holders of the company
— Taxation (note 11)
Profit for the year attributable to equity holders of the company
Segment total assets
166
Total
£m
337.0
48.9
18.3
51.7
455.9
(158.5)
(87.1)
(245.6)
(113.3)
−
(358.9)
97.0
(19.5)
(13.4)
64.1
64.1
(15.1)
49.0
Total
£m
Wealth
Management
£m
Asset
Management
£m
Indirect
expenses
£m
274.8
48.9
17.8
51.4
392.9
(109.5)
(66.9)
(176.4)
(41.5)
(104.4)
(322.3)
70.6
(19.5)
(10.0)
41.1
−
−
−
62.2
−
0.5
0.3
63.0
(7.0)
(11.2)
(18.2)
(9.6)
(8.8)
(36.6)
26.4
−
−
26.4
−
−
−
−
−
−
−
−
(42.0)
(9.0)
(51.0)
(62.2)
113.2
−
−
−
(3.4)
(3.4)
−
−
−
Wealth
Management
£m
3,323.4
Asset
Management
£m
114.4
Unallocated Assets
£m
9.4
3,447.2
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
SEGMENTAL INFORMATION CONTINUED
3
The following table reconciles underlying operating expenses to operating expenses:
Underlying operating expenses
Charges in relation to client relationships and goodwill (note 22)
Acquisition-related costs (note 9)
Operating expenses
167
2023
£m
444.0
25.2
44.3
513.5
2022
£m
358.8
19.5
13.5
391.8
GEOGRAPHIC ANALYSIS
The following table presents operating income analysed by the geographical location of the group
entity providing the service:
TIMING OF REVENUE RECOGNITION
The following table presents operating income analysed by the timing of revenue recognition of the
operating segment providing the service:
United Kingdom
Channel Islands
Rest of the World
Operating income
2023
£m
553.4
17.7
–
571.1
The following is an analysis of the carrying amount of non-current assets analysed by the
geographical location of the assets:
United Kingdom
Channel Islands
Non-current assets
2023
£m
1,103.0
2.9
1,105.9
2022
£m
442.0
13.8
0.1
455.9
2022
£m
404.6
3.4
408.0
Products and services transferred
at a point in time
Products and services transferred
over time
2023
2022
Wealth
Management
£m
Asset
Management
£m
Wealth
Management
£m
Asset
Management
£m
44.4
459.5
503.9
–
67.2
67.2
41.2
351.7
392.9
−
63.0
63.0
MAJOR CLIENTS
The group is not reliant on any one client or group of connected clients for generation of revenues.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
168
2022
£m
(0.4)
−
2.8
2.4
2023
£m
1.1
7.7
1.7
10.5
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
4 NET INTEREST INCOME
6 OTHER OPERATING INCOME
Interest income
Cash and balances with central banks
Amortised cost investment securities
Loans and advances to banks
Loans and advances to customers
Interest expense
Due to customers
Lease liabilities
Subordinated loan notes (note 28)
Net interest income
2023
£m
56.3
56.1
7.9
8.5
128.8
(71.6)
(3.2)
(2.3)
(77.1)
51.7
All net interest income is calculated using the effective interest method (note 1.7).
5 NET FEE AND COMMISSION INCOME
Fee and commission income
Wealth Management
Asset Management
Fee and commission expense
Wealth Management
Asset Management
Net fee and commission income
2023
£m
469.0
69.6
538.6
(26.2)
(3.5)
(29.7)
508.9
2022
£m
23.7
12.7
3.5
6.4
46.3
(22.7)
(3.0)
(2.3)
(28.0)
18.3
2022
£m
394.5
68.2
462.7
(23.3)
(4.2)
(27.5)
435.2
Credit Impairment Gains/(Losses) On Financial Assets Measured
At Fair Value
Income from equity shares
Other operating income
Other operating income of £10.5 million (2022: £2.4 million) comprised gains and losses from fair
value through profit or loss equity securities of £1.1 million (2022: £(0.5) million), net client money
interest income £7.7 million (2022: £nil) of which £6.4 million relates to IW&I and other operating
income of £1.7 million (£2.8 million).
7 OPERATING EXPENSES
Staff costs (note 10)
Depreciation and impairment charges of property, plant and equipment
(note 19)
Depreciation and impairment charges of right-of-use assets (note 20)
Amortisation of internally generated intangible assets (note 22)
Amortisation and impairment of purchased software (note 22)
Auditor's remuneration (see below)
Impairment (recoveries)/charges on loans and advances to customers
(note 33)
Rental charge
Other
Other operating expenses
Charges in relation to client relationships and goodwill (note 22)
Acquisition-related costs (note 9)
Total operating expenses
2023
£m
313.6
5.2
6.5
1.8
3.8
3.0
0.1
3.5
106.5
444.0
25.2
44.3
513.5
2022
£m
245.6
4.7
5.6
1.5
3.6
1.1
(0.1)
2.1
94.7
358.8
19.5
13.5
391.8
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
169
7 OPERATING EXPENSES CONTINUED
The property, plant and equipment depreciation and impairment charge differs to the amount in Note
19 predominantly due to £1.7 million accelerated depreciation on fixtures and fittings, which has
been treated as acquisition-related costs (note 9).
The right-of-use asset depreciation and impairment charge differs to the amount in Note 20
predominantly due to £1.1 million accelerated depreciation and impairment on leases within the
Group, which has been treated as acquisition-related costs (note 9).
Other expenses largely comprise costs relating to other staff costs £11.0 million (2022: £8.4 million);
settlement, admin and dealing charges £10.7 million (2022: £9.8 million); client costs £5.1 million
(2022: £3.2 million); marketing costs £6.1 million (2022: £3.3 million); IT and licenses costs £45.9
million (2022: £40.0 million) and legal and professional costs £7.8 million (2022: £4.2 million).
IW&I specialises in the provision of wealth and investment management services in the UK and
Channel Islands, catering to private clients, clients of professional advisers and charities. The group
expects to capture significant scale benefits from the combination, due to the consolidation of
technology platforms and operations, enablement functions, third party services and property, in
addition to utilising the benefits of the group’s banking licence once IW&I clients are migrated.
Consideration transferred
Total consideration transferred to Investec Bank Plc comprised a share issue of 27,056,463 ordinary
shares and 17,481,868 convertible non-voting ordinary shares. Based on Rathbones’ issued share
capital at completion, the total shares transferred to Investec Bank Plc amounted to an economic
interest in Rathbones Group Plc of 41.25%, but in accordance with the terms of the acquisition 29.9%
of the total voting rights in Rathbones.
A more detailed analysis of auditor’s remuneration is provided below:
Fees payable to the company’s auditor for the audit of the company’s
annual financial statements
Fees payable to the company’s auditor and their associates for other
services to the group:
— audit of the company’s subsidiaries pursuant to legislation
— audit-related assurance services
— other services
2023
£m
2022
£m
The fair value of the ordinary shares issued was determined with reference to the share price of
Rathbones Group Plc at close of business on 20 September 2023, and was assessed to be £17.22 per
share. The fair value of the non-voting shares of £16.36 was calculated by applying a 5.0% discount
to this share price, to reflect the fact the shares are non-marketable and non-transferable. This
produced a total value for consideration paid of £751.9 million.
0.7
1.0
1.2
0.1
3.0
0.1
0.6
0.5
−
1.2
As the share issue was in pursuance of the arrangement to acquire 100% of the shares in IW&I, the
premium on the share issue, being £749.8 million, qualifies for merger relief. This has been
recognised within the merger reserve.
The regulatory announcement for the acquisition on 4 April 2023 used a share price of £18.84 to
derive an implied equity value of £839 million. However, the group’s share price has reduced since
the announcement, resulting in a lower value for the shares issued at the completion date of the
acquisition (21 September 2023).
Audit-related assurance services includes costs relating to audits of the group’s client money and
independent reporting to third parties on internal controls under ISAE 3402.
8 BUSINESS COMBINATIONS
INVESTEC WEALTH & INVESTMENT
On 21 September 2023, the group completed its acquisition of 100% of the ordinary share capital of
Investec Wealth & Investment Limited (IW&I) from Investec Bank Plc. Investec Wealth & Investment
Limited owns 100% of the ordinary share capital in Investec Wealth & Investment (Channel Islands)
Limited and Murray Asset Management UK Limited. Results were consolidated with effect from 30
September 2023, as the effect of transactions and activities in the period from 21 September 2023 to
30 September 2023 on the consolidated financial statements was not material.
The convertible non-voting ordinary shares rank pari-passu with the ordinary shares, except that
they do not carry voting rights. Investec Bank Plc may convert the convertible non-voting ordinary
shares into ordinary shares on a 1-for-1 basis, provided that at no time shall Investec group hold more
than 29.9% of the Rathbones group’s enlarged voting rights. Both the ordinary shares and convertible
non-voting ordinary shares qualify as common equity tier 1 capital of the Rathbones group.
Deferred Incentive awards
An ancillary matters agreement, which was signed at the time of the combination announcement in
April, includes detail of deferred awards and contingent payments to be made to a group of Investec
W&I employees under the Rathbones Integration Incentive Scheme. These payments require the
recipients of the awards to remain in employment with the group for the duration of the respective
deferral periods, and therefore these amounts have not been included in the acquisition accounting.
The cost for these equity-settled awards is being charged to profit or loss and spread over each
vesting period. Details of the share awards are as follows:
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
170
8
BUSINESS COMBINATIONS CONTINUED
Gross
amount
£m
Grant date
Grant date
fair value
£m
Vesting date
Rathbone Integration
Incentive Scheme
39.0
6 October 2023
31.2 22 September 2027
The Rathbone Integration Incentive Scheme awards of £39.0 million is payable in shares, and will
vest in three equal tranches annually on the second, third and fourth anniversary of the completion
date, subject to conditions relating to the client migration process. Vesting of the final one-third of the
shares on the fourth anniversary of the date of grant will be subject to engagement in the client
migration process. The gross amount of £39.0 million represents management’s best estimate as to
the extent to which these conditions will be achieved. These awards are being accounted for as an
equity-settled share-based payment under IFRS 2. The grant date fair value was determined with
reference to the share price at grant less the value of expected dividends over the period to vesting, as
no dividend shares have been granted on this award. There are no market-related performance
conditions attached to this award.
The group recognised a charge of £3.0 million in relation to this scheme in 2023 and all share options
are outstanding at the end of the period.
A Business Enablement award of £6.9 million was also granted during the year and is payable
predominantly in cash to different groups of employees in key business enablement functions. For
those recipients who are classified by the group as material risk-takers in accordance with
remuneration regulations, 50% of their award will be payable in shares. Approximately 30% of the
total award will vest on 31 March 2024, and the remainder will vest on 31 March 2025, subject to the
recipients remaining employed until this date and other conditions being met. The group treats the
cash element of the award as an employee benefit under IAS 19, with a corresponding liability
recognised for the services received at the balance sheet date, and the share element of the awards as
equity-settled share-based payments under IFRS 2.
The group recognised a charge of £1.8 million in relation to this scheme in 2023.
These costs are being reported as staff costs within acquisition-related costs (see note 9).
Identifiable assets acquired and liabilities assumed
The group uses the acquisition method to account for business combinations. The identifiable net
assets of the IW&I group have been remeasured at fair value at the acquisition date as follows:
21 September 2023
Settlement assets
Property, plant and equipment
Trade and other receivables
Loans and advances to customers
Software assets (note 22)
Client relationship intangible assets (note 22)
Cash and cash equivalents
Right-of-use assets
Settlement liabilities
Trade and other payables
Accruals and deferred income
Deferred tax liabilities (note 21)
Lease liabilities
Provisions
Total net assets acquired
Carrying
amounts
£m
Fair value
£m
Recognised
amounts
£m
233.3
5.0
45.5
0.7
3.7
20.0
172.6
31.8
(225.7)
(30.0)
(51.7)
4.6
(39.8)
(10.7)
159.3
–
–
–
–
–
330.3
–
1.1
–
–
–
(87.6)
8.7
–
252.5
233.3
5.0
45.5
0.7
3.7
350.3
172.6
32.9
(225.7)
(30.0)
(51.7)
(83.0)
(31.1)
(10.7)
411.8
The fair value of £350.3 million for the client relationship intangible assets has been measured using
a multi-period earnings method (note 22). The model uses estimates of client longevity and
investment performance to derive a series of cash flows, which are discounted to a present value to
determine the fair value of the client relationships acquired. These assets were valued separately by
client group, being direct private clients, corporates, intermediaries and charities, to reflect their
differing revenue margins and attrition rates. The average weighted life of the four groups has been
calculated at 14 years.
The deferred tax liability of £87.6 million arising on recognition of the client relationship intangible
assets is equal to its carrying value at the applicable tax rate and affects the amount of goodwill that
is recognised as part of the business combination.
No brand has been acquired as part of the transaction.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
171
BUSINESS COMBINATIONS CONTINUED
8
The group measured the acquired lease liabilities using the present value of the remaining lease
payments as if the leases were new leases at the acquisition date. The corresponding right-of-use
assets were measured at an amount equal to the lease liabilities, adjusted to reflect favourable or
unfavourable terms of the leases when compared to market terms. However, no off-market terms that
required an additional adjustment to the right-of-use assets were identified. Assumptions of when the
group expects to terminate these leases were reflected in the valuation.
A contingent liability assumed in a business combination is recognised at the acquisition date even if
an outflow of economic benefits is not probable, provided it is a present obligation arising from past
events and its fair value can be measured reliably. No contingent liabilities have been recognised at
acquisition. Circumstances which potentially exposed certain clients of IW&I to detriment arose in
the ordinary course of business prior to the date of acquisition. An estimate of the potential outflow
has been calculated at £1.1 million. A liability was not recognised at the year end, however all
economic outflows arising from this were indemnified by Investec Group at acquisition. The asset
relating to the amount receivable under the indemnity would be measured on the same basis as the
related liability and there would therefore be no impact on acquired goodwill.
Included within other creditors is £8.3 million payable by Investec W&I to Investec Bank Plc in
relation to amounts recharged for the provision of payroll and other services.
Settlement balances and other receivables are current assets that are deemed to be collectible with no
allowance for doubtful debts required. Trade and settlement payables are generated through the
normal course of business and are classified as current liabilities expected to be settled through
payments in the short-term. The carrying value of these was therefore determined to approximate
fair value.
The fair value of all other net assets acquired were deemed to be equal to their carrying value.
Goodwill
Goodwill of £340.1 million arising on the excess of consideration over the fair value of the net assets
acquired represents the future economic benefit expected from an acquired workforce, expected
future growth and future client relationships, as well as operational and revenue synergies. Where
goodwill arises on consolidation within the group it is not deductible for tax purposes, and nor is any
impairment of goodwill in future periods.
If the group had made the acquisition on 1 January 2023, IW&I would have contributed £358.4
million to group operating income and £85.8 million to profit before tax, as based on the company’s
results for the year to 31 December 2023.
SAUNDERSON HOUSE
On 20 October 2021, the group acquired 100% of the ordinary share capital of the Saunderson
House group.
OTHER DEFERRED PAYMENTS
In addition to a total cash consideration of £98.9 million paid in prior years, the sale and purchase
agreement details other deferred and contingent payments to be made to the vendors for the sale of
the shares of Saunderson House. However, these payments require the recipients to remain in
employment with the group for the duration of the respective deferral periods. Hence, they are being
treated as remuneration for post-combination services, and the cost is therefore charged to the
income statement over the respective vesting periods. Details of each of these elements is as follows:
Gross
amount
£m
Grant date
Grant date
fair value
£m
Initial share consideration
Deferred share consideration
Management incentive scheme
5.2
4.1
5.5
20 October 2021
20 October 2021
20 December 2021
5.5
4.1
4.8
Vesting date
20 October 2024
20 October 2022
31 December 2024
All of these payments are to be made 100% in shares and are being accounted for as equity-settled
share-based payments under IFRS 2.
— Initial share consideration of £5.2 million was issued on the date of acquisition, however it does not
vest until the third anniversary of the acquisition date, subject to the vendors remaining employed
until this date. As the share issuance is in pursuance of the arrangement to acquire the shares of
the Saunderson House group, the premium of £5.2 million on the issuance of these shares has
been recognised within the merger reserve.
— Deferred share consideration of £4.1 million was settled in shares during the prior year on the first
anniversary of the acquisition date, and was subject to the vendors remaining in employment with
the group.
Total consideration
Fair value of identifiable net assets acquired (see above)
Goodwill
£m
751.9
411.8
340.1
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
172
BUSINESS COMBINATIONS CONTINUED
8
An incentive plan is in place for the Saunderson House senior management team, which is subject to
certain operational and financial performance targets. The consideration vests in the fourth year
following the acquisition date. The gross amount represents management’s best estimate as to the
extent to which these targets will be achieved. The award ranges from a minimum payment of £nil to
a cap of £7.5 million (see note 2.3).
These costs are being reported as staff costs within acquisition-related costs (see note 9).
The group incurred costs of £2.2 million in the year that were deemed to be incremental to the share
issue that occurred on 21 September 2023. These costs have been recognised as a deduction to the
merger reserve.
From 30 September 2023 to 31 December 2023, Investec W&I contributed £87.9 million to the
group’s total operating income, and £15.0 million to the group’s profit before tax. This excludes
integration costs of the acquired business since acquisition, and amortisation of the acquired client
relationship intangible assets.
9 ACQUISITION-RELATED AND INTEGRATION COSTS
During 2023 £44.3 million of acquisition-related and integration costs were incurred (2022: £13.5
million).
COSTS RELATING TO THE ACQUISITION OF SPEIRS & JEFFREY
The group has incurred the following costs in relation to the 2018 acquisition of Speirs & Jeffrey,
summarised by the following classification within the income statement:
Acquisition of Speirs & Jeffrey
Acquisition of Investec Wealth & Investment
Acquisition of Saunderson House
Acquisition-related and Integration costs
2023
£m
1.0
36.5
6.8
44.3
2022
£m
3.5
−
10.0
13.5
Acquisition costs:
Staff costs (note 10)
Acquisition-related and Integration costs
2023
£m
1.0
1.0
Total Acquisition related staff costs worth £11.0 million (2022: 10.0 million) during the year relate to
equity-settled share-based payments (Note 10).
COSTS RELATING TO THE ACQUISITION OF SAUNDERSON HOUSE
The group has incurred the following costs in relation to the acquisition of Saunderson House,
summarised by the following classification within the income statement:
COSTS RELATING TO THE ACQUISITION OF INVESTEC WEALTH & INVESTMENT
The group has incurred the following costs in relation to the acquisition of IW&I, summarised by the
following classification within the income statement:
Acquisition costs:
Staff costs (note 10)
Legal and Advisory Fees
Integration Costs
Acquisition-related and Integration costs
2023
£m
6.2
21.3
9.0
36.5
2022
£m
−
−
−
−
Acquisition costs:
Staff costs (note 10)
Legal and advisory fees
Integration costs
Acquisition-related and Integration costs
2023
£m
3.9
0.8
2.1
6.8
Non-staff acquisition costs of £0.8 million (2022: £nil) and Integration costs of £2.1 million (2022:
£3.4 million ) have not been allocated to a specific operating segment (note 3).
2022
£m
3.5
3.5
2022
£m
6.5
−
3.4
10.0
Non-staff acquisition costs (Leagal and Advisory fees) of £21.3 million (2022: £nil) and integration
costs of £9.0 million (2022: £nil) have not been allocated to a specific operating segment (note 3).
Staff costs of £3.9 million (2022: 6.5 million) are related to deferred remuneration.
The Legal and advisory fees of £21.3 million are one-off costs incurred on executing the transaction
(2022: £nil).
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
10 STAFF COSTS
11
INCOME TAX EXPENSE
Wages and salaries
Social security costs
Acquisition-related equity-settled share-based payments (note 9)
Acquisition-related cash-settled staff costs
Other equity-settled share-based payments
Pension costs (note 29):
— Defined benefit schemes
— Defined contribution schemes
Total staff costs
Acquisition-related staff costs
Underlying staff costs (note 3)
2023
£m
244.3
32.2
7.5
3.5
16.5
(0.5)
21.1
20.6
324.6
(11.0)
313.6
2022
£m
189.5
25.2
10.0
−
15.9
(0.3)
15.3
15.0
255.6
(10.0)
245.6
The average number of employees on a full-time equivalent basis during the year, incorporating IW&I
Ltd employees from the date of completion, was as follows:
Wealth Management:
— investment management services1
— advisory services1
Asset Management
Shared services
2023
2022
1,312
374
52
760
2,498
1,305
155
50
543
2,053
1. A number of FTE in Saunderson House have been reclassified from investment management services to advisory services during
2023 as the integration has progresed
The actual number of Group employees at 31 December 2023 was 3,532 (2022: 2,124).
173
2022
£m
16.5
0.3
(1.3)
(0.4)
15.1
2023
£m
22.8
1.1
(1.9)
(1.9)
20.1
Current tax:
— charge for the year
— adjustments in respect of prior years
Deferred tax (note 21):
— credit for the year
— adjustments in respect of prior years
The tax charge is calculated based on our best estimate of the amount payable as at the balance sheet
date. Any subsequent differences between these estimates and the actual amounts paid are recorded
as adjustments in respect of prior years.
The tax charge on profit for the year is higher (2022: higher) than the standard rate of corporation tax
in the UK of 23.5% (2022: 19.0%). 23.5% is a composite tax rate, since the UK corporation tax rate
was 19.0% until the 31st March 2023 and 25.0% for the remainder of the financial year.
The differences are explained below:
Tax on profit from ordinary activities at the standard rate of 23.5%
(2022: 19.0%)
Effects of:
— disallowable expenses
— share-based payments
— tax on overseas earnings
— adjustments in respect of prior year
— deferred payments to previous owners of acquired companies (note 9)
— change in corporation tax rate on deferred tax
2023
£m
13.6
8.0
(0.2)
(0.7)
(0.8)
0.3
(0.1)
20.1
2022
£m
12.2
0.9
−
(0.2)
(0.1)
1.2
1.1
15.1
£0.4 million of current tax on share-based payments was charged to equity during the year (2022:
£0.1 million).
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
INCOME TAX EXPENSE CONTINUED
11
On 11 July 2023, the United Kingdom government, where the parent company is incorporated,
enacted the Pillar II income taxes legislation effective from 1 January 2024. Under the legislation,
the parent company will be required to pay, in the United Kingdom, top-up tax on profits of its
subsidiaries located in territories outside the United Kingdom that are taxed at an effective tax rate of
less than 15%. The jurisdiction in which an exposure to this tax may exist is the Channel Islands. The
group is continuing to assess the impact of the Pillar II income taxes legislation on its future financial
performance following the Investec acquisition. Based on our initial evaluations, we do not expect
there to be a material additional Pillar II exposure for the group.
12 DIVIDENDS
Amounts recognised as distributions to equity holders in the year:
— final dividend for the year ended 31 December 2022 of 56.0p (2021:
54.0p) per share
— interim dividend for the year ended 31 December 2023 of 29.0p (2022:
28.0p) per share
— second interim dividend for the year ended 31 December 2023 of
34.0p (2022:0p) per share
Dividends paid in the year of 119.0p (2022: 82.0p) per share
Proposed final dividend for the year ended 31 December 2023 of 24.0p
(2022: 56.0p) per share
2023
£m
33.4
17.5
20.5
71.4
24.9
2022
£m
32.1
16.6
−
48.6
32.8
An interim dividend of 29.0p per share was paid on 25 August 2023 to shareholders on the register at
the close of business on 4 August 2023 (2022: 28.0p).
A second interim dividend of 34.0 per share was paid on 11 October 2023 to shareholders on the
register at the close of business on 20 September 2023 (2022: nil).
A final dividend declared of 24.0p per share (2022: 56.0p) is payable on 14 May 2024 to shareholders
on the register at the close of business on 19 April 2024. The final dividend is subject to approval by
shareholders at the Annual General Meeting on 9 May 2024 and has not been included as a liability in
these financial statements.
13 EARNINGS PER SHARE
Earnings used to calculate earnings per share on the bases reported in these financial
statements were:
174
Underlying profit attributable
to shareholders
Charges in relation to client
relationships and goodwill
(note 22)
Acquisition-related costs
(note 9)
Profit attributable to
shareholders
2023
Pre-tax
£m
Taxation
£m
Post-tax
£m
Pre-tax
£m
2022
Taxation
£m
Post-tax
£m
127.1
(30.3)
96.8
97.1
(20.4)
76.7
(25.2)
5.9
(19.3)
(44.3)
4.3
(40.0)
(19.5)
(13.5)
3.7
1.6
(15.8)
(11.9)
57.6
(20.1)
37.5
64.1
(15.1)
49.0
Basic earnings per share has been calculated by dividing profit attributable to shareholders by the
weighted average number of shares in issue throughout the year, excluding own shares, of
71,269,129 (2022: 58,618,521). This includes 17,481,868 convertible non-voting shares issued as
consideration for the IW&I transaction. In total, 44,538,331 shares were issued as a result of the IW&I
transaction on 21 September. This has resulted in a mismatch between the weighted average number
of shares and the total number of shares of 108,065,997 million disclosed in note 30 due to the
shares in the weighted average share calculation being prorated over from 21 September to year end.
Diluted earnings per share is the basic earnings per share, adjusted for the effect of contingently
issuable shares under the Saunderson House initial share consideration and Executive Incentive Plan,
employee share options remaining capable of exercise, expected shares to be issued under the KEEP
Support Function award, expected shares to be issued within the Rathbones Integration Incentive
Award Scheme and any dilutive shares to be issued under the Share Incentive Plan, all weighted for
the relevant period.
Weighted average number of ordinary shares in issue during the year – basic
Effect of ordinary share options/Save As You Earn
Effect of dilutive shares issuable under the Share Incentive Plan
Effect of contingently issuable shares under the Executive Incentive Plan
Effect of contingently issuable shares under Saunderson House initial share
consideration (note 8)
Effect of expected shares to be issued under the Key Employee Equity Plan
Support Function Award
Effect of expected shares to be issued under the Rathbones Integration
Incentive Scheme Award
2023
2022
71,269,129
443,865
2,517
294,770
58,618,521
595,055
671
563,816
272,952
272,952
314,600
1,276,744
−
−
Diluted ordinary shares
73,874,577
60,051,015
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
13 EARNINGS PER SHARE CONTINUED
2023
2022
15 LOANS AND ADVANCES TO BANKS
Earnings per share for the year attributable to equity holders of the
company:
— basic
— diluted
Underlying earnings per share for the year attributable to equity holders
of the company:
— basic
— diluted
52.6p
50.8p
135.8p
131.0p
83.6p
81.6p
130.8p
127.7p
Underlying earnings per share is calculated in the same way as earnings per share, but by reference to
underlying profit attributable to shareholders.
14 CASH AND BALANCES WITH CENTRAL BANKS
Balances with central banks
Less impairment loss allowance
2023
£m
1,038.3
–
1,038.3
2022
£m
1,413.0
(0.1)
1,412.9
The fair value of balances with central banks is not materially different from their carrying amount.
Current accounts
Fixed term deposits/notice accounts
Less impairment loss allowance
Repayable:
on demand
within 3 months or less excluding on demand
within 1 year but over 3 months
5 years or less but over 1 year
Less impairment loss allowance
Amounts include loans and advances:
with variable interest rates
with fixed interest rates
which are non-interest-bearing
Less impairment loss allowance
Repayable:
— on demand
— within 1 year but over 3 months
Less impairment loss allowance
Amounts include balances:
— with variable interest rates
— which are non-interest-bearing
Less impairment loss allowance
2023
£m
2022
£m
1,036.0
2.3
–
1,038.3
1,036.0
2.3
–
1,038.3
1,408.0
5.0
(0.1)
1,412.9
1,408.0
5.0
(0.1)
1,412.9
The group’s exposure to credit risk arising from cash and balances with central banks is described in
note 33.
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 2023 were
£266.9 million (note 38) (2022: £164.7 million).
The group’s exposure to credit risk arising from loans and advances to banks is described in note 33.
175
2022
£m
164.7
30.0
−
194.7
2022
£m
164.7
−
30.0
−
−
194.7
194.4
−
0.3
−
194.7
2023
£m
252.4
14.5
–
266.9
2023
£m
245.4
21.5
–
–
–
266.9
256.8
9.9
0.2
–
266.9
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
16 LOANS AND ADVANCES TO CUSTOMERS
Overdrafts
Investment management loan book
Trust and financial planning debtors
Other debtors
Less impairment loss allowance
17 INVESTMENT SECURITIES
FAIR VALUE THROUGH PROFIT OR LOSS
Equity securities:
— listed
— unlisted
2023
£m
9.7
101.7
2.9
1.6
(0.3)
115.6
2022
£m
6.5
159.7
3.2
0.5
(0.1)
169.8
176
2022
£m
8.1
3.1
11.2
2023
£m
–
1.2
1.2
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 financial planning
businesses are non-interest-bearing or subject to a fixed interest rate.
Repayable:
— on demand
— within 3 months or less excluding on demand
— within 1 year but over 3 months
— within 5 years but over 1 year
Less impairment loss allowance
Amounts include loans and advances:
— with variable interest rates
— which are non-interest-bearing
— with fixed interest rates
Less impairment loss allowance
2023
£m
11.5
3.4
3.2
97.8
(0.3)
115.6
111.3
4.3
0.3
(0.3)
115.6
2022
£m
8.2
3.1
2.3
156.3
(0.1)
169.8
166.0
3.5
0.4
(0.1)
169.8
The group’s exposure to credit risk arising from loans and advances to customers is described in
note 33.
Fair value through profit or loss securities includes direct holdings in equity securities. The group
previously owned units in collectives managed by Rathbones Asset Management Limited (valued at
31 December 2022: £8.1 million). These assets were used to hedge the group’s exposure to deferred
remuneration schemes for employees of unit trusts. These assets were sold during the period. Equity
securities now comprise shares in Euroclear after units in Rathbones Asset Management Limited
managed funds were disposed of during the financial year. During the year, the group sold 1,292 of
its shares in Euroclear in two separate transactions. Equity securities do not bear interest.
AMORTISED COST
Debt securities:
— unlisted
Less impairment loss allowance
2023
£m
2022
£m
1,294.6
–
1,294.6
1,045.2
−
1,045.2
Debt securities comprise certificates of deposit that are all due to mature within one year (2022: all),
and treasury bills that are due to mature within one year (2022: all).
The fair value of debt securities is disclosed in note 33.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
INVESTMENT SECURITIES CONTINUED
17
The change in the group’s holdings of investment securities in the year is summarised below.
19 PROPERTY, PLANT AND EQUIPMENT
At 1 January 2022
Additions
Disposals (sales and redemptions)
Foreign exchange movements
Gain from changes in fair value
Increase in impairment loss allowance
At 1 January 2023
Additions
Disposals (sales and redemptions)
Foreign exchange movements
Gain from changes in fair value
Increase in impairment loss allowance
At 31 December 2023
Fair value through
profit or loss
£m
29.9
2.5
(20.9)
0.2
(0.5)
−
11.2
–
(11.0)
(3.2)
4.2
–
1.2
Amortised
cost
£m
761.7
1,260.0
(983.5)
7.0
−
−
Total
£m
791.6
1,262.5
(1,004.4)
7.2
(0.5)
−
1,045.2
1,056.4
2,059.9
(1,807.1)
(3.4)
–
–
2,059.9
(1,818.1)
(6.6)
4.2
–
1,294.6
1,295.8
Included within fair value through profit or loss are additions of £nil (2022:£2.5 million) and £8.1
million (2022: £0.1 million) of disposals of financial instruments that are not classified as cash and
cash equivalents.
18 PREPAYMENTS, ACCRUED INCOME AND OTHER ASSETS
Work in progress
Prepayments and other assets
Other Assets
Accrued income
2023
£m
14.4
6.5
57.4
147.0
225.3
2022
£m
9.6
0.4
24.1
92.6
126.7
Other assets include temporary client receivables, which are subject to daily movements as a result of
outstanding client transactions.
Work in progress reflects time and materials charged at year end but not invoiced to clients.
Accrued income reflects investment management fees, which are charged on a quarterly basis.
Cost
At 1 January 2022
Additions
Disposals
At 1 January 2023
Additions
Acquisitions through business combinations
(note 8)
Disposals
Other Movements
At 31 December 2023
Depreciation
At 1 January 2022
Charge for the year
Disposals
At 1 January 2023
Charge for the year
Disposals
At 31 December 2023
Carrying amount at 31 December 2023
Carrying amount at 31 December 2022
Carrying amount at 1 January 2022
177
Total
£m
50.6
4.4
(1.6)
53.4
5.1
5.0
(0.2)
–
63.3
37.6
4.7
(1.6)
40.7
6.7
(0.2)
47.3
16.1
12.7
13.1
Short term
leasehold
improvements
£m
Plant and
equipment
£m
23.4
1.4
(0.5)
24.3
0.3
2.4
–
0.8
27.8
14.2
2.0
(0.4)
15.8
3.5
–
19.3
8.5
8.5
9.2
27.2
3.0
(1.1)
29.1
4.8
2.6
(0.2)
(0.8)
35.5
23.3
2.8
(1.2)
24.9
3.2
(0.2)
27.9
7.6
4.2
3.9
During the year, where there was an expectation of the group vacating its properties prior to their
respective lease termination dates, the useful lives of any property, plant and equipment were
revised, and the assets were reviewed for impairment. The group subsequently recognised
accelerated depreciation in the year of £1.7 million.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
178
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
20 RIGHT-OF-USE ASSETS
Cost
At 1 January 2022
Additions
Disposals
Other movements
At 1 January 2023
Additions
Acquisitions through business combinations (Note 8)
Disposals
Other movements
At 31 December 2023
Depreciation and impairment
1 January 2022
Charge for the year
Disposals
Other movements
At 1 January 2023
Charge for the year
Disposals
Other movements
At 31 December 2023
Carrying amount at 31 December 2023
Carrying amount at 31 December 2022
Carrying amount at 1 January 2022
Property
£m
Motor
vehicles and
equipment
£m
58.1
3.7
(0.8)
(2.9)
58.1
2.1
32.9
(0.2)
(2.9)
90.1
14.5
5.5
(0.8)
−
19.2
7.4
(0.9)
–
25.7
64.4
38.9
43.6
0.3
−
−
−
0.3
–
–
–
–
0.3
−
0.1
−
−
0.1
0.1
–
–
0.2
0.1
0.2
0.3
Total
£m
58.4
3.7
(0.8)
(2.9)
58.4
2.1
32.9
(0.2)
(2.9)
90.4
14.5
5.6
(0.8)
−
19.3
7.5
(0.9)
–
25.9
64.5
39.1
43.9
During the year, where there was an expectation of the group vacating its properties prior to their
respective lease termination dates, the useful lives of the right-of-use assets were revised, and the
assets were reviewed for impairment. The group subsequently recognised impairment charges and
accelerated depreciation in the year of £2.9 million, which has been recognised in acquisition-related
costs (Note 9).
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
179
21 NET DEFERRED TAX ASSET/(LIABILITY)
The UK Government legislated in the Finance Act 2021 to increase the UK corporation tax rate to 25.0% from 19.0% on the 1st April 2023. This has been reflected in the deferred tax calculations. Deferred
income taxes are calculated on all temporary differences under the liability method using the rate expected to apply when the relevant timing differences are forecast to unwind.
The group has applied the temporary exception, introduced in May 2023, from the accounting requirements for deferred taxes in IAS 12, so that the group neither recognises nor discloses information about
deferred tax assets and liabilities related to Pillar II income taxes.
The movement on the deferred tax account is as follows:
As at 1 January 2023
Recognised in profit or loss in respect of:
current year
prior year
change in rate
Total
Recognised in other comprehensive income in respect of:
current year
prior year
change in rate
Total
Recognised in equity in respect of:
current year
prior year
change in rate
Total
Business combinations
Total
As at 31 December 2023
Deferred tax assets
Deferred tax liabilities
As at 31 December 2023
Deferred
capital
allowances
£m
Pensions
£m
Share-based
payments
£m
Staff-related
costs
£m
4.0
1.3
0.8
0.1
2.2
–
–
–
–
–
–
–
–
1.3
1.3
7.5
7.5
–
7.5
(2.4)
(0.8)
–
(0.1)
(0.9)
1.4
–
0.1
1.5
–
–
–
–
–
–
(1.8)
–
(1.8)
(1.8)
12.1
(2.5)
–
–
(2.5)
–
–
–
–
(0.9)
–
–
(0.9)
–
–
8.7
8.7
–
8.7
9.2
(0.5)
1.3
–
0.8
–
–
–
–
0.1
–
–
0.1
3.3
3.3
13.4
13.4
–
13.4
Fair value
through
profit or loss
£m
Intangible
assets
£m
(0.9)
(29.5)
0.6
–
–
0.6
–
–
–
–
–
–
–
–
–
–
3.8
(0.2)
–
3.6
–
–
–
–
–
–
–
–
(87.6)
(87.6)
Total
£m
(7.5)
1.9
1.9
–
3.8
1.4
–
0.1
1.5
(0.8)
–
–
(0.8)
(83.0)
(83.0)
(0.3)
(113.5)
(86.0)
–
(0.3)
(0.3)
–
(113.5)
(113.5)
29.6
(115.6)
(86.0)
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
21 NET DEFERRED TAX ASSET/(LIABILITY) CONTINUED
As at 1 January 2022
Recognised in profit or loss in respect of:
current year
prior year
change in rate
Total
Recognised in other comprehensive income in respect of:
current year
prior year
change in rate
Total
Recognised in equity in respect of:
current year
prior year
change in rate
Total
Business combinations
Total
As at 31 December 2022
Deferred tax assets
Deferred tax liabilities
As at 31 December 2022
180
Total
£m
(13.8)
−
2.3
0.4
(1.0)
1.7
1.4
−
2.0
3.4
1.2
−
−
1.2
−
−
Intangible
assets
£m
(31.4)
−
1.9
−
−
1.9
−
−
−
−
−
−
−
−
−
−
(0.8)
−
0.1
−
(0.2)
(0.1)
−
−
−
−
−
−
−
−
−
−
(0.9)
(29.5)
(7.5)
−
(0.9)
(0.9)
−
(29.5)
(29.5)
25.3
(32.8)
(7.5)
Deferred
capital
allowances
£m
Pensions
£m
Share-based
payments
£m
Staff-related
costs
£m
Fair value
through
profit or loss
£m
3.8
−
−
0.2
−
0.2
−
−
−
−
−
−
−
−
−
−
4.0
4.0
−
4.0
(2.4)
−
(0.8)
−
(2.6)
(3.4)
1.4
−
2.0
3.4
−
−
−
−
−
−
9.7
−
0.9
0.1
0.2
1.2
−
−
−
−
1.2
−
−
1.2
−
−
(2.4)
12.1
−
(2.4)
(2.4)
12.1
−
12.1
7.3
−
0.2
0.1
1.6
1.9
−
−
−
−
−
−
−
−
−
−
9.2
9.2
−
9.2
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
22 INTANGIBLE ASSETS
Goodwill of £340.1 million was recognised as part of the acquisition of IW&I. (see note 8). This has
been provisionally allocated between the IW&I cash-generating unit (‘CGU’) and the Wealth
Management group of CGUs in the year, before being reviewed for impairment. This allocation will be
reviewed in 2024.
The group does not believe there are any key assumptions where reasonable changes could occur
which could give rise to a material adjustment in the carrying value.
Client relationships of £350.3 million were recognised as part of the acquisition of IW&I (see note 8).
An average useful life of 14 years was assigned to these relationships, based on observed historic
attrition rates.
Goodwill
Other intangible assets
2023
£m
507.8
517.5
1,025.3
2022
£m
167.7
188.5
356.2
GOODWILL
Goodwill acquired in a business combination is allocated, at acquisition, to the groups of cash-
generating units (CGUs) that are expected to benefit from that business combination.
The carrying amount of goodwill has been allocated as follows:
Cost
At 1 January 2022
Acquired through business combinations (note 8)
At 1 January 2023
Acquired through business combinations (note 8)
At 31 December 2023
Impairment
At 1 January 2022
Charge for the year
At 31 December 2023
Wealth
Management
£m
Investec W&I
£m
Asset
Management
£m
167.7
−
167.7
82.1
249.8
−
–
–
−
−
–
258.0
258.0
−
–
–
1.9
−
1.9
–
1.9
1.9
–
1.9
Total
£m
169.6
−
169.6
340.1
509.7
1.9
–
1.9
Wealth
Management
£m
Investec W&I
£m
Asset
Management
£m
Carrying amount at 31 December 2023
249.8
258.0
Carrying amount at 31 December 2022
Carrying amount at 1 January 2022
167.7
167.7
−
−
–
−
−
181
Total
£m
507.8
167.7
167.7
IMPAIRMENT
The recoverable amounts of the groups of CGUs to which goodwill is allocated are assessed using
value-in-use calculations. The group prepares cash flow forecasts derived from the most recent
financial budgets approved by the board, which cover the three year period from the end of the
current financial year. This is extrapolated for five years based on recent historic annual revenue and
cost growth for each group of CGUs (see table below), adjusted for significant historic fluctuations in
industry growth rates where relevant, as well as the group’s expectation of future growth.
A five-year extrapolation period is chosen as this aligns with the period covered by the group’s
Internal Capital Adequacy Assessment Process (‘ICAAP’) modelling. A terminal growth rate is applied
to year five cash flows, which takes into account the net growth forecasts over the extrapolation
period and the long-term average growth rate for the industry. The group estimates discount rates
using pre-tax rates that reflect current market assessments of the time value of money and the risks
specific to the group of CGUs.
The pre-tax rate used to discount the forecast cash flows for each group of CGU is shown in the table
below; these are based on a risk-adjusted weighted average cost of capital. The group judges that these
discount rates appropriately reflect the markets in which each group of CGUs operate.
There was no impairment to the goodwill allocated to the Wealth Management group of CGUs or to
the Investec CGU during the period. The group has considered any reasonably foreseeable changes to
the assumptions used in the value-in-use calculation for the Wealth Management group of CGUs to
its cash flow projections and the level of risk associated with those cash flows. Based on this
assessment, no such change would result in an impairment of the goodwill allocated to this CGU.
At 31 December
Discount rate
Average annual revenue growth rate
Average annual profit margin
Terminal growth rate
IW&I
2023
15.0%
4.0%
26.8%
1.5%
Wealth management
2023
14.1%
1.1%
14.3%
1.5%
2022
14.1%
4.3%
25.6%
1.0%
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
182
INTANGIBLE ASSETS CONTINUED
22
The increase in the terminal growth rate to 1.5% in 2023 is to align this with current expectations of
long-term UK economic growth. The fall in the average annual revenue growth rate since the prior
year primarily reflects the group's latest forecasts for the Saunderson House client migration by
operating segment, and lower levels of forecast commission income.
The total amount charged to profit or loss in the year in relation to goodwill and client relationship
intangible assets was £25.2 million (2022: £19.5 million).
Purchased software with a cost of £36.4 million (2022: £35.2 million) has been fully amortised but is
still in use.
OTHER INTANGIBLE ASSETS
Cost
At 1 January 2022
Internally developed in the year
Purchased in the year
Disposals
At 1 January 2023
Internally developed in the year
Acquired through business combinations (note 8)
Purchased in the year
Disposals
Client
relationships
£m
Software
development
costs
£m
Purchased
software
£m
302.6
−
1.0
(2.7)
300.9
–
350.3
2.6
(2.8)
11.7
1.8
−
−
13.5
1.0
1.7
–
–
8.5
1.5
−
53.1
−
1.8
−
54.9
–
2.0
2.2
–
59.1
41.3
3.6
−
23 DEPOSITS BY BANKS
On 31 December 2023, deposits by banks included overnight cash book overdraft balances of £12.4
million (2022: £1.0 million).
The fair value of deposits by banks was not materially different to their carrying value. Fair value has
been calculated as the discounted amount of estimated future cash flows expected to be paid using
current market rates.
24 DUE TO CUSTOMERS
Repayable:
— on demand
— within 3 months or less excluding on demand
— within 1 year or less but over 3 months
Amounts include balances:
— with variable interest rates
— with fixed interest rates
— which are non-interest-bearing
2023
£m
2022
£m
1,652.3
501.8
99.2
2,253.3
1,618.6
589.6
45.1
2,253.3
2,328.0
183.2
4.9
2,516.1
2,324.4
127.2
64.5
2,516.1
Total
£m
367.4
1.8
2.8
(2.7)
369.3
1.0
354.0
4.8
(2.8)
726.3
158.8
24.6
(2.6)
10.0
44.9
180.8
1.8
–
11.8
4.4
3.5
3.1
3.8
–
48.7
10.4
10.0
11.8
30.8
(2.8)
208.8
517.5
188.5
208.5
The fair value of amounts due to customers was not materially different from their carrying value.
The estimated fair value of deposits with no stated maturity, which include non-interest-bearing
deposits, is the amount at which deposits could be transferred to a third party at the measurement
date. 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.
At 31 December 2023
651.0
16.2
Amortisation and impairment
At 1 January 2022
Amortisation charge
Disposals
At 1 January 2023
Amortisation charge
Disposals
At 31 December 2023
Carrying amount at 31 December 2023
Carrying amount at 31 December 2022
Carrying amount at 1 January 2022
109.0
19.5
(2.6)
125.9
25.2
(2.8)
148.3
502.7
175.0
193.6
Purchases of client relationships of £2.6 million (2022: £1 million) in the year relate to payments
made to investment managers and third parties for the introduction of client relationships.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
25 ACCRUALS AND OTHER LIABILITIES
Amounts due to associates
Trade creditors
Other creditors
Accruals
26 PROVISIONS
At 1 January 2022
Charged to profit or loss
Unused amount credited to
profit or loss
Net charge to profit or loss
Other movements
Utilised/paid during the year
At 1 January 2023
Charged to profit or loss
Unused amount credited to
profit or loss
Net charge to profit or loss
Acquisitions through business
combinations (Note 8)
Other movements
Utilised/paid during the year
At 31 December 2023
Payable within 1 year
Payable after 1 year
Note
36
2023
£m
8.3
8.2
24.4
168.7
209.6
Deferred,
variable costs
to acquire
client
relationship
intangible
assets
£m
Deferred
consideration
in business
combinations
£m
Legal and
compensation
£m
Property-
related
£m
Onerous
Contract
£m
8.6
−
−
−
1.0
(5.2)
4.4
–
–
–
–
2.6
(2.3)
4.7
4.2
0.5
4.7
−
−
−
−
−
−
–
–
(0.1)
(0.1)
3.4
–
–
3.3
0.3
3.0
3.3
2.1
0.8
−
0.8
−
(0.2)
2.7
9.1
(1.1)
8.0
1.9
–
(7.7)
4.9
4.2
0.7
4.9
4.6
1.2
−
1.2
−
−
5.8
0.2
–
0.2
5.4
–
–
11.4
3.8
7.6
11.4
2022
£m
−
3.2
10.2
100.9
114.3
Total
£m
15.3
2.0
−
2.0
1.0
(5.4)
12.9
−
−
−
−
−
−
–
1.2
10.5
–
1.2
–
–
–
1.2
1.2
–
(1.2)
9.3
10.7
2.6
(10.0)
25.5
13.7
11.8
1.2
25.5
183
DEFERRED, VARIABLE COSTS TO ACQUIRE CLIENT RELATIONSHIP INTANGIBLE ASSETS
Other movements in provisions relate to deferred payments to investment managers and third
parties for the introduction of client relationships, which have been previously capitalised.
LEGAL AND COMPENSATION
During the ordinary course of business the group may, from time to time, be subject to complaints, as
well as threatened and actual legal proceedings (which may include lawsuits brought on behalf of
clients or other third parties) both in the UK and overseas. Any such material matters are periodically
reassessed, with the assistance of external professional advisers where appropriate, to determine the
likelihood of the group incurring a liability. In those instances where it is concluded that it is more
likely than not that a payment will be made, a provision is established to the group’s best estimate of
the amount required to settle the obligation at the relevant balance sheet date. The group’s best
estimate is based on legal advice and management’s expectation of the most likely settlement
outcome, which in some cases is calculated by external professional advisers. The timing of
settlement of provisions for client compensation or litigation is dependent, in part, on the duration of
negotiations with third parties.
DEFERRED CONSIDERATION IN BUSINESS COMBINATIONS
Deferred Consideration in Business Combinations relates to Investec Wealth & Investment’s deferred
consideration provision on their acquisitions of Murray Asset Management and The Share Centre.
PROPERTY-RELATED
Property-related provisions of £11.4 million relate to dilapidation provisions expected to arise on
leasehold premises held by the group (2022: £5.8 million). Dilapidation provisions are calculated
using a discounted cash flow model.
In 2023 the group did not utilise the property provision (2022: £nil). The impact of discounting led to
an additional charge of £0.2 million (2022: additional charge of £1.2 million) being recognised during
the year.
Amounts payable after one year
Property-related provisions of £7.6 million are expected to be settled within 11 years of the balance
sheet date, which corresponds to the longest lease for which a dilapidations provision is being held.
Remaining provisions payable after one year are expected to be settled within 13 years of the balance
sheet date.
ONEROUS CONTRACT
During the year, the group terminated a support agreement with a third-party service provider. The
onerous element of the contract represented a cost of £1.2 million to the group, which was recognised
as a provision at the year end.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
184
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
27 LEASE LIABILITIES
Maturity analysis
Less than one year
One to five years
More than five years
Lease liabilities at 31 December
Current
Non-current
2023
£m
11.9
29.4
33.6
74.9
11.9
63.0
74.9
The total cash outflow for Group leases during the year was £10.7 million (2022: £8.5 million).
28 SUBORDINATED LOAN NOTES
Subordinated loan notes
— face value
— carrying value
2023
£m
40.0
39.9
2022
£m
5.0
19.6
25.9
50.5
5.0
45.5
50.5
2022
£m
40.0
39.9
Rathbones Group Plc holds £39.9 million of 10-year tier 2 notes with a call option in October 2026 and
annually thereafter. The Issuer requires the group’s subsidiaries to comply with all laws and
governmental rules or regulations to which they are subject. Interest is payable at a fixed rate of
5.642% per annum until the first call option date in 2026, and at a fixed rate of 4.893% over
Compounded Daily SONIA thereafter. Legal fees of £0.1 million were incurred in issuing the notes,
which have been accounted for in the carrying value of amortised cost. An interest expense of £2.3
million (2022: £2.3 million) was recognised in the year.
29 LONG-TERM EMPLOYEE BENEFITS
DEFINED CONTRIBUTION PENSION SCHEME
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 contributions
made to these schemes during the year were £21.0 million (2022: £15.2 million). The group also
operates a defined contribution scheme for overseas employees, for which the total contributions
were £0.1 million (2022: £0.1 million).
DEFINED BENEFIT PENSION SCHEMES
The group operates two defined benefit pension schemes that operate within the UK legal and
regulatory framework: the Rathbone 1987 Scheme and the Laurence Keen Retirement Benefit
Scheme. The schemes are currently both clients of Rathbones Investment Management, 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 and to future accrual from
30 June 2017.
The schemes are valued by independent actuaries at least every three years using the projected unit
credit method, which looks at the value of benefits accruing over the years following the valuation
date based on projected salary to the date of termination of services, discounted to a present value
using a rate that reflects the characteristics of the liability. The valuations are updated at each balance
sheet date in between full valuations. The latest full actuarial valuations were carried out as at 31
December 2022.
In June 2023, the High Court handed down a judgement that casts doubt on the validity of previous
pension scheme amendments made by schemes which were previously contracted out. This was in
the Court Case of Virgin Media Limited Vs NTL Pension Trustees II Limited, where it was determined
that a Deed of Amendment was not valid because the accompanying written actuarial confirmation
under Section 37 of the Pensions Act 1995 was not present. An appeal to the ruling is due to be heard
this year. In the meantime, there remains a risk that the benefits of schemes affected by the ruling
turn out to be incorrect. The Rathbone 1987 Scheme was never contracted out and so is not impacted
by this ruling, however there could be a potential impact on the Lawrence Keen Scheme if any
amendments are found to be invalid. The impact is not known at this time but is not expected to be
material for the group based on information currently available to the Actuary, we will continue to
monitor.
The assumptions used by the actuaries, to estimate the schemes’ liabilities, are the best estimates
chosen from a range of possible actuarial assumptions. Due to the timescale covered by the liability,
these assumptions may not necessarily be borne out in practice.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
185
29 LONG-TERM EMPLOYEE BENEFITS CONTINUED
The principal actuarial assumptions used, which reflect the different membership profiles of the
schemes, were:
The proportion of members assumed to be married at retirement age is 80% (2022: 80%)
The assumed duration of the liabilities for the Laurence Keen Scheme is 12 years (2022: 13 years) and
the assumed duration for the Rathbone 1987 Scheme is 16 years (2022: 16 years).
Rate of increase of salaries
Rate of increase of pensions in
payment
Rate of increase of deferred pensions
Discount rate
Inflation*
Percentage of members transferring
out of the schemes per annum
Average age of members at date of
transferring out (years)
Laurence Keen Scheme
Rathbone 1987 Scheme
2023
%
(unless stated)
2022
%
(unless stated)
2023
%
(unless stated)
2022
%
(unless stated)
n/a
3.70
3.10
4.40
3.10
2.00
n/a
3.60
3.20
4.70
3.20
2.00
n/a
2.90
3.10
4.40
3.10
2.00
n/a
3.20
3.20
4.70
3.20
2.00
52.50
52.50
52.50
52.50
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 thereafter, following the introduction of pension benefits based on
Career-Average Revalued Earnings (CARE) from that date. The assumed life expectancy for the
membership with improvements in line with the CMI 2022 tables with a long-term rate of
improvement of 1.5% p.a. The assumed life expectancies on retirement were:
Retiring today:
Retiring in 20 years:
aged 60
aged 65
aged 60
aged 65
2023
2022
Males
Females
27.6
22.8
29.4
24.3
29.5
24.5
31.2
26.1
Males
28.2
23.3
29.9
24.9
Females
29.9
24.9
31.6
26.6
*
Inflation assumptions are based on the Retail Prices Index
Over the year, the financial assumptions have been amended to reflect changes in market conditions.
Specifically:
1. the discount rate has decreased by 0.3% to reflect a decrease in the yields available on AA-rated
Corporate Bonds;
2. the assumed rate of future inflation has decreased by 0.1% and reflects expectations of long-term
inflation as implied by changes in the Bank of England inflation yield curve;
3. the assumed rates of future increases to pensions in payment, where linked to inflation, have
decreased by 0.3% for the Rathbone 1987 Scheme and, for the Laurence Keen Scheme increased
by 0.1%
Over the year the mortality assumptions have been updated. The CMI model used to project future
improvements in mortality has been updated from the 2021 version to the 2022 version.
2% of members not yet in receipt of their pension are assumed to transfer out of the scheme each
year (2022: 2%).
The amount included in the balance sheet arising from the group’s assets in respect of the schemes is
as follows:
Laurence
Keen
Scheme
£m
2023
Rathbone
1987
Scheme
£m
Laurence
Keen
Scheme
£m
Total
£m
2022
Rathbone
1987
Scheme
£m
Total
£m
Present value of defined
benefit obligations
Fair value of scheme assets
Net defined benefit asset/
(liability)
(7.3)
8.2
(93.8)
99.9
(101.1)
108.1
(7.2)
8.1
(87.5)
96.0
(94.7)
104.1
0.9
6.1
7.0
0.9
8.5
9.4
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
186
29 LONG-TERM EMPLOYEE BENEFITS CONTINUED
The amounts recognised in profit or loss, within operating expenses, are as follows:
Movements in the fair value of scheme assets were as follows:
Interest expense
Laurence
Keen
Scheme
£m
2023
Rathbone
1987
Scheme
£m
(0.1)
(0.1)
(0.4)
(0.4)
Laurence
Keen
Scheme
£m
(0.1)
(0.1)
2022
Rathbone
1987
Scheme
£m
(0.2)
(0.2)
Total
£m
(0.5)
(0.5)
Total
£m
(0.3)
(0.3)
Remeasurements of the net defined benefit asset have been reported in other comprehensive
income. The actual return on scheme assets was a rise in value of £0.4 million (2022: £4.4 million
fall) for the Laurence Keen Scheme and a rise in value of £3.6 million (2022: £58.8 million fall) for the
Rathbone 1987 Scheme.
Movements in the present value of defined benefit obligations were as follows:
Laurence
Keen
Scheme
£m
2023
Rathbone
1987
Scheme
£m
At 1 January
Interest cost
Actuarial experience gains
Actuarial gains/(losses)
arising from:
— demographic assumptions
— financial assumptions
Past service cost
Benefits paid
At 31 December
7.2
0.3
0.1
(0.1)
0.2
–
(0.4)
7.3
87.5
4.1
3.4
(1.5)
2.8
–
(2.5)
93.8
101.1
Laurence
Keen
Scheme
£m
11.2
0.2
0.1
2022
Rathbone
1987
Scheme
£m
144.4
2.7
3.6
−
(3.6)
−
(0.7)
7.2
0.1
(59.5)
−
(3.8)
87.5
Total
£m
155.6
2.9
3.7
0.1
(63.1)
−
(4.5)
94.7
Total
£m
94.7
4.4
3.5
(1.6)
3.0
–
(2.9)
Laurence
Keen
Scheme
£m
2023
Rathbone
1987
Scheme
£m
Laurence
Keen
Scheme
£m
Total
£m
2022
Rathbone
1987
Scheme
£m
Total
£m
8.1
96.0
104.1
13.0
154.9
167.9
0.4
4.5
4.9
0.3
2.9
3.2
–
(0.8)
(0.8)
(4.6)
(61.8)
(66.4)
0.1
(0.4)
8.2
2.8
(2.6)
2.9
(3.0)
99.9
108.1
0.1
(0.7)
8.1
3.8
(3.8)
96.0
3.9
(4.5)
104.1
At 1 January
Remeasurement of net
defined benefit asset/
(liability)
— interest income
— return on scheme assets
(excluding amounts
included in interest
income)
Contributions from the
sponsoring companies
Benefits paid
At 31 December
The Schemes' assets are fully invested with Legal & General Investment Management in Self-
Sufficiency Credit Funds and Absolute Return Bond Funds and no assets are invested in Rathbones
Funds. The Schemes invest in self-sufficiency strategies, which aim to fully hedge the interest and
inflation rate risk. The Trustees will review the asset allocation on a regular basis to ensure the
strategy remains appropriate.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
29 LONG-TERM EMPLOYEE BENEFITS CONTINUED
The analysis of the scheme assets, measured at bid prices, at the balance sheet date was as follows:
Laurence Keen Scheme
Equity instruments:
— United Kingdom
— Eurozone
— North America
— Other
Debt instruments:
— United Kingdom corporate bonds
Liability-driven investments
Cash
Other
At 31 December
Rathbone 1987 Scheme
Equity instruments:
— United Kingdom
— Eurozone
— North America
— Other
Debt instruments:
— United Kingdom corporate bonds
Liability-driven investments
Cash
Other
At 31 December
2023
Fair value
£m
2022
Fair value
£m
2023
Current
allocation
%
2022
Current
allocation
%
–
–
–
–
–
0.4
0.4
7.8
0.1
–
8.3
0.2
0.2
0.7
0.5
1.6
4.3
4.3
2.0
0.1
0.1
8.1
–
–
–
–
–
–
5
93
2
–
−
−
−
−
19
−
54
25
1
1
100
100
2023
Fair value
£m
2022
Fair value
£m
2023
Current
allocation
%
2022
Current
allocation
%
–
–
–
–
–
–
–
98.4
1.5
–
99.9
4.2
2.5
13.5
6.1
26.3
37.7
37.7
30.8
1.2
−
96.0
–
–
–
–
–
–
–
99
1
–
100
−
−
−
−
28
−
39
32
1
−
100
187
The key assumptions affecting the results of the valuation are the discount rate, future inflation,
mortality, the rate of members transferring out and the average age at the time of transferring out. In
order to demonstrate the sensitivity of the results to these assumptions, the actuary has recalculated
the defined benefit obligations for each scheme by varying each of these assumptions in isolation
whilst leaving the other assumptions unchanged. Changes to these assumptions of a different, but
similar, magnitude would result in a broadly proportional change in these figures. Where the changes
to these assumptions are more significant the impact will be more significant, but potentially not
proportional. These events within the sensitivity analysis are unlikely to occur in isolation. For
example, in order to demonstrate the sensitivity of the results to the discount rate, the actuary has
recalculated the defined benefit obligations for each scheme using a discount rate that is 0.5% higher
than that used for calculating the disclosed figures. A similar approach has been taken to
demonstrate the sensitivity of the results to the other key assumptions. A summary of the
sensitivities in respect of the total of the two schemes’ defined benefit obligations is set out below.
0.5% increase in:
— discount rate
0.5% increase in:
— rate of inflation
1-year increase to:
— longevity at 60
Combined impact on schemes’ liabilities
(Decrease)/
increase
£m
(Decrease)/
increase
%
(7.7)
(7.6)
4.4
4.2
4.4
4.1
The total contributions made by the group to the 1987 Scheme during the year were £2.8 million
(2022: £3.8 million).
There have been contributions of £0.2 million (2022: £0.2 million) made by the group to the
Laurence Keen Scheme during the year.
Contributions for the year are in line with those agreed as part of the actuarial valuation as at 31
December 2023.
Per IAS 19, companies are required to limit the value of any defined benefit asset to the lower of the
surplus in the plan and the defined benefit asset ceiling, where the asset ceiling is the present value
of economic benefits available in the form of refunds from the plan or reductions in future
contributions to the plan. The company expects to access any surplus assets remaining in the plan
once all members have left after gradual settlement of the liabilities. Therefore, the net asset is
deemed to be recoverable and the effect of the asset ceiling is £nil.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
30 SHARE CAPITAL, SHARE PREMIUM AND MERGER RESERVE
The following movements in share capital occurred during the year:
At 1 January 2022
Shares issued:
— to Share Incentive Plan
— to Save As You Earn scheme
— to Employee Benefit Trust
— to Business Combinations
At 1 January 2023
Shares issued:
— to Share Incentive Plan
— to Save As You Earn scheme
— to Employee Benefit Trust
— to Business Combinations
At 31 December 2023
Share Capital
– Voting
shares
62,003,341
467,559
1,181
481,500
441,256
63,394,837
132,829
–
–
Share Capital
– Non-voting
shares
−
−
−
−
−
–
–
–
–
Exercise/
issue price
Pence
−
1,600.0 - 2,090.0
1,085.0 - 1,813.0
5.0
1,913.4 - 2,484.0
–
1,574.0 - 2,160.0
–
–
27,056,463
17,481,868
1,635.9 - 1,722.0
90,584,129
17,481,868
–
Share
capital
£m
3.1
−
−
−
0.1
3.2
–
–
–
2.2
5.4
188
Total
£m
371.1
9.2
−
−
9.8
Share
premium
£m
291.0
9.2
−
−
9.7
Merger
reserve
£m
77.0
−
−
−
−
310.0
77.0
390.1
2.3
–
–
–
312.3
–
–
–
747.4
824.4
2.3
–
–
749.6
1,142.0
The total number of issued and fully paid up ordinary shares at 31 December 2023 was 108,065,997
(2022: 63,394,837) with a par value of 5p per share.
On 30 March 2022, the company issued 229,489 shares in respect of the Speirs & Jeffrey second
earn-out consideration relating to the 2021 incentivisation award.
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.
On 26 October 2022, the company issued 211,767 shares in respect of the Saunderson House
deferred consideration award.
The convertible non-voting shares rank pari passu with the ordinary shares, except that they do not
carry voting rights. Both the ordinary shares and convertible non-voting shares qualify as common
equity tier 1 capital.
On 21 September 2023, the company issued to Investec Bank Plc 27,056,463 of ordinary shares at
£17.22 per share, and 17,481,868 of convertible non-voting ordinary shares at £16.36 per share.
Share issue costs of £2.2 million were offset against the merger reserve. See notes 8 and 9 for
further detail.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
189
31 OWN SHARES
The following movements in own shares occurred during the year:
For UK employees, SIP dividends are reinvested and used to purchase dividend shares, whilst for
Jersey employees dividends are paid in cash.
At 1 January 2022
Additions in the year
Released on vesting
At 1 January 2023
Additions in the year
Released on vesting
At 31 December 2023
Number of
Shares
3,624,714
1,440,695
(178,115)
4,887,294
931,153
(1,374,930)
4,443,517
£m
36.6
18.7
(2.7)
52.5
16.0
(13.0)
55.6
Own shares represent the cost of the company’s own shares, either purchased in the market or issued
by the company, that are held by the company or in an Employee Benefit Trust (‘EBT’) to satisfy future
awards under the group’s share-based payment schemes (note 32). A total of 3,275,598 shares were
held in the EBT at 31 December 2023 (2022: 3,786,182), and 894,966 shares were held by the trustees
of the Share Incentive Plan but were not unconditionally gifted to employees (2022: 828,160).
A further 272,952 (2022: 272,952) of shares were held in nominee in respect of the initial share
consideration for the acquisition of Saunderson House.
32 SHARE-BASED PAYMENTS
The group recognised total charges of £24.0 million in relation to share-based payment transactions
in 2023 (2022: £25.9 million) (see note 10). This includes acquisition-related share-based payments
(see note below), and excludes social security costs of £1.7 million (2022: £1.1 million).
The impact on retained earnings of employee remuneration and share plans vesting in the year,
where shares were not released from the group employee benefit trust, was a debit of £6.0 million
(2022: debit of £12.8 million). This includes £nil for share schemes where no cash consideration was
received (2022: debit of £9.8 million). See note 38.
SHARE INCENTIVE PLAN
The group operates a Share Incentive Plan (SIP), which is available to all employees. Employees can
contribute up to £150 per month to acquire partnership shares in Rathbones Group Plc, which are
purchased or allotted in monthly 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 earnings per share up to a maximum of £3,600
per annum.
Fair value assumptions required by IFRS 2 are used to calculate the relevant fair values for this
award. The assumptions have been set with reference to market conditions at the grant date. The fair
value of free shares has been calculated as the value of an option with a zero exercise price and
exercise date 15 months from the date of grant. Once free share awards are allocated, they accrue
dividends, which become payable once the awards vest. The dividend yield has been calculated
based on the share price at grant and 12 months’ historical dividends at each grant date, resulting in a
dividend yield of 4.0% per annum.
As at 31 December 2023, the trustees of the SIP held 1,773,475 (2022: 1,634,429) ordinary shares of
5p each in Rathbones Group Plc with a total market value of £30.9 million (2022: £33.3 million). Of
the total number of shares held by the trustees, 1,146,166 (2022: 1,101,112) have been conditionally
gifted to employees and Nil (2022: 2,055) remain unallocated.
The group recognised a charge of £2.5 million in relation to this scheme in 2023 (2022: £2.4 million).
SAVINGS-RELATED SHARE OPTION OR SAVE AS YOU EARN (SAYE) PLAN
Under the SAYE plan, employees can contribute up to £500 per month to acquire shares at the end of
a three- or five-year savings period.
Options with an aggregate estimated fair value of £2.2 million, determined using a binomial
valuation model including expected dividends, were granted on 28 April 2023 to directors and staff
under the SAYE plan. The inputs into the binomial model for options granted during 2023, as at the
date of issue, were as follows:
Share price (pence)
Exercise price (pence)
Expected volatility
Risk-free rate
Expected dividend yield
2023
1,954
1,524
28.0%
3.8%
4.3%
2022
2,125
1,394
26%
1.7%
3.5%
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 dates on which they may be exercised are given below.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
190
32 SHARE-BASED PAYMENTS CONTINUED
The group recognised a charge of £1.8 million in relation to this scheme in 2023 (2022: £1.6 million).
Year of grant
2018
2019
2020
2021
2022
2023
At 31 December
Exercise price
Pence
Exercise price
period
Number of
share options
Number of
share options
2023
2022
1,977.0 2021 and 2023
1,813.0 2022 and 2024
1,085.0 2023 and 2025
1,365.0 2024 and 2026
1,394.0 2025 and 2027
1,524.0 2026 and 2028
60
4,260
520,303
169,879
320,801
388,343
1,403,646
5,634
4,418
1,061,217
180,570
345,645
−
1,597,484
Movements in the number of share options outstanding for the SAYE plan were as follows:
2023
2022
Number of
share options
Weighted average
exercise price
Pence
Number of
share options
Weighted average
exercise price
Pence
At 1 January
Granted in the year
Forfeited or cancelled in the year
Exercised in the year
1,597,484
418,512
(89,609)
(522,741)
1,272.0
1,365.0
1,403.0
1,086.0
At 31 December
1,403,646
1,266.0
1,363,852
364,650
(88,406)
(42,612)
1,597,484
1,152.0
1,365.0
1,272.0
1,588.0
1,272.0
EXECUTIVE INCENTIVE PLAN
Under the remuneration policy, 40% of the total award will be given in cash with the remaining 60%
of the award granted in shares. The group treats the cash element of the award as an employee benefit
under IAS 19 and the share element of the award as an equity-settled share-based payment under
IFRS 2. The fair value has been determined with reference to the share price at grant.
In 2021 this award was replaced with the Executive Share Performance Plan.
The group recognised a charge of £0.6 million in relation to the equity-settled share-based payment
element of this scheme in 2023 (2022: £2.0 million).
The number of outstanding options left to vest for the EIP scheme as at 31 December 2023 is 200,725.
EXECUTIVE SHARE PERFORMANCE PLAN
The scheme was launched in 2021 to replace the Executive Incentive Plan.
Details of the general terms of this plan are set out in the remuneration committee report on page 129.
Under the remuneration policy, 50% of the annual bonus award is paid in cash and 50% is deferred in
shares, although this split can be altered subject to Remuneration Committee approval. An annual
restricted stock plan award is also granted under the scheme, and payment is deferred in shares.
The group treats the cash element of the award as an employee benefit under IAS 19 and the share
element of the awards as equity-settled share-based payments under IFRS 2. The fair value has been
determined with reference to the share price at grant.
The fair value assumptions for each SAYE award granted are set with reference to market conditions
at the grant date. Factors affecting the fair value of the award are the volatility of the share return,
dividend policy, expected leaving service rates and early exercise.
The group recognised a charge of £3.3 million in relation to the equity-settled share-based payment
element of this scheme in 2023 (2022: £2.0 million).
The number of outstanding options left to vest for the ESPP scheme as at 31 December 2023 is 353,292.
In setting the assumption for future share return volatility, historical volatility is calculated, using the
Group’s historical share price and calculating the return on a weekly basis. The historical annualised
volatility of the Group’s share return is then measured over rolling one, three and five periods.
The most appropriate historical volatility measure, based on weekly share price data, is then used for
the purposes of setting the volatility assumption for both awards. Consistent with previous practice,
a 5-year historical volatility measure was used, creating a volatility assumption of 28% per annum
(2022: 26% per annum).
The weighted average share price at the dates of exercise for share options exercised during the year
was £10.86 (2022: £15.88). The options outstanding at 31 December 2023 had a weighted average
contractual life of 2.6 years (2.4 years) and a weighted average exercise price of £13.13 (2022: £11.89).
STAFF EQUITY PLAN
The Key Staff Equity Plan (‘KSEP’) was for individuals within Rathbones Investment Management
and Rathbones Investment Management International. In anticipation of the KSEP vesting during
2023, the Key Employee Equity Plan (‘KEEP’) was launched in 2022 for individuals within Rathbones
Investment Management and Rathbones Investment Management International, as well as
employees within the group’s support functions. The aim of the schemes is to promote increased
equity interest in Rathbones Group Plc amongst employees.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
191
32 SHARE-BASED PAYMENTS CONTINUED
Under both schemes, participants were granted awards under the plan in the form of an option with
an exercise price of £nil. The option awards are subject to certain service and performance
conditions. There are no market-related performance conditions attached to these awards.
The group categorises its financial risks into the following primary areas:
(i) credit risk (which includes counterparty default risk)
(ii)
(iii) market risk (which includes fair value interest rate risk, cash flow interest rate risk, foreign
liquidity risk;
The KSEP awards vested during the year on the fifth anniversary of the grant date. The awards are
exercisable from the vesting date until the tenth anniversary of the grant date. The fair value has
been determined with reference to the share price at grant less the value of expected dividends over
the period to vesting, as no dividend shares have been granted on this award.
exchange risk and price risk); and
(iv) pension risk.
The group’s exposures to pension risk are set out in note 29.
The KEEP awards will vest and become exercisable on the fifth anniversary of the grant date for
the front office employees, and on the third anniversary of the grant date for employees in support
functions. The fair value has been determined with reference to the share price at grant. There are
no market-related performance conditions attached to this award.
The group recognised a charge of £2.1 million for the KSEP award in the year (2022: £4.2 million),
and a charge of £2.7 million for the KEEP award (2022: £0.9 million).
The number of outstanding options left to vest for the KEEP scheme as at 31 December 2023
is 962,100.
OTHER SCHEMES
The group operates a number of other plans for rewarding employees. Participants are granted
awards under these plans in the form of options, which vest automatically on an anniversary of the
grant date (generally between one and five years). As the intention is to settle the options in such
plans in shares, the awards are treated as equity-settled share-based payments under IFRS 2.
The Group recognised a charge of £1.3 million for the Rathbones Exceptional Performance Plan
scheme in 2023 (2022: 1.7 million).
The Group recognised a charge of £2.3 million for the Rathbone Enhanced Profit Share Plan scheme
in 2023 (2022: 2.1 million).
ACQUISITION-RELATED SHARE-BASED PAYMENTS
Details of the general terms of share-based payments associated with the acquisition of Speirs &
Jeffrey, Saunderson House and IW&I are set out in note 8.
33 FINANCIAL RISK MANAGEMENT
The group has identified the financial, business and operational risks arising from its activities and
has established policies and procedures to manage these items in accordance with its risk appetite,
as described in the group risk committee report on pages 110 to 113.
The group’s financial risk management policies are designed to identify and analyse the financial
risks that the group faces, to set appropriate risk tolerances, limits and controls, and to monitor the
financial risks and adherence to limits by means of reliable and up-to-date information systems.
The group regularly reviews its financial risk management policies and systems to reflect changes
in the business, counterparties, markets and the range of financial instruments that it utilises.
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 prescribe 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 financial planning activities.
The principal source of credit risk arises from placing funds in the money market and holding
interest-bearing securities. The group also has exposure to credit risk through its client loan book.
It is the group’s policy to place funds generated internally and from deposits by clients with a range
of high-quality, investment grade financial institutions and the Bank of England. Investments with
financial institutions 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, Moody’s or S&P. 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 with its ongoing monitoring. The group’s financial assets are
categorised as follows:
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
33 FINANCIAL RISK MANAGEMENT CONTINUED
(i) CREDIT RISK CONTINUED
Balances with central banks (note 14)
The group has exposure to central banks through its deposits held with the Bank of England.
Loans and advances to banks (note 15) and debt and other securities (note 17)
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 UK Government
treasury bills. These exposures principally arise from the placement of clients’ cash, where it is held
under a banking relationship, and the group’s own reserves.
Balances with central banks, loans and advances to banks and debt and other securities (excluding
equity securities) are collectively referred to as the group’s treasury book.
Treasury book
Balances with central banks
Loans and advances to banks − fixed deposits/notice accounts
Unlisted debt securities
Gross amount
2023
£m
1,038.3
14.5
1,294.6
2,347.4
2022
£m
1,413.0
30.0
1,045.2
2,488.2
The group’s policy requires that all such exposures are only taken with counterparties that have been
awarded a minimum long-term rating of single A by Fitch or equivalent rating by Moody’s or S&P.
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 by the treasury
department and reviewed by the banking committee on a monthly basis, or more frequently when
necessary. 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 (note 16)
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 overdrafts on clients’ investment
management accounts, work in progress arising from the trust, tax and financial planning businesses
(‘trust and financial planning debtors’) and other debtors.
(a) Overdrafts
Overdrafts on clients’ investment management accounts arise from time to time due to short-
term timing differences between the purchase and sale of assets on a client’s behalf. Overdrafts
are actively monitored and reported to the banking committee on a monthly basis.
192
(b)
Investment management loan book
Loans 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 some loans may be
partially secured by property. Extensions to the initial loan period may be granted subject to
credit criteria.
All lending exposures undergo an initial assessment of creditworthiness according to Rathbones’
internal affordability model. On an ongoing basis, the assessment is repeated at least annually,
or sooner in the event of a trigger, such as a decline in portfolio value due to withdrawal or
market conditions, as this would highlight a potential deterioration in creditworthiness.
At 31 December 2023, the total lending exposure limit for the investment management loan
book was £250.0 million (2022: 250.0 million), of which £100.2 million had been advanced
(2022: £158.1 million) and a further £15.4 million had been committed (2022: £22.5 million).
(c) Trust and financial planning debtors
Trust and financial planning debtors relate to fees which have been invoiced but not yet settled
by clients. The collection and ageing of trust and financial planning debtors are reviewed on a
monthly basis by the management committees of the group’s trust and financial planning
businesses.
(d) Other debtors
Other loans and advances to customers relate to management fees receivable.
Settlement balances
Settlement risk arises in any situation where a payment in cash or transfer of a security is made in the
expectation of a corresponding delivery of a security or receipt of cash. The majority of transactions
are carried out on a delivery versus payment basis, which results in securities and cash being
exchanged within a very close timeframe. Settlement balances outside standard terms are monitored
on a daily basis.
The Wealth Management and Asset Management segments 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.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
33 FINANCIAL RISK MANAGEMENT CONTINUED
(i) CREDIT RISK CONTINUED
Maximum exposure to credit risk
Credit risk relating to on-balance-sheet exposures:
Cash and balances with central banks
Settlement balances
Loans and advances to banks
Loans and advances to customers:
— overdrafts
— investment management loan book
— trust and financial planning debtors
— other debtors
Investment securities:
— unlisted debt securities and money market funds
Other financial assets
Credit risk relating to off-balance-sheet exposures:
Loan commitments
2023
£m
2022
£m
1,038.3
165.7
266.9
9.7
101.7
2.7
1.6
1,294.6
191.3
15.4
3,087.9
1,413.0
65.8
194.7
6.5
159.7
3.0
0.5
1,045.2
104.7
22.5
3,015.7
The above table represents the group’s gross credit risk exposure at 31 December 2023 and 2022,
without taking account of any associated collateral held or other credit enhancements. For on-
balance-sheet assets, the exposures set out above are based on gross carrying amounts.
Of the total maximum exposure, 14.2% is derived from loans and advances to banks and customers
(2022: 12.1%) and 41.1% represents investment securities (2022: 34.7%).
Impairment of financial instruments
The group’s accounting policy governing impairment of financial assets is given in note 1.12.
Impairment losses on financial assets recognised in profit or loss were as shown in the table below.
The main class of asset these impairment losses have arisen against is cash and balances held with
central banks.
Impairment losses/(reversals) arising from:
— treasury book
— investment management loan book
— trust and financial planning debtors
2023
£m
–
–
0.1
0.1
2022
£m
−
−
(0.1)
(0.1)
193
Expected Credit Loss (‘ECL’) assessment
At each reporting date, for both the treasury book and investment management loan book, the group
assesses whether there has been a significant increase in credit risk of exposures since initial
recognition, by comparing the change in the risk of a default occurring over the expected life of the
instrument between the reporting date and the date of initial recognition. The following criteria are
used to identify significant increases in credit risk and are monitored and reviewed periodically for
appropriateness by the treasury team.
The group’s ECL model was calibrated during a time of benign inflation, and thus inflation was
historically negatively correlated with PDs. Given current inflation is supply-driven, a post-model
adjustment was made to flatten the inflation forecast to remove the dampening effect on the PD.
Qualitative indicators
The group periodically monitors its exposures and uses a set of defined criteria to flag any
counterparties that may be experiencing financial difficulties. Such exposures are monitored by the
treasury team, and those that are considered to have experienced a significant increase in credit risk
are classified as ‘stage 2’, on which a lifetime ECL is recognised.
Quantitative indicators
The lifetime probability of default at the reporting date is compared to the original lifetime
probability of default at initial recognition and if the difference exceeds a predefined threshold
(for the current analysis this threshold is set at 50% of the value at initial recognition) the exposure
is moved to stage 2.
Probability of defaults used for identifying significant increases in credit risk for staging purposes are
calculated using the same methodology and data used for estimating probability of defaults for the
purpose of measuring expected credit losses.
The ‘30 days past due’ backstop indicator has not been rebutted by the group, albeit it is not a
significant driver of stage movements as the opportunity for a counterparty to miss a payment is low
due to the fact that over the life of exposure, any interest and/or principal is directly debited from the
counterparty’s investment balance and investment income, which is in turn held as collateral under
the group’s custody.
Materially all exposures in both the treasury book and investment management loan book follow a
bullet repayment structure; therefore, the exposure at any point in time reflects the outstanding
balance of the instrument at that point in time.
Definition of default
The group considers an investment management loan book exposure to be in default when a client
fails to respond to three sets of default notices (every 30 days for a period of 90 days). A treasury book
exposure is deemed to be in default when a payment is past due by more than one working day
(grace period).
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
194
33 FINANCIAL RISK MANAGEMENT CONTINUED
(i) CREDIT RISK CONTINUED
Probability of default (PD)
The group uses a lifetime PD for each exposure, which is the probability-weighted result of
considering three economic scenarios: a base case, an upside scenario and a downside scenario.
These scenarios include the forecast of the macroeconomic factors that have been identified as
relevant to the group’s exposures, which are incorporated into the estimation of lifetime PDs.
The methodology for estimating lifetime PDs and adjustments for macroeconomic scenarios used for
identifying significant increases in credit risk are as follows:
in point in time (‘PiT’) default probabilities, which inherently revolve around expectations of future
development of macroeconomic factors relevant to treasury assets, namely UK GDP, UK
unemployment rates, UK inflation and UK interest rates.
Loss given default (LGD) for treasury book assets is dependent on the nature of the counterparty and
the region in which the instrument was issued. For sovereign exposures, the group applies a flat LGD
rate, which is externally sourced from Moody’s most recent sovereign default and recovery rates
research statistics, by country of issuer. For unsecured corporate exposures, a time series of historical
corporate recovery rates is sourced from Moody’s annual publication on corporate defaults and
recovery rates.
Treasury book assessment
The 12-month PD for each exposure is initially estimated as the historical 12-month PD sourced from
Standard & Poor’s, by credit rating and country of exposure. In order to estimate the PDs occurring
over the lifetime of an underlying exposure, the group applies its expectations of future progression
The following table presents an analysis of the credit quality of treasury book exposures at amortised
cost and FVTPL. It indicates whether assets measured at amortised cost were subject to a 12-month
ECL or lifetime ECL allowance and, in the latter case, whether they were credit-impaired:
AAA
AA+ to AA-
A+ to A-
Gross carrying amounts
Loss allowance
Carrying amount
Cash and balances with central banks
Loans and advances to banks
Unlisted debt securities
Carrying amount
2023
2022
At amortised cost
Fair value
through profit or
loss
£m
12-month ECL
£m
Lifetime ECL
– not credit-
impaired
£m
Lifetime ECL
– credit-impaired
£m
Fair value through
profit or loss
£m
12-month ECL
£m
Lifetime ECL – not
credit-impaired
£m
Lifetime ECL
– credit-impaired
£m
–
–
–
–
–
–
–
–
–
–
1,666.2
681.3
2,347.5
(0.1)
2,347.4
1,038.3
14.5
1,294.6
2,347.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
−
−
−
−
−
−
−
−
−
−
−
1,953.2
535.0
2,488.2
(0.1)
2,488.1
1,412.9
30.0
1,045.2
2,488.1
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
33 FINANCIAL RISK MANAGEMENT CONTINUED
(i) CREDIT RISK CONTINUED
The movement in allowance for impairment for the treasury book during the year was as follows.
Balance at 1 January 2023
Net remeasurement of loss allowance
Balance at 31 December 2023
Cash and balances with central banks
Loans and advances to banks
Unlisted debt securities
ECL provision
195
Total
ECL
£m
0.1
–
0.1
–
–
0.1
0.1
12-month
ECL
£m
Lifetime ECL
– not credit-
impaired
£m
Lifetime ECL
– credit-impaired
£m
0.1
–
0.1
–
–
0.1
0.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Investment management loan book assessment
Due to the lack of historical defaults within the investment management loan book, the model uses
publicly available default data for UK secured lending as a starting point in order to obtain an initial
estimate for PD. The 12-month PD is estimated as the historical long-term default rate on lending in
the UK as sourced from the Council of Mortgage Lenders (CML).
Using the calculated 12-month PiT PD as a starting point, conditional PDs for each future period
within the period of exposure are estimated by applying the GDP and UR coefficients to the group’s
forecasts of UK GDP and UK UR respectively, as sourced from International Monetary Fund (IMF)
forecast data. This analysis forms the base case scenario for estimating lifetime PDs. The same
methodology is applied for separate upside and downside scenarios as required by the standard.
In order to estimate the PDs occurring over the lifetime of an underlying exposure, the group
develops its expectations of future progression in PiT default probabilities, which inherently revolves
around expectations of future development of macroeconomic factors relevant to the bank’s lending
portfolio, namely UK GDP (‘GDP’) and UK unemployment rates (UR).
In order to develop and apply such forward-looking expectations, a historical relationship between
PD, GDP and UR is estimated statistically through a multi-factor regression analysis of past
movements between these variables. The relationship resulting from this analysis reflects the
relative quantitative behaviour of the regressed macroeconomic factors against PD.
The following table presents an analysis of the credit quality of investment management loan book
exposures at amortised cost. It indicates whether assets measured at amortised cost were subject to
a 12-month ECL or lifetime ECL allowance and, in the latter case, whether they were credit-impaired.
The categories below reflect the group’s internal affordability tests, which consider a range of factors
for the client, including their portfolio value, Experian score, and the length of their relationship with
the group. ‘High’ is an indication the client poses a high risk in terms of being able to afford
repayment of the loan facility. ‘Medium’ is an indication of a possibility the client may pose a risk in
terms of being able to afford repayment of the loan facility. ‘Low’ is where the risk of a client not being
able to repay the loan facility is considered reasonably low. ‘Very low’ is where the risk of a client not
being able to repay the loan facility is considered extremely low.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
196
33 FINANCIAL RISK MANAGEMENT CONTINUED
(i) CREDIT RISK CONTINUED
The following table provides information about the exposure to credit risk and ECLs for trust and
financial planning debtors as at 31 December 2023:
2023
2022
At amortised cost
Lifetime
ECL – not
credit-
impaired
£m
Lifetime
ECL
– credit-
impaired
£m
Lifetime ECL
– not
credit-
impaired
£m
Lifetime ECL
– credit-
impaired
£m
12-month
ECL
£m
12-month
ECL
£m
23.1
70.2
6.9
1.5
101.7
–
101.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
31.1
112.0
14.5
2.1
159.7
−
159.7
−
−
−
−
−
−
−
−
−
−
−
−
−
−
Very low
Low
Medium
High
Gross carrying amounts
Loss allowance
Carrying amount
The movement in allowance for impairment of the investment management loan book during the
year was as follows.
Balance at 1 January 2023
Net remeasurement of loss allowance
Balance at 31 December 2023
12-month
ECL
£m
Lifetime ECL
– not credit-
impaired
£m
Lifetime ECL
– credit-
impaired
£m
Total ECL
£m
–
–
–
–
–
–
–
–
–
–
–
–
Trust and financial planning debtors assessment
The group uses a provision matrix to measure the ECLs of trust and financial planning debtors,
which comprise a large number of small balances. For such debts, a normal settlement period of up to
30 days is expected.
The weighted average loss rates are calculated with reference to the historic credit losses as a
proportion of the overall debtor balance within each aging category at the time of default. The current
period of assessment for the provision is five years.
Rathbones Trust Company
Rathbones Trust & Legal Services
Rathbone Financial Planning
Saunderson House
Gross carrying amounts
Loss allowance
Carrying amount
Rathbones Trust Company
<90 days overdue
90-180 days overdue
180-270 days overdue
270-365 days overdue
>365 days overdue
2023
£m
1.3
0.2
0.7
0.7
2.9
(0.2)
2.7
Weighted
average loss
rate
Gross
carrying
amount
£m
Not credit
impaired
£m
Credit
impaired
£m
Loss allowance
0.3%
1.4%
2.6%
4.4%
23.2%
0.6
0.2
0.2
0.1
0.2
1.3
–
–
–
–
(0.1)
(0.1)
–
–
–
–
–
–
2022
£m
1.0
0.2
0.5
1.4
3.2
(0.1)
3.0
Total
£m
–
–
–
–
(0.1)
(0.1)
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
197
33 FINANCIAL RISK MANAGEMENT CONTINUED
(i) CREDIT RISK CONTINUED
At the prior year end, £0.03 million was recognised as an expected credit loss provision for
Rathbones Trust Company.
Rathbones Trust & Legal Services
<90 days overdue
90-180 days overdue
180-270 days overdue
270-365 days overdue
>365 days overdue
Weighted
average loss
rate
0.8%
3.9%
7.0%
12.7%
11.9%
Gross
carrying
amount
£m
0.2
–
–
–
–
0.2
Loss allowance
Not
credit-
impaired
£m
Credit-
impaired
£m
–
–
–
–
–
–
–
–
–
–
–
–
At the prior year end, £0.01 million was recognised as an expected credit loss provision for
Rathbones Trust & Legal Services.
Rathbone Financial Planning
<90 days overdue
90-180 days overdue
180-270 days overdue
270-365 days overdue
>365 days overdue
Weighted
average loss
rate
Gross
carrying
amount
£m
Not
credit-
impaired
£m
Credit-
impaired
£m
Loss allowance
0.0%
0.0%
0.0%
0.0%
0.0%
0.3
0.1
0.1
0.1
–
0.6
–
–
–
–
–
–
–
–
–
–
–
–
Total
£m
–
–
–
–
–
–
Total
£m
–
–
–
–
–
–
At the prior year end, £nil was recognised as an expected credit loss provision for Rathbone Financial
Planning.
Saunderson House
<90 days overdue
90-180 days overdue
180-270 days overdue
270-365 days overdue
>365 days overdue
Weighted
average loss
rate
0.0%
12.9%
50.0%
50.0%
100.0%
Loss allowance
Gross
carrying
amount
£m
Not credit
impaired
£m
Credit
impaired
£m
0.5
–
–
0.1
0.1
0.7
–
–
–
–
(0.1)
(0.1)
–
–
–
–
–
–
Total
£m
–
–
–
–
(0.1)
(0.1)
At the prior year end, £0.08 million was recognised as an expected credit loss provision for
Saunderson House.
The movement in allowance for impairment in respect of trust and financial planning debtors during
the year is set out below.
Movement in impairment provision during the year
At 1 January
Amounts written off
Change in credit risk
At 31 December 2023
Trust
and financial
planning debtors
£m
0.1
0.1
–
0.2
Concentration of credit risk
The group has counterparty credit risk within its financial 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 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.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
198
33 FINANCIAL RISK MANAGEMENT CONTINUED
(i) CREDIT RISK CONTINUED
(a) Geographical sectors
The following table analyses the group’s credit exposures, at their carrying amounts, by geographical
region as at the balance sheet date. In this analysis, exposures are categorised based on the country of
domicile of the counterparty.
At 31 December 2023
Cash and balances with central banks
Settlement balances
Loans and advances to banks
Loans and advances to customers:
— overdrafts
— investment management loan book
— trust and financial planning debtors
— other debtors
Investment securities:
— unlisted debt securities
Other financial assets
United
Kingdom
£m
1,038.3
150.7
232.8
9.3
80.1
2.7
1.5
Eurozone
£m
Rest of
the World
£m
–
5.9
7.5
0.1
0.1
–
–
–
9.1
26.6
0.3
21.5
–
–
Total
£m
1,038.3
165.7
266.9
9.7
101.7
2.7
1.5
415.9
164.4
2,095.7
366.8
10.9
391.3
511.9
16.0
1,294.6
191.3
585.4
3,072.4
At 31 December 2022
Cash and balances with central banks
Settlement balances
Loans and advances to banks
Loans and advances to customers:
— overdrafts
— investment management loan book
— trust and financial planning debtors
— other debtors
Investment securities:
— unlisted debt securities and money market
funds
— Other financial assets
United
Kingdom
£m
1,412.9
65.4
192.9
5.8
132.5
3.0
0.5
159.6
89.4
2,062.0
Eurozone
£m
Rest of
the World
£m
−
0.1
−
0.1
0.8
−
−
−
0.3
1.8
0.7
26.4
−
−
Total
£m
1,412.9
65.8
194.7
6.6
159.7
3.0
0.5
250.0
3.3
254.3
635.7
12.0
676.9
1,045.3
104.7
2,993.2
At 31 December 2023, materially all eurozone exposures were to counterparties based in the
Netherlands, France and Finland (2022: Netherlands, France and Finland) and materially all rest of
the world exposures were to counterparties based in Switzerland, Sweden, Norway, Canada, Japan,
United States of America and Australia (2022: Switzerland, Sweden, Norway, Canada and Australia).
At 31 December 2023, the group had exposure to the UK government through the holding of treasury
bills (2022: UK government through the holding of treasury bill).
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
33 FINANCIAL RISK MANAGEMENT CONTINUED
(i) CREDIT RISK CONTINUED
(B) Industry sectors
The group’s credit exposures at the balance sheet date, analysed by the primary industry sectors in
which our counterparties operate, were:
At 31 December 2023
Cash and balances with central banks
Settlement balances
Loans and advances to banks
Loans and advances to customers:
— overdrafts
— investment management loan book
— trust and financial planning debtors
— other debtors
Investment securities:
— unlisted debt securities and money
market funds
Other financial assets
Public
sector
£m
Financial
institutions
£m
Clients
and other
corporate
£m
1,038.3
–
–
–
–
–
–
–
163.9
266.9
–
–
–
–
–
1.8
–
9.7
101.7
2.7
1.5
Total
£m
1,038.3
165.7
266.9
9.7
101.7
2.7
1.5
200.9
1,093.7
–
1,294.6
6.4
56.8
128.1
191.3
1,245.6
1,581.3
245.5
3,072.4
199
At 31 December 2022
Cash and balances with central banks
Settlement balances
Loans and advances to banks
Loans and advances to customers:
— overdrafts
— investment management
loan book
— trust and financial planning debtors
— other debtors
Investment securities:
— unlisted debt securities and money market
funds
Other financial assets
Public
sector
£m
Financial
institutions
£m
1,412.9
−
−
−
65.8
194.7
Clients
and other
corporate
£m
−
−
−
Total
£m
1,412.9
65.8
194.7
−
−
−
−
−
−
−
−
24.6
2.6
1,440.1
1,020.6
11.8
1,292.9
6.6
6.6
159.7
3.0
0.5
−
90.4
260.2
159.7
3.0
0.5
1,045.2
104.8
2,993.2
(ii) LIQUIDITY RISK
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. In addition to setting the treasury policy, Rathbones Investment Management
(‘the Bank’) performs an annual assessment of liquidity adequacy in accordance with the regulatory
requirements of the Prudential Regulation Authority (PRA) (our Internal Liquidity Adequacy
Assessment Process). The Bank faces two principal risks, namely that a significant proportion
of client funds are withdrawn over a short period of time (retail funding risk) and the risk that
marketable assets may not be capable of being realised in the time and at the value required
(marketable assets risk).
Funding risks are monitored by daily cash mismatch analyses and CRR ratios using expected cash
and asset maturity profiles and regular forecasting work. This is supported by stress tests which cover
firm-specific idiosyncratic scenarios and/or the effects of unforeseen market-wide stresses.
Marketable assets risk is primarily managed by holding cash and marketable instruments which are
realisable at short notice. The group operates strict criteria to ensure that investments are liquid and
placed with high-quality, investment grade counterparties. A minimum liquid assets buffer (to be
held in eligible liquid assets) is set by the board at least annually in conjunction with an amount
prescribed by the PRA.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
200
33 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 analysed by the remaining contractual maturities at the
balance sheet date.
At 31 December 2023
Cash and balances with central banks
Settlement balances
Loans and advances to banks
Loans and advances to customers
Debt securities and money market funds
Equity securities
Other financial assets
Cash flows arising from financial assets
Deposits by banks
Settlement balances
Due to customers
Subordinated loan notes
Lease liabilities¹
Other financial liabilities
Cash flows arising from financial liabilities
Net liquidity gap
Cumulative net liquidity gap
On
demand
£m
Not more than
3 months
£m
After 3 months
but not more
than 1 year
£m
After 1 year
but not more
than 5 years
£m
After 5 years
£m
No fixed
maturity date
£m
1,036.0
6.4
245.4
11.5
–
–
1.1
1,300.4
12.4
7.4
1,652.5
–
–
1.6
1,673.9
(373.5)
(373.5)
2.8
159.3
21.5
3.4
413.2
–
157.0
757.2
–
164.7
506.5
–
–
49.0
720.2
37.0
(336.5)
2.3
–
–
3.2
941.1
–
3.3
949.9
–
–
103.0
2.3
–
14.9
120.2
829.7
493.3
–
–
–
115.0
–
–
0.3
115.3
–
–
–
44.5
–
28.1
72.6
42.7
536.0
–
–
–
–
–
–
–
–
–
–
–
–
–
10.4
10.4
(10.4)
525.5
–
–
–
–
–
1.2
–
1.2
–
–
–
–
–
–
–
1.2
526.7
Total
£m
1,041.1
165.7
266.9
133.1
1,354.3
1.2
161.7
3,124.0
12.4
172.1
2,262.0
46.8
–
104.0
2,597.3
526.7
–
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
33 FINANCIAL RISK MANAGEMENT CONTINUED
(ii) LIQUIDITY RISK CONTINUED
At 31 December 2022
Cash and balances with central banks
Settlement balances
Loans and advances to banks
Loans and advances to customers
Debt securities and money market funds
Equity securities
Other financial assets
Cash flows arising from financial assets
Deposits by banks
Settlement balances
Due to customers
Subordinated loan notes
Lease liabilities
Other financial liabilities
Cash flows arising from financial liabilities
Net liquidity gap
Cumulative net liquidity gap
On
demand
£m
Not more than
3 months
£m
After 3 months
but not more
than 1 year
£m
After 1 year
but not more
than 5 years
£m
After 5 years
£m
No fixed
maturity date
£m
1,408.0
−
164.8
8.2
−
−
4.5
1,585.5
1.0
−
2,328.0
−
−
0.2
2,329.2
(743.7)
(743.7)
2.3
65.8
−
3.4
361.9
−
85.9
519.3
−
69.9
183.6
−
1.9
19.9
275.3
244.0
(499.8)
5.0
−
30.1
2.3
710.5
−
1.6
749.5
−
−
5.0
2.3
5.9
0.2
13.4
736.1
236.4
−
−
−
167.6
−
−
0.2
167.8
−
−
−
46.8
22.2
5.4
74.4
93.4
329.8
−
−
−
−
−
−
−
−
−
−
−
−
37.8
4.5
42.3
(42.3)
287.5
−
−
−
−
−
3.1
−
3.1
−
−
−
−
−
−
−
3.1
290.6
201
Total
£m
1,415.3
65.8
194.9
181.5
1,072.4
3.1
92.2
3,025.2
1.0
69.9
2,516.6
49.1
67.8
30.2
2,734.6
290.6
−
Liabilities which do not have a contractual maturity date are categorised as ‘on demand’. Included
within the amounts due to customers on demand are balances which historical experience shows are
unlikely to be called in the short term. A prudent level of highly liquid assets is retained to cover
reasonably foreseeable short-term changes in client deposits. All debt securities are readily
marketable and can be realised through disposals.
The group holds equity investments worth £nil (2022: £8.1 million) which are subject to liquidity risk
but are not included in the table above. These units in collectives managed by Rathbones Asset
Management Ltd were sold during the period. The assets were previously held as fair value through
profit or loss securities and had no fixed maturity date; cash flows arose from receipt of dividends or
through sale of the assets.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
33 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 35) are summarised in
the table below.
The contractual value of the group’s commitments to extend credit to clients are analysed by the
duration of the commitment. Capital commitments are summarised by the earliest expected date
of payment.
At 31 December 2023
Loan commitments
Capital commitments
Total off-balance-sheet items
At 31 December 2022
Loan commitments
Capital commitments
Total off-balance-sheet items
Not more
than 3 months
£m
After 3
months but
not more than
1 year
£m
After 1
year but
not more than
5 years
£m
15.4
8.5
23.9
–
5.5
5.5
–
–
–
Not more
than 3
months
£m
After 3
months but not
more
than 1 year
£m
After 1
year but
not more
than 5 years
£m
22.5
0.5
23.0
−
−
−
−
−
−
After
5 years
£m
–
–
–
After
5 years
£m
−
−
−
Total
£m
15.4
14.0
29.4
Total
£m
22.5
0.5
23.0
Total liquidity requirement
At 31 December 2023
Cash flows arising from
financial liabilities
Not more
than 3
months
£m
After 3
months but
not more
than 1 year
£m
After 1
year but
not more
than 5 years
£m
On
demand
£m
1,673.9
720.2
120.2
Total off-balance-sheet items
–
Total liquidity requirement
1,673.9
23.9
744.1
5.5
125.7
At 31 December 2022
Cash flows arising from
financial liabilities
Total off-balance-sheet items
Total liquidity requirement
Not more
than 3
months
£m
After 3
months but
not more
than 1 year
£m
275.3
23.0
298.3
13.4
−
13.4
On
demand
£m
2,329.2
−
2,329.2
72.6
–
72.6
After 1
year but
not more
than 5
years
£m
74.4
−
74.4
202
After
5 years
£m
Total
£m
10.4
2,597.3
–
29.4
10.4
2,626.7
After
5 years
£m
42.3
−
42.3
Total
£m
2,734.6
23.0
2,757.6
(iii) MARKET RISK
Interest rate risk
Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the
value of a financial instrument will fluctuate because of changes in market interest rates.
The group’s principal exposure to cash flow interest rate risk arises from the mismatch between the
repricing of its financial assets and liabilities. In particular, customer accounts and loan balances are
repriced very shortly after changes in base rates, whereas the yield on the group’s interest-bearing
assets is correlated to the future expectation of base rates and varies depending on the maturity
profile of the group’s treasury portfolio. The average maturity mismatch is controlled by the banking
committee, which generally lengthens the mismatch when the yield curve is rising and shortens it
when the yield curve is falling.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
203
33 FINANCIAL RISK MANAGEMENT CONTINUED
(iii) MARKET RISK CONTINUED
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 2023
Assets
Cash and balances with central banks
Settlement balances
Loans and advances to banks
Loans and advances to customers
Investment securities:
— equity securities
— unlisted debt securities and money market funds
Other financial assets
Total financial assets
Liabilities
Deposits by banks
Settlement balances
Due to customers
Subordinated loan notes
Other financial liabilities
Total financial liabilities
Interest rate repricing gap
Not more than
3 months
£m
After 3 months
but not more
than 6 months
£m
After 6 months
but not more
than 1 year
£m
After 1 year but
not more than
5 years
£m
After
5 years
£m
Non-
interest-
bearing
£m
1,036.0
–
252.2
111.8
–
400.4
0.5
1,800.9
12.4
–
2,108.9
–
4.4
2,125.7
(324.8)
–
–
14.5
0.4
–
370.8
–
385.7
–
–
99.2
–
2.4
101.6
284.1
–
–
–
0.3
–
523.4
–
523.7
–
–
–
–
4.8
4.8
518.9
–
–
–
–
–
–
–
–
–
–
–
39.9
39.2
79.1
(79.1)
–
–
–
–
–
–
–
–
–
–
–
–
26.0
26.0
(26.0)
2.3
165.7
0.2
3.1
1.2
–
190.8
363.3
–
172.1
45.2
–
69.6
286.9
76.4
Total
£m
1,038.3
165.7
266.9
115.6
1.2
1,294.6
191.3
3,073.6
12.4
172.1
2,253.3
39.9
146.4
2,624.1
449.5
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
33 FINANCIAL RISK MANAGEMENT CONTINUED
(iii) MARKET RISK CONTINUED
At 31 December 2022
Assets
Cash and balances with central banks
Settlement balances
Loans and advances to banks
Loans and advances to customers
Investment securities:
— equity securities
— unlisted debt securities and money market funds
Other financial assets
Total financial assets
Liabilities
Deposits by banks
Settlement balances
Due to customers
Subordinated loan notes
Other financial liabilities
Total financial liabilities
Interest rate repricing gap
Not more
than 3 months
£m
After 3 months
but not more
than 6 months
£m
After 6 months
but not more
than 1 year
£m
After 1 year
but not more
than 5 years
£m
After 5 years
£m
Non-
interest-
bearing
£m
1,408.0
−
164.5
166.0
3.1
357.1
0.6
2,099.3
1.0
−
2,446.7
−
1.2
2,448.9
−
−
30.0
−
−
313.1
−
343.1
−
−
4.9
−
1.2
6.1
−
−
−
−
−
375.0
−
375.0
−
−
−
−
2.6
2.6
−
−
−
−
−
−
−
−
−
−
−
39.9
19.6
59.5
−
−
−
−
−
−
−
−
−
−
−
−
25.9
25.9
(349.6)
337.0
372.4
(59.5)
(25.9)
4.9
65.8
0.3
3.8
8.1
−
104.1
187.0
−
69.9
64.5
−
28.6
163.0
24.1
204
Total
£m
1,412.9
65.8
194.8
169.8
11.2
1,045.2
104.7
3,004.4
1.0
69.9
2,516.1
39.9
79.1
2,706.0
298.4
The banking committee has set an overall pre-tax interest rate exposure limit of £8.0 million (2022: £8.0 million) for the total potential loss resulting from an unexpected immediate and sustained 2%
movement in sterling interest rates for the Bank, the principal operating subsidiary. The potential total 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 2023, the Bank had a net present value sensitivity of £7.5 million (2022: £6.4 million) for an upward 2% shift in rates. The group held no forward rate agreements at 31 December 2023
(2022: none).
The Group has assessed the impact of climate change on the carrying amount of its financial assets and liabilities at year-end, and considers there to be no material impact.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
205
33 FINANCIAL RISK MANAGEMENT CONTINUED
(iii) MARKET RISK CONTINUED
Foreign exchange risk
The group is exposed to translational foreign exchange risk as it undertakes transactions in foreign currencies and is therefore exposed to foreign exchange rate fluctuations. 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 has no structural foreign currency exposure.
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 2023. Included
in the table are the group’s financial assets and liabilities, at carrying amounts, categorised by currency.
At 31 December 2023
Assets
Cash and balances with central banks
Settlement balances
Loans and advances to banks
Loans and advances to customers
Investment securities:
— equity securities
— unlisted debt securities and money market funds
Other financial assets
Total financial assets
Liabilities
Deposits by banks
Settlement balances
Due to customers
Subordinated loan notes
Other financial liabilities
Total financial liabilities
Net on-balance-sheet position
Loan commitments
Sterling
£m
US dollar
£m
1,038.3
150.6
230.3
109.3
–
1,259.3
185.1
2,972.9
12.4
146.5
2,176.4
39.9
146.2
2,521.4
451.5
15.4
–
5.4
13.2
5.1
–
35.3
1.6
60.6
–
16.0
53.7
–
0.2
69.9
(9.3)
–
Euro
£m
–
2.4
18.7
1.2
1.2
–
1.7
25.2
–
2.3
18.2
–
–
20.5
4.7
–
Other
£m
Total
£m
–
7.3
4.7
–
–
–
2.9
14.9
–
7.3
5.0
–
–
12.3
2.6
–
1,038.3
165.7
266.9
115.6
1.2
1,294.6
191.3
3,073.6
12.4
172.1
2,253.3
39.9
146.4
2,624.1
449.5
15.4
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
33 FINANCIAL RISK MANAGEMENT CONTINUED
(iii) MARKET RISK CONTINUED
At 31 December 2022
Assets
Cash and balances with central banks
Settlement balances
Loans and advances to banks
Loans and advances to customers
Investment securities:
— equity securities
— unlisted debt securities and money market funds
Other financial assets
Total financial assets
Liabilities
Deposits by banks
Settlement balances
Due to customers
Subordinated loan notes
Other financial liabilities
Total financial liabilities
Net on-balance-sheet position
Loan commitments
206
Sterling
£m
US dollar
£m
Euro
£m
Other
£m
Total
£m
1,412.9
63.6
137.5
161.4
8.1
974.6
103.1
−
0.5
27.1
5.6
−
70.7
0.8
2,861.2
104.7
1.0
67.4
2,389.4
39.9
78.8
2,576.5
284.7
22.5
−
1.9
91.4
−
0.2
93.5
11.2
−
−
0.1
20.0
2.8
3.1
−
0.8
26.8
−
0.3
25.1
−
0.1
25.5
1.3
−
−
1.6
10.1
−
−
−
−
11.7
−
0.3
10.2
−
−
10.5
1.2
−
1,412.9
65.8
194.7
169.8
11.2
1,045.3
104.7
3,004.4
1.0
69.9
2,516.1
39.9
79.1
2,706.0
298.4
22.5
A 10% weakening of the US dollar against sterling, occurring on 31 December 2023, would have
increased equity and profit after tax by £0.7 million (2022: reduced by £0.9 million). A 10%
weakening of the euro against sterling, occurring on 31 December 2023, would have reduced equity
and profit after tax by £0.4 million (2022: reduced by £0.1 million). 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.
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 17).
At 31 December 2023, the fair value of listed equity securities recognised on the balance sheet was
£nil (2022: £8.1 million). A 10% fall in global equity markets would, in isolation, have resulted in a
pre-tax decrease to net assets of £nil (2022: £0.5 million); there would have been no impact on profit
after tax. A 10% rise in global markets would have had an equal and opposite effect
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
207
33 FINANCIAL RISK MANAGEMENT CONTINUED
(iii) MARKET RISK CONTINUED
Fair values
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:
— Subordinated loan notes (note 28) comprise Tier 2 loan notes. The fair value of the loan notes at 31
December 2023 was £37.4 million (2022: £41.2 million) and the carrying value was £39.9 million
(2022: £39.9 million). Fair value of the loan notes is based on discounted future cash flows using
current market rates for debts with similar remaining maturity, and hence would be categorised as
level 2 in the fair value hierarchy.
— 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 2023
Assets
Fair value through profit or loss:
— equity securities
At 31 December 2022
Assets
Fair value through profit or loss:
— equity securities
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
–
–
–
–
1.2
1.2
Level 1
£m
Level 2
£m
Level 3
£m
8.1
8.1
−
−
3.1
3.1
1.2
1.2
Total
£m
11.2
11.2
The group recognises transfers between levels of the fair value hierarchy at the end of the reporting
period during which the change has occurred. There have been no transfers between levels during
the year (2022: none).
The fair value of listed equity securities is their quoted price.
Level 3 financial instruments
Fair value through profit or loss
At 31st December 2023, the group held 517 shares in Euroclear Holdings SA, which are classed as
Level 3 in the fair value hierarchy, since readily available observable market data is not available.
At the prior year-end, the Group held 1,809 shares which were valued at £3.1 million by reference to
the indicative price derived from the most recent transactions of the shares in the market. During the
year, the group sold 1,292 of its shares in two separate transactions. The price was used to value the
remaining shares at year-end.
The valuation at the balance sheet date has been adjusted for movements in exchange rates since the
acquisition date. A 10% weakening of the euro against sterling, occurring on 31 December 2022,
would have reduced equity and profit after tax by £0.1 million (2022: £0.3 million). A 10%
strengthening of the euro against sterling would have had an equal and opposite effect.
Changes in the fair values of financial instruments categorised as level 3 within the fair value
hierarchy were as follows:
At 1 January
Total unrealised gains/(losses) recognised in profit or loss
Total disposals
At 31 December
2023
2022
3.1
1.0
(2.9)
1.2
2.5
0.6
−
3.1
The gains or losses relating to the fair value through profit or loss equity securities is included within
‘other operating income’ in the consolidated statement of comprehensive income.
The fair values of the group’s other financial assets and liabilities are not materially different from
their carrying values, with the exception of the following:
There were no other gains or losses arising from changes in the fair value of financial instruments
categorised as level 3 within the fair value hierarchy.
— Investment debt securities measured at amortised cost (note 17) comprise bank and building
society certificates of deposit, which have fixed coupons, and treasury bills. The fair value of the
debt securities at 31 December 2023 was £1,296.8 million (2022: £1,053.5 million) and the
carrying value was £1,294.6 million (2022: £1,045.3 million). Fair value of debt securities is based
on market bid prices, and hence would be categorised as level 1 within the fair value hierarchy.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
208
33 FINANCIAL RISK MANAGEMENT CONTINUED
(iv) PENSION RISK
The main risks to the group arising from both schemes are in respect of:
— Volatility of assets: In accordance with the requirements of IAS19, the discount rate used for
valuing the Schemes' defined benefit obligations has been derived from the yield available on
suitably dated 'high quality' (AA-rated) corporate bonds at the effective date. The schemes' assets
are invested in instruments other than such bonds, and so relative under-performance will lead to
a fall in the balance sheet position
— Changes in Bond yields: A change in the yields of corporate bonds used to set the discount rate will
affect the value placed on the Schemes' defined benefit obligations. This is expected to be partially
mitigated by the holding of corporate bonds by the schemes
— Inflation: The value placed on the schemes' defined benefit obligations are linked to inflation. If
actual levels of inflation are higher or lower than the assumed rate of inflation, or the assumed rate
of inflation changes, this will affect the value of the schemes' defined benefit obligations. Both
schemes holds investments linked to future inflation rates (including Liability Driven
Investments), which act to provide protection to the balance sheet position from inflation changes.
Investments), which act to provide protection to the balance sheet position from inflation changes
— Life Expectancy (mortality): Members and their spouses receive benefits payable over their
lifetime, so an increase in future life expectancies will result in pensions being assumed to be paid
for longer, and an increase in the defined benefit obligation.
Rathbones is classified for capital purposes as a banking group and performs an ICAAP, which is
prepared on an annual basis and presented to the PRA on request. Regulatory capital resources for
ICAAP purposes are calculated in accordance with published 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 PRA’s Pillar 1 and Pillar 2 methodology. The group has adopted the
standardised approach to calculating its Pillar 1 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 2023 the group’s regulatory capital resources, including retained earnings for 2023,
were £471.4 million (2022: £338.8 million). The increase in reserves during 2023 is due to an
increase in the group’s retained earnings, on account of profits generated in the year, and newly
issued shares in the year for employee remuneration awards.
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 forecast on a monthly basis to ensure
that dividends and investment requirements are appropriately managed and appropriate buffers are
kept against adverse business conditions.
No breaches were reported to the PRA during the financial years ended 31 December 2022 and 2023.
34 CAPITAL MANAGEMENT
Rathbones Group Plc’s capital is defined for accounting purposes as total equity. As at 31 December
2023 this totalled £1,350.1 million (2022: £634.8 million).
The group has not applied transitional relief in recognising expected credit losses (ECLs) in regulatory
capital resources. As such, there is no difference between accounting ECLs and regulatory capital ECLs.
In 2021 Rathbones Group Plc issued £40.0 million of 10-year tier 2 notes with a call option in October
2026 and annually thereafter (note 28). As at 31 December 2023, the carrying value of the notes was
£39.9 million (2022: £39.9 million). From time to time, the group also runs small overnight overdraft
balances as part of working capital.
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 in a cost-efficient manner 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
— comply with regulatory requirements at all times.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
209
35 CONTINGENT LIABILITIES AND COMMITMENTS
(a)
Capital expenditure authorised and contracted for at 31 December 2023 but not provided in the
financial statements amounted to £14.0 million relating to expenditure on fixtures and fittings
and software (2022: £0.5 million ).
The contractual amounts of the group’s commitments to extend credit to its clients are
as follows:
(b)
Undrawn commitments to lend of 1 year or less
Undrawn commitments to lend of more than 1 year
2023
£m
11.8
3.6
15.4
2022
£m
17.9
4.6
22.5
(c)
The arrangements put in place by the Financial Services Compensation Scheme (FSCS) to
protect depositors and investors from loss in in the event of failure of financial institutions has
resulted in significant levies on the industry in recent years. The financial impact of unexpected
FSCS levies is largely out of the group’s control as they result from other industry failures.
There is uncertainty over the level of future FSCS levies as they depend on the ultimate cost to
the FSCS of industry failures. The group contributes to the deposit class, investment fund
management class and investment intermediation levy classes and accrues levy costs for future
levy years when the obligation arises.
36 RELATED PARTY TRANSACTIONS
Transactions with key management personnel
The remuneration of the key management personnel of the group, who are defined as the company’s
directors and other members of senior management who are responsible for planning, directing and
controlling the activities of the group, is set out below.
Gains on options exercised by directors during the year totalled £nil (2022: £nil). Further information
about the remuneration of individual directors is provided in the audited part of the directors’
remuneration report on page 132.
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payments
2023
£m
13.2
0.3
1.3
2.6
17.4
2022
£m
10.2
0.3
0.3
0.4
11.2
Dividends totalling £0.3 million were paid in the year (2022: £0.2 million) in respect of ordinary
shares held by key management personnel and their close family members.
At 31 December 2023, key management personnel and their close family members had gross
outstanding deposits of £1.0 million (2022: £1.7 million) and gross outstanding banking loans of
£0.1 million (2022: nil). A number of the group’s key management personnel 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. All transactions were made on normal business terms.
Other related party transactions
The group’s transactions with the pension funds are described in note 29. At 31 December 2023, no
amounts were outstanding with either the Laurence Keen Scheme or the Rathbone 1987 Scheme
(2022: none).
As a result of the IW&I transaction on 21 September 2023, Rathbones Group Plc is an associate of
Investec Bank PLC. As at the 31 December there was a net payable balance with Investec Bank PLC of
£8.3 million (2022: £nil). IW&I outsources payroll to Investec Bank PLC (for which a charge is levied
under the transitional services agreement), the balance outstanding as at the reporting date is
predominantly related to IW&I employee salary costs and associated payroll taxes. During the period
from acquisition, Investec Bank PLC have provided certain services to IW&I via the transitional
services agreement. The total expense for these services recognised during the period from 21
September 2023 to 31 December 2023 is £4.8 million (2022: £nil). These amounts were fully paid as
at 31 December 2023. IW&I partially sublets certain regional office space to Investec Bank PLC
companies and charges Investec Bank PLC for use of research, total fees receivable under these
arrangements 21 September 2023 to 31 December 2023 were £0.1 million and £0.3 million
respectively (2022: nil).
One group subsidiary, Rathbones Asset Management Limited, has authority to manage the
investments within a number of unit trusts. During 2023, the group managed 28 unit trusts,
Sociétés d’Investissement à Capital Variable (SICAVs) and open-ended investment companies (OEICs)
(together, ‘collectives’) (2022: 32 unit trusts and OEICs).
The group charges each fund an annual management fee for these services, but does not earn any
performance fees on the unit trusts. The management charges are calculated on the bases published
in the individual fund prospectuses, which also state the terms and conditions of the management
contract with the group
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
210
36 RELATED PARTY TRANSACTIONS CONTINUED
The following transactions and balances relate to the group’s interest in the unit trusts:
38 CONSOLIDATED STATEMENT OF CASH FLOWS
For the purposes of the consolidated statement of cash flows, cash and cash equivalents comprise the
following balances with less than three months until maturity from the date of acquisition:
Year ended 31 December
Total management fees
As at 31 December
Management fees owed to the group
Holdings in unit trusts (note 17)
2023
£m
69.6
2023
£m
6.5
–
6.5
2022
£m
68.2
2022
£m
5.6
8.1
13.7
Total management fees are included within ‘fee and commission income’ in the consolidated
statement of comprehensive income.
Management fees owed to the group are included within ‘accrued income’ and holdings in unit trusts
are classified as ‘fair value through profit or loss equity securities’ in the consolidated balance sheet.
The maximum exposure to loss is limited to the carrying amount on the balance sheet as disclosed
above.
All amounts outstanding with related parties are unsecured and will be settled in cash.
No guarantees have been given or received. No expected credit loss provisions have been made in
respect of the amounts owed by related parties.
37 INTEREST IN UNCONSOLIDATED STRUCTURED ENTITIES
As described in note 36, at 31 December 2023, the group owned units in collectives managed by
Rathbones Asset Management Limited with a value of £nil (2022: £8.1 million), representing 0.0%
(2022: 0.08%) of the total value of the collectives managed by the group. These assets are held to
hedge the group’s exposure to deferred remuneration schemes for employees of Unit Trusts.
The group’s primary risk associated with its interest in the unit trusts is from changes in the fair value
of its holdings in the funds.
The group is not judged to control, and therefore does not consolidate, the collectives. Although the
fund trustees have limited rights to remove Rathbones Asset Management Limited, the group is
exposed to very low variability of returns from its management and share of ownership of the funds
and is therefore judged to act as an agent rather than having control under IFRS 10.
Cash and balances at central banks (note 14)
Loans and advances to banks (note 15)
At 31 December
2023
£m
1,036.0
266.9
1,302.9
2022
£m
1,408.0
164.7
1,572.7
Mandatory reserve deposits of £2.3 million (2022: £5.0 million) are held with central banks in
accordance with statutory requirements. As these deposits are not held in demand accounts,
and are not available to finance the group's day-to-day operations, they are excluded from cash
and cash equivalents.
Cash flows arising from the issue/(repurchase) of ordinary shares comprise:
Share capital issued (note 30)
Share premium on shares issued (note 30)
Merger reserve on shares issued (note 30)
Shares issued in relation to share-based schemes and business
combinations for which no cash consideration was received
Proceeds from issue of share capital
Shares repurchased and placed into the employee benefit trust (note 31)
Net issue/(repurchase) of ordinary shares
2023
£m
2.2
2.3
747.4
(751.9)
–
(16.0)
(16.0)
2022
£m
0.1
18.9
−
(9.8)
9.3
(18.6)
(9.3)
In 2022, £5.7 million of shares were issued for the vesting of the Speirs & Jeffrey second earn-out
consideration. £4.1 million of shares were also issued for the Saunderson House deferred share
consideration. There was no cash consideration received for these transactions. £18.6 million of
shares were repurchased and placed into the group EBT in the prior year.
During the year, £751.9 million of shares were issued as consideration for the IW&I transaction,
there was no cash consideration received for this transaction. In addition to this, £16.0 million of
shares were repurchased and placed into the group EBT.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
38 CONSOLIDATED STATEMENT OF CASH FLOWS CONTINUED
A reconciliation of the movements of financing liabilities and equity to cash flows arising from financing activities is as follows:
At 1 January 2023
Changes from financing cash flows
Proceeds from issue of share capital
Payments for share repurchases
Dividends paid
Interest charge
Payment for lease liabilities
Total financing cash flows
Total non-cash movements
At 31 December 2023
At 1 January 2022
Changes from financing cash flows
Proceeds from issue of share capital
Payments for share repurchases
Dividends paid
Interest charge
Payment for lease liabilities
Total financing cash flows
Total non-cash movements
At 31 December 2022
Subordinated
loan notes
£m
Lease liabilities
£m
Liabilities from
financing
activities
£m
Share capital/
premium
£m
39.9
50.5
90.4
313.2
–
–
–
(2.3)
–
(2.3)
2.3
39.9
–
–
–
(3.3)
(7.5)
(10.8)
35.2
74.9
–
–
–
(5.6)
(7.5)
(13.1)
37.5
114.8
2.3
–
–
–
–
2.3
2.2
317.7
Subordinated
loan notes
£m
Lease liabilities
£m
Liabilities from
financing
activities
£m
Share capital/
premium
£m
39.9
55.0
94.9
294.1
−
−
−
(2.3)
−
(2.3)
2.3
39.9
−
−
−
(3.1)
(8.5)
(11.6)
7.1
50.5
−
−
−
(5.4)
(8.5)
(13.9)
9.4
90.4
9.3
−
−
−
−
9.3
9.8
313.2
Reserves
£m
24.4
(2.3)
(16.0)
–
–
–
(18.3)
762.7
768.8
Reserves
£m
40.3
−
(18.6)
−
−
−
(18.6)
2.7
24.4
Retained
earnings
£m
297.2
–
–
(71.4)
–
–
(71.4)
37.9
263.7
Retained
earnings
£m
288.8
−
−
(48.6)
−
−
(48.6)
57.0
297.2
Total
equity
£m
634.8
–
(16.0)
(71.4)
–
–
(87.4)
802.8
1,350.2
Total
equity
£m
623.2
9.3
(18.6)
(48.6)
−
−
(57.9)
69.5
634.8
39 EVENTS AFTER THE BALANCE SHEET DATE
There have been no material events occurring between the balance sheet date and the date of signing this report.
211
Total
£m
725.2
–
(16.0)
(71.4)
(5.6)
(7.5)
(100.5)
840.3
1,465.0
Total
£m
718.1
9.3
(18.6)
(48.6)
(5.4)
(8.5)
(71.8)
78.9
725.2
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE CONSOLIDATED STATEMENTS CONTINUED
212
40 COUNTRY-BY-COUNTRY REPORTING
HM Treasury has transposed the requirements set out under the Capital Requirements Directive IV (CRD IV) and issued the Capital Requirements Country-by-Country Reporting Regulations 2013, effective
1 January 2014. The legislation requires Rathbones Group Plc (together with its subsidiaries, ‘the group’) to publish certain additional information, on a consolidated basis, for the year ended 31 December 2023.
BASIS OF PREPARATION:
Country
In most cases, we have determined the country by reference to the country of tax residence. Where an entity is not subject to tax (e.g. a partnership) we have considered the location
of management or the jurisdiction in which the revenues are generated. In these cases it is possible that tax is paid in a different country to the one in which profits are reported.
Nature of activities
The nature of activities within the United Kingdom are described within our services on page 2. Discretionary investment management is the sole activity which occurs in Jersey.
Turnover
Turnover is defined as operating income. As the consolidated results are split by country, there is an element of double counting when inter-jurisdictional transactions (for example,
the payment of dividends) occur. The entries to eliminate this double counting are included at the bottom of the table to enable the disclosed figures to agree to the published
consolidated accounts of the group.
Profit/(loss) before
taxation
These are accounting profits. As with turnover some double counting may arise and again this has been eliminated at the bottom of the table. The majority of the total relates to the
elimination of inter-jurisdictional dividends, which are reflected as profits in the United Kingdom.
This column reflects corporation tax actually paid in the year. Note that it is rare that tax paid in any given year relates directly to the profits earned in the same period.
The group received no public subsidies in the year.
The number of employees reported is the average number of full-time employees who were permanently employed by the group, or one of its subsidiaries, during the year.
Contractors are excluded.
A list of the subsidiaries of the group, including their main activity and country of incorporation, is shown within note 45.
Tax paid
Public subsidies
received
Number of
employees
Subsidiaries
Country
United Kingdom
Channel Islands
Sub-total
Inter-group eliminations and other entries arising on consolidation
Total
Turnover
£m
570.0
6.3
576.3
(5.2)
571.1
Profit/(loss)
before
taxation
£m
108.0
(6.1)
101.9
(44.3)
57.6
Tax paid
£m
Number of
employees
29.2
0.3
29.5
–
29.5
2,468
30
2,498
–
2,498
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
At 1 January 2022
Profit for the year
Net remeasurement of defined benefit liability
Deferred tax relating to components of other comprehensive income
Other comprehensive income net of tax
Dividends paid
Issue of share capital
Share-based payments:
— cost of share-based payment arrangements
— cost of vested employee remuneration and share plans
— cost of own shares acquired
— cost of own shares vesting
— tax on share-based payments
At 31 December 2022
Profit for the year
Net remeasurement of defined benefit liability
Deferred tax relating to components of other comprehensive income
Other comprehensive income net of tax
Dividends paid
Issue of share capital
Share-based payments:
— cost of share-based payment arrangements
— cost of vested employee remuneration and share plans
— cost of own shares vesting
— cost of own shares acquired
— tax on share-based payments
At 31 December 2023
The accompanying notes form an integral part of the company financial statements.
Note
Share
capital
£m
3.1
Share
premium
£m
291.0
Merger
reserve
£m
45.1
Own
shares
£m
(36.6)
Retained
earnings
£m
143.4
54
49
44
55
55
55
54
49
44
55
55
−
−
−
−
0.1
−
−
−
−
−
−
−
19.0
−
−
−
−
−
−
−
−
−
−
−
3.2
310.0
45.1
−
–
–
–
2.2
–
–
–
–
−
–
–
–
2.3
–
–
–
–
−
–
–
–
747.4
–
–
–
–
5.4
312.3
792.5
−
−
−
−
−
−
−
2.7
(18.7)
−
(52.6)
−
–
–
–
–
–
–
13.0
(16.0)
–
(55.6)
40.3
(7.1)
3.4
(3.7)
(48.6)
−
25.9
(12.8)
(2.7)
−
1.3
143.1
63.3
(5.8)
1.5
(4.3)
(71.4)
–
24.0
(6.0)
(13.0)
–
(0.4)
135.3
1,189.9
213
Total
equity
£m
446.0
40.3
(7.1)
3.4
(3.7)
(48.6)
19.1
25.9
(12.8)
−
(18.7)
1.3
448.8
63.3
(5.8)
1.5
(4.3)
(71.4)
751.9
24.0
(6.0)
–
(16.0)
(0.4)
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
COMPANY BALANCE SHEET
FOR THE YEAR ENDED 31 DECEMBER 2023
Non-current assets
Investment in subsidiaries
Other investments
Right-of-use assets
Deferred tax
Net defined benefit asset
Current assets
Trade and other receivables
Cash and cash equivalents
Note
45
46
48
49
54
47
2023
£m
1,173.4
–
33.2
7.5
7.0
2022
£m
421.5
8.0
38.3
9.6
Equity
Share capital
Share premium
Merger reserve
Own shares
9.4
Retained earnings
1,221.1
486.8
Equity shareholders' funds
Note
55
55
55
55
2023
£m
5.4
312.3
792.5
(55.6)
135.3
1,189.9
214
2022
£m
3.2
310.0
45.1
(52.5)
143.1
448.9
143.6
16.3
159.9
118.9
56.6
175.5
As permitted by section 408 of the Companies Act 2006 the company has elected not to present its
own statement of comprehensive income for the year. Rathbones Group Plc reported a profit after tax
for the financial year ended 31 December 2023 of £63.3 million (2022: £40.3 million).
The financial statements were approved by the board of directors and authorised for issue on 5 March
2024 and were signed on its behalf by:
Paul Stockton
Group Chief Executive Officer
Iain Hooley
Group Chief Financial Officer
Company registered number: 01000403
The accompanying notes form an integral part of the company financial statements.
Total assets
1,381.0
662.3
Current liabilities
Trade and other payables
Lease liabilities
Provisions
Net current assets
Non-current liabilities
Provisions
Subordinated loan notes
Lease liabilities
Total liabilities
Net assets
50
51
52
52
53
51
(95.4)
(5.3)
(4.7)
(105.4)
(114.0)
(4.8)
(1.5)
(120.3)
54.5
55.2
(5.4)
(39.9)
(40.4)
(85.7)
(191.1)
1,189.9
(8.3)
(39.9)
(44.9)
(93.1)
(213.4)
448.9
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
215
2022
£m
9.3
(18.6)
(48.6)
(7.8)
(5.3)
(70.9)
37.5
19.1
56.6
Cash flows from financing activities
Issue of ordinary shares
Repurchase of ordinary shares
Dividends paid
Payment of lease liabilities
Interest paid
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Note
55
55
44
51
Cash and cash equivalents at the end of the year
60
2023
£m
–
(16.0)
(71.4)
(4.7)
(5.0)
(97.1)
(40.3)
56.6
16.3
The accompanying notes form an integral part of the consolidated financial statements.
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
Note
45
52
54
54
55
Cash flows from operating activities
Profit before tax
Change in fair value through profit or loss
Impairment losses
Net interest and dividend income
Net charge for provisions
Depreciation and amortisation
Defined benefit pension scheme (credits)/charges
Defined benefit pension scheme contributions paid
Share-based payment charges
Changes in operating assets and liabilities:
— net (increase)/decrease in prepayments, accrued income
and other assets
— net decrease in accruals, provisions and other liabilities
Cash (used in)/generated from operations
Tax (paid)/received
Net cash (outflow)/inflow from operating activities
Cash flows from investing activities
Interest received
Inter-company dividends received
Payment of deferred consideration
Purchase of investment securities
Proceeds from sale and redemption of investment securities
Net cash generated from investing activities
2023
£m
63.9
(0.1)
–
(90.9)
6.6
7.0
(0.5)
(2.9)
24.0
7.1
(42.7)
(14.2)
(49.8)
2.6
(47.2)
3.9
92.0
–
–
8.1
104.0
2022
£m
42.6
0.9
0.7
(50.4)
0.9
5.0
(0.3)
(3.9)
25.9
21.4
51.2
(7.3)
65.3
(0.1)
65.2
5.7
50.0
(10.9)
(2.5)
0.9
43.2
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE COMPANY STATEMENTS
216
41 SIGNIFICANT ACCOUNTING POLICIES
STATEMENT OF COMPLIANCE
The separate financial statements of the company are presented as required by the Companies Act
2006 and have been prepared in accordance with UK-adopted International Accounting Standards
and IAS 27 ‘Separate Financial Statements’.
43 EXPENSES FOR THE YEAR
The auditor’s remuneration for audit and other services to the company is set out in note 7 to the
consolidated financial statements.
The average number of employees, on a full-time-equivalent basis, during the year was as follows:
On publishing the parent company financial statements here together with the group financial
statements, the company is taking advantage of the exemption in section 408 of the Companies Act
2006 not to present its individual statement of comprehensive income 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 set out in note 1.3 to the consolidated
financial statements.
Wealth Management:
— investment management services
— advisory services
Asset Management
Shared services
2023
2022
1,086
161
52
617
1,916
1,042
155
50
543
1,791
PRINCIPAL ACCOUNTING POLICIES
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.
44 DIVIDENDS
Details of the company’s dividends paid and proposed for approval at the Annual General Meeting
are set out in note 12 to the consolidated financial statements.
INVESTMENTS IN SUBSIDIARIES
Investments in subsidiaries are stated at cost less, where appropriate, provision for impairment.
The company’s dividend policy is described in the directors’ report on page 145.
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.
The merger reserve is used where more than 90% of the share capital in a subsidiary is acquired and
the consideration includes the issue of new shares by the Company, thereby attracting merger relief
under Section 612 of the Companies Act 2006.
Accounting policies in relation to impairment, interest income, dividend income, leases, foreign
currency, retirement benefit obligations, taxation, cash and cash equivalents and share-based
payments are set out in note 1 to the consolidated financial statements.
42 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF
ESTIMATION UNCERTAINTY
The critical accounting judgements and key sources of estimation uncertainty arise from the
company’s defined benefit pension schemes and valuation of the consideration payable for
Saunderson House and Investec Wealth & Investment. These are described in note 2 to the
consolidated financial statements.
Reserves available for distribution as at 31 December were as follows:
Net assets
Less:
— share capital
— share premium
— merger reserve
— Unrealised profits
Distributable reserves
2023
£m
1,189.9
(5.4)
(312.3)
(792.5)
(9.6)
70.1
2022
£m
448.9
(3.2)
(310.0)
(45.1)
−
90.6
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE COMPANY STATEMENTS CONTINUED
44 DIVIDENDS CONTINUED
Movements in reserves available for distribution were as follows:
As at 1 January
Profit for the year
Net remeasurement of defined benefit liability/asset
Dividends paid
Unrealised profits
Other movements
As at 31 December
45 INVESTMENT IN SUBSIDIARIES
At 1 January 2022
Additions
Disposals
At 1 January 2023
Additions
Disposals
At 31 December 2023
2023
£m
90.6
63.3
(4.3)
(71.4)
(9.6)
1.5
70.1
Equities
£m
422.2
(0.7)
421.5
751.9
–
2022
£m
106.8
40.3
(3.7)
(48.6)
−
(4.1)
90.6
Total
£m
422.2
(0.7)
421.5
751.9
–
1,173.4
1,173.4
The additions in the year of £751.9 million relate to the acquisition of Investec Wealth & Investment
(see note 8).
An impairment review is undertaken at the end of each reporting period when indicators of potential
impairment are identified. Where impairment may be indicated, a test of carrying value against the
recoverable value is performed. The recoverable amount is calculated as the value in use (VIU) which
is derived from the present value of future cash flows expected to be received from the investment.
Impairment is recognised where the investment exceeds the recoverable amount. No indicators of
impairment have been identified this financial period (2022: £0.7 million).
EQUITIES
At 31 December 2023 the company’s subsidiary undertakings were as follows:
217
Company
registration
number
1448919
50503
1688454
2376568
3898083
6650476
7370865
Subsidiary undertaking
Rathbones Investment Management Limited
Rathbones Investment Management International
Limited*
Rathbones Trust Company Limited
Rathbones Asset Management Limited
Arcticstar Limited**
Activity and operation
Investment management and
banking services
Investment management
Trust and tax services
Asset Management
Introducer of private clients
Vision Independent Financial Planning Limited
Financial planning services
Castle Investment Solutions Limited
Investment support services
Rathbones Legal Services Limited*
Laurence Keen Holdings Limited**
Rathbone Directors Limited*
Rathbone Secretaries Limited*
Laurence Keen Nominees Limited*
Neilson Cobbold Client Nominees Limited*
Rathbone Nominees Limited*
Citywall Nominees Limited*
Penchart Nominees Limited*
Argus Nominee Limited
Rathbone Brothers Ltd
Rathbone Pension & Advisory Services Limited
Rathbone Stockbrokers Limited*
Dean River Asset Management Limited*
R.M. Walkden & Co. Limited*
Rathbone Funds Advisers Unipessoal LDA
(entity dissolved 9 January 2023)*
Speirs & Jeffrey Limited**
Trust and legal services
10514352
Intermediate holding company
Corporate director services
Corporate secretarial services
Corporate nominee
Corporate nominee
Corporate nominee
Corporate nominee
Corporate nominee
2474285
4410000
4627820
2801952
3217430
646336
3070653
2608726
Corporate nominee
11395344
Non-trading
12866506
Non-trading
Non-trading
5679426
2483921
Non-trading
SC204313
Non-trading
1246166
European fund marketing
515534528
Investment management
SC098335
Speirs & Jeffrey Client Nominees Limited*
Corporate nominee
SC162589
Speirs & Jeffrey Portfolio Management Limited*
Corporate nominee
SC122842
Speirs & Jeffrey Fund Management Limited*
Corporate nominee
SC095908
Saunderson House Limited
Financial planning and
investment management
940473
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE COMPANY STATEMENTS CONTINUED
45 INVESTMENT IN SUBSIDIARIES CONTINUED
Subsidiary undertaking
CastleCo Limited
HouseCo Limited
CabinCo Limited
CottageCo Limited
Activity and operation
Non-trading
Non-trading
Non-trading
Non-trading
Investec Wealth & Investment Limited
Investment management
Bell Nominees Limited
Investment Administration Nominees Limited
Corporate nominee
Corporate nominee
Company
registration
number
130602
130603
130601
131144
02122340
00625232
02075505
R.& R. Nominees Limited
Tudor Nominees Limited
Carr PEP Nominees Limited
Ferlim Nominees Limited
Murray Asset Management UK Limited
Castle Street Nominees UK Limited
Murray Asset Nominees UK Limited
Click Nominees Limited
PEP Services (Nominees) Limited
Murray Asset Management Limited
Murray Investment Management Limited
Murray Asset Nominees Limited
Spring Nominees Limited
Anston Trustees Limited
Carr Investment Services Nominees Limited
Investec Wealth & Investment Trustees Limited
Rensburg Client Nominees Limited
Scarwood Nominees Limited
Castle Street Nominees Limited
Hero Nominees Limited
Corporate nominee
00790828
Speirs & Jeffrey Limited
Corporate nominee
Corporate nominee
02016278
02560336
Corporate nominee
01022478
Asset Management
09447298
Corporate nominee
Corporate nominee
Corporate nominee
09329323
09329081
03276308
Corporate nominee
02368386
Corporate nominee
Corporate nominee
SC173493
SC173492
Corporate nominee
SC196715
Trustee Company
Corporate nominee
Trustee Company
Corporate nominee
Corporate nominee
02826318
02620560
02243919
02020824
01147539
Corporate nominee
Corporate nominee
01747036
CottageCo Limited
218
The registered office for all subsidiary undertakings is 8 Finsbury Circus, London EC2M 7AZ except
for the following:
Subsidiary undertaking
Registered office
Rathbones Investment Management Limited
Rathbones Investment Management International
Limited
Vision Independent Financial Planning Limited
Castle Investment Solutions Limited
Port of Liverpool Building, Pier Head, Liverpool L3
1NW
26 Esplanade, St Helier, Jersey JE1 2RB
Vision House, Unit 6A Falmouth Business Park,
Bickland Water Road, Falmouth, Cornwall TR11 4SZ
Vision House, Unit 6A Falmouth Business Park,
Bickland Water Road, Falmouth, Cornwall TR11 4SZ
George House, 50 George Square, Glasgow G2 1EH
Speirs & Jeffrey Client Nominees Limited
George House, 50 George Square, Glasgow G2 1EH
Speirs & Jeffrey Portfolio Management Limited
George House, 50 George Square, Glasgow G2 1EH
Speirs & Jeffrey Fund Management Limited
George House, 50 George Square, Glasgow G2 1EH
Dean River Asset Management Limited
10 George Street, Edinburgh EH2 2PF
Rathbone Funds Advisers Unipessoal LDA (entity
dissolved 9 January 2023)*
R Tierno Galvan 10 Torre 3, Piso 6 Sala 602,
1070-274, Campo Ourique Lisbon, Lisbon, Portugal
CastleCo Limited
HouseCo Limited
CabinCo Limited
Neilson Cobbold Client Nominees Ltd
Rathbone Nominees Limited
Aztec Group House, 11-15 Seaton Place, St Helier,
Jersey, JE4 0QH
Aztec Group House, 11-15 Seaton Place, St Helier,
Jersey, JE4 0QH
Aztec Group House, 11-15 Seaton Place, St Helier,
Jersey, JE4 0QH
Aztec Group House, 11-15 Seaton Place, St Helier,
Jersey, JE4 0QH
Port of Liverpool Building, Pier Head, Liverpool L3
1NW
Port of Liverpool Building, Pier Head, Liverpool L3
1NW
Investec Wealth & Investment (Channel Islands) Limited
Investment management
Torch Nominees Limited
Corporate nominee
* Held by subsidiary undertaking
** UK subsidiary has taken an exemption from audit under section 479A of the Companies Act 2006 for the year ended 31
December 2023
Corporate nominee
SC050721
Bell Nominees Limited
30 Gresham Street, London, England, EC2V 7QN
Investec Wealth & Investment Limited
30 Gresham Street, London, England, EC2V 7QN
34543
54988
54991
Investment Administration Nominees Limited
30 Gresham Street, London, England, EC2V 7QN
R.& R. Nominees Limited
Tudor Nominees Limited
Carr PEP Nominees Limited
30 Gresham Street, London, England, EC2V 7QN
30 Gresham Street, London, England, EC2V 7QN
30 Gresham Street, London, England, EC2V 7QN
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 NOTES TO THE COMPANY STATEMENTS CONTINUED
45 INVESTMENT IN SUBSIDIARIES CONTINUED
Subsidiary undertaking
Ferlim Nominees Limited
Registered office
30 Gresham Street, London, England, EC2V 7QN
46 OTHER INVESTMENTS
FAIR VALUE THROUGH PROFIT OR LOSS SECURITIES
Murray Asset Management UK Limited
30 Gresham Street, London, England, EC2V 7QN
Castle Street Nominees UK Limited
30 Gresham Street, London, England, EC2V 7QN
Equity securities:
— listed
Murray Asset Nominees UK Limited
30 Gresham Street, London, England, EC2V 7QN
Click Nominees Limited
30 Gresham Street, London, England, EC2V 7QN
PEP Services (Nominees) Limited
30 Gresham Street, London, England, EC2V 7QN
Murray Asset Management Limited
Murray Investment Management Limited
Murray Asset Nominees Limited
Spring Nominees Limited
Anston Trustees Limited
Quartermile, 15 Lauriston Place, Edinburgh,
Scotland, EH3 9EN
Quartermile One, Lauriston Place, Edinburgh,
Scotland, EH3 9EN
Quartermile One, 15 Lauriston Place, Edinburgh,
Scotland, EH3 9EN
30 Gresham Street, London, England, EC2V 7QN
30 Gresham Street, London, England, EC2V 7QN
Carr Investment Services Nominees Limited
30 Gresham Street, London, England, EC2V 7QN
Investec Wealth & Investment Trustees Limited
30 Gresham Street, London, England, EC2V 7QN
Rensburg Client Nominees Limited
30 Gresham Street, London, England, EC2V 7QN
Current
Scarwood Nominees Limited
Castle Street Nominees Limited
Hero Nominees Limited
30 Gresham Street, London, England, EC2V 7QN
Quartermile One, Lauriston Place, Edinburgh,
Scotland, EH3 9EN
Glategny Court, Glategny Esplanade, St Peter Port,
Guernsey, GY1 1WR
Investec Wealth & Investment (Channel Islands)
Limited
Glategny Court, Glategny Esplanade, St Peter Port,
Guernsey, GY1 1WR
Torch Nominees Limited
Glategny Court, Glategny Esplanade, St Peter Port,
Guernsey, GY1 1WR
The company owns, directly or indirectly, 100% of the ordinary share capital of all subsidiary
undertakings.
As described in note 37 of the consolidated financial statements, fair value through profit or loss
securities includes direct holdings in equity securities. The group previously owned units in
collectives managed by Rathbones Asset Management Limited (valued at 31 December 2022:
£8.1 million). These assets were used to hedge the Group’s exposure to deferred remuneration
schemes for employees of unit trusts. These assets were sold during the period.
47 TRADE AND OTHER RECEIVABLES
Prepayments and other receivables
Amounts owed by group undertakings
Amounts owed by Group undertakings do not have specific repayment dates but are on demand and
are paid down periodically as trading requires.
219
2023
£m
–
–
2022
£m
8.1
8.1
2023
£m
6.8
136.8
143.6
143.6
143.6
2022
£m
4.2
114.7
118.9
118.9
118.9
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE COMPANY STATEMENTS CONTINUED
48 RIGHT-OF-USE ASSETS
Cost
At 1 January 2022
Additions
Disposals
Other movements
At 1 January 2023
Additions
Disposals
Other movements
At 31 December 2023
Depreciation and impairment
1 January 2022
Charge for the year
Disposals
At 1 January 2023
Charge for the year
Disposals
At 31 December 2023
Carrying amount at 31 December 2023
Carrying amount at 31 December 2022
Carrying amount at 1 January 2022
Property
£m
Motor vehicles
and equipment
£m
56.3
3.4
(0.8)
(2.9)
56.0
1.9
–
(2.6)
55.3
13.8
4.9
(0.7)
18.0
4.8
(0.5)
22.3
33.0
38.0
42.4
0.4
−
−
−
0.4
–
–
–
0.4
−
0.1
−
0.1
0.1
–
0.2
0.2
0.2
0.4
Total
£m
56.7
3.4
(0.8)
(2.9)
56.4
1.9
–
(2.6)
55.7
13.8
5.0
(0.7)
18.1
4.9
(0.5)
22.5
33.2
38.2
42.8
During the year, where there was an expectation of the company vacating its properties prior to their
respective lease termination dates, the useful lives of the right-of-use assets were revised, and the
assets were reviewed for impairment. The company subsequently recognised impairment charges of
£2.1m and accelerated depreciation of £0.2m in the year.
220
49 DEFERRED TAX
The UK Government legislated in the Finance Act 2021 to increase the UK corporation tax rate to
25.0% from 19.0% on 1 April 2023. This has been reflected in the deferred tax calculations. Deferred
income taxes are calculated on all temporary differences under the liability method using the rate
expected to apply when the relevant timing differences are forecast to unwind.
The movement on the deferred tax account is as follows:
As at 1 January 2023
Recognised in profit or loss in
respect of:
— current year
— prior year
— change in rate
Total recognised in profit
or loss
Recognised in other comprehensive
income in respect of:
— current year
— prior year
— change in rate
Total recognised in other
comprehensive income
Recognised in equity in respect of:
— current year
— prior year
— change in rate
Total recognised in equity
As at 31 December 2023
Deferred tax assets
Deferred tax liabilities
As at 31 December 2023
Pensions
£m
Share-based
payments
£m
Staff-related
costs
£m
Fair value
through
profit or loss
£m
(2.4)
12.1
0.1
(0.2)
(0.8)
–
(0.1)
(2.5)
–
–
(0.9)
(2.5)
1.4
–
0.1
1.5
–
–
–
–
(1.8)
–
(1.8)
(1.8)
–
–
–
–
(0.7)
–
–
(0.7)
8.9
8.9
–
8.9
0.1
0.2
–
0.3
–
–
–
–
–
–
–
–
0.4
0.4
–
0.4
0.2
–
–
0.2
–
–
–
–
–
–
–
–
–
–
–
–
Total
£m
9.6
(3.0)
0.2
(0.1)
(2.9)
1.4
–
0.1
1.5
(0.7)
–
–
(0.7)
7.5
9.3
(1.8)
7.5
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
221
2022
£m
1.7
84.7
18.2
9.4
114.0
2023
£m
1.7
83.7
–
10.0
95.4
NOTES TO THE COMPANY STATEMENTS CONTINUED
49 DEFERRED TAX CONTINUED
50 TRADE AND OTHER PAYABLES
Share-based
payments
£m
Staff-related
costs
£m
Fair value
through
profit or loss
£m
Trade creditors
Accruals and other creditors
Amounts owed to group undertakings
Other taxes and social security costs
As at 1 January 2022
Recognised in profit or loss in
respect of:
— current year
— prior year
— change in rate
Total recognised in profit or loss
Recognised in other comprehensive
income in respect of:
— current year
— prior year
— change in rate
Total recognised in other
comprehensive income
Recognised in equity in respect of:
— current year
— prior year
— change in rate
Total recognised in equity
Pensions
£m
(2.3)
(0.8)
−
(2.6)
(3.4)
1.3
−
2.0
3.3
−
−
−
−
9.7
0.9
0.1
0.2
1.2
−
−
−
−
1.2
−
−
1.2
As at 31 December 2022
(2.4)
12.1
Deferred tax assets
Deferred tax liabilities
As at 31 December 2022
−
(2.4)
(2.4)
12.1
−
12.1
0.1
(0.3)
(0.1)
−
−
(0.1)
−
−
−
−
−
−
−
−
0.1
0.1
−
0.1
0.2
−
−
0.1
−
−
−
−
−
−
−
−
(0.2)
−
(0.2)
(0.2)
Total
£m
7.1
0.2
0.1
(2.5)
(2.1)
1.3
−
2.0
3.3
1.2
−
−
1.2
9.6
12.1
(2.5)
9.6
£0.4 million of current tax on share-based payments was charged to equity during the year (2022:
credit of £0.1 million).
The fair value of trade and other payables is not materially different from their carrying amount.
51 LEASE LIABILITIES
Maturity analysis
Less than one year
One to five years
More than five years
Lease liabilities at 31 December
Current
Non-current
2023
£m
5.3
18.7
21.7
45.7
5.3
40.4
45.7
2022
£m
4.8
19.1
25.8
49.7
4.8
44.9
49.7
The total cash outflow for Company leases during the year was £7.6 million (2022: £7.8 million).
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
222
2023
£m
40.0
39.9
2022
£m
40.0
39.9
NOTES TO THE COMPANY STATEMENTS CONTINUED
52 PROVISIONS
53 SUBORDINATED LOAN NOTES
As at 1 January 2022
Charged to profit or loss
Unused amount credited to profit
or loss
Net charge to profit or loss
Other movements
Utilised/paid during the year
At 31 December 2022
Charged to profit or loss
Unused amount credited to profit
or loss
Net credit to profit or loss
Other movements
Utilised/paid during the year
As at 31 December 2023
Payable within 1 year
Payable after 1 year
Deferred, variable
costs to acquire
client relationship
intangibles
£m
Legal and
compensation
£m
Property-
related
£m
8.5
−
−
−
1.0
(5.2)
4.3
−
−
−
2.6
(2.3)
4.6
4.1
0.5
4.6
0.1
−
−
−
−
−
0.1
−
−
−
−
−
0.1
0.1
–
0.1
4.5
0.9
−
0.9
−
−
5.4
−
−
−
−
−
5.4
0.5
4.9
5.4
Total
£m
13.1
0.9
−
0.9
1.0
(5.2)
9.8
−
−
−
2.6
(2.3)
10.1
4.7
5.4
10.1
Other movements in provisions relate to deferred payments to investment managers and third
parties for the introduction of client relationships, which have been previously capitalised.
Property-related provisions of £5.3 million relate to dilapidation provisions expected to arise on
leasehold premises held by the group (2022: £5.3 million). Dilapidation provisions are calculated
using a discounted cash flow model.
In 2023 the company did not utilise the property provision (2022: £nil). The impact of discounting
led to a credit of £nil (2022: additional charge of £0.9 million) being recognised during the year.
Subordinated loan notes
— face value
— carrying value
Rathbones Group Plc holds £39.9 million of 10-year tier 2 notes with a call option in October 2026
and annually thereafter. The Issuer requires the group’s subsidiaries to comply with all laws and
governmental rules or regulations to which they are subject. Interest is payable at a fixed rate of
5.642% per annum until the first call option date and at a fixed rate of 4.893% over Compounded
Daily SONIA thereafter. Legal fees of £0.1 million were incurred in issuing the notes, which have
been accounted for in the carrying value of amortised cost.
An interest expense of £2.3 million (2022: £2.3 million) was recognised in the year.
54 LONG-TERM EMPLOYEE BENEFITS
Details of the defined benefit pension schemes operated by the company are provided in note 29 to
the consolidated financial statements.
55 SHARE CAPITAL, OWN SHARES AND SHARE-BASED PAYMENTS
Details of the share capital of the company and ordinary shares held by the company together with
changes thereto are provided in notes 30 and 31 to the consolidated financial statements. Details of
options on the company’s shares and share-based payments are set out in note 32 to the consolidated
financial statements.
56 FINANCIAL INSTRUMENTS
The company’s risk management policies and procedures are integrated with the wider Rathbones
group’s risk management process. The Rathbones 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 the
following primary areas:
(i) credit risk
(ii) liquidity risk
(iii) market risk (which includes fair value interest rate risk, cash flow interest rate risk,
foreign exchange risk and price risk); and
(iv) pension risk.
Provisions payable after one year are expected to be settled within four years of the balance sheet
date (2022: two years), except for the property-related provisions of £4.9 million (2022: £5.0 million),
which are expected to be settled within 11 years of the balance sheet date (2022: 11 years).
The company’s exposures to pension risk are set out in note 29 to the consolidated financial
statements.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE COMPANY STATEMENTS CONTINUED
223
56 FINANCIAL INSTRUMENTS CONTINUED
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.
Cash and cash equivalents (balances at banks)
The company has exposure to financial institutions through its bank deposits (reported within
cash equivalents).
The company’s financial risk management policies are designed to identify and analyse the financial
risks that the company faces, to set appropriate risk tolerances, limits and controls, and to monitor the
financial risks and adherence to limits by means of reliable and up-to-date information systems. The
company regularly reviews its financial 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 has embedded risk management within the business through
the executive committee and senior management.
(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’s financial assets are categorised as follows.
Trade and other receivables
Trade and other receivables relate to amounts placed with subsidiaries and staff advances.
The collection and ageing of trade and other receivables are reviewed on a periodic basis
by management.
Maximum exposure to credit risk
Trade and other receivables:
— amounts owed by group undertakings
— other financial assets
Balances at banks
2023
£m
136.8
1.1
16.3
154.2
2022
£m
114.7
1.1
56.6
172.4
The above table represents the gross credit risk exposure of the company at 31 December 2023 and
2022, without taking account of any collateral held or other credit enhancements attached.
Trade and other receivables
No trade and other receivables have been written off or are credit-impaired at the reporting date.
Amounts owed by group undertakings do not have specific repayment dates and are paid down
periodically as trading requires.
Balances at banks
The credit quality of balances at banks is analysed below by reference to the long-term credit rating
awarded by Fitch, or equivalent rating by Moody’s or S&P, as at the balance sheet date.
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.
A
Other
For the purposes of financial reporting the company categorises its exposures based on the long-term
ratings awarded to counterparties by Fitch, Moody’s or S&P.
2023
£m
7.6
8.7
16.3
2022
£m
4.5
52.1
56.6
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 NOTES TO THE COMPANY STATEMENTS CONTINUED
56 FINANCIAL INSTRUMENTS CONTINUED
(i) CREDIT RISK CONTINUED
£8.7 million of cash was held in a designated account with Rathbones Investment Management
Limited at 31 December 2023, which acts as the group’s treasury function and a licenced deposit
taker (2022: £52.1 million). The credit risk assessed for this balance at the year-end was ‘low’
Concentration of credit risk
The company has counterparty credit 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 includes the placement of funds with a range of high-quality financial institutions.
(a) Geographical sectors
The following table analyses the company’s credit exposures, at their carrying amounts, by
geographical region as at the balance sheet date. In this analysis, exposures are categorised based
on the country of domicile of the counterparty
At 31 December 2023
Trade and other receivables:
— amounts owed by group undertakings
— other financial assets
Balances at banks
At 31 December 2022
Trade and other receivables:
— amounts owed by group undertakings
— other financial assets
Balances at banks
United
Kingdom
£m
Rest of
the World
£m
135.8
1.0
16.3
153.1
United
Kingdom
£m
113.9
0.9
56.6
171.4
1.0
0.1
–
1.1
Rest of
the World
£m
0.8
0.2
−
1.0
Total
£m
136.8
1.1
16.3
154.2
Total
£m
114.7
1.1
56.6
172.4
224
At 31 December 2023, all rest of the world exposures were to counterparties based in Jersey, Japan
and the United States of America (2022: Jersey and the United States of America). At 31 December
2023, the group had exposure to the UK government through the holding of treasury bills (2022:
UK government).
(b)
Industry sectors
The company’s credit exposures at the balance sheet date, analysed by the primary industry
sectors in which our counterparties operate, were:
At 31 December 2023
Trade and other receivables:
— amounts owed by group undertakings
— other financial assets
Balances at banks
At 31 December 2022
Trade and other receivables:
— amounts owed by group undertakings
— other financial assets
Balances at banks
Financial
institutions
£m
Clients and other
corporates
£m
8.3
–
16.3
24.6
128.5
1.1
–
129.6
Financial
institutions
£m
Clients and other
corporates
£m
−
−
56.6
56.6
114.7
1.1
−
115.8
Total
£m
136.8
1.1
16.3
154.2
Total
£m
114.7
1.1
56.6
172.4
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 NOTES TO THE COMPANY STATEMENTS CONTINUED
225
56 FINANCIAL INSTRUMENTS CONTINUED
(ii) LIQUIDITY RISK
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 no bank loans (2022: £nil).
Non-derivative cash flows
The table below presents the undiscounted cash flows receivable and payable by the company on its non-derivative financial assets and liabilities by remaining contractual maturities at the balance
sheet date.
At 31 December 2023
Trade and other receivables:
— amounts owed by group undertakings
— other financial assets
Balances at banks
Cash flows arising from financial assets
Trade and other payables:
— amounts owed to group undertakings
— subordinated loan notes
— lease liabilities
— other financial liabilities
Cash flows arising from financial liabilities
Net liquidity gap
Cumulative net liquidity gap
On
demand
£m
Not more than
3 months
£m
After 3 months
but not more
than 1 year
£m
After 1 year
but not more
than 5 years
£m
136.8
–
16.3
153.1
–
–
–
0.2
0.2
152.9
152.9
–
0.2
–
0.2
–
–
2.0
11.3
13.3
(13.1)
139.8
–
0.8
–
0.8
–
2.3
5.9
0.9
9.1
(8.3)
131.5
–
0.2
–
0.2
–
44.5
20.6
3.0
68.1
(67.9)
63.6
After 5
years
£m
–
–
–
–
–
–
31.9
3.7
35.6
(35.6)
28.0
No fixed
maturity
date
£m
–
–
–
–
–
–
–
–
–
–
28.0
Total
£m
136.8
1.2
16.3
154.3
–
46.8
60.4
19.1
126.3
28.0
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE COMPANY STATEMENTS CONTINUED
56 FINANCIAL INSTRUMENTS CONTINUED
(ii) LIQUIDITY RISK CONTINUED
At 31 December 2022
Trade and other receivables:
— amounts owed by group undertakings
— other financial assets
Balances at banks
Cash flows arising from financial assets
Trade and other payables:
— amounts owed to group undertakings
— subordinated loan notes
— lease liabilities
— other financial liabilities
Cash flows arising from financial liabilities
Net liquidity gap
Cumulative net liquidity gap
226
Total
£m
114.7
1.1
56.6
172.4
18.2
49.0
67.0
16.2
150.4
22.0
On
demand
£m
Not more than
3 months
£m
After 3 months
but not more
than 1 year
£m
After 1 year
but not more
than 5 years
£m
After 5
years
£m
No fixed
maturity
date
£m
114.7
−
56.6
171.3
18.2
−
0.2
18.4
152.9
152.9
−
0.2
−
0.2
−
1.9
6.4
8.3
(8.1)
144.8
−
0.7
−
0.7
−
2.2
5.7
0.2
8.1
(7.4)
137.4
−
0.2
−
0.2
−
46.8
21.7
5.1
73.6
(73.4)
64.0
−
−
−
−
−
37.7
4.3
42.0
(42.0)
22.0
−
−
−
−
−
−
−
−
−
22.0
Included within trade and other payables 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.
The company holds £nil of equity investments (2022: £8.1 million) which are subject to liquidity risk but are not included in the table above. These assets are held as fair value through profit or loss securities
and have no fixed maturity date; cash flows arise from receipt of dividends or through sale of the assets.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE COMPANY STATEMENTS CONTINUED
56 FINANCIAL INSTRUMENTS CONTINUED
(ii) LIQUIDITY RISK CONTINUED
Total liquidity requirement
At 31 December 2023
Cash flows arising from financial liabilities
Total off-balance-sheet items
Total liquidity requirement
At 31 December 2022
Cash flows arising from financial liabilities
Total off-balance-sheet items
Total liquidity requirement
227
Total
£m
126.3
–
126.3
Total
£m
150.4
−
150.4
On
demand
£m
Not more
than 3 months
£m
After 3 months
but not more
than 1 year
£m
After 1 year
but not more
than 5 years
£m
0.2
–
0.2
13.3
–
13.3
9.1
–
9.1
68.1
–
68.1
On
demand
£m
Not more than
3 months
£m
After 3 months
but not more
than 1 year
£m
After 1 year
but not more
than 5 years
£m
18.4
−
18.4
8.3
−
8.3
8.2
−
8.2
73.5
−
73.5
After
5 years
£m
35.6
–
35.6
After 5
years
£m
42.0
−
42.0
(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.
At 31 December 2023
Assets
Other investments:
— equity securities
Trade and other receivables:
— amounts owed by group undertakings
— other financial assets
Balances at banks
Total financial assets
Not more
than 3 months
£m
After 3 months
but not more
than 6 months
£m
After 6 months
but not more
than 1 year
£m
After 1 year
but not more
than 5 years
£m
After
5 years
£m
Non-interest
-bearing
£m
Total
£m
–
–
0.5
16.3
16.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
136.8
0.6
–
137.4
136.8
1.1
16.3
154.2
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE COMPANY STATEMENTS CONTINUED
56 FINANCIAL INSTRUMENTS CONTINUED
(iii) MARKET RISK CONTINUED
At 31 December 2023
Liabilities
Trade and other payables:
— amounts owed to group undertakings
— subordinated loan notes
— other financial liabilities
Total financial liabilities
Interest rate repricing gap
At 31 December 2022
Assets
Other investments:
— equity securities
Trade and other receivables:
— amounts owed by group undertakings
— other financial assets
Balances at banks
Total financial assets
Liabilities
Trade and other payables:
— amounts owed to group undertakings
— subordinated loan notes
— other financial liabilities
Total financial liabilities
Interest rate repricing gap
Not more
than 3 months
£m
After 3 months
but not more
than 6 months
£m
After 6 months
but not more
than 1 year
£m
After 1 year
but not more
than 5 years
£m
After
5 years
£m
Non-interest
-bearing
£m
–
–
1.3
1.3
15.5
–
–
1.3
1.3
–
–
2.7
2.7
–
39.9
18.7
58.6
–
–
21.7
21.7
(1.3)
(2.7)
(58.6)
(21.7)
–
–
17.6
17.6
119.8
Not more
than 3 months
£m
After 3 months
but not more
than 6 months
£m
After 6 months
but not more
than 1 year
£m
After 1 year
but not more
than 5 years
£m
After
5 years
£m
Non-interest
-bearing
£m
−
−
0.6
56.5
57.1
−
−
1.1
1.1
56.0
−
−
−
−
−
−
−
1.1
1.1
(1.1)
−
−
−
−
−
−
−
2.5
2.5
(2.5)
−
−
−
−
−
−
39.9
19.2
59.1
(59.1)
−
−
−
−
−
−
−
25.8
25.8
(25.8)
8.1
114.7
0.5
−
123.3
18.2
−
14.7
32.9
90.4
228
Total
£m
–
39.9
63.3
103.2
51.0
Total
£m
8.1
114.7
1.1
56.5
180.4
18.2
39.9
64.4
122.5
57.9
A 2% parallel increase or decrease in the sterling yield curve would have no impact on profit after tax or equity (2022: no impact).
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE COMPANY STATEMENTS CONTINUED
229
56 FINANCIAL INSTRUMENTS CONTINUED
(iii) MARKET RISK CONTINUED
The company has assessed the impact of climate change on the carrying amount of its financial
assets and liabilities at year-end, and considers there to be no material impact.
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
2023. Included in the table are the company’s financial assets and liabilities, at carrying amounts,
categorised by currency.
At 31 December 2023
Assets
Other investments:
— equity securities
Trade and other receivables:
— amounts owed by group undertakings
— other financial assets
Balances at banks
Total financial assets
Liabilities
Trade and other payables:
— amounts owed to group undertakings
— subordinated loan notes
— other financial liabilities
Total financial liabilities
Net on-balance-sheet position
Sterling
£m
US dollar
£m
Euro
£m
Total
£m
–
136.8
1.0
16.3
154.1
–
39.9
63.2
103.1
51.0
–
–
0.1
–
0.1
–
–
0.1
0.1
–
–
–
–
–
–
–
–
–
–
–
–
136.8
1.1
16.3
154.2
–
39.9
63.3
103.2
51.0
At 31 December 2022
Assets
Other investments:
— equity securities
Trade and other receivables:
— amounts owed by group undertakings
— other financial assets
Balances at banks
Total financial assets
Liabilities
Trade and other payables:
— amounts owed to group undertakings
— subordinated loan notes
— other financial liabilities
Total financial liabilities
Net on-balance-sheet position
Sterling
£m
US dollar
£m
Euro
£m
Total
£m
8.1
114.7
0.9
56.6
180.3
18.2
39.9
64.2
122.3
57.9
−
−
0.1
−
0.1
−
−
0.2
0.2
−
−
−
−
−
−
−
−
−
−
−
8.1
114.7
1.0
56.6
180.4
18.2
39.9
64.4
122.5
57.9
A 10% weakening of the US dollar against sterling would have reduced equity and profit after tax
by £nil in 2023 (2022: £nil). A 10% strengthening of the US dollar would have had an equal and
opposite effect. This analysis assumes that all other variables, in particular other exchange rates,
remain constant.
Price risk
The group’s exposure to price risk, all of which is through the company’s holdings of equity
investment securities, is described in note 33.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
NOTES TO THE COMPANY STATEMENTS CONTINUED
56 FINANCIAL INSTRUMENTS CONTINUED
(iii) MARKET RISK CONTINUED
Fair values
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.
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
230
57 CAPITAL MANAGEMENT
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
— maintain a strong capital base to support the development of its business
For monitoring purposes, the company defines capital as distributable reserves (see note 44). The
company monitors the level of distributable reserves on a monthly basis and compares 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 monitors 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.
There were no changes in the company’s approach to capital management during the year.
–
–
–
–
–
–
–
–
58 CONTINGENT LIABILITIES AND COMMITMENTS
The company had no contingent liabilities or commitments at the year-end (2022: £nil).
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
59 RELATED PARTY TRANSACTIONS
Rathbones Group Plc is considered to be the ultimate controlling party.
8.1
8.1
−
−
−
−
8.1
8.1
TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
The remuneration of the key management personnel of the company, who are defined as the
company’s directors and other members of senior management who are responsible for planning,
directing and controlling the activities of the company, is set out below.
At 31 December 2023
Assets
Fair value through profit or loss:
— equity securities
At 31 December 2022
Assets
Fair value through profit or loss:
— equity securities
The company recognises transfers between levels of the fair value hierarchy at the end of the
reporting period during which the change has occurred. There have been no transfers between levels
during the year (2022: none).
Details of the methods and assumptions used to determine the fair values of the financial assets in
the above table, along with how reasonably possible changes to the assumptions affect these fair
values, are provided in note 33 to the consolidated financial statements.
Short-term employee benefits
Other long-term benefits
Share-based payments
2023
£m
2.3
0.1
0.7
3.1
2022
£m
1.7
−
0.1
1.8
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 45).
Dividends totalling £0.3 million were paid in the year (2022: £0.2 million) in respect of ordinary
shares held by key management personnel and their close family members.
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. All transactions were made on normal business terms.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
231
NOTES TO THE COMPANY STATEMENTS CONTINUED
59 RELATED PARTY TRANSACTIONS CONTINUED
OTHER RELATED PARTY TRANSACTIONS
During the year, the company entered into the following transactions with its subsidiaries:
Interest
Charges for management services
Dividends received
2023
2022
Receivable
£m
Payable
£m
Receivable
£m
Payable
£m
3.8
68.1
92.0
163.9
–
–
–
–
5.6
58.0
50.0
113.6
−
−
−
−
The company’s balances with fellow group companies at 31 December 2023 are set out in notes 47
and 50.
The company’s transactions with the pension funds are described in note 54. At 31 December 2023,
no amounts were due from the pension schemes (2022: £nil).
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.
60 CASH AND CASH EQUIVALENTS
For the purposes of the company 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 at bank (excluding amounts held by employee benefit trust)
2023
£m
16.3
2022
£m
56.6
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 NOTES TO THE COMPANY STATEMENTS CONTINUED
60 CASH AND CASH EQUIVALENTS CONTINUED
A reconciliation of the movements of financing liabilities and equity to cash flows arising from financing activities is as follows:
232
Total
£m
538.5
–
(16.0)
(71.4)
(5.0)
(4.7)
(97.1)
834.1
Subordinated
loan notes
£m
Lease
liabilities
£m
Liabilities from
financing
activities
£m
Share capital/
premium
£m
Reserves
£m
Retained
earnings
£m
Total
equity
£m
39.9
49.7
89.6
313.2
(7.4)
143.1
448.9
–
–
–
(2.3)
–
(2.3)
2.3
–
–
–
(2.7)
(4.7)
(7.4)
3.4
–
–
–
(5.0)
(4.7)
(9.7)
5.7
2.3
–
–
–
–
2.3
2.2
39.9
45.7
85.6
317.7
Subordinated
loan notes
£m
39.9
−
−
−
(2.3)
−
(2.3)
2.2
39.9
Lease
liabilities
£m
53.9
Liabilities from
financing
activities
£m
Share capital/
premium
£m
93.8
294.1
−
−
−
(3.0)
(7.8)
(10.8)
6.6
49.7
−
−
−
(5.3)
(7.8)
(13.1)
8.8
89.6
9.3
−
−
−
−
9.3
9.8
313.2
(2.3)
(16.0)
–
–
–
(18.3)
762.6
736.9
Reserves
£m
8.5
−
(18.6)
−
−
−
(18.6)
2.7
(7.4)
–
–
(71.4)
–
–
(71.4)
63.6
–
(16.0)
(71.4)
–
–
(87.4)
828.4
135.3
1,189.9
1,275.5
Retained
earnings
£m
143.4
−
−
(48.6)
−
−
(48.6)
48.3
143.1
Total
equity
£m
446.0
9.3
(18.6)
(48.6)
−
−
(57.9)
60.8
Total
£m
539.8
9.3
(18.6)
(48.6)
(5.3)
(7.8)
(71.0)
69.6
448.9
538.5
At 1 January 2023
Changes from financing cash flows
Proceeds from issue of share capital
Payments for share repurchases
Dividends paid
Interest charge
Payment for lease liabilities
Total financing cash flows
Total non-cash movements
At 31 December 2023
At 1 January 2022
Changes from financing cash flows
Proceeds from issue of share capital
Payments for share repurchases
Dividends paid
Interest charge
Payment for lease liabilities
Total financing cash flows
Total non-cash movements
At 31 December 2022
61 EVENTS AFTER THE BALANCE SHEET DATE
There have been no material events occurring between the balance sheet date and the date of signing this report.
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
STRATEGIC
REPORT
GOVERNANCE
REPORT
FINANCIAL
STATEMENTS
RATHBONES GROUP PLC REPORT & ACCOUNTS 2023
233
233
234 Five-year record
234 Corporate information
FURTHER
INFORMATION
FURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023 234
FURTHER INFORMATION
FIVE-YEAR RECORD
Operating income (and underlying operating income)1
Underlying profit before tax1
Profit before tax
Profit after tax
Equity dividends paid and proposed
Basic earnings per share
Diluted earnings per share
Underlying earnings per share1
Dividends per ordinary share
Equity shareholders' funds
2023
£’000
571.1
127.1
57.6
37.5
62.9
52.6p
50.8p
135.8p
87.0p
1,350.1
2022²
£’000
455.9
97.1
64.1
49.0
49.3
83.6p
81.6p
130.8p
84.0p
634.8
2021²
£’000
435.9
120.7
95.0
75.2
49.5
133.5p
129.3p
172.2p
81.0p
623.3
2020²
£’000
366.1
92.5
43.8
26.7
38.7
49.6p
47.6p
133.3p
72.0p
513.8
2019²
£’000
348.1
88.7
39.7
26.9
37.7
50.3p
48.7p
132.8p
70.0p
485.4
Total funds under management and administration
£105.3bn
£60.2bn
£68.2bn
£54.7bn
£50.4bn
1. A reconciliation between the underlying measure and its closest IFRS equivalent for the current year and the prior year is shown in table 3 on page 34
2. Data excludes IW&I
CORPORATE INFORMATION
Principal trading names
Wealth management
Asset management
Rathbones Asset Management
(formerly Rathbone Unit Trust Management)
Rathbones Investment Management
Rathbones Investment Management International
Greenbank Investments
Rathbones Trust Company
Rathbones Legal Services
Vision Independent Financial Planning
Castle Investment Solutions
Saunderson House
Investec Wealth & Investment
Investec Wealth & Investment (Channel Islands)
Murray Asset Management UK
Offices
Websites
23
2
rathbones.com
rathbones.com/international
greenbankinvestments.com
rathbones.com/financial-planning
rathbonesam.com
investec.com/en_gb/wealth
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE REPORTFURTHER INFORMATIONRATHBONES GROUP PLC REPORT & ACCOUNTS 2023
235
FURTHER INFORMATION CONTINUED
REGISTERED OFFICE
Rathbones Group Plc
8 Finsbury Circus
London
EC2M 7AZ
Company No. 01000403
www.rathbones.com
COMPANY SECRETARY
A Johnson
ali.johnson@rathbones.com
REGISTRARS AND TRANSFER OFFICE
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
www.equiniti.com
UK MAINLAND CORRESPONDENCE
Rathbones
PO Box 1965
Liverpool
L69 3HU
OUR OFFICES
To find your local office please visit our website.
www.rathbones.com
RATHBONES GROUP PLC REPORT & ACCOUNTS 2023
236
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RATHBONES GROUP PLC REPORT & ACCOUNTS 2023 Rathbones
8 Finsbury Circus
London
EC2M 7AZ
+44 (0)20 7399 0000
rathbones.com