Rathbone Brothers Plc

www.rathbones.comRathbone Brothers Plc

Rathbone Brothers Plc

Announcement of Preliminary Results to 31 December 2005

8 March 2006

www.rathbones.com8 March 2006Page 2

Rathbone Brothers PlcPreliminary Results to December 31, 2005

Andrew Morris

Director

Sue Desborough

Finance Director

Andy Pomfret

Chief Executive

Mark Powell

Chairman

The executive team



Rathbone Brothers Plc

“2005 has proved to be a year of considerable growth in UK and overseas stock markets. This has provided the backdrop for an increase in the rates of organic growth within Rathbones and has helped us to make real progress.”Mark Powell, Chairman



Highlights• Funds under management as at 2 March 2006 are £10 billion

• Profits before tax, aborted acquisition costs and LSE-related profits increased 28.4% to £34.4 million (2004: £26.8million)

• Profits before tax increased 23.9% to £35.3 million (2004: £28.5 million)

• Unit trust profits increased 182.4% to £3.8 million (2004: £1.3 million)

• Basic earnings per share rose by 22.7% to 60.13p (2004: 48.99p)

• Recommended final dividend is 18.5p, making a total of 30.0p (2004: 27.5p) for the year – an overall increase of 9.1%

• New non-executive appointments and Paul Egerton-Vernon steps down from the Plc Board

• Court hearing in relation to the approval of the acquisition of Dexia UK private banking business



Results highlights

9.127.530.0Dividend (p)

59.50

34.4

76.5

110.9

2005 Adjusted

(£m)

45.44

26.8

67.0

93.8

2004* Adjusted

(£m)

(3.99)

(1.4)

Rensburg-related

costs (£m)

3.36

(2.3)

LSE-related profits

(£m)

30.960.13Earnings per share (p)

28.435.3Profit before tax

14.277.9Operating expenses

18.2113.2Operating income

% increase

2005 income statement

(£m)

1*Restated for IFRS



Operating income (adjusted)

93.8

3.2

20.5

6.8

63.3

2004* (£m)

21.93.9Other income

4.921.5Trust income

18.2110.9Operating income

54.410.5Unit trust income

18.575.0Investment management income

% increase 2005 (£m)

*Restated for IFRS



Operating expenses (adjusted)

71%69%Adjusted cost/income ratio

% increase2004* (£m) 2005 (£m)

4.235.436.9Fixed staff costs

43.09.313.3Variable (include profit-related) staff costs

67.0

22.3

44.7

14.276.5Operating expenses

17.926.3Other operating expenses

12.350.2Total staff costs

*Restated for IFRS



Profits by segment

26.8

3.3

1.3

22.2

2004* (£m)

-2.73.2Trust

28.134.4

+182.43.8Unit trusts

+23.427.4Investment management

% change 2005 (£m)

*Restated for IFRS



Trust

• Jersey business profits increased by 5.2%

• Three Jersey sites will combine into a single, purpose-built site on the Esplanade in St. Helier

• Geneva returned to operating profitability during 2005

• Our operations in the UK continue to perform in line with expectations

• Trust division helps to secure and retain investment management mandates and works closely with some key investment management clients

1.9

1.5

H1

3.31.42004

3.21.72005

TotalH2Operating profit (£m)



Unit trusts• Continued growth in funds under management since the year end to

over £1.3 billion as at 2 March 2006

• Rathbone Income Fund top quartile over one, two, three and five year periods

• Recent awards from Citywire, What Investment and Standard & Poor’s

• Growing level of support from over 2,000 IFAs

• New sources of business from life companies, further fund supermarket links and fund of fund managers

• Internal sales now account for only 5% of total gross sales



Unit trustsOperating Income

6.810.5Unit trust operating income

(3.4)(5.6)Rebates and trail commission

10.716.7

(0.5)(0.6)Commission payable

0.10.5Interest & other income

0.91.4Net dealing profits

8.813.7Annual management charges

0.91.1Initial charges net of discounts

2004* (£m)2005 (£m)

*Restated for IFRS



Unit trustsGrowth in funds under management

0.20.3Net new money

0.1-Effect of performance relative to market

0.81.2Closing funds under management

(0.1)(0.1)Outflow of money

0.30.4Inflow of new money

-0.1Market movement (FTSE 100)

0.50.8Opening funds under management

2004 £bn2005 £bn



Investment managementOperating income

9799Basis point return

12.323132597Average FTSE/APCIMS Balanced Index on charging dates

63.3

7.5

24.8

31.0

2004* (£m)

20.09.0Interest

18.575.0

6.526.4Commission

27.739.6Fees

% increase 2005 (£m)

*Restated for IFRS



Investment managementGrowth in segregated funds under management

6.57.6Average funds under management

0.30.4Net new money

(0.1)-Effect of performance relative to market

6.98.3Closing funds under management

(0.2)(0.5)Outflow of money

0.50.9Inflow of new money – organic

0.41.0Market movement (FTSE/APCIMS Balanced)

6.36.9Opening funds under management

2004 £bn2005 £bn



Investment management • New investment managers joining

• The value of segregated portfolios under management rose by 20.6% to £8.3 billion (31 December 2005)

• £700 million of charity funds

• £300 million of SIPP funds

• The Rathbone SIPP

• SEC registration

• Fees and commission unbundling

• Further development of the Rathbones Investment Process



Investment management: Dexia• Dexia’s UK private banking operations

• What we are buying:

• Investment management

• Banking book

• Timetable

• Court approval

• Date of transfer

• Accommodation

• Financial impact



55.9%

21.3%

8.7%

5.4%8.8%

Private client funds (exc SIPPs)

Trusts and settlements

Charities

Pensions, including SIPPs

Other funds under management

Investment management: client base (1)Funds under management by type of account

Source: Internal data.



Funds under management by type of account

88.0%

12.0%Discretionary

Non-discretionary

Investment management: client base (2)

Source: Internal data.



Investment management: client base (3)Profile of client numbers by location Profile of client FUM by location

39.9%

20.6%

11.4%

12.0%

3.1%5.0%

2.8%

5.2%

Internal data. Private clients only.

19.0%

12.6%

8.7%

3.0%5.0%

2.6%

44.3%

4.8%South EastSouth WestCentralNorth WestNorth EastScotlandWales/NIRest of World



Investment management: client base (4)Profile of client numbers by age Profile of client FUM by age

43.2%

22.2%

13.3%

10.8%

6.3%4.2%


51.9%

23.0%

12.6%

7.8%3.6%

1.1%65+55 to 6445 to 5435 to 4425 to 34Under 25



Investment management: client base (5)Profile of client numbers by gender

36.4%

52.1%

11.5% Male

Female

Joint


Breakdown by funds under management almost the same



Investment management: client baseChange in value of clients: December 2001 – December 2005

+66.5%£1million +

+45.2%£500,000 - £999,999

+35.9%£250,000 - £499,999

+16.2%£100,000 - £249,999

-18.9%<£100,000

+4.3%Total number of clients

Number of clients banded by value

+34.3%Value of total funds under management (ex-RUTM)

+11.0%FTSE APCIMS Balanced

+12.8%FTSE All Share

% change



Investment management: client base• Private client focus

• Bias towards discretionary

• Well-diversified client base

• Growth potential



Issues for 2006• Market levels and momentum

• Organic growth

• Dexia acquisition

• Pension deficit

• Pensions – A-day

• Further consolidation in sector

• LSE shares



Conclusion and current trading

“These are record results for Rathbones. We are busy and facing the future in all three of our activities with enthusiasm and confidence.”Mark Powell, Chairman



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

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

• Primary focus will remain on private clients

• Encourage and reward organic growth

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

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

• To grow our unit trust business

• Continuing development of the investment process



Appendices



Analysis of investment management operating income 12 months to 31 December 2005

52.8%35.2%

12.0%Fees

Commission

Net interest and otherincome



48.3%

17.4%

3.7%

11.8%

3.0%

7.8%4.6%

3.4%Staff - payroll (excl variable)

Staff - variable (incl profit-related)

Staff other (non-payroll costs)

Premises

Depreciation

Professional

Settlements

IT

Analysis of operating expenses (excl Rensburg-related)

12 months to 31 December 2005



Operating profit (£m)

14

.2

11

.2

11

.4

9.4

13

.3 16

.1

12

.3

9.4

7.0

10

.4

15

.2

19

.2

26

.5

20

.6

18

.4 19

.7

28

.5

35

.3

0

5

10

15

20

25

30

35

40

2000 2001 2002 2003 2004 2005

£ m

illio

n 1st Half

2nd Half

Full Year

2000 - 2005 After IFRS restatement



Market movements and growth Group funds under management

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2000 2001 2002 2003 2004 2005

£ m

illio

ns

Funds under management

FTSE 100

FTSE APCIMS BalancedFTSE 100 and FTSE

APCIMS Balanced

rebased at 5574 as at

31 December 2000



Consolidated balance sheetas at 31 December 2005

6,0677,869Current tax liabilities59,86060,101Intangible assets

23,00327,526Accruals, deferred income, provisions381,119396,000Investment securities – held-to-maturity

286141Debt securities in issue7,2195,157Investment securities – available-for-sale

425,078493,612Due to customers41,22637,520Loans and advances to customers

197Derivative financial instruments57,881144,975Loans and advances to banks

15,23816,133Settlements balances11,19914,017Settlement balances

Total liabilities

Equity shareholders funds

Retained earnings

Share premium/other reserves

Called up share capital

Retirement benefit obligations

Deposits by banks

Liabilities

605,357

22,154

4,379

4,480

15,840

31/12/04*

£’000

696,268

130,417

57,854

70,500

2,063

18,710

1,853

31/12/05

£’000

605,357696,268Total assets

117,440

46,174

69,22325,093Prepayments, accrued income, other assets

2,0438,599Deferred tax asset

14,9834,295Property, plant and equipment

3,243511Cash and balances at central banks

31/12/04*

£’000

31/12/05

£’000Assets

*Restated for IFRS



Rathbone Brothers Plc159 New Bond StreetLondonW1S 2UDTelephone +44 (0)20 7399 0000Facsimile +44 (0)20 7399 [email protected]

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