Www.rathbones.comRathbone Brothers Plc Announcement of Preliminary Results to 31 December 2005 8 March 2006

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

Mark Powell

Chairman

Andy Pomfret

Chief Executive

Sue Desborough

Finance Director

Andrew Morris

Director

The executive team




“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

2005 income statement

(£m)

LSE-related profits

(£m)

Rensburg-related

costs (£m)

2005 Adjusted

(£m)

2004* Adjusted

(£m) % increase

Operating income 113.2 (2.3) 110.9 93.8 18.2

Operating expenses 77.9 (1.4) 76.5 67.0 14.2

Profit before tax 35.3 34.4 26.8 28.4

Earnings per share (p) 60.13 3.36 (3.99) 59.50 45.44 30.9

Dividend (p) 30.0 27.5 9.1

1*Restated for IFRS



Operating income (adjusted)

2005 (£m) 2004* (£m) % increase

Investment management income 75.0 63.3 18.5

Unit trust income 10.5 6.8 54.4

Trust income 21.5 20.5 4.9

Other income 3.9 3.2 21.9

Operating income 110.9 93.8 18.2

*Restated for IFRS



Operating expenses (adjusted)

2005 (£m) 2004* (£m) % increase

Fixed staff costs 36.9 35.4 4.2

Variable (include profit-related) staff costs 13.3 9.3 43.0

Total staff costs 50.2 44.7 12.3

Other operating expenses 26.3 22.3 17.9

Operating expenses 76.5 67.0 14.2

Adjusted cost/income ratio 69% 71%

*Restated for IFRS



Profits by segment

2005 (£m) 2004* (£m) % change

Investment management 27.4 22.2 +23.4

Unit trusts 3.8 1.3 +182.4

Trust 3.2 3.3 -2.7

34.4 26.8 28.1

*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

Operating profit (£m) H1 H2 Total

2005 1.5 1.7 3.2

2004 1.9 1.4 3.3



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

2005 (£m) 2004* (£m)

Initial charges net of discounts 1.1 0.9

Annual management charges 13.7 8.8

Net dealing profits 1.4 0.9

Interest & other income 0.5 0.1

16.7 10.7

Commission payable (0.6) (0.5)

Rebates and trail commission (5.6) (3.4)

Unit trust operating income 10.5 6.8

*Restated for IFRS



Unit trustsGrowth in funds under management

2005 £bn 2004 £bn

Opening funds under management 0.8 0.5

Market movement (FTSE 100) 0.1 -

Inflow of new money 0.4 0.3

Outflow of money (0.1) (0.1)

Effect of performance relative to market - 0.1

Closing funds under management 1.2 0.8

Net new money 0.3 0.2



Investment managementOperating income

2005 (£m) 2004* (£m) % increase

Fees 39.6 31.0 27.7

Commission 26.4 24.8 6.5

Interest 9.0 7.5 20.0

75.0 63.3 18.5

Average FTSE/APCIMS Balanced Index on charging dates

2597 2313 12.3

Basis point return 99 97

*Restated for IFRS



Investment managementGrowth in segregated funds under management

2005 £bn 2004 £bn

Opening funds under management 6.9 6.3

Market movement (FTSE/APCIMS Balanced) 1.0 0.4

Inflow of new money – organic 0.9 0.5

Outflow of money (0.5) (0.2)

Effect of performance relative to market - (0.1)

Closing funds under management 8.3 6.9

Net new money 0.4 0.3

Average funds under management 7.6 6.5



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

% change

FTSE All Share +12.8%

FTSE APCIMS Balanced +11.0%

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

Number of clients banded by value

Total number of clients +4.3%

<£100,000 -18.9%

£100,000 - £249,999 +16.2%

£250,000 - £499,999 +35.9%

£500,000 - £999,999 +45.2%

£1million + +66.5%



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

Emorris

s Balanced rebased at 5575



Consolidated balance sheetas at 31 December 2005

Assets31/12/05

£’000

31/12/04*

£’000Liabilities

31/12/05

£’000

31/12/04*

£’000

Cash and balances at central banks 511 15,840 Deposits by banks 1,853 3,243

Settlement balances 14,017 11,199 Settlements balances 16,133 15,238

Loans and advances to banks 144,975 57,881 Derivative financial instruments 7 19

Loans and advances to customers 37,520 41,226 Due to customers 493,612 425,078

Investment securities – available-for-sale 5,157 7,219 Debt securities in issue 141 286

Investment securities – held-to-maturity 396,000 381,119 Accruals, deferred income, provisions 27,526 23,003

Intangible assets 60,101 59,860 Current tax liabilities 7,869 6,067

Property, plant and equipment 4,295 4,480 Retirement benefit obligations 18,710 14,983

Deferred tax asset 8,599 4,379 Called up share capital 2,063 2,043

Prepayments, accrued income, other assets 25,093 22,154 Share premium/other reserves 70,500 69,223

Retained earnings 57,854 46,174

Equity shareholders funds 130,417 117,440

Total assets 696,268 605,357 Total liabilities 696,268 605,357

*Restated for IFRS




159 New Bond Street

London

W1S 2UD

Telephone +44 (0)20 7399 0000

Facsimile +44 (0)20 7399 0011

[email protected]

www.rathbones.com

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Www.rathbones.comRathbone Brothers Plc Announcement of Preliminary Results to 31 December 2005 8 March 2006