Rathbones Group (RAT) H2 2024 earnings summary

Executive summary

• Achieved strong financial and operational progress in 2024, with successful integration of IW&I and Saunderson House, ahead of synergy targets and significant technology and property consolidation initiatives.

• Funds under management and administration (FUMA) rose 3.7% to £109.2bn, supported by market gains and robust new business inflows, despite elevated outflows due to macroeconomic factors.

• Integration of IW&I and Saunderson House completed key milestones, with client migration and organizational redesign progressing well, positioning the business for future growth.

• Fully integrated Saunderson House, expanding financial planning capabilities and enhancing technology and digital programs.

• Delivered robust financial returns, with strong dividend growth and a progressive dividend policy.

Financial highlights

• Operating income increased 57% year-over-year to £895.9m, reflecting the full-year contribution from IW&I and Saunderson House migration.

• Underlying profit before tax grew 79% to £227.6m; statutory profit before tax up 73% to £99.6m.

• Underlying operating margin improved to 25.4%, up 3.1 percentage points from 2023.

• Underlying basic EPS rose 19% to 161.6p; total dividend for the year increased 7% to 93p per share.

• Closing FUMA reached £109.2bn, up from £105.3bn, with gross inflows at record levels in Q4.

Outlook and guidance

• Targeting a 30% underlying operating margin by September 2026, with further synergy delivery and cost discipline expected to drive margin progression.

• Improvement in net flows anticipated in H2 2025 as integration headwinds subside and growth initiatives gain traction.

• Advice fees expected to grow faster, leveraging increased capacity post-integration.

• Remaining cost synergies of ~£21m expected in H2 2025 post-IW&I client migration; salary inflation to reduce to ~2% p.a.

• Capital allocation priorities, including potential returns to shareholders, to be reassessed after IW&I migration.